Michael Balmuth, Vice Chairman, President and CEO, commented, “We are very pleased with our strong sales and earnings results in the first quarter, which were well ahead of plan. This performance is especially noteworthy considering that it was achieved in one of the most challenging economic and retail environments on record. Our business benefited mainly from our ability to offer customers fresh and exciting name brand bargains, as we continue to take advantage of the substantial amount of close-out opportunities in the marketplace. The best performing merchandise categories during the period were Dresses and Shoes, while the strongest region was the Mid-Atlantic.”
Balmuth continued, “Operating margin for the quarter grew about 75 basis points to 8.9%, primarily driven by a 90 basis point improvement in gross margin. Partially offsetting this gain was a 15 basis point increase in selling, general and administrative costs versus the prior year. Last year benefited by about 30 basis points from income related to the previously mentioned real estate settlement.”
Balmuth also noted, “Our balance sheet and cash flows remain healthy. We continued to return capital to stockholders during the quarter through our stock repurchase and dividend programs. During the first three months of fiscal 2009, we repurchased 2.2 million shares of common stock for an aggregate purchase price of $77 million. We remain on track to complete the remaining $223 million stock repurchase authorization by the end of fiscal 2009.”
Looking ahead, Balmuth said, “While the external environment remains challenging, our much better-than-expected results year-to-date reflect that consumers are continuing to respond very favorably to the compelling values we offer. As a result, we have increased our sales and earnings outlook for the second quarter and the back half of 2009.”
“For the second quarter ending August 1, 2009, we are now forecasting same store sales to be flat to down 1%, on top of a strong 6% gain in the prior year. This compares to our previous second quarter guidance for a mid single digit percentage decline in comparable store sales. We also are raising our same store sales guidance for the second half of this year from relatively flat to up 2% to 3%, compared to a 1% decline in the same period last year,” he said.
Based on these updated sales targets, the company is projecting second quarter earnings per share to be in the range of 60 cents to 63 cents, versus 54 cents in the prior year period. For the 52 weeks ending Jan. 30, 2010, earnings per share are now forecast to be in the range of $2.62 to $2.72. This compares to the company's initial fiscal 2009 earnings per share guidance of $2.25 to $2.45 and reported EPS of $2.33 in fiscal 2008.
Ross Stores, Inc.
Condensed Consolidated Statements of Earnings
Three Months Ended
——————
($000, except stores and per share data, May 2, May 3,
unaudited) 2009 2008
—————————————- —- —-
Sales $1,691,599 $1,556,328
Costs and expenses
Cost of goods sold 1,268,709 1,181,557
Selling, general and
administrative 272,030 247,672
Interest expense (income), net 1,656 (1,621)
—– ——
Total costs and expenses 1,542,395 1,427,608
Earnings before taxes 149,204 128,720
Provision for taxes on earnings 57,817 49,235
—— ——
Net earnings $91,387 $79,485
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Earnings per share
Basic $0.73 $0.61
Diluted $0.72 $0.60
Weighted average shares outstanding (000)
Basic 124,692 131,319
Diluted 126,564 133,314
Dividends per share
Cash dividends declared per share $- $-
Stores open at end of period 974 918
