Ross 2008 Annual Report Download - page 24

Download and view the complete annual report

Please find page 24 of the 2008 Ross annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 74

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74

22
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
Overview
We are the second largest off-price apparel and home goods retailer in the United States. At the end of fiscal 2008, we operated
904 Ross Dress for Less (“Ross”) locations in 27 states and Guam, and 52 dd’s DISCOUNTS stores in four states. Ross offers
first-quality, in-season, name brand and designer apparel, accessories, footwear and home fashions at everyday savings of 20%
to 60% off department and specialty store regular prices. dd’s DISCOUNTS features a more moderately-priced assortment of
first-quality, in-season, name brand apparel, accessories, footwear and home fashions at everyday savings of 20% to 70% off
moderate department and discount store regular prices.
Our primary objective is to pursue and refine our existing off-price strategies to drive gains in profitability and improved financial
returns over the long term. In establishing appropriate growth targets for our business, we closely monitor market share
trends for the off-price industry. Total aggregate sales for the five largest off-price retailers in the United States increased 3%
during 2008 on top of a 6% increase in 2007. This compares to total national apparel sales which declined 4% during 2008
compared to a 4% increase in 2007, according to data published by the NPD Group, which provides global sales and marketing
information on the retail industry.
The macro-economic and retail climate became more difficult as the year progressed in 2008. We believe that the stronger
relative sales gains of the off-price retailers during the year reflected the increasing importance of value to consumers, especially
as the recessionary headwinds accelerated. Our sales and earnings gains in 2008 benefited from efficient execution of our
resilient and flexible off-price business model. Our merchandise and operational strategies are designed to take advantage of
the expanding market share of our off-price industry as well as continued customer demand for name brand fashions for the
family and home at compelling everyday discounts.
Looking ahead to 2009, we expect the macro-economic pressures to continue, and are planning to maintain tight controls of
both inventory levels and operating expenses as part of our strategy to help us maximize our profitability.
We refer to our fiscal years ended January 31, 2009, February 2, 2008, and February 3, 2007 as fiscal 2008, fiscal 2007, and
fiscal 2006, respectively. Fiscal 2006 was 53 weeks. Fiscal 2008 and 2007 were 52 weeks.
Results of Operations
The following table summarizes the financial results for fiscal years ended January 31, 2009, February 2, 2008, and
February 3, 2007.
2008 2007 2006
Sales
Sales (millions) $ 6,486 $ 5,975 $ 5,570
Sales growth 8.6% 7.3% 12.7%
Comparable store sales growth (52-week basis) 2% 1% 4%
Costs and expenses (as a percent of sales)
Cost of goods sold 76.4% 77.3% 77.5%
Selling, general and administrative 16.0% 15.7% 15.5%
Interest income, net 0.0% (0.1%) (0.2%)
Earnings before taxes (as a percent of sales) 7.6% 7.1% 7.2%
Net earnings (as a percent of sales) 4.7% 4.4% 4.3%