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Ross Stores CEO pleased with Q3 performance
20
Nov '08
Ross Stores Inc reported that earnings per share for the 13 weeks ended November 1, 2008 increased 22% to $.44, from $.36 for the 13 weeks ended November 3, 2007. Net earnings for the third quarter ended November 1, 2008 grew to a record $57.3 million, up from $48.7 million for the third quarter ended November 3, 2007. Fiscal 2008 third quarter sales increased 6% to $1.555 billion, with comparable store sales even with the prior year period.

For the nine months ended November 1, 2008, earnings per share increased 30% to $1.57, from $1.21 for the nine months ended November 3, 2007. Net earnings for the year-to-date period in 2008 grew to a record $208.1 million, up from $166.6 million in the prior year period. Sales for the first nine months of 2008 increased 10% to $4.752 billion, with comparable store sales up 3%.

Michael Balmuth, Vice Chairman, President and Chief Executive Officer, commented, "We are pleased with our solid third quarter earnings growth, especially considering the very challenging macro-economic and retail environment. The ongoing resilience and flexibility of our off-price business model enabled us to respond to these external pressures by further reducing both inventories and expenses. These actions, along with better-than-expected shortage results from our annual physical inventory during the quarter, enabled us to protect profit margins and deliver earnings per share at the high end of our original guidance."

Mr. Balmuth continued, "Operating margin in the third quarter increased about 70 basis points to 6.1%, as a 130 basis point gain in gross margin was partially offset by a 60 basis point increase in selling, general and administrative expenses. Higher merchandise margin was the main driver of this improved profitability, as strict inventory management increased our open-to-buy position and drove faster turns and lower markdowns."

"As noted above, we also benefited from lower shrink results due to efficient execution of our shortage control initiatives over the past year. The increase in selling, general and administrative costs was driven in part by a shift of payroll dollars associated with the receipt of holiday merchandise from this year's fourth quarter into the third quarter. Also, as expected, comparisons were affected by a construction-related settlement at one of our distribution facilities in the third quarter of 2007 that benefited that prior year period by about 25 basis points."

Mr. Balmuth also noted, "Both our balance sheet and cash flows remain strong and healthy. During the first nine months of 2008, we continued to return capital to stockholders through our dividend and stock repurchase programs, buying back a total of 7.0 million shares of common stock for an aggregate of $231 million. We remain on track to complete during 2008 approximately $300 million of our current two-year $600 million stock repurchase program."

Looking ahead, Mr. Balmuth said,"We believe our stores are competitively positioned to appeal to an increasingly value-driven customer as we enter the important fourth quarter. Our merchants have been able to take advantage of the increased supply of terrific close-out opportunities in today's markets to create fresh and exciting assortments of sharply-priced name-brand bargains and gifts."


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