Ross Stores, Inc 10-Q for FY2021 Q1

Ross Stores, Inc. (ROST)

10-Q 2020-06-10 For: 2020-05-02

Added on April 11, 2026

About this 10-Q

Ross Stores, Inc filed this 10-Q on June 10, 2020, covering the quarter ended May 2, 2020 (FY2021 Q1).

Headline figures

Quarter ended May 2, 2020, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $1.84B; down 51.5% from $3.8B a year earlier
Net loss: $305.84M; compared with net income of $421.14M a year earlier
Diluted EPS: -$0.87; compared with $1.15 a year earlier

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	Three Months Ended
($000, except stores and per share data, unaudited)	May 2, 2020		May 4, 2019
Sales	$	1,842,673	$	3,796,642

Costs and Expenses
Cost of goods sold	1,889,991		2,701,668
Selling, general and administrative	415,305		558,250
Interest expense (income), net	6,666		(5,635)
Total costs and expenses	2,311,962		3,254,283

(Loss) earnings before taxes	(469,289)		542,359
(Benefit) provision for taxes on (loss) earnings	(163,447)		121,217
Net (loss) earnings	$	(305,842)	$	421,142

(Loss) earnings per share
Basic	$	(0.87)	$	1.16
Diluted	$	(0.87)	$	1.15


Weighted average shares outstanding (000)
Basic	352,202		363,085
Diluted	352,202		365,912






Store count at end of period	1,832		1,745


	Three Months Ended
($000, unaudited)	May 2, 2020		May 4, 2019
Net (loss) earnings	$	(305,842)	$	421,142

Other comprehensive (loss) income:	—		—

Comprehensive (loss) income	$	(305,842)	$	421,142


($000, except share data, unaudited)	May 2, 2020		February 1, 2020		May 4, 2019
Assets
Current Assets
Cash and cash equivalents	$	2,669,535	$	1,351,205	$	1,366,592

Accounts receivable	49,624		102,236		121,607
Merchandise inventory	1,757,263		1,832,339		1,813,773
Prepaid expenses and other	111,493		147,048		160,733

Total current assets	4,587,915		3,432,828		3,462,705

Property and Equipment
Land and buildings	1,177,847		1,177,262		1,129,049
Fixtures and equipment	3,125,333		3,115,003		2,844,135
Leasehold improvements	1,238,313		1,219,736		1,139,600
Construction-in-progress	281,692		189,536		148,021
	5,823,185		5,701,537		5,260,805
Less accumulated depreciation and amortization	3,126,467		3,048,101		2,824,433
Property and equipment, net	2,696,718		2,653,436		2,436,372

Operating lease assets	3,078,373		3,053,782		2,942,980
Other long-term assets	365,040		208,321		207,063
Total assets	$	10,728,046	$	9,348,367	$	9,049,120

Liabilities and Stockholders’ Equity
Current Liabilities
Accounts payable	$	706,267	$	1,296,482	$	1,296,183
Accrued expenses and other	374,811		462,111		450,762
Current operating lease liabilities	570,832		564,481		536,900
Accrued payroll and benefits	166,707		364,435		220,376
Income taxes payable	—		14,425		89,290
Short-term debt	805,000		—		—
Total current liabilities	2,623,617		2,701,934		2,593,511

Long-term debt	2,285,614		312,891		312,552
Non-current operating lease liabilities	2,631,769		2,610,528		2,514,530
Other long-term liabilities	206,504		214,086		226,788
Deferred income taxes	163,150		149,679		134,213

Commitments and contingencies

Stockholders’ Equity
Common stock, par value $.01 per share Authorized 1,000,000,000 shares Issued and outstanding 355,922,000, 356,775,000 and 365,260,000 shares, respectively	3,559		3,568		3,653
Additional paid-in capital	1,484,911		1,458,307		1,391,558
Treasury stock	(465,645)		(433,328)		(423,543)

Retained earnings	1,794,567		2,330,702		2,295,858
Total stockholders’ equity	2,817,392		3,359,249		3,267,526
Total liabilities and stockholders’ equity	$	10,728,046	$	9,348,367	$	9,049,120



				Additional paid-in capital
	Common stock							Treasury stock					Retained earnings
(000)	Shares	Amount												Total
Balance at February 1, 2020	356,775	$	3,568	$	1,458,307	$	(433,328)		$	2,330,702	$	3,359,249
Net loss	—	—		—		—			(305,842)		(305,842)




Common stock issued under stock
plans, net of shares
used for tax withholding	318	3		5,441		(32,317)			—		(26,873)
Stock-based compensation	—	—		24,739		—			—		24,739
Common stock repurchased	(1,171)	(12)		(3,576)		—			(128,879)		(132,467)
Dividends declared ($0.285 per share)	—	—		—		—			(101,414)		(101,414)
Balance at May 2, 2020	355,922	$	3,559	$	1,484,911	$	(465,645)		$	1,794,567	$	2,817,392





				Additional paid-in capital
	Common stock							Treasury stock					Retained earnings
(000)	Shares	Amount												Total
Balance at February 2, 2019	368,242	$	3,682	$	1,375,965	$	(372,663)		$	2,298,762	$	3,305,746
Net earnings	—	—		—		—			421,142		421,142
Cumulative effect of adoption of
accounting standard
(leases), net	—	—		—		—			(19,614)		(19,614)

Common stock issued under stock
plans, net of shares
used for tax withholding	390	4		5,291		(50,880)			—		(45,585)
Stock-based compensation	—	—		19,689		—			—		19,689
Common stock repurchased	(3,372)	(33)		(9,387)		—			(310,710)		(320,130)
Dividends declared ($0.255 per share)	—	—		—		—			(93,722)		(93,722)
Balance at May 4, 2019	365,260	$	3,653	$	1,391,558	$	(423,543)		$	2,295,858	$	3,267,526























The accompanying notes are an integral part of these condensed consolidated financial statements.


☒						QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐						TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

						For the transition period from __________ to __________


($000)	May 2, 2020		February 1, 2020		May 4, 2019
Cash and cash equivalents	$	2,669,535	$	1,351,205	$	1,366,592
Restricted cash and cash equivalents included in:
Prepaid expenses and other	10,341		10,235		11,867
Other long-term assets	50,490		49,970		54,058
Total restricted cash and cash equivalents	60,831		60,205		65,925
Total cash, cash equivalents, and restricted cash and cash equivalents	$	2,730,366	$	1,411,410	$	1,432,517


	Three Months Ended
Statements of Operations Classification ($000)	May 2, 2020		May 4, 2019
Cost of goods sold	$	12,666	$	13,122
Selling, general and administrative	12,073		6,567
Total	$	24,739	$	19,689


(000, except per share data)	Number of shares	Weighted-average grant date fair value
Unvested at February 1, 2020	4,394	$	76.20
Awarded	592	97.85
Released	(891)	61.03
Forfeited	(7)	79.37
Unvested at May 2, 2020	4,088	$	82.63


	Three Months Ended
Shares in (000s)	Basic EPS		Effect of dilutive common stock equivalents		Diluted EPS
May 2, 2020
Shares	352,202		—		352,202
Amount	$	(0.87)	$	—	$	(0.87)

May 4, 2019
Shares	363,085		2,827		365,912
Amount	$	1.16	$	(0.01)	$	1.15


	Three Months Ended
Store Count	May 2, 2020	May 4, 2019
Beginning of the period	1,805	1,717
Opened in the period	27	28
Closed in the period	—	—
End of the period	1,832	1,745


($000)	Less than one year		1 - 3 years		3 - 5 years		After 5 years		Total¹

Recorded contractual obligations:
Senior notes	$	—	$	65,000	$	950,000	$	1,300,000	$	2,315,000
Short-term debt²	805,000		—		—		—		805,000
Operating leases	655,686		1,187,657		812,892		685,684		3,341,919
New York buying office ground lease³	5,883		13,394		14,178		945,755		979,210
Unrecorded contractual obligations:
Real estate obligations⁴	10,041		38,798		39,552		119,216		207,607
Interest payment obligations	127,002		216,020		207,556		814,850		1,365,428
Purchase obligations⁵	1,105,190		34,074		5,286		—		1,144,550
Total contractual obligations	$	2,708,802	$	1,554,943	$	2,029,464	$	3,865,505	$	10,158,714

¹We have a $67.6 million liability for unrecognized tax benefits that is included in Other long-term liabilities on our interim Condensed Consolidated Balance Sheet. This liability is excluded from the schedule above as the timing of payments cannot be reasonably estimated.
² Includes $800 million draw down on our revolving credit facility and other short-term debt financing.
³ Our New York buying office building is subject to a 99-year ground lease.
⁴Minimum lease payments for leases signed that have not yet commenced.
⁵Purchase obligations primarily consist of merchandise inventory purchase orders, commitments related to construction projects, store fixtures and supplies, and information technology services, transportation, and maintenance contracts.


	Total number of shares (or units) purchased¹	Average price paid per share (or unit)	Total number of shares (or units) purchased as part of publicly announced plans or programs	Maximum number (or approximate dollar value) of shares (or units) that may yet be purchased under the plans or programs ($000)²
Period
February
(2/02/2020 - 2/29/2020)	881,839	$118.92	881,839	$1,170,130
March
(3/01/2020 - 4/04/2020)	638,941	$93.78	289,428	$1,142,533
April
(4/05/2020 - 5/02/2020)	—	$.00	—	$1,142,533
Total	1,520,780	$108.36	1,171,267	$1,142,533


Exhibit
Number			Exhibit
3.1			Certificate of Incorporation of Ross Stores, Inc. as amended (Corrected First Restated Certificate of Incorporation, dated March 17, 1999, together with amendments thereto through Amendment of Certificate of Incorporation dated May 29, 2015) incorporated by reference to Exhibit 3.1 to the Form 10-Q filed by Ross Stores, Inc. for its quarter ended August 1, 2015.

3.2			Amended and Restated Bylaws of Ross Stores, Inc. (as amended March 8, 2017), incorporated by reference to Exhibit 3.2 to the Form 10-K filed by Ross Stores, Inc. for its fiscal year ended January 28, 2017.

4.1			Indenture, dated September 18, 2014, between Ross Stores, Inc. and U.S. Bank National Association, incorporated by reference to Exhibit 4.1 to the Form 8-K filed by Ross Stores on September 18, 2014.

4.2			Officers’ Certificate, dated as of April 6, 2020, establishing the ag gregate amounts, terms and form of the Notes, incorporated by reference to Exhibit 4.2 to the Form 8-K filed by Ross Stores , Inc. on April 7, 2020.

4.3			Form of 4.600% Senior Notes Due 2025, included in Exhibit 4.2 and incorporated by reference to Exhibit 4.2 to the Form 8-K filed by Ross Stores , Inc. on April 7, 2020.

4.4			Form of 4.700% Senior Notes Due 2027, included in Exhibit 4.2 and incorporated by reference to Exhibit 4.2 to the Form 8-K filed by Ross Stores , Inc. on April 7, 2020.

4.5			Form of 4.800% Senior Notes Due 2030, included in Exhibit 4.2 and incorporated by reference to Exhibit 4.2 to the Form 8-K filed by Ross Stores , Inc. on April 7, 2020.

4.6			Form of 5.450% Senior Notes Due 2050, included in Exhibit 4.2 and incorporated by reference to Exhibit 4.2 to the Form 8-K filed by Ross Stores , Inc. on April 7, 2020.

10.1			364-Day Credit Agreement dated as of May 1, 2020 among Ross Stores, Inc., various lenders, and Bank of America, N.A., as Administrative Agent.

10.2			First Amendment to the Amended and Restated Credit Agreement dated as of May 1, 2020 among Ross Stores, Inc., various lenders, and Bank of America, N.A., as Administrative Agent.

10.3			Underwriting Agreement, dated as of April 2, 2020, by and among Ross Stores, Inc., BofA Securities, Inc. and J.P. Morgan Securities LLC, as representatives of the underwriters named therein, incorporated by reference to Exhibit 1.1 to the Form 8-K filed by Ross Stores on April 7, 2020.

10.4			Form of Executive Employment Agreement for Executive Officers (CA).

10.5			For m of Executive Employment Agreement for Executive Officers (NON-CA).

10.6			Form of Addendum to Executive Employment Agreement.

10.7			Addendum to Independent Contractor Consultancy Agreement effective April 1, 2020 between Norman A. Ferber and Ross Stores, Inc.

10.8			Addendum to Employment Agreement effective April 1, 2020 between Michael Balmuth and Ross Stores, Inc.


						Commission file number:			0-14678


	Three Months Ended
	May 2, 2020		¹	May 4, 2019
Home Accents and Bed and Bath	27	%		25	%
Ladies	25	%		27	%
Shoes	14	%		14	%
Accessories, Lingerie, Fine Jewelry, and Fragrances	13	%		13	%
Men's	12	%		13	%
Children's	9	%		8	%
Total	100	%		100	%
¹ Sales mix for the three months ended May 2, 2020 represents sales through the temporary closure of all stores on March 20, 2020.


($000)	May 2, 2020		February 1, 2020		May 4, 2019
Level 1	$	121,198	$	134,440	$	127,785
Level 2	11,068		7,003		10,626
Total	$	132,266	$	141,443	$	138,411


	Three Months Ended
	May 2, 2020		¹	May 4, 2019
Home Accents and Bed and Bath	27	%		25	%
Ladies	25	%		27	%
Shoes	14	%		14	%
Accessories, Lingerie, Fine Jewelry, and Fragrances	13	%		13	%
Men's	12	%		13	%
Children's	9	%		8	%
Total	100	%		100	%
¹ Sales mix for three months ended May 2, 2020 represents sales through the temporary closure of all stores on March 20, 2020.


10.9			Addendum to Employment Agreement effective April 1, 2020 between Barbara Rentler and Ross Stores, Inc.

10.10			Addendum to Employment Agreement effective April 1, 2020 between Michael Hartshorn and Ross Stores, Inc.

10.11			Employment Agreement effective March 16, 2020 between Brian Morrow and Ross Stores, Inc.

10.12			Addendum to Employment Agreement effective April 1, 2020 between Brian Morrow and Ross Stores, Inc.

10.13			Employment Agreement effective August 16, 2019 between Michael Kobayashi and Ross Stores, Inc.

10.14			Addendum to Employment Agreement effective April 1, 2020 between Michael Kobayashi and Ross Stores, Inc.

10.15			Addendum to Employment Agreement effective April 1, 2020 between Travis Marquette and Ross Stores, Inc.

15			Letter re: Unaudited Interim Financial Information from Deloitte & Touche LLP dated June 10, 2020 .

31.1			Certification of Chief Executive Officer Pursuant to Sarbanes-Oxley Act Section 302(a).

31.2			Certification of Chief Financial Officer Pursuant to Sarbanes-Oxley Act Section 302(a).

32.1			Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350.

32.2			Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350.

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