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Ross Stores registers strong sales & earnings growth
Aug '08
Ross Stores Inc reported that earnings per share for the 13 weeks ended August 2, 2008 increased 46% to $.54, from $.37 for the 13 weeks ended August 4, 2007. Net earnings for the second quarter ended August 2, 2008 rose 40% to a record $71.3 million, from $50.9 million for the second quarter ended August 4, 2007. Fiscal 2008 second quarter sales increased 14% to $1.640 billion, with comparable store sales up 6% over the prior year.

For the six months ended August 2, 2008, earnings per share increased 33% to $1.13, from $.85 for the six months ended August 4, 2007. Net earnings for the year-to-date period in 2008 grew 28% to a record $150.8 million, compared to $117.9 million in the prior year period. Sales for the first six months of 2008 increased 12% to $3.197 billion, with comparable store sales up 5%.

Michael Balmuth, Vice Chairman, President and Chief Executive Officer, commented, "We are pleased to report strong sales and earnings growth for both the second quarter and year-to-date periods. We believe that our solid financial results were driven mainly by our ability to offer compelling bargains on fresh and exciting name brand fashions for the family and the home.

The tax rebate checks and favorable weather also benefited sales in the quarter. Dresses, Accessories and Shoes were the strongest merchandise categories during the second quarter, while the best-performing markets were in Texas and the Mid-Atlantic."

Mr. Balmuth continued, "Operating margin in the second quarter increased about 130 basis points to 7.1%, as a 180 basis point gain in gross margin was partially offset by a 50 basis point increase in selling, general and administrative expenses. Strong merchandise margin performance was the main driver of the increase in gross margin, driven primarily by lower markdowns.

As expected, selling, general and administrative costs as a percent of sales were impacted by the prior year comparison, which benefited about 25 basis points from insurance proceeds related to a store loss and lower legal settlement costs. Incentive plan accruals were also higher due to the strong above-plan results in the quarter."

Mr. Balmuth also noted, "As we ended the first half of the year, our balance sheet and cash flows remained healthy. We continued to return capital to stockholders through our stock repurchase and dividend programs. During the first six months of 2008, we repurchased 4.6 million shares of common stock for an aggregate of $153 million. We remain on track to complete during 2008 approximately $300 million of our current two-year $600 million stock repurchase program."

Mr. Balmuth continued, "Looking ahead to the important back-to-school and holiday periods, we believe it is prudent to remain defensively positioned based on the uncertain macro economic and retail environments, which no longer have the benefit of the tax rebate checks. As a result, we are maintaining our original target of comparable store sales gains of 2% to 3% for both the third and fourth quarters."

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