Ross Stores(ROST) - 2025 Q2 - Quarterly Results

Executive Summary & Financial Performance Second Quarter 2024 Results Ross Stores reported strong second quarter 2024 results, exceeding expectations with significant year-over-year growth in earnings per share, net income, total sales, and comparable store sales Second Quarter 2024 Financial Highlights | Metric | Q2 2024 (13 weeks ended Aug 3) | Q2 2023 (13 weeks ended Jul 29) | YoY Change (%) | | :----------------------- | :----------------------------- | :------------------------------ | :------------- | | Earnings Per Share ($) | $1.59 | $1.32 | +20.5% | | Net Income ($ million) | $527 | $446 | +18.2% | | Total Sales ($ billion) | $5.3 | $4.9 | +7% | | Comparable Store Sales | +4% | N/A | N/A | First Half 2024 Results The company also demonstrated robust performance for the first half of fiscal 2024, with notable increases in earnings per share, net income, and total sales compared to the prior year period First Half 2024 Financial Highlights | Metric | H1 2024 (6 months ended Aug 3) | H1 2023 (6 months ended Jul 29) | YoY Change (%) | | :----------------------- | :----------------------------- | :------------------------------ | :------------- | | Earnings Per Share ($) | $3.05 | $2.41 | +26.6% | | Net Income ($ billion) | $1.0 | $0.818 | +22.2% | | Total Sales ($ billion) | $10.1 | $9.4 | +7.4% | | Comparable Store Sales | +3% | N/A | N/A | Management Commentary on Q2 Performance The CEO highlighted that second quarter sales and earnings surpassed expectations, attributing improved profitability to stronger value offerings, higher sales, and reduced distribution and incentive costs, despite lower merchandise margins - Second quarter sales and earnings were above expectations as stronger value offerings resonated with customers[3] - Operating margin increased 115 basis points to 12.5% compared to the prior year period[3] - Improved profitability benefited from higher sales, and lower distribution and incentive costs, partially offset by lower merchandise margins[3] Share Repurchase Program Ross Stores continued its share repurchase program in Q2 2024, buying back 1.8 million shares and remaining on track to meet its fiscal year 2024 target under the approved $2.1 billion authorization Q2 2024 Share Repurchase Activity | Metric | Q2 2024 | | :----------------------- | :----------- | | Shares Repurchased (million) | 1.8 | | Aggregate Price ($ million) | $262 | - The company remains on track to buy back a total of $1.05 billion in common stock during fiscal 2024 under the two-year $2.1 billion authorization[3] Outlook and Guidance Second Half and Updated Fiscal 2024 Guidance Ross Stores provided updated guidance for the second half and full fiscal year 2024, projecting comparable sales growth and specific earnings per share ranges for Q3, Q4, and the entire year, reflecting expected additional efficiencies Second Half 2024 Comparable Sales Growth Guidance | Quarter | Comparable Sales Growth (Planned) (%) | 2023 Gains (Prior Year) (%) | | :------ | :------------------------------------ | :-------------------------- | | Q3 | 2% to 3% | 5% | | Q4 | 2% to 3% | 7% | Second Half 2024 Earnings Per Share Guidance | Quarter | Projected EPS (2024) ($) | Actual EPS (2023) ($) | | :------ | :----------------------- | :-------------------- | | Q3 | $1.35 to $1.41 | $1.33 | | Q4 | $1.60 to $1.67 | $1.82 | Full Fiscal Year 2024 Earnings Per Share Guidance | Metric | FY 2024 Projected ($) | FY 2023 Actual ($) | | :----------------------- | :-------------------- | :----------------- | | Earnings Per Share | $6.00 to $6.13 | $5.56 | - The 2023 fourth quarter and full year results included an approximate $0.20 earnings per share benefit from the 53rd week[5] Management Commentary on Future Outlook The CEO expressed caution regarding the second half outlook due to persistent high costs affecting low-to-moderate income customers and a challenging external environment, emphasizing a continued focus on providing strong value offerings - Low-to-moderate income customers continue to face persistently high costs on necessities, pressuring their discretionary spending[5] - Prior year sales comparisons become more challenging in the second half amidst an uncertain and volatile external environment, leading to a cautious approach to sales forecasting[5] - The company will stay laser-focused on providing quality branded bargains to maximize prospects for ongoing market share gains[5] Conference Call Details Ross Stores announced details for a conference call to discuss Q2 results and the fiscal year 2024 outlook, providing access via webcast and audio playback - A conference call will be hosted on Thursday, August 22, 2024, at 4:15 p.m. Eastern time[5] - A real-time audio webcast of the conference call will be available in the Investors section of the Company's website, **www.rossstores.com**[5](index=5&type=chunk) - An audio playback will be available at 201-612-7415, PIN 13748197 until 8:00 p.m. Eastern time on August 29, 2024, as well as on the Company's website[5] Company Information & Disclosures Forward-Looking Statements This section provides a cautionary statement regarding forward-looking information, outlining various risks and uncertainties that could cause actual results to differ materially from projections, and disclaims any obligation to update these statements - Forward-looking statements reflect current beliefs, plans, and estimates with respect to future events and projected financial performance, subject to risks and uncertainties[7] - Key risk factors include macroeconomic environment (inflation, high interest rates, recession concerns), consumer spending, competitive pressures, inventory management, supply chain disruption, and information or data security breaches[7] - The company disclaims any obligation to update or revise these forward-looking statements[7] About Ross Stores, Inc. Ross Stores, Inc. is a major off-price retailer operating Ross Dress for Less and dd's DISCOUNTS, offering branded apparel and home fashions at significant savings across a wide geographic footprint - Ross Stores, Inc. is an S&P 500, Fortune 500, and Nasdaq 100 company headquartered in Dublin, California, with fiscal 2023 revenues of $20.4 billion[8] Store Operations Overview | Brand | Locations (count) | States/Territories (count) | Merchandise Offering | Savings Range (%) | | :------------------ | :---------------- | :------------------------- | :-------------------------------------------------------------------------------- | :---------------------------------------------------- | | Ross Dress for Less | 1,795 | 43 states, DC, Guam | First-quality, in-season, name brand and designer apparel, accessories, footwear, and home fashions | 20% to 60% off department and specialty store regular prices | | dd's DISCOUNTS | 353 | 22 states | More moderately-priced assortment of first-quality, in-season, name brand apparel, accessories, footwear, and home fashions | 20% to 70% off moderate department and discount store regular prices | Condensed Consolidated Financial Statements Condensed Consolidated Statements of Earnings The condensed consolidated statements of earnings detail the company's revenue, costs, and net income for the second quarter and first half of fiscal 2024 compared to the prior year periods, showing overall growth in profitability Condensed Consolidated Statements of Earnings (Q2 & H1) | Metric ($000) | Q2 2024 (Aug 3) | Q2 2023 (Jul 29) | H1 2024 (Aug 3) | H1 2023 (Jul 29) | | :---------------------------------- | :-------------- | :--------------- | :-------------- | :--------------- | | Sales | $5,287,519 | $4,934,905 | $10,145,586 | $9,429,591 | | Cost of goods sold | $3,791,929 | $3,569,367 | $7,282,601 | $6,861,973 | | Selling, general and administrative | $836,357 | $807,898 | $1,612,639 | $1,554,120 | | Earnings before taxes | $702,583 | $594,854 | $1,339,646 | $1,082,109 | | Net earnings | $527,148 | $446,319 | $1,015,138 | $817,510 | | Diluted EPS ($) | $1.59 | $1.32 | $3.05 | $2.41 | | Store count at end of period (count) | 2,148 | 2,061 | 2,148 | 2,061 | Condensed Consolidated Balance Sheets The balance sheet shows the company's financial position as of August 3, 2024, indicating an increase in total assets, particularly cash and merchandise inventory, alongside changes in liabilities and stockholders' equity Condensed Consolidated Balance Sheets (Key Items) | Metric ($000) | August 3, 2024 | July 29, 2023 | YoY Change (%) | | :------------------------ | :------------- | :------------ | :------------- | | Cash and cash equivalents | $4,668,137 | $4,583,606 | +1.8% | | Merchandise inventory | $2,490,558 | $2,300,063 | +8.3% | | Total current assets | $7,594,983 | $7,273,752 | +4.4% | | Total assets | $14,678,021 | $13,987,302 | +4.9% | | Total current liabilities | $4,874,240 | $3,969,642 | +22.8% | | Long-term debt | $1,513,826 | $2,458,615 | -38.5% | | Stockholders' Equity | $5,130,532 | $4,454,742 | +15.2% | Condensed Consolidated Statements of Cash Flows The cash flow statement for the first half of 2024 shows a decrease in net cash provided by operating activities, continued investment in property and equipment, and increased cash usage in financing activities, primarily due to share repurchases and dividends Condensed Consolidated Statements of Cash Flows (H1) | Metric ($000) | H1 2024 (Aug 3) | H1 2023 (Jul 29) | YoY Change (%) | | :-------------------------------------------------------------------------------- | :-------------- | :--------------- | :------------- | | Net earnings | $1,015,138 | $817,510 | +24.2% | | Net cash provided by operating activities | $961,042 | $1,116,281 | -13.9% | | Net cash used in investing activities | ($333,735) | ($363,459) | +8.2% | | Net cash used in financing activities | ($830,040) | ($719,766) | +15.3% | | Net (decrease) increase in cash, cash equivalents, and restricted cash and cash equivalents | ($202,733) | $33,056 | N/A | | Cash, cash equivalents, and restricted cash and cash equivalents: End of period | $4,732,708 | $4,645,297 | +1.9% |