This summary is based on the first quarter fiscal 2007 earnings call conducted by Ross Stores, Inc. (ROST) on May 23, 2007.
Vice Chairman, President and Chief Executive Officer: Michael Balmuth
Executive Vice President and Chief Operations Officer: Gary Cribb
Executive Vice President and Chief Administrative Officer: Michael O’Sullivan
Senior Vice President and Chief Financial Officer: John Call
Chairman of the Board: Norman Ferber
Vice President of Investor Relations: Katie Loughnot
Key Investors Issues
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Earnings per share were 48 cents versus 41 cents for 2006.
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Sales were $1.4 billion, up 9% from fiscal 2006 first quarter sales.
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The $149 million remaining in authorization is expected to be completed by end of 2007.
First Quarter Highlights
The first quarter lasted 13 weeks to May 5, 2007.
Net earnings for the quarter were $67 million versus $59.2 million for the prior year period.
Comparable store sales were flat compared to the 13 weeks ended May 6, 2006.
- For the 13 weeks ended April 29 2006, comparable store sales rose 6%.
- Same store sales were below the projected 1% to 2% increase due to the sales shortfall in April.
- California comparable store sales were up 2%.
- dd’s DISCOUNT sales were lower than plan due to the sales shortfall in April.
April was affected by a larger than expected impact from the Easter calendar shift and unseasonal weather during the first two weeks. Geographic and merchandise trends during the quarter were broad based.
Operating margin grew 30 basis points to 7.7%.
- Gross margin grew 60 basis points due to a 30 basis point increase in selling, general and administrative costs.
- Cost of goods sold benefited from higher merchandise gross margin.
- SG&A expenses rose due to higher store operating costs.
Total consolidated inventories were up 12%.
- In store levels were down 5%, in line with plan.
- Packed away inventories were 36% of the total, versus 35% at end of first quarter last year.
- The company opened 25 Ross and 8 dd’s DISCOUNT stores in the quarter.
Cash and short-term investments at the end of the period were $206 million.
Long-term debt was $150 million at the end of the period.
The company continues to return capital stockholders through its repurchase and dividend program.
It repurchased 1.5 million shares of common stock for $51 million, ending the quarter with 138.7 million shares of common stock issued and outstanding.
Fiscal 2007 Outlook
For the 13 weeks of the second quarter ending August 4, 2007:
Same stores sales are expected to increase 1% to 2% over the prior year.
Earnings per share is expected in the range of 35 cents to 37 cents.
This will be due to the following assumptions:
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Total sales are expected to grow 10% to 11% versus second quarter ended July 29, 2006.
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32 new stores are expected, including 21 Ross Dress For Less and 11 dd’s DISCOUNT.
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Comparable store sales on a day-for-day basis for May and June will be flat to up 1% and for July will be up 3% to 4%.
