Ross Stores Inc (ROST) has reported a 13.40 percent rise in profit for the quarter ended Oct. 29, 2016. The company has earned $244.55 million, or $0.62 a share in the quarter, compared with $215.66 million, or $0.53 a share for the same period last year. Revenue during the quarter grew 10.92 percent to $3,086.69 million from $2,782.86 million in the previous year period. Gross margin for the quarter expanded 52 basis points over the previous year period to 28.53 percent. Total expenses were 87.35 percent of quarterly revenues, down from 87.92 percent for the same period last year. This has led to an improvement of 57 basis points in operating margin to 12.65 percent.
Operating income for the quarter was $390.42 million, compared with $336.15 million in the previous year period.
Barbara Rentler, chief executive officer, commented, “We are very pleased with our better-than-expected sales and earnings growth in the third quarter as customers responded favorably to the compelling values we offered throughout our stores. Operating margin of 12.6% was ahead of plan, increasing 55 basis points mainly from higher merchandise margin.”
The company forecasts diluted earnings per share to be in the range of $0.72 to $0.75 for the fourth-quarter. For financial year 2016, the company forecasts diluted earnings per share to be in the range of $2.78 to $2.81.
Operating cash flow improves significantly
Ross Stores Inc has generated cash of $1,029.23 million from operating activities during the nine month period, up 35.06 percent or $267.20 million, when compared with the last year period. The company has spent $216.03 million cash to meet investing activities during the nine month period as against cash outgo of $285.77 million in the last year period.
The company has spent $695.99 million cash to carry out financing activities during the nine month period as against cash outgo of $687.17 million in the last year period.
Cash and cash equivalents stood at $878.81 million as on Oct. 29, 2016, up 80.94 percent or $393.11 million from $485.70 million on Oct. 31, 2015.
Working capital increases sharply
Ross Stores Inc has recorded an increase in the working capital over the last year. It stood at $987.43 million as at Oct. 29, 2016, up 44.13 percent or $302.32 million from $685.11 million on Oct. 31, 2015. Current ratio was at 1.52 as on Oct. 29, 2016, up from 1.39 on Oct. 31, 2015.
Cash conversion cycle (CCC) has decreased to 6 days for the quarter from 28 days for the last year period. Days sales outstanding were almost stable at 3 days for the quarter, when compared with the last year period.
Days inventory outstanding has decreased to 36 days for the quarter compared with 73 days for the previous year period. At the same time, days payable outstanding went down to 45 days for the quarter from 48 for the same period last year.
Debt remains almost stable
Total debt of Ross Stores Inc remained almost stable for the quarter at $396.38 million, when compared with the last year period. Long-term debt of Ross Stores remained almost stable for the quarter at $396.38 million, when compared with the last year period. Total debt was 7.41 percent of total assets as on Oct. 29, 2016, compared with 8.07 percent on Oct. 31, 2015. Debt to equity ratio was at 0.15 as on Oct. 29, 2016, down from 0.17 as on Oct. 31, 2015.
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