Ross Stores, Inc. (ROST) CEO Barbara Rentler on Q4 2021 Results - Earnings Call Transcript

Ross Stores, Inc. (NASDAQ:ROST) Q4 2021 Earnings Conference Call March 1, 2022 4:15 PM ET

Company Participants

Barbara Rentler - Chief Executive Officer

Adam Orvos - Executive Vice President & Chief Financial Officer

Michael Hartshorn - Group President & Chief Operating Officer

Conference Call Participants

Kimberly Greenberger - Morgan Stanley

Mark Altschwager - Baird

Matthew Boss - JPMorgan

Chuck Grom - Gordon Haskett

Lorraine Hutchinson - Bank of America

Michael Binetti - Credit Suisse

Marni Shapiro - Retail Tracker

Beth Reed - Truist Securities

Dana Telsey - Telsey Advisory Group

Laura Champine - Loop Capital

John Kernan - Cowen

Ike Burochow - Wells Fargo

Operator

Good afternoon, and welcome to the Ross Stores Fourth Quarter and Fiscal Year 2021 Earnings Release Conference Call. The call will begin with prepared comments by management, followed by a question-and-answer session. [Operator instructions] Please be advised that today's call is being recorded.

Before we get started, on behalf of Ross Stores, I would like to note that the comments made on this call will contain forward-looking statements regarding expectations about future growth and financial results, including sales and earnings forecasts, new store openings, COVID-related costs and other matters that are based on the Company's current forecast of aspects of its future business.

These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from historical performance or current expectations. Risk factors are included in today's press release and the Company's fiscal 2020 Form 10-K and fiscal 2021 Form 10-Qs and 8-Ks on file with the SEC.

Now I would like to turn the call over to Barbara Rentler, Chief Executive Officer.

Barbara Rentler

Good afternoon. Joining me on our call today are Michael Hartshorn, Group President and Chief Operating Officer; Adam Orvos, Executive Vice President and Chief Financial Officer; and Betty Chen, Vice President, Investor Relations.

We will begin our call today with a review of our fourth quarter and 2021 performance, followed by our outlook for 2022 and the longer term. Afterwards, we'll be happy to respond to any questions you may have.

As noted in today's press release, we achieved strong sales results in the fourth quarter despite the negative impact from both the surge in Omicron cases during the peak holiday selling period and continued supply chain congestion.

Earnings per share for the 13 weeks ended January 29, 2022, were $1.04 on net income of $367 million. This compared to $1.28 per share on net earnings of $456 million for the 13 weeks ended February 1, 2020.

Total sales for the fourth quarter were $5 billion, with comparable store sales up 9% versus the same period in 2019. For the 2021 fiscal year, earnings per share were $4.87 on net income of $1.723 billion, up from $4.60 per share on net earnings of $1.661 billion in 2019. Total sales for 2021 rose 18% to $18.9 billion, with comparable store sales up 13%.

Now let's turn to additional details on our fourth quarter results. For the holiday selling period, the best performing larger merchandise areas were children's and men's, while the Midwest and Southeast were the strongest regions.

Similar to Ross, dd's discount trends remained solid during the period. However, their profitability was also negatively impacted by cost pressures related to freight, wages and COVID. At quarter end, total consolidated inventories were up 23% versus 2019, mainly from an increase in in-transit merchandise due to longer lead times from the industry-wide supply chain bottlenecks.

Average store inventories were down slightly versus 2019, while packaway merchandise represented 40% of total inventories versus 46%, two years ago.

As noted in today's release, we are pleased to report that our Board recently authorized a new two-year program to repurchase up to $1.9 billion of our common stock through fiscal 2023. This authorization replaces the $850 million remaining under the prior buyback we announced in May of last year. A total of $650 million of common stock was repurchased under the previous program in fiscal 2021.

The Board also increased our quarterly cash dividend by 9% to $0.31 per share to be payable on March 31, 2022, to stockholders of record as of March 15, 2022. The increases to our stock repurchase and dividend program reflects our ongoing commitment to enhancing stockholder value and returns as well as our confidence in the strength of our balance sheet and projected future cash flows.

Now Adam will provide further details on our fourth quarter results and additional color on our outlook for fiscal 2022.

Adam Orvos

Thank you, Barbara. As previously mentioned, our comparable store sales increased 9% for the quarter. This gain was driven by growth in the size of the average basket, partially offset by a decline in transactions. Fourth quarter operating margin of 9.8% was down 350 basis points from 13.3% in 2019, mainly due to ongoing expense headwinds. Cost of goods sold increased 210 basis points due to a combination of factors.

Domestic freight rose 100 basis points and distribution costs increased 70 basis points, primarily due to the previously mentioned supply chain challenges in addition to higher wages. Merchandise margin declined 50 basis points due to higher ocean freight costs while buying expenses grew 20 basis points. Occupancy levered 30 basis points on higher sales volume.

SG& A for the period rose 140 basis points. Again, due to pressure from the holiday-related pay incentives plus higher wages and COVID costs. Total net COVID-related expenses for the quarter were approximately 35 basis points with a higher impact to SG&A than cost of goods sold.

Now let's discuss our outlook for fiscal 2022. As Barbara noted in our press release, 2022 is a difficult year to predict for numerous reasons. We are up against last year's record government stimulus and the lifting of COVID restrictions that led to unprecedented consumer demand, which fueled extraordinary sales gains in the spring of 2021.

In addition, we continue to face industry-wide supply chain headwinds as well as external risks from the effects of inflation both on consumer demand and on costs within our business. As a result, comparable store sales for the 52 weeks ending January 28, 2023, are planned to be flat to up 3% versus a 13% gain in 2021. Earnings per share for 2022 are projected to be $4.71 to $5.12 compared to $4.87 in 2021. This reflects our expectation for sales and profitability to improve as we move through the year given the substantial cost increases we incurred in the fall of 2021.

Our guidance assumptions for the 2022 year include: total sales are forecast to grow by 2% to 6%. We plan to return to our more normal opening cadence of 100 new locations in 2022, comprised of about 75 Ross and 25 dd's discounts. As usual, we expect to close about 10 older stores.

Operating margin for the full year is planned to be in the 11.6% to 12.1% range, down slightly from 2021 due to deleveraging on lower same-store sales gains and again, ongoing expense headwinds, especially in the first half of 2022.

Net interest expense is estimated to be $70 million. Depreciation and amortization expense inclusive of stock-based amortization is forecast to be about $560 million for the year. The tax rate is projected to be about 24% to 25% and diluted shares outstanding are expected to be approximately $348 million.

In addition, capital expenditures for 2022 are planned to be approximately $800 million. This outlay will fund further investments in our supply chain to support long-term growth and in technology to increase efficiencies throughout the business in order to maximize our prospects to capture profitable market share going forward.

Let's now turn to our guidance for the first quarter. In addition to the aforementioned stimulus benefits and strong pent-up demand early last year, we also faced larger headwinds from higher freight and wage costs early in the year.

As a result, we are forecasting comparable store sales for the 13 weeks ending April 30th, 2022, to be down 2% to down 4% on top of a 13% gain for the 13 weeks ended May 1st, 2021.

Earnings per share for the 2022 first quarter are projected to be $0.93 to $0.99 versus $1.34 in the prior year period. The operating statement assumptions that support our first quarter guidance includes the following; total sales are forecast to be down 2% to up 1% versus last year's first quarter. We plan to add 30 new stores, consisting of 22 Ross and eight dd's discounts during the period. We project first quarter operating margin to be 10.2% to 10. 6% compared to 14.2% last year.

The expected decline reflects the deleveraging effect from the negative same-store sales assumption as well as ongoing expense pressure from freight and wage costs early in the year. Net interest expense is estimated to be $19 million. Our tax rate is expected to be approximately 25% and diluted shares are forecast to be about $350 million.

Now, I will turn the call back to Barbara Rentler for closing comments.

Barbara Rentler

Thank you, Adam. As mentioned in our press release, given consumers increased focus on value and convenience, we have seen favorable sales trends in both our new and infill market stores. As a result, along with the large number of retail closures and bankruptcies over the last several years, we now believe that Ross Dress for Less can expand to about 2,900 locations, up from our prior target of 2,400 and that dd's discounts can eventually become a chain of approximately 700 stores versus our previous projection of 600.

This represents an overall 20% increase in our forecasted potential to 3,600 stores, providing substantial runway for expansion relative to our year-end store count of 1,923 locations.

We operate in attractive sector of retail and our mission continues to be delivering the best bargains possible to leverage our favorable market position. Looking at 2023 and beyond, we are targeting a return to double-digit earnings per growth driven by a combination of same-store sales gains, operating margin improvement, accelerated new store openings and our ongoing stock repurchase program.

In closing, we especially want to thank our approximately 100,000 talented associates throughout the company whose dedication has enabled us to successfully navigate through the unprecedented challenges of the past two years. We believe their continued efforts will enable us to capitalize on our opportunities for future sales and earnings growth, while also delivering strong returns to stockholders over the coming years.

At this point, we'd like to open up the call and respond to any questions you may have.

Question-and-Answer Session

Operator

[Operator Instructions] Your first question comes from the line of Kimberly Greenberger with Morgan Stanley. Please go ahead.

Kimberly Greenberger

Okay, great. Thank you so much. I wanted to just ask about the guidance here for Q1. And if you have seen perhaps a better start to the quarter, better expecting deceleration as we get through the stimulus lap. I'm just wondering how you're planning the quarter. And then if I could just sneak one more in, I just wanted to ask Barbara about what you're seeing in terms of inventory availability in the market and whether you have been able to capitalize on perhaps some of the supply chain volatility that's causing late deliveries elsewhere? Thanks so much.

Michael Hartshorn

Kimberly hi, I'll start with the first quarter guidance, it's Michael Hartshorn. The first quarter last year, we saw a significant acceleration in March and April last year. As a reminder, the government stimulus hit in the -- started being dispersed to taxpayers in the third week. So that -- we're planning around that with our guidance. We had a slower start to the year last year and then had a significant acceleration as we move through the quarter.

Barbara Rentler

And then as it pertains Kimberly to availability, there is definitely availability. But what I would say is it's not consistent across all merchandise departments and classifications. As goods come in from the supply chain congestion and there's issues it's not always as broad-based in every business. But with that, yes, I would say we've been able to capitalize on the volatility in the supply chain just given our increase in packaway, how much it's gone up in the last few months. And we see more potential opportunities in front of us from closeout -- there's a lot of that merchandise that vendors are still moving is not necessarily even in the country.

Kimberly Greenberger

Great. Thank you so much.

Operator

Thank you. Your next question comes from the line of Mark Altschwager with Baird. Please go ahead.

Mark Altschwager

Good afternoon. Thanks for taking my question. So with the inflationary backdrop getting tougher, I was hoping you could give us some perspective on how your customer has responded to the inflation in the past. And as you're planning for the spring season, how are you thinking about the share gain opportunity as consumers seek value versus the risk of a near-term pullback in spending as consumers digest some of the price hikes in essentials categories? Thank you.

Michael Hartshorn

Obviously, we don't have -- it's been 40 years since the US has seen this type of inflation. So we don't have a ton of experience on how the customer will react. So I'd be speculating as inflation appears at this point to be with us for a while. In general, I'd say the consumer seems to be healthy coming into the year, given higher wages and savings. But obviously, with this level of inflation, throughout the economy, they're going to have to make choices how and where they spend their money, and it's highly likely the consumer will be seeking value, and that would be positive for us.

Operator

Thank you. Your next question comes from the line of Matthew Boss with JPMorgan. Please go ahead.

Matthew Boss

Great. Thanks and congrats on the next quarter. So Barbara, maybe could you elaborate on the behavioral changes that you cited tied to value and convenience, when you saw this potentially accelerate, how you think the model is positioned? And then just on the profitability front, as you cited in 2023 and moving forward, operating margin improvement, help us to think about the drivers of that as we think about the return to double-digit earnings growth annually going forward?

Michael Hartshorn

Let me -- on the way we're thinking about this year, I'll just go through the components of expenses. And then talk through the long-term model. Overall, like everyone in the US economy, we're seeing cost inflation throughout the business. For us, it's most acutely felt in transportation, both domestic and ocean freight markets and also on the wage front.

In those 3 areas, we have a very good line of sight on ocean freight and we know that they will remain elevated through 2022. On the domestic freight, we don't expect the same type of headwinds on core domestic freight, although we do expect, especially with the current geopolitics, we do expect volatility in fuel-related costs.

And then on wages with low unemployment rates, the overall labor market continues to be very tight, although the warehousing labor market has been the most competitive over the last year. All that said, we believe we're well positioned to start the year, especially given the wage actions we took in the back half of 2021.

On the long-term model, given our market share opportunity with the consumers' heightened focus on value and convenience and given the fact that we're facing less brick-and-mortar competition, we believe we have a market share opportunity going forward. So looking into 2023, we're -- as you mentioned, we're targeting double-digit earnings per share growth.

And the model or the formula looks very similar to what it looked like prior to the pandemic. And that's a combination of new store growth around 5%, comp sales of 3% to 4% with EBIT margin expansion at the high end of that range and with the stock repurchase program, that adds up to the double-digit EPS growth.

Operator

Thank you. Your next question comes from the line of Chuck Grom with Gordon Haskett. Please go ahead.

Chuck Grom

Thank you very much. Earlier today, Cole [ph] spoke to an improving traffic picture in the month of February and also noted that they've begun to see some trade down in certain categories, suggesting that the focus on value that you guys are suggesting is actually started to begun. So I'm just curious, if you've seen that thus far and how it bodes for the balance of the year.

Michael Hartshorn

We wouldn't comment on inter-quarter trends for us. Obviously, the latest information we can talk about is in January, what we did see during the quarter, as Omicron spiked, surged right before Christmas, we did see a falloff on traffic, but the customer, with their fewer trips, bought more per transaction as we progress through the remainder of the quarter.

Barbara Rentler

And the focus on value, our customer has always been focused on value. But as the world is evolving and this inflation, we actually feel we have an opportunity to gain a trade-down customer at the same time.

So value has always been critical for us and it's something the merchants are constantly watching and evaluating, especially, as retails have gone up in the outside world, understanding where our price value relationship is with everything. So value is critical to us always, and it'll just be more important go forward.

Chuck Grom

Thank you.

Operator

Thank you. Your next question comes from the line of Lorraine Hutchinson with Bank of America. Please go ahead.

Lorraine Hutchinson

Thanks. Good afternoon. Just following up on that. You had discussed last quarter some limited pricing actions in certain categories. Can you update us on the success of that and if you plan to continue to broaden that out through more of the store?

Barbara Rentler

Sure. We have put in a strategic process, where we actually go in and the buyers are constantly assessing the market to understand pricing and where there were potentially opportunities to increase that pricing. And we started that last quarter and it continued through this quarter.

And the average price per SKU was up somewhat during the quarter. The way we're looking at it is, we've had successes in many areas now compared to where we were, and we are watching it and evaluating it. And I would say, being cautious about moving the needle, based off of where we sit in the food chain. So we're evolving and testing in certain commodities, not even testing, buy it in certain commodities where it's been successful.

But I think the most important thing for us to remember is that, value to our customer, that real definition for her is the appropriate separation of price between ourselves and mainstream retail. So we'll continue to do that, and we'll watch things as they evolve and move on from there.

Lorraine Hutchinson

Thank you.

Operator

Thank you. Your next question comes from the line of Michael Binetti with Credit Suisse. Please go ahead.

Michael Binetti

Hey, guys. Thanks for all the information here. Just to follow that a little bit. I mean, it does seem like -- I know, at first, you're fairly resistant to talking about AUR increases. But I guess, two quarters has gone by now, and the rest of the world is going to be taking some pretty meaningful price increases.

I mean, do you see the opportunity improving versus where you were one and two quarters ago as far as the ability to take price? And I guess also, as you look through the store, are you starting to see any evidence of a new customer coming in that would point to evidence to you of a trade down?

I know, during the great recession, it was a long time ago now, but I know you guys benefited from a lot of customers coming in from channels like department store and specialty apparel. Wondering if you're seeing any evidence like that of -- among the new customers coming in?

Barbara Rentler

Well, Michael, first, let's talk about the pricing. So right, for the last two quarters, we've really been watching it. We've got a process in place. We are watching the retails move in our competition and all types of competition because the merchants are studying that and where we think we have that opportunity, and we can still offer unbelievable value to the customer, we're taking it.

If we don't feel like we can offer that value to her at this point, we're not taking it. What I would also say is, it's kind of hard to predict where mainstream retailers will be in the future and what they're going to do, because prices can go up and go up and go up, and they might go up until they don't work at some point. And a traditional retailer can POS in any moment in time. So we are trying to really manage our way through giving the customer great value, increasing the AUR, where it's appropriate and really making sure that we balance through where the future could go in terms of potential POS-ing at some point in time.

So -- there's a lot of variables, which is why we have processes in place, and we're doing it strategically. But where we have done it strategically and continue to offer value to the customer, great values, it is working.

And in terms of understanding of the trade-down customer, I think it's kind of hard to see if you're asking from specific types of products or retails, I wouldn't say we've seen anything specific along those lines to say that we're getting a trade-down customer at this point. But with inflation continuing, one would think that, that would be a logical conclusion that over time that we could potentially pick up additional market share.

Michael Binetti

Thanks a lot.

Operator

Thank you. Your next question comes from the line of Marni Shapiro with Retail Tracker. Please go ahead.

Marni Shapiro

Hey, guys. I have just a quick follow-up on the pricing question again, I'm sorry. But are you able to take prices up at dd's? I know those prices tend to be a little bit lower and the customer a little bit more sensitive. And then if you could also just talk about past this year kind of longer term, -- you said there's a change out there in bricks-and-mortar fewer competitors, potentially meaning a healthier retail environment in general. So is there an opportunity for you guys to push up the food chain a little bit with some better brands and some changes to the assortment just a little bit, especially at Ross Stores?

Barbara Rentler

Okay. So two things. So at dd's, we have the customer is absolutely price sensitive and has lower price points -- but in dd’s, we're running the same process we're doing at Ross, we're studying it. The merchants are understanding it, they're understanding values because a lot of the competition for dd's is mass market and a lot of those retails have gone up. And so we're running the same process in both companies to make sure that we have real sizes around it, we can understand it and make the right decisions. And dd's has also had success in some areas where they have tried it. So I would say both companies, it's kind of -- it's an ongoing process, and it will be the same process that will continue.

In terms of longer, you're saying an assortment strategy could we -- could we trade up into more better brands. And I think our better brand strategy that we have, we're comfortable with. We continue to test and try a set of brands to what the customers respond to -- so I would think we would continue to do that and then give her and offer her what she wants. But as it stands today, when it comes to brands and supply, as you know, -- it can also pick it out, right? So, especially on better brands, they can be a lot and then it can temper they can come back up. So, I think we're always looking to try to increase our brand strategy and try to offer the customer the best possible products and values that we can. And so that process would continue with over time, there were more opportunities and the customer was responding. We would continue to shift the assortment based on the customers' response.

Marni Shapiro

Great. That makes a lot of sense. Best of luck for the spring season.

Barbara Rentler

Thank you.

Operator

Thank you. Your next question comes from the line of Beth Reed with Truist Securities. Please go ahead.

Beth Reed

Hi, good afternoon. I want to ask about the lower income consumer. Do you see any changes in purchasing patterns related to this specific customer cohort, or any color on trends at Ross versus dd's? Thank you.

Michael Hartshorn

I wouldn't make any call-outs, Ross versus double-digit'. dd's performance has been in line to Ross, actually performed better with government stimulus earlier in the year, but has maintained levels that are similar.

And then -- in terms of changes, there are just so many factors that are happening with the consumer, whether it's COVID-related, whether it's inflation, whether it's -- all the other things we're seeing, it would be hard to parse that specifically out on their behavior related to income factors.

Operator

Thank you. Your next question comes from the line of Dana Telsey with Telsey Advisory Group. Please go ahead.

Dana Telsey

Hi, good afternoon everyone. As you think about the expanded opportunity for new store openings at both businesses, any adjustments in the size that you're making? How are you thinking about the regions where you're going to and expanding into? And any framework this past fourth quarter of what you saw by region and how it was different by brand? Thank you.

Michael Hartshorn

On region performance, what we saw in the fourth quarter, as we said in the commentary, the top performing regions included the Southeast and the Midwest. And then our largest regions, California, Florida, and Texas. Texas was above the chain average and California and Florida were slightly below.

But in terms of how we're thinking about long-term store potential, where we -- what gives us confidence in that is we -- as we do every year, we look at research on the store potential. And there's a couple of factors that are important. First of all, more broadly, the consumers focus on value and convenience and then the brick-and-mortar retail closures, but also the changing traffic patterns for evolving customer behavior post-COVID, our ability to cluster stores together in high-density and high-volume trade areas. We've had success in our smaller markets.

And then last but not least, we have a favorable growth trends in our targeted demographics. So, those are the changes that gives us confidence to increase the store count potential to 3,600 locations.

Dana Telsey

Thank you.

Operator

Thank you. Your next question comes from the line of Laura Champine with Loop Capital. Please go ahead.

Laura Champine

Thanks for taking my question. It's about the long-term growth algorithm that you're laying out today, and it's more philosophical, like why is now we're going into our third year where the comparables aren't exactly likely to live up to their name. Why is now the right time to lay out this long-term growth algorithm? And what gives you the confidence that you can put up sustainable comp growth? What kind of a macro do you need to hit your goals?

Michael Hartshorn

Well, I'd say, number one, Laura, is what we've talked about is, given the customers' continued focus on value and convenience, we're in the right sector of retail, and we think we have a large market share opportunity ahead of us. I think this is the first time, 2022 is a difficult year to predict. But we think we can grow market share, and we think we have the strategies in place to be able to do that.

Laura Champine

If I can get a quick follow-on, will the growth, I think what I heard was store growth of about 5%. Would that push your CapEx in the out years up to more like 4% or 5% of sales compared to the 3%, 3.5% you have been running historically?

Michael Hartshorn

It's -- there's a couple of factors that go into the CapEx. Certainly, one of the most important is new store growth. But it can get choppy with our distribution center capital as we're -- as last year, we added a new distribution center that is opening early this year. So it can get a bit choppy. But going forward, I think it remains at these levels, maybe slightly up in future years based on distribution center capacity growth.

Laura Champine

Got it. Thank you.

Operator

Thank you. Your next question comes from the line of John Kernan with Cowen. Please go ahead.

John Kernan

Good afternoon and thanks for taking my question. Freight inflation and wage inflation isn't the only cost inflation out there. Product costs are higher. What's the outlook for merchandise margin this year and long-term?

Michael Hartshorn

Yeah, John, I'll jump in on that. Consistent with the prior quarters and 2021, merchandise margin was strong without ocean freight it improved every quarter versus 2019. So while we expect ocean freight costs to remain elevated through 2022, we're going to anniversary that initial spike in ocean freight costs in the fall.

So as we look forward into 2022, again, without the impact of ocean freight, we feel like its healthy and will continue to be strong and grow in 2022, obviously, dependent on sales and inventory turns. But feel strong about that.

John Kernan

Got it. Thanks Just maybe one quick follow-up. Where are we in the wage inflation cycle at Ross Stores, you seem to imply that you've taken wages up both in stores and DCs. We've heard quite a bit from some of your big box competitors out there about where they're taking wages. Where are we in the wage inflation cycle here? Do you feel comfortable where you are now in both PCs and stores?

Michael Hartshorn

Yeah. I would say, answer the year, we feel good about the changes we made last year, but we -- our approach has been to look at wages on a market-by-market basis versus blanket approach. But I would also add, there are statutory increases. There's minimum wage increases. California has large bumps year-to-year, and there's other large states for us. that have minimum wage increases. So we're keeping up with those, and then we're making decisions on a market-by-market basis to make sure we can hire great talent across the chain.

John Kernan

Got it. Thank you. Best of luck.

Operator

Your next question comes from the line of Ike Burochow with Wells Fargo.

Ike Burochow

Hey everyone. Just on freight, I think you gave on a LY basis, it was a 100 basis point headwind in Q4. Can you just say what that was year-over-year, just to give some context? And then -- if there's any way you could explain what's embedded? I think you said the cost should get much better as you move through next fiscal year. But what is the year-over-year headwind that you're currently anticipating, whether it's first half, full year? Anything that would be helpful would be great.

Michael Hartshorn

Ike, we wouldn't give specifics on the deleverage. We usually would do that after the fact. But as I explained the back half of last year is, when we started seeing significant increases in ocean freight as lead times extended, and we had to pay more in the spot rate market. So we're up against that. We'll be up against that next year. So it will be less of a headwind this year. Overall, we expect though that ocean freights will stay elevated all the way through the year and perhaps a bit higher, but the vast headwind will be in the first half of the year versus the second half of the year, if that makes.

Ike Burochow

Okay. Thanks.

Operator

And we have no further questions at this time. I will now turn the call over back to Barbara Rentler for closing remarks.

Barbara Rentler

Thank you for joining us today and for your interest in Ross Stores.

Operator

And this concludes today's conference call. You may now disconnect.