Ross Stores Inc ROST
Q1 2012 Earnings Call Transcript

Transcript Call Date 05/17/2012

Operator: Good morning, and welcome to the Ross Stores First Quarter 2012 Earnings Release Conference Call. The call will begin with prepared comments by management followed by a question-and-answer session.

Before we get started on behalf of Ross Stores, I would like to note that the comments made on this call will contain forward-looking statements regarding expectations about future growth and financial results, including sales and earnings forecasts and other matters that are based on the Company's current forecast of aspects of its future business. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from historical performance or current expectations.

Risk factors are included in today's press release and the Company's fiscal 2011 Form 10-K and fiscal 2012 Form 8-Ks on file with the SEC.

Now I'd like to turn the call over to Michael Balmuth, Vice Chairman and Chief Executive Officer.

Michael Balmuth - VC and CEO: Good morning. Joining me on our call today are Norman Ferber, Chairman of the Board; Michael O'Sullivan, President and Chief Operating Officer; Gary Cribb, Executive Vice President, Stores and Loss Prevention; John Call, Group Senior Vice President and Chief Financial Officer; and Bobbi Chaville, Senior Director of Investor Relations.

We'll begin with a brief review of our first quarter performance followed by our outlook for the second quarter and fiscal year. We'll conclude with some comments about our longer term growth prospects Afterwards we'll be happy to respond to any questions you may have.

We are pleased with our much better than expected financial results in the first quarter. Our robust sales and earnings were driven mainly by our ongoing ability to deliver a wide array of fresh and exciting name brand bargains to today's value focused consumers. In addition, we believe that favorable weather across many of our markets also contributed to our above-plan performance.

Our ability to operate our business with lower in-store inventories and strictly controlled expenses also continued to enhance both sales and profit margins.

Earnings per share for the 13 weeks ended April 28, 2012 were $0.93, up from a split-adjusted $0.74 in the prior year. These results represent a 26% increase on top of 28% gain in the same period last year. Net earnings for the 2012 first quarter grew 21% to $208.6 million, Sales rose 14% to $2.357 billion, with comparable store sales up 9% on top of 3% growth in the first quarter of 2011.

Merchandise and geographic trends were broad based; juniors and accessories were the best performing categories while Florida remained the top region. Earnings before interest and taxes grew to a record 14.4% of sales, off of that 70 basis points on top of an exceptional 160 basis point increase in the prior year. Our improved profit margin versus last year was driven primarily by leverage on expenses from the strong gains in same-store sales and higher merchandise gross margin. John will provide some additional color on these operating margin trends in a few minutes.

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