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Press release from PR Newswire

Ross Stores Reports Strong Fourth Quarter and Fiscal Year 2011 Performance

Thursday, March 15, 2012

Ross Stores Reports Strong Fourth Quarter and Fiscal Year 2011 Performance08:30 EDT Thursday, March 15, 2012PLEASANTON, Calif., March 15, 2012 /PRNewswire/ -- Ross Stores, Inc. (Nasdaq: ROST) today reported earnings per share for the 13 weeks ended January 28, 2012 of $.85, up from $.69 for the 13 weeks ended January 29, 2011.  These results represent a 23% increase on top of 18% and 53% gains for the fourth quarters of 2010 and 2009, respectively.  Net earnings for the 2011 fourth quarter grew to $192.0 million, up 19% from $161.8 million in the prior year.  Sales for the fourth quarter ended January 28, 2012 grew 12% to $2.398 billion, with comparable store sales up 7% on top of 4% and 10% gains in the fourth quarter of the prior two years.For the 52 weeks ended January 28, 2012, earnings per share were $2.86, up 24% on top of 31% and 52% increases in fiscal 2010 and 2009, respectively.  Net earnings for fiscal 2011 grew 18% to $657.2 million, from $554.8 million in the prior year.  Sales for fiscal 2011 rose 9% to $8.608 billion, with same store sales up 5% on top of 5% and 6% increases in 2010 and 2009, respectively. Michael Balmuth, Vice Chairman and Chief Executive Officer, commented, "We are very pleased with our robust sales and earnings in the fourth quarter and fiscal year of 2011, especially considering they were achieved on top of strong multi-year gains. Our healthy revenue growth continues to be driven mainly by our ability to deliver compelling bargains on a wide assortment of exciting name brand fashions for the family and the home to today's increasingly value-focused consumers."Mr. Balmuth continued, "Earnings before interest and taxes for the 2011 fourth quarter grew to 13.0% of sales, up about 70 basis points on top of 60 basis point and 260 basis point increases in the prior two years.  For fiscal 2011, operating margin rose to a record 12.4%, up 85 basis points on top of 140 and 250 basis point gains in 2010 and 2009, respectively. Our improved profitability for both the quarter and the full year were driven primarily by a combination of higher merchandise gross margin, lower shortage costs and leverage on operating expenses from our strong sales gains."   Operating cash flows provided the resources to make capital investments in new store growth and infrastructure as well as to fund the Company's ongoing stock repurchase and dividend programs.  A total of 11.3 million shares of common stock were repurchased during fiscal 2011, for an aggregate purchase price of $450 million, representing half of our two-year $900 million repurchase authorization.  As announced last month, the Company's Board of Directors raised the quarterly cash dividend by 27% to $.14 per share.  Mr. Balmuth noted, "Our recent two-for-one stock split, substantial increase in the quarterly cash dividend and ongoing share repurchase program demonstrate our confidence in the Company's ability to generate significant amounts of excess cash after self-funding the capital needs of our business.  We have repurchased stock as planned every year since 1993 and have also raised our quarterly cash dividend annually since 1994.  This consistent record of returning excess cash reflects our commitment to enhancing stockholder value and returns."Looking ahead, Mr. Balmuth said, "We believe our ability to offer customers terrific name brand bargains, while running our business with much lower store inventories, remains a key driver of sales growth and operating profitability.  This ongoing focus, as well as our history of delivering solid financial results in both healthy and more challenging economic times, gives us the confidence to project respectable increases in both revenues and earnings per share in 2012 and beyond."The Company will host a conference call on Thursday, March 15, 2012 at 11:00 a.m. Eastern time to provide additional details concerning the fourth quarter and fiscal year 2011 results and management's outlook and plans for fiscal 2012.  A real-time audio webcast of the conference call will be available in the Investors section of the Company's website, located at www.rossstores.com. An audio playback will be available at 404-537-3406, PIN # 60163144 until 8:00 p.m. Eastern time on March 22, 2012, as well as at the Company's website address.  Forward-Looking Statements:  This press release and the recorded comments on our corporate website contain forward-looking statements regarding expected sales, earnings levels and other financial results in future periods that are subject to risks and uncertainties which could cause our actual results to differ materially from management's current expectations. The words "plan," "expect," "target," "anticipate," "estimate," "believe," "forecast," "projected," "guidance," "looking ahead" and similar expressions identify forward-looking statements. Risk factors for Ross Dress for Less® ("Ross") and dd's DISCOUNTS® include without limitation, competitive pressures in the apparel or home-related merchandise industry; changes in the level of consumer spending on or preferences for apparel or home-related merchandise; the impact from the macro-economic environment and financial and credit markets including but not limited to interest rates, recession, inflation, deflation, energy costs, tax rates and policy, unemployment trends, and fluctuating commodity costs; changes in geopolitical and geoeconomic conditions; unseasonable weather trends; disruptions in supply chain; lower than planned gross margin, including higher than planned markdowns and higher than expected inventory shortage; greater than planned operating costs; our ability to continue to purchase attractive brand name merchandise at desirable discounts; our ability to attract and retain personnel with the retail talent necessary to execute our strategies; our ability to effectively operate our various supply chain, core merchandising and other information systems; our ability to improve our merchandising capabilities through the implementation of new processes and systems enhancements; achieving and maintaining targeted levels of productivity and efficiency in our distribution centers; and obtaining acceptable new store locations. Other risk factors are set forth in our SEC filings including without limitation, the Form 10-K for fiscal 2010, Form 10-Qs for fiscal 2011 and Form 8-Ks for fiscal 2011 and 2012.  The factors underlying our forecasts are dynamic and subject to change.  As a result, our forecasts speak only as of the date they are given and do not necessarily reflect our outlook at any other point in time.  We do not undertake to update or revise these forward-looking statements.Ross Stores, Inc. is an S&P 500, Fortune 500 and Nasdaq 100 (ROST) company headquartered in Pleasanton, California, with fiscal 2011 revenues of $8.6 billion.  The Company operates Ross Dress for Less® ("Ross"), the largest off-price apparel and home fashion chain in the United States with 1,051 locations in 30 states, the District of Columbia and Guam. Ross offers first-quality, in-season, name brand and designer apparel, accessories, footwear and home fashions for the entire family at everyday savings of 20% to 60% off department and specialty store regular prices. The Company also operates 95 dd's DISCOUNTS® in eight states that feature a more moderately-priced assortment of first-quality, in-season, name brand apparel, accessories, footwear and home fashions for the entire family at everyday savings of 20% to 70% off moderate department and discount store regular prices. Additional information is available at www.rossstores.com.Contact:John G. CallBobbi ChavilleGroup Senior Vice President,Senior Director, Investor RelationsChief Financial Officer(925) 965-4289(925) 965-4315bobbi.chaville@ros.comRoss Stores, Inc.Condensed Consolidated Statements of EarningsThree Months Ended Twelve Months Ended January 28, January 29, January 28, January 29, ($000, except stores and per share data, unaudited)2012201120122011Sales$ 2,397,878$2,145,242$ 8,608,291$7,866,100Costs and ExpensesCosts of goods sold1,745,0341,562,3556,240,7605,729,735Selling, general and administrative341,794319,6241,304,0651,229,775Interest expense, net2,6932,51310,3229,569     Total costs and expenses2,089,5211,884,4927,555,1476,969,079Earnings before taxes308,357260,7501,053,144897,021Provision for taxes on earnings116,40598,954395,974342,224Net earnings$    191,952$   161,796$    657,170$   554,797Earnings per share (1)Basic$          0.86$         0.70$          2.91$         2.35Diluted$          0.85$         0.69$          2.86$         2.31Weighted average shares outstanding (000) (1)Basic222,288231,599225,915235,641Diluted226,511235,877229,982239,805Dividends (1)Cash dividends declared per share$          0.25$         0.19$          0.47$         0.35Stores open at end of period1,1251,0551,1251,055(1) All share and per share amounts have been adjusted for the two-for-one stock split effective December 15, 2011.Ross Stores, Inc.Condensed Consolidated Balance SheetsJanuary 28,January 29, ($000, unaudited)20122011AssetsCurrent AssetsCash and cash equivalents$    649,835$   833,924Short-term investments6583,204Accounts receivable50,84845,384Merchandise inventory1,130,0701,086,917Prepaid expenses and other87,36263,807Current deferred income taxes, net5,59810,003Total current assets1,924,3712,043,239Property and equipment, net1,241,722983,776Long-term investments5,60214,082Other long-term assets129,51475,107Total assets$ 3,301,209$3,116,204Liabilities and Stockholders? EquityCurrent LiabilitiesAccounts payable    $    761,717$   767,455Accrued expenses and other304,654292,174Accrued payroll and benefits248,552235,030Income taxes payable31,12957,661Total current liabilities1,346,0521,352,320Long-term debt150,000150,000Other long-term liabilities203,625189,989Long-term deferred income taxes, net108,52091,203Commitments and contingenciesStockholders? Equity1,493,0121,332,692Total liabilities and stockholders? equity$ 3,301,209$3,116,204Ross Stores, Inc.Condensed Consolidated Statements of Cash FlowsTwelve Months EndedJanuary 28, January 29, ($000, unaudited)20122011Cash Flows From Operating ActivitiesNet earnings$    657,170$  554,797Adjustments to reconcile net earnings to net cashprovided by operating activities:Depreciation and amortization159,892160,693Stock-based compensation40,40436,551Deferred income taxes21,722(17,977)Tax benefit from equity issuance19,04015,412Excess tax benefit from stock-based compensation(18,180)(14,746)Change in assets and liabilities:Merchandise inventory(43,153)(214,419)Other current assets(10,329)(6,339)Accounts payable(11,614)102,851Other current liabilities (2,109)52,594Other long-term, net7,2623,649Net cash provided by operating activities820,105673,066Cash Flows From Investing ActivitiesAdditions to property and equipment(416,271)(198,651)Increase in restricted cash and investments(60,086)-Purchases of investments-(6,842)Proceeds from investments4,5898,648Net cash used in investing activities(471,768)(196,845)Cash Flows From Financing ActivitiesExcess tax benefit from stock-based compensation18,18014,746Issuance of common stock related to stock plans17,29036,479Treasury stock purchased(15,854)(9,544)Repurchase of common stock(450,000)(375,000)Dividends paid(102,042)(77,321)Net cash used in financing activities(532,426)(410,640)Net (decrease) increase in cash and cash equivalents(184,089)65,581Cash and cash equivalents:Beginning of year833,924768,343End of year$    649,835$  833,924Supplemental Cash Flow DisclosuresInterest paid$        9,668$      9,668Income taxes paid$    370,074$  330,589Non-Cash Investing ActivitiesIncrease in fair value of investment securities$           226$         490SOURCE Ross Stores, Inc.