Ross Stores, Inc. (ROST)

October 06, 2011 8:30 am ET

Executives

John G. Call - Chief Financial Officer, Principal Accounting Officer and Senior Vice President

Presentation

John G. Call

Good morning. Welcome to this Ross Stores prerecorded message that provides additional information on our September sales release issued on Thursday, October 6, 2011. This is John Call, the company's Chief Financial Officer. This recording will be available until 8 p.m. Eastern time on Friday, October 7. In addition, a written transcript will be available in the Investors section of the company's website at www.rossstores.com.

As a reminder, today’s press release and the recorded comments and transcript on our website contain forward-looking statements regarding expected sales, earnings levels and other financial results in future periods that are subject to risks and uncertainties which could cause our actual results to differ materially from management’s current expectations. The words plan, expect, target, anticipate, estimate, believe, forecast, project, guidance, looking ahead and similar expressions identify forward-looking statements.

Risk factors for Ross Dress for Less and dd's DISCOUNTS are detailed in our SEC filings, including without limitation, the Form 10-K for fiscal 2010 and Form 10-Qs and 8-Ks for fiscal 2011.

For the 5 weeks ended October 1, 2011, sales grew 9% to $726 million, up from $666 million in sales for the 5 weeks ended October 2, 2010. Comparable store sales for the month grew 5% over the prior year. For the 8 months ended October 1, 2011, sales totaled $5,549,000,000, an 8% increase over the $5,121,000,000 in sales for the 8 months ended October 2, 2010. Comparable store sales for the 8 months ended October 1, 2011, increased 5% on top of a 6% gain in 2010.

September same-store sales were ahead of our expectations for a 1% to 2% gain as our value-focused offerings continue to resonate with customers. Juniors, Dresses and Shoes were the strongest merchandise categories, all with double-digit same-store sales increases. Florida was the best performing market, also posting a double-digit gain.

At the end of September, average in-store inventories were down about 7% from last year. Total consolidated inventories were up about 22%, driven by packaway [ph] balances which were approximately 48% of total inventories at month end, compared to 39% in the prior year period.

We are pleased to report that earnings per share for the 13 weeks ending October 29, 2011 are now projected to be in the range of $1.16 to $1.18, compared to $1.02 in last year's third quarter. The forecasted upside from our previous earnings per share guidance of $1.00 to $1.04 is being driven by a combination of ahead-of-plan sales and merchandise gross margin performance in August and September, as well as much better than expected shortage results from our annual physical inventory in September.

Our lower projected shrink expense for 2011 mainly reflects the significant progress we have made over the past several years in successfully implementing our shortage control initiative.

Looking ahead, our guidance for the remainder of the year is unchanged. October same-store sales are forecast to be up 1% to 2%. For the fourth quarter ending January 28, 2012, we continue to project comparable same-store sales gains of 2% to 3%, and earnings per share in the range of $1.53 to $1.59. We plan to report October, 2011 sales results on Thursday, November 3. If you have any further questions, please do not hesitate to call Bobbi Chaville, Senior Director of Investor Relations at (925) 965-4289 or me at (925) 965-4315. Thank you.

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