Ross Stores Inc. reported earnings per share for the 13 weeks ended February 1, 2020, grew 7 percent to $1.28 on net income of $456 million. Sales for the fourth quarter of 2019 were $4.4 billion, with comparable-store sales up 4 percent on top of a 4 percent gain in the prior-year period.
For the 2019 fiscal year, earnings per share increased 8 percent to $4.60, compared to $4.26 in the prior year. Net income for the period was $1.7 billion, up from $1.6 billion last year. Sales for the 2019 year grew 7 percent to $16.0 billion, with same-store sales up 3 percent on top of a 4 percent gain last year.
Earnings results for both the 2019 and 2018 fourth quarters and fiscal years reflect one-time, non-cash gains of $.02 and $.07 per share, respectively, primarily related to the favorable resolution of tax matters.
Barbara Rentler, chief executive officer, commented, “We delivered strong sales and earnings growth for both the fourth quarter and fiscal year. Our ongoing ability to offer compelling bargains to our customers enabled us to achieve these results despite our own challenging multi-year comparisons and a fiercely competitive holiday season.”
Rentler continued, “Fourth quarter operating margin of 13.3 percent was slightly better than expected, driven by higher merchandise margin.”
Update on Stock Repurchase Program
During the fourth quarter and fiscal 2019, we repurchased a total of 2.7 million and 12.3 million shares of common stock, respectively, for an aggregate price of $309 million in the quarter and $1.275 billion for the full year. These purchases were made pursuant to the two-year $2.55 billion program announced in March 2019. We expect to complete the $1.275 billion remaining under the authorization in fiscal 2020.
Declaration of Higher Quarterly Cash Dividend
The company’s Board of Directors also recently approved an increase in the quarterly cash dividend to $.285 per share, up 12 percent over the prior year. This higher quarterly dividend is payable on March 31, 2020, to stockholders of record as of March 17, 2020.
Rentler noted, “The increases to our shareholder payouts for 2020 reflect our ongoing confidence in the company’s ability to generate significant amounts of cash after funding our growth and the other capital needs of our business. We have repurchased stock as planned every year since 1993 and raised our cash dividend annually since 1994. This consistent record reflects our ongoing commitment to enhancing stockholder value and returns.”
Fiscal 2020 Guidance
Looking ahead, Rentler said, “As we enter 2020, we continue to face our own strong long-term sales and earnings results plus ongoing uncertainty in the macro-economic, political, and retail landscapes. Therefore, while we hope to do better, we believe it is prudent to maintain a somewhat cautious outlook when projecting our performance for the coming year.”
Rentler added, “Our guidance also does not reflect the potential unknown impacts from the evolving coronavirus outbreak. While we are closely monitoring the situation, there remains a high level of uncertainty over supply chain disruptions in China. In addition, it is unclear how a further possible spread of the coronavirus could negatively impact U.S. consumer demand.”
For the 52 weeks ending January 30, 2021, the company is planning same-store sales to grow 1 percent to 2 percent and earnings per share of $4.67 to $4.88. We also plan to open about 100 stores this year, consisting of approximately 75 Ross Dress for Less and 25 dd’s DISCOUNTS locations.
For the first quarter ending May 2, 2020, comparable store sales are forecast to be up 1 percent to 2 percent with earnings per share projected to be $1.16 to $1.21 versus $1.15 for the first quarter ended May 4, 2019.
Photo courtesy Ross Stores corporate