John Call - Chief Financial Officer
Ross Stores (ROST) May Sales Call June 5, 2008 8:30 AM ET
Good morning. Welcome to this Ross Stores pre-recorded message that provides additional information on our May sales release issued on Thursday, June 5, 2008. This is John Call, the company’s Chief Financial Officer. This recording will be available until 8:00 p.m. Eastern time on Friday, June 6. In addition, a written transcript will be available on our website at www.RossStores.com through the end of June.
As a reminder, today’s press release and the recorded comments on our website contain forward-looking statements regarding expected sales and earnings levels and our stock repurchase program 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, anticipate, estimate, believe, forecast, projected, guidance, looking ahead and similar expressions identify forward-looking statements.
Risk factors for Ross Dress for Less® and dd’s DISCOUNTS® include, without limitation: competitive pressures in the apparel industry; changes in the level of consumer spending on or preferences for apparel or home-related merchandise, including the potential impact from uncertainty in mortgage credit markets and higher gas and commodity prices; changes in geopolitical and general economic conditions; unseasonable weather trends; disruptions in supply chain; lower than planned gross margin, including higher than planned markdowns and higher than expected inventory shortage; greater than planned operating costs; our ability to continue to purchase attractive brand-name merchandise at desirable discounts; our ability to attract and retain personnel with the retail talent necessary to execute our strategies; our ability to effectively operate our various supply chain, core merchandising and other information systems; our ability to improve our merchandising capabilities through the development and implementation of new processes and systems enhancements; achieving and maintaining targeted levels of productivity and efficiency in our distribution centers; potential pressure on freight costs from higher-than-expected fuel surcharges; and obtaining acceptable new store locations.
Other risk factors are detailed in our SEC filings including, without limitation, the Form 10-K for fiscal 2007 and Form 8-K’s for fiscal 2008. The factors underlying our forecasts are dynamic and subject to change. As a result, our forecasts speak only as of the date they are given and do not necessarily reflect our outlook at any other point in time. We do not undertake to update or revise these forward-looking statements.
Sales for the four weeks ended May 31, 2008 were $513 million, a 14% increase over the $450 million in sales for the four weeks ended June 2, 2007. Comparable store sales for the month increased 7%.
Sales for the 17 weeks ended May 31, 2008 totaled $2.07 billion, an 11% increase over the $1.86 billion in sales for the 17 weeks ended June 2, 2007. Comparable store sales for the 17 weeks ended May 31, 2008 grew 4% over the prior year period.
We are pleased with our May sales results which exceeded our expectations. We believe this solid performance was driven mainly by our ongoing ability to deliver compelling bargains to customers throughout our stores. Business also benefited from favorable weather in many of our key markets.
For the month, the best-performing merchandise categories were dresses with a same store sales gain in the mid-30% range and shoes and accessories with mid to high teen percentage increases.
Geographic trends were broad-based as all major markets posted same store sales gains during the month. Texas was the strongest region with a low teen percentage increase. California comparable store sales rose 5%.
As we ended the month, average in-store inventories were down about 11% from the prior year. Packaway is estimated to be about 36% of total inventories at month end, which is flat to the prior year. Total consolidated inventories are estimated to be down about 7%.
For June, which is the most important month of the quarter, we continue to project comparable store sales of up 1% to 3% on top of a solid 4% increase in the prior year. Because July is typically a transitional and more clearance-driven period, we are planning same store sales that month to be relatively flat to the prior year, as we expect to have much lower levels of clearance inventory compared to last year.
We also continue to project earnings per share for the second quarter of $0.43 to $0.47, for a forecasted increase of 16% to 27% over earnings per share of $0.37 for the second quarter of 2007.
We plan to report June 2008 sales results on Thursday, July 10. If you have any further questions, please do not hesitate to call me at 925-965-4315, Katie Loughnot, Vice President of Investor Relations, at 925-965-4509 or Bobbi Chaville, Senior Director of Investor Relations at 925-965-4289. Thank you.