Ross Stores Inc.
), one of the leading off-price retailers of apparels and home
accessories, came up with robust fourth-quarter fiscal 2012
results. The company's reported earnings for the quarter surged
25.9% to $1.07 per share from the year-ago comparable quarter's
earnings of 85 cents primarily attributable to its ability to
attract bargain hunters who value both quality and price.
Ross Stores' efforts to trim down costs and reduce store
inventories also benefitted the results. However, quarterly
earnings were in line with the Zacks Consensus Estimate.
Let's Dig Deep
Net sales for the 14-week period ended Feb 2, increased 15.1%
to $2,760.6 million from $2,397.9 million in the prior-year
quarter. This also surpassed the Zacks Consensus Estimate of
$2,751.0 million. Comparable store sales for the 13-week period
ended Jan 26 increased 5% versus 7% growth registered in the
Gross profit, in dollar terms, increased 17.5% to $767.0
million from $652.8 million in the year-ago quarter while gross
margin improved 55 basis points (bps) to 27.78%. The
year-over-year expansion in gross margin was primarily due to
lower cost of goods sold as a percentage of sales.
Increased merchandise gross profit, leverage on operating
expenses and rise in comparable store sales led to an elevation
of 21.2% in operating income to $377.0 million from the
prior-year level of $311.1 million. Consequently, operating
margin for the quarter expanded 69 bps to 13.66%.
Other Financial Aspects
Ross Stores, which faces stiff competition from
Sears Holdings Corporation
Costco Wholesale Corporation
Dollar Tree Inc
) ended the fiscal with cash and cash equivalents of $646.8
million compared with $649.8 million at the end of fiscal 2011.
During the fiscal year, Ross Stores generated $979.6 million of
cash from its operational activities. This will enable the
company to make capital investments, pay dividends and repurchase
At the end of fiscal 2012, the company possessed long-term
debt of $150.0 million and shareholders' equity of $1,766.9
During the 12-month period, the company bought back 7.5
million shares for $450.0 million and completed its $900 million
share repurchase program, which was authorized in 2011. The board
of directors of Ross Stores authorized a new $1.1 billion share
repurchase program in January this year, which is expected to be
complete by Jan 2015. Apart from this, the company hiked its
regular quarterly cash dividend by 21.0% to 17 cents per
Headquartered in Pleasanton, CA, Ross Stores operates through
1,091 'Ross Dress for Less' stores in 33 states, the District of
Columbia and Guam, as well as 108 dd's DISCOUNTS stores across 8
states. Currently, the company retains a Zacks Rank #3
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