Ross Stores, Inc. today reported sales for the four weeks ended Feb. 2, 2008 of $350 million, a 9% increase over the $322 million in sales for the four weeks ended Feb. 3, 2007.
For the 52 weeks ended February 2, 2008, sales were $5.975 billion, a 9% increase over the $5.486 billion in sales for the 52 weeks ended February 3, 2007. Comparable store sales for the 52 weeks ended February 2, 2008 rose 1% over the 52 weeks ended February 3, 2007.
Michael Balmuth, Vice Chairman, President and Chief Executive Officer, commented, “Our healthy fourth quarter sales results benefited from strong holiday traffic in both November and December, when same store sales rose 3%. While our January results were impacted by wet weather throughout California, our 1% comparable store sales gain for the month was within our forecasted range. We believe our solid performance for the quarter, especially in today's challenging retail climate, benefited from our ability to deliver compelling name brand bargains to our customers, reflecting the resiliency of our off-price model.”
New $600 Million Stock Repurchase Program and 27% Increase in Quarterly Dividend
Mr. Balmuth continued, “I also am pleased to report that, based on our current cash position, strong balance sheet and forecasted free cash flows, our Board of Directors has approved a new two-year $600 million stock repurchase program. At the current stock price, this new authorization represents over 15% of the Company's total market value and a 50% increase over our most recent program, reflecting our confidence in the long-term prospects for our business.”
During fiscal 2007, the Company repurchased 6.9 million shares of common stock for an aggregate purchase price of $200 million, completing its prior two-year $400 million stock repurchase program for 2006 and 2007. For the ten years ending in fiscal 2007, the Company has returned approximately $1.6 billion in capital to stockholders through its stock repurchase programs.
The Board has also approved a 27% increase in the quarterly cash dividend to $.095 per share. The new quarterly dividend is payable on or about March 31, 2008 to stockholders of record as of February 22, 2008. Today's dividend announcement represents the fourteenth consecutive annual increase since the Company initiated its dividend in 1994.
Updated Fourth Quarter and Fiscal 2007 Estimates
Based on favorable gross margin and expense trends, the Company now estimates that earnings per share for the 13 weeks ended February 2, 2008 will be $.69 to $.70, up from its previous guidance of $.68 to $.69. For the 52 weeks ended February 2, 2008, earnings per share are estimated to be $1.89 to $1.90. Prior year earnings per share for the 14 and 53 weeks ended February 3, 2007 were $.66 and $1.70, respectively, and included income equivalent to about $.07 per share related to the 53rd week in fiscal 2006.
Fiscal 2008 Guidance
Looking ahead, Mr. Balmuth said, “Our 2008 guidance takes into consideration the current economic pressures on consumers, which we believe will gradually ease as the year progresses. As a result, for the fiscal year ending January 31, 2009, we are forecasting same store sales gains of 1% to 2% and projecting earnings per share in the range of $2.10 to $2.20. For the 13 weeks ending May 3, 2008, we are targeting same store sales to be flat to up 1% and earnings per share of $.52 to $.54, compared to $.48 in the prior year. Our 2008 earnings targets assume total unit growth of 8%, comprised of approximately 65 to 70 net new Ross locations and about 5 new dd's DISCOUNTS stores.”
Longer Term Outlook
Commenting on longer term plans for 2009 and 2010, Mr. Balmuth said, “Our overarching objective is to deliver profitable growth with improving financial returns. Over the past several years, we expanded our Ross Dress for Less business rapidly in newer markets in the Southeast and Mid-Atlantic, as we worked to improve name brand recognition and realize economies of scale in these regions. Moving forward, until we complete the roll-out of our micro-merchandising initiatives in 2010, we believe that the Company's total store productivity and profitability will be enhanced by targeting expansion in existing markets, with fewer new locations in the Southeast and Mid-Atlantic. In addition, after doubling the size of our dd's DISCOUNTS chain with 26 new stores in 2007, for at least the next year or so, we will focus mainly on gaining a better understanding of the dd's customer and also on fine-tuning our merchandise assortments to improve performance, especially in the new dd's markets of Arizona, Florida and Texas.”
Mr. Balmuth continued, “As a result of these changes, we have adjusted our longer range earnings model for 2009 and 2010, which now assumes annual unit growth of about 5% to 6% as well as a return to our historical comparable store sales growth rate of about 3%. Combined with our larger stock repurchase program, these modifications are expected to drive average annual earnings per share gains in the mid-teen percentage range and an increase in return on average equity to over 30% by 2010.”
To sum up, Mr. Balmuth said, “We remain confident in our off-price model as the competitive bargains we offer continue to make our stores attractive destinations for customers in both healthy and more challenging economic landscapes. We strongly believe the actions announced today will enhance stockholder returns while maximizing our long-term prospects for future growth and profitability.”
