Ross Stores Provides Second Quarter and Updated Fiscal 2022 Guidance
Dublin, CA.– Ross Stores, Inc. reported earnings per share for the 13 weeks ended April 30, 2022 of $0.97 on net earnings of $338 million. The quarter includes an approximate benefit of $0.06 per share from the favorable timing of expenses that are expected to reverse in subsequent quarters. These results compare to $1.34 per share on net income of $476 million for the 13 weeks ended May 1, 2021. Sales for the first quarter of 2022 were $4.3 billion versus $4.5 billion in the prior year period. Comparable store sales declined 7% on top of a robust 13% gain in the first quarter of 2021 versus 2019.
Barbara Rentler, Chief Executive Officer, commented, “We are disappointed with our lower-than-expected first quarter results. Following a stronger-than-planned start early in the period, sales underperformed over the balance of the quarter. We knew fiscal 2022 would be a difficult year to predict, especially the first half when we were facing last year’s record levels of government stimulus and significant customer pent-up demand as COVID restrictions eased. The external environment has also proven extremely challenging as the Russia-Ukraine conflict has exacerbated inflationary pressures on the consumer not seen in 40 years.”
She continued, “First quarter operating margin of 10.8% was down from 14.2% in 2021, reflecting the deleveraging effect from the same store sales decline combined with ongoing headwinds from higher freight and wage costs that began rising in the second half of 2021.”
Second Quarter and Updated Fiscal 2022 Guidance
Looking ahead, Ms. Rentler commented, “Given our first quarter results and today’s increasingly uncertain macro-economic and geopolitical environment, we believe it is prudent to adopt a more conservative outlook for the balance of the year. We are now forecasting same store sales for the 13 weeks ending July 30, 2022 to decrease 4% to 6% on top of a very strong 15% gain in the prior year period, with earnings per share projected to be $0.99 to $1.07 versus $1.39 in last year’s second quarter.”
She continued, “Although we continue to expect sales and profitability to improve as we move through the year, for the 52 weeks ending January 28, 2023, we now forecast comparable store sales to decline 2% to 4% versus a 13% gain in fiscal 2021. Earnings per share for fiscal 2022 are projected to be $4.34 to $4.58 compared to $4.87 in the prior year.”
Ms. Rentler concluded, “While the landscape in early 2022 has been tougher than expected and the year may prove to be more difficult than initially anticipated, we remain confident in our ability to successfully navigate through this period. We have shown in the past that our value-focused business model has served us well in both healthy and more uncertain external climates and believe the current challenging conditions will be no different.”
The Company will host a conference call on Thursday, May 19, 2022 at 4:15 p.m. Eastern time to provide additional details concerning its first quarter results and management’s outlook for the second quarter and fiscal year 2022. 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 #7142135 until 8:00 p.m. Eastern time on May 26, 2022, as well as on the Company’s website.
Ross Stores, Inc. | ||||||
Condensed Consolidated Statements of Earnings | ||||||
Three Months Ended | ||||||
($000, except stores and per share data, unaudited) |
April 30, 2022 |
May 1, 2021 |
||||
Sales |
$ |
4,333,100 |
$ |
4,516,080 |
||
Costs and Expenses | ||||||
Cost of goods sold |
|
3,196,446 |
|
3,198,396 |
||
Selling, general and administrative |
|
669,496 |
|
675,053 |
||
Interest expense, net |
|
17,696 |
|
19,049 |
||
Total costs and expenses |
|
3,883,638 |
|
3,892,498 |
||
Earnings before taxes |
|
449,462 |
|
623,582 |
||
Provision for taxes on earnings |
|
111,017 |
|
147,103 |
||
Net earnings |
$ |
338,445 |
$ |
476,479 |
||
Earnings per share | ||||||
Basic |
$ |
0.98 |
$ |
1.35 |
||
Diluted |
$ |
0.97 |
$ |
1.34 |
||
Weighted-average shares outstanding (000) | ||||||
Basic |
|
347,053 |
|
352,988 |
||
Diluted |
|
348,820 |
|
355,367 |
||
Store count at end of period |
|
1,951 |
|
1,866 |
||
Ross Stores, Inc. | ||||||
Condensed Consolidated Balance Sheets | ||||||
($000, unaudited) |
April 30, 2022 |
May 1, 2021 |
||||
Assets | ||||||
Current Assets | ||||||
Cash and cash equivalents |
$ |
4,015,567 |
$ |
5,367,006 |
||
Accounts receivable |
|
164,071 |
|
167,139 |
||
Merchandise inventory |
|
2,673,551 |
|
1,697,992 |
||
Prepaid expenses and other |
|
194,813 |
|
199,391 |
||
Total current assets |
|
7,048,002 |
|
7,431,528 |
||
Property and equipment, net |
|
2,887,926 |
|
2,713,873 |
||
Operating lease assets |
|
3,057,641 |
|
3,004,747 |
||
Other long-term assets |
|
240,129 |
|
245,715 |
||
Total assets |
$ |
13,233,698 |
$ |
13,395,863 |
||
Liabilities and Stockholders’ Equity | ||||||
Current Liabilities | ||||||
Accounts payable |
$ |
2,175,350 |
$ |
2,574,780 |
||
Accrued expenses and other |
|
582,792 |
|
583,399 |
||
Current operating lease liabilities |
|
635,799 |
|
599,838 |
||
Accrued payroll and benefits |
|
272,760 |
|
323,165 |
||
Income taxes payable |
|
89,361 |
|
172,276 |
||
Current portion of long-term debt |
|
– |
|
64,937 |
||
Total current liabilities |
|
3,756,062 |
|
4,318,395 |
||
Long-term debt |
|
2,453,367 |
|
2,449,208 |
||
Non-current operating lease liabilities |
|
2,567,286 |
|
2,542,358 |
||
Other long-term liabilities |
|
236,211 |
|
285,762 |
||
Deferred income taxes |
|
166,875 |
|
147,319 |
||
Commitments and contingencies | ||||||
Stockholders’ Equity |
|
4,053,897 |
|
3,652,821 |
||
Total liabilities and stockholders’ equity |
$ |
13,233,698 |
$ |
13,395,863 |
||
Ross Stores, Inc. | ||||||
Condensed Consolidated Statements of Cash Flows | ||||||
Three Months Ended | ||||||
($000, unaudited) |
April 30, 2022 |
May 1, 2021 |
||||
Cash Flows From Operating Activities | ||||||
Net earnings |
$ |
338,445 |
$ |
476,479 |
||
Adjustments to reconcile net earnings to net cash (used in) provided by in operating activities: | ||||||
Depreciation and amortization |
|
92,108 |
|
87,510 |
||
Stock-based compensation |
|
36,071 |
|
28,674 |
||
Deferred income taxes |
|
29,233 |
|
25,452 |
||
Change in assets and liabilities: | ||||||
Merchandise inventory |
|
(411,278) |
|
(189,010) |
||
Other current assets |
|
(70,331) |
|
(77,246) |
||
Accounts payable |
|
(189,888) |
|
349,540 |
||
Other current liabilities |
|
(325,075) |
|
(71,623) |
||
Income taxes |
|
81,625 |
|
121,255 |
||
Operating lease assets and liabilities, net |
|
2,902 |
|
2,554 |
||
Other long-term, net |
|
(79) |
|
(765) |
||
Net cash (used in) provided by operating activities |
|
(416,267) |
|
752,820 |
||
Cash Flows From Investing Activities | ||||||
Additions to property and equipment |
|
(109,848) |
|
(136,937) |
||
Net cash used in investing activities |
|
(109,848) |
|
(136,937) |
||
Cash Flows From Financing Activities | ||||||
Issuance of common stock related to stock plans |
|
5,917 |
|
6,063 |
||
Treasury stock purchased |
|
(38,113) |
|
(47,378) |
||
Repurchase of common stock |
|
(239,565) |
|
– |
||
Dividends paid |
|
(108,908) |
|
(101,519) |
||
Net cash used in financing activities |
|
(380,669) |
|
(142,834) |
||
Net (decrease) increase in cash, cash equivalents, and restricted cash and cash equivalents |
|
(906,784) |
|
473,049 |
||
Cash, cash equivalents, and restricted cash and cash equivalents: | ||||||
Beginning of period |
|
4,982,382 |
|
4,953,769 |
||
End of period |
$ |
4,075,598 |
$ |
5,426,818 |
||
Reconciliations: | ||||||
Cash and cash equivalents |
$ |
4,015,567 |
$ |
5,367,006 |
||
Restricted cash and cash equivalents included in prepaid expenses and other |
|
11,406 |
|
10,766 |
||
Restricted cash and cash equivalents included in other long-term assets |
|
48,625 |
|
49,046 |
||
Total cash, cash equivalents, and restricted cash and cash equivalents: |
$ |
4,075,598 |
$ |
5,426,818 |
||
Supplemental Cash Flow Disclosures | ||||||
Interest paid |
$ |
40,158 |
$ |
39,929 |
||
Income taxes paid |
$ |
160 |
$ |
396 |
||