Ross 2014 Annual Report Download - page 4

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To Our Stockholders
Delivering bargains that our customers can count on every day will always be our top
priority at both Ross Dress for Less and dd’s DISCOUNTS. We are pleased to report
that the successful execution of this core strategy drove another year of solid sales and
earnings growth in fiscal 2014.
Solid Sales and EPS Growth in Fiscal 2014
For the fiscal year ended January 31, 2015, sales grew
8% to $11.0 billion, up from $10.2 billion for the fiscal
year ended February 1, 2014. Comparable store sales
for 2014 increased 3% over the prior year.
Net earnings were $925 million in 2014, up from $837
million in the prior year. Earnings per share grew to $4.42
compared to $3.88 in 2013, up 14% on top of strong
multi-year gains. Operating margin increased 35 basis
points in 2014 to 13.5%, benefiting from a combination
of higher merchandise gross margin and leverage on
operating expenses.
Ongoing Store Growth and Expansion into
New Markets
As planned, the Company opened 86 net new locations
during the year, consisting of 64 Ross Dress for Less
and 22 dd’s DISCOUNTS. We ended 2014 with a
combined 1,362 stores in 33 states, the District of
Columbia and Guam.
Our store growth included ongoing expansion of Ross
Dress for Less in established regions as well as the
new markets we entered beginning in October 2011.
By the end of 2014, we operated a total of 81 Ross
locations in Illinois, Missouri, Kansas, Kentucky and
Indiana. dd’s DISCOUNTS also entered five new states
in 2014 including Louisiana, New Jersey, North Carolina,
Oklahoma and Oregon.
For 2015, we plan to open about 70 new Ross Dress for
Less and 20 dd’s DISCOUNTS stores. As usual, these
numbers do not reflect our plans to close or relocate
about ten older locations.
We continue to believe that Ross Dress for Less can grow
into a chain of at least 2,000 locations across the United
States and that dd’s DISCOUNTS can eventually expand
to about 500 stores. Combined, this reflects projected
long-term domestic capacity of about 2,500 locations,
providing us with significant store growth potential over
the next several years.
Continued Gains in Sales and Profits at
dd’s DISCOUNTS
dd’s DISCOUNTS delivered another year of solid gains in
sales and ongoing operating profits in 2014. Like Ross,
dd’s DISCOUNTS continued to benefit from their ability to
deliver a faster flow of fresh and exciting product to their
stores while operating on lower inventory levels. Its solid
performance also reflects that dd’s customers continue
to respond favorably to its compelling value offerings.
Healthy Cash Flows Fund Growth and Ongoing
Stock Repurchases
Operating cash flows in 2014 helped fund new store
expansion and infrastructure improvements to support our
long-term growth. We invested approximately $650 million
of capital during the year, including about $200 million
to open new locations and update existing stores, $240
million for distribution and information technology projects,
2 | 2014 Annual Report Ross Stores, Inc.