Ross 2007 Annual Report Download - page 19

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Bed and Bath 23%, Men’s 15%, Fine Jewelry, Accessories, Lingerie and Fragrances 11%, Shoes 10%, and Children’s 9%. Our
merchandise offerings also include product categories such as small furniture and furniture accents, educational toys and games,
luggage, gourmet food and cookware, watches, sporting goods and, in select Ross stores, fine jewelry.
Purchasing. We have a combined network of approximately 6,400 merchandise vendors and manufacturers for both Ross and
dd’s DISCOUNTS and believe we have adequate sources of first-quality merchandise to meet our requirements. We purchase the
vast majority of our merchandise directly from manufacturers, and we have not experienced any difficulty in obtaining sufficient
merchandise inventory.
We believe that our ability to effectively execute certain off-price buying strategies is a key factor in our success. Our buyers use
a number of methods that enable us to offer our customers brand-name and fashion merchandise at strong everyday discounts
relative to department and specialty stores for Ross and moderate department and discount stores for dd’s DISCOUNTS.
By purchasing later in the merchandise buying cycle than department and specialty stores, we are able to take advantage of
imbalances between retailers’ demand for products and manufacturers’ supply of those products.
Unlike most department and specialty stores, we typically do not require that manufacturers provide promotional allowances,
co-op advertising allowances, return privileges, split shipments, drop shipments to stores or delayed deliveries of merchandise.
Formostorders,onlyonedeliveryismadetooneofourfourdistributioncenters.Theseexiblerequirementsfurtherenableour
buyers to obtain significant discounts on in-season purchases.
The vast majority of the merchandise that we offer in all of our stores is acquired through opportunistic purchases created by
manufacturer overruns and canceled orders both during and at the end of a season. These buys are referred to as “close-out”
and “packaway” purchases. Close-outs can be shipped to stores in-season, allowing us to get in-season goods into our stores at
lower prices. Packaway merchandise is purchased with the intent that it will be stored in our warehouses until a later date, which
may even be the beginning of the same selling season in the following year. Packaway purchases are an effective method of
increasing the percentage of prestige and national brands at competitive savings within our merchandise assortments. Packaway
merchandise is mainly fashion basics and, therefore, not usually affected by shifts in fashion trends.
In fiscal 2007, we continued our emphasis on this important sourcing strategy in response to compelling opportunities available
in the marketplace. Packaway accounted for approximately 38% of total inventories as of February 2, 2008 and February 3, 2007.
We believe the strong discounts we are able to offer on packaway merchandise are one of the key drivers of our business results.
We are currently working to develop and roll-out additional information system enhancements and process changes to improve
our merchandising capabilities. These new tools are designed to strengthen our ability to plan, buy and allocate at a more
local versus regional level. The long-term objective of these investments is to be able to fine tune our merchandise offerings to
address more localized customer preferences and thereby gradually increase sales productivity and gross profit margins in both
newer and existing regions and markets.
Our buying offices are located in New York City and Los Angeles, the nation’s two largest apparel markets. These strategic
locations allow our buyers to be in the market on a daily basis, sourcing opportunities and negotiating purchases with vendors
and manufacturers. These locations also enable our buyers to strengthen vendor relationships — a key element in the success of
our off-price buying strategies.
We have a total of approximately 330 merchants for Ross and dd’s DISCOUNTS combined, although the two buying
organizations are separate and distinct. These buying resources include merchandise management, buyers and assistant buyers.
Ross and dd’s DISCOUNTS buyers have an average of about 14 years of experience, including merchandising positions with
other retailers such as Ann Taylor, Bloomingdale’s, Burlington Coat Factory, Foot Locker, Kohl’s, Loehmann’s, Lord & Taylor,
Macy’s, Marshalls, Nordstrom, Saks, T.J. Maxx and Value City. We believe that the investment we have made over the years in our
merchandise organization enables our merchants to spend more time in the market developing and nurturing relationships with
a wide array of manufacturers and vendors, enhancing our ability to continue to procure the most desirable brands and fashions
at competitive discounts.