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Ross Stores Provides Second Quarter and Updated Fiscal 2022 Guidance image

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

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