Ross Stores, Inc 10-Q for FY2021 Q2

Ross Stores, Inc. (ROST)

10-Q 2020-09-09 For: 2020-08-01

Added on April 11, 2026

About this 10-Q

Ross Stores, Inc filed this 10-Q on September 9, 2020, covering the quarter ended August 1, 2020 (FY2021 Q2).

Headline figures

Quarter ended August 1, 2020, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $2.68B; down 32.5% from $3.98B a year earlier
Net income: $22.05M; down 94.7% from net income of $412.72M a year earlier
Diluted EPS: $0.06; down 94.7% from $1.14 a year earlier

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	Three Months Ended						Six Months Ended
($000, except stores and per share data, unaudited)	August 1, 2020		August 3, 2019		August 1, 2020		August 3, 2019
Sales	$	2,684,712	$	3,979,869	$	4,527,385	$	7,776,511

Costs and Expenses
Cost of goods sold	2,080,120		2,843,850		3,970,111		5,545,518
Selling, general and administrative	519,495		591,970		934,800		1,150,220
Interest expense (income), net	28,855		(4,782)		35,521		(10,417)
Total costs and expenses	2,628,470		3,431,038		4,940,432		6,685,321

Earnings (loss) before taxes	56,242		548,831		(413,047)		1,091,190
Provision (benefit) for taxes on earnings (loss)	34,195		136,110		(129,252)		257,327
Net earnings (loss)	$	22,047	$	412,721	$	(283,795)	$	833,863

Earnings (loss) per share
Basic	$	0.06	$	1.15	$	(0.81)	$	2.31
Diluted	$	0.06	$	1.14	$	(0.81)	$	2.29


Weighted-average shares outstanding (000)
Basic	352,276		359,794		352,239		361,439
Diluted	354,232		362,074		352,239		364,007






Store count at end of period	1,832		1,772		1,832		1,772


	Three Months Ended						Six Months Ended
($000, unaudited)	August 1, 2020		August 3, 2019		August 1, 2020		August 3, 2019
Net earnings (loss)	$	22,047	$	412,721	$	(283,795)	$	833,863

Other comprehensive income (loss)	—		—		—		—

Comprehensive income (loss)	$	22,047	$	412,721	$	(283,795)	$	833,863


($000, except share data, unaudited)	August 1, 2020		February 1, 2020		August 3, 2019
Assets
Current Assets
Cash and cash equivalents	$	3,793,043	$	1,351,205	$	1,382,025

Accounts receivable	162,723		102,236		130,439
Merchandise inventory	1,117,983		1,832,339		1,835,869
Prepaid expenses and other	273,612		147,048		167,585

Total current assets	5,347,361		3,432,828		3,515,918

Property and Equipment
Land and buildings	1,177,863		1,177,262		1,162,269
Fixtures and equipment	3,137,495		3,115,003		2,886,275
Leasehold improvements	1,241,819		1,219,736		1,162,935
Construction-in-progress	363,000		189,536		200,012
	5,920,177		5,701,537		5,411,491
Less accumulated depreciation and amortization	3,214,072		3,048,101		2,906,451
Property and equipment, net	2,706,105		2,653,436		2,505,040

Operating lease assets	3,053,735		3,053,782		2,932,199
Other long-term assets	215,044		208,321		198,790
Total assets	$	11,322,245	$	9,348,367	$	9,151,947

Liabilities and Stockholders’ Equity
Current Liabilities
Accounts payable	$	1,009,704	$	1,296,482	$	1,359,829
Accrued expenses and other	557,475		462,111		474,273
Current operating lease liabilities	579,277		564,481		549,841
Accrued payroll and benefits	204,109		364,435		295,465
Income taxes payable	—		14,425		—
Short-term debt	802,507		—		—
Total current liabilities	3,153,072		2,701,934		2,679,408

Long-term debt	2,286,295		312,891		312,665
Non-current operating lease liabilities	2,601,254		2,610,528		2,496,230
Other long-term liabilities	258,869		214,086		227,842
Deferred income taxes	155,556		149,679		139,538

Commitments and contingencies

Stockholders’ Equity
Common stock, par value $.01 per share Authorized 1,000,000,000 shares Issued and outstanding 356,006,000, 356,775,000 and 362,166,000 shares, respectively	3,560		3,568		3,622
Additional paid-in capital	1,512,699		1,458,307		1,412,976
Treasury stock	(465,674)		(433,328)		(425,012)

Retained earnings	1,816,614		2,330,702		2,304,678
Total stockholders’ equity	2,867,199		3,359,249		3,296,264
Total liabilities and stockholders’ equity	$	11,322,245	$	9,348,367	$	9,151,947


	Six Months Ended August 1, 2020
				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
Net earnings	—	—		—		—			22,047		22,047
Common stock issued under stock
plans, net of shares
used for tax withholding	84	1		5,630		(29)			—		5,602
Stock-based compensation	—	—		22,158		—			—		22,158


Balance at August 1, 2020	356,006	$	3,560	$	1,512,699	$	(465,674)		$	1,816,614	$	2,867,199




	Six Months Ended August 3, 2019
				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
Net earnings	—	—		—		—			412,721		412,721



Common stock issued under stock
plans, net of shares
used for tax withholding	98	1		5,610		(1,469)			—		4,142
Stock-based compensation	—	—		24,924		—			—		24,924
Common stock repurchased	(3,192)	(32)		(9,116)		—			(310,981)		(320,129)
Dividends declared ($0.255 per share)	—	—		—		—			(92,920)		(92,920)
Balance at August 3, 2019	362,166	$	3,622	$	1,412,976	$	(425,012)		$	2,304,678	$	3,296,264


☒						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)	August 1, 2020		February 1, 2020		August 3, 2019
Cash and cash equivalents	$	3,793,043	$	1,351,205	$	1,382,025
Restricted cash and cash equivalents included in:
Prepaid expenses and other	10,348		10,235		11,048
Other long-term assets	50,524		49,970		50,328
Total restricted cash and cash equivalents	60,872		60,205		61,376
Total cash, cash equivalents, and restricted cash and cash equivalents	$	3,853,915	$	1,411,410	$	1,443,401


	Three Months Ended						Six Months Ended
Statements of Operations Classification ($000)	August 1, 2020		August 3, 2019		August 1, 2020		August 3, 2019
Cost of goods sold	$	11,849	$	13,812	$	24,515	$	26,934
Selling, general and administrative	10,309		11,112		22,382		17,679
Total	$	22,158	$	24,924	$	46,897	$	44,613


(000, except per share data)	Number of shares	Weighted-average grant date fair value
Unvested at February 1, 2020	4,394	$	76.20
Awarded	605	97.70
Released	(905)	61.29
Forfeited	(14)	79.87
Unvested at August 1, 2020	4,080	$	82.68


	Three Months Ended										Six Months Ended
Shares in (000s)	Basic EPS		Effect of dilutive common stock equivalents		Diluted EPS		Basic EPS		Effect of dilutive common stock equivalents		Diluted EPS
August 1, 2020
Shares	352,276		1,956		354,232		352,239		—		352,239
Amount	$	0.06	$	—	$	0.06	$	(0.81)	$	—	$	(0.81)

August 3, 2019
Shares	359,794		2,280		362,074		361,439		2,568		364,007
Amount	$	1.15	$	(0.01)	$	1.14	$	2.31	$	(0.02)	$	2.29


	Three Months Ended			Six Months Ended
Store Count	August 1, 2020	August 3, 2019	August 1, 2020	August 3, 2019
Beginning of the period	1,832	1,745	1,805	1,717
Opened in the period	—	28	27	56
Closed in the period	—	(1)	—	(1)
End of the period	1,832	1,772	1,832	1,772


($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	802,507		—		—		—		802,507
Operating leases	641,743		1,182,929		800,150		660,407		3,285,229
New York buying office ground lease³	5,883		13,562		14,178		943,983		977,606
Unrecorded contractual obligations:
Real estate obligations⁴	8,930		33,671		35,620		109,672		187,893
Interest payment obligations	123,290		213,897		207,556		814,850		1,359,593
Purchase obligations⁵	2,272,543		15,199		3,731		—		2,291,473
Total contractual obligations	$	3,854,896	$	1,524,258	$	2,011,235	$	3,828,912	$	11,219,301

¹We have a $70.4 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
May
(5/03/2020 - 5/30/2020)	—	$0.00	—	$1,142,533
June
(5/31/2020 - 7/04/2020)	308	$92.48	—	$1,142,533
July
(7/05/2020 - 8/01/2020)	—	$0.00	—	$1,142,533
Total	308	$0.00	—	$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.

10.1			First Amendment to Note Purchase Agreement dated as of June 30, 2020.

15			Letter re: Unaudited Interim Financial Information from Deloitte & Touche LLP dated September 9 , 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.

101.INS			XBRL Instance Document. (The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.)

101.SCH			Inline XBRL Taxonomy Extension Schema

101.CAL			Inline XBRL Taxonomy Extension Calculation Linkbase

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104			Cover Page Interactive Data File. (The cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.)


						Commission file number:			0-14678


($000)	August 1, 2020		February 1, 2020		August 3, 2019
Level 1	$	135,650	$	134,440	$	126,377
Level 2	10,329		7,003		7,411
Total	$	145,979	$	141,443	$	133,788


Four Fiscal Quarters Ending			Maximum Consolidated Adjusted Debt to EBITDAR Ratio
Prior to January 30, 2021			No maximum ratio
January 30, 2021 and each fiscal quarter thereafter			4.50:1.00


1.	Consolidated Net Income for Subject Period:	$________
2.	Consolidated Total Interest Expense for Subject Period:	$________
3.	Consolidated taxes on income for Subject Period:	$________
4.	Consolidated depreciation for Subject Period:	$________
5.	Consolidated amortization for Subject Period:	$________
6.	Extraordinary non-cash losses to the extent such losses have not been and will not become cash losses in a later fiscal period:	$________
7.	Consolidated Lease Expense for Subject Period	$________
8.	Consolidated EBITDAR (Lines A.1 + 2 + 3 + 4 + 5 + 6 + 7):	$________
B.	Consolidated Adjusted Debt at Statement Date:	$________
C.	Consolidated EBITDAR for Subject Period (Line A.8 above):	$________
D.	Consolidated Adjusted Debt to EBITDAR Ratio (Line B- Line C):	to 1.0
E.	Maximum permitted:	to 1.0


1	Aggregate Commitments	$
2	Commitments of the lenders under the Existing Credit Facility	$
3	Amount of all then outstanding and unpaid Obligations	$
4	Amount of all then outstanding and unpaid Obligations (as defined in the Existing Credit Facility).	$
	(Lines 1+2-(3+4):	$
B.	Qualified Cash:	$
C.	Excess Availability + Qualified Cash:	$
D.	Minimum Permitted:	$ 800,000,000**


(i)	Restricted Investments	_________
(ii)	Principal Amount of obligations secured by Liens permitted under Section 10.4 (excluding obligations secured by Liens permitted by paragraphs (c) through (k) of Section 10.4)	_________
(iii)	15% of Consolidated Total Assets	_________
(iv)	Lines (i) plus (ii) plus (iii)		$_________


(i)	Asset dispositions (determined in accordance with Section 10.5) in excess of 10% of book value of Consolidated Total Assets	_________
(ii)	Proceeds used to acquire assets used and useful in carrying on the business of the Company and its Subsidiaries	_________
(iii)	Proceeds used to prepay or retire Senior Debt of the Company and its Subsidiaries	_________
(iv)	Lines (i) minus (ii) minus (iii)		$_________


Date:	September 9, 2020	/s/Barbara Rentler
		Barbara Rentler
		Chief Executive Officer


Date:	September 9, 2020	/s/Travis R. Marquette
		Travis R. Marquette
		Group Senior Vice President and Chief Financial Officer,
		and Principal Accounting Officer