Ross 2009 Annual Report Download - page 26

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— 24 —
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 2009, we operated
953 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 percent 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 percent off moderate department and discount store regular prices.
Our primary objective is to pursue and refine our existing off-price strategies to maintain or improve profitability and improve
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 five of the largest off-price retailers in the United States increased 7%
during 2009 on top of a 3% increase in 2008. This compares to total national apparel sales which declined 5% during 2009
compared to a 3% decline in 2008, according to data published by the NPD Group, Inc., which provides global sales and
marketing information on the retail industry.
We believe that the stronger relative sales gains of the off-price retailers during 2009 were driven mainly by the increased focus
on value by consumers, whose spending continued to be pressured by the challenging macro-economic environment. Our
sales and earnings gains in 2009 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 the ongoing customer demand for name brand fashions for the family and home at compelling everyday discounts.
Looking ahead to 2010, we 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 30, 2010, January 31, 2009, and February 2, 2008 as fiscal 2009, fiscal 2008, and
fiscal 2007, respectively. Fiscal 2009, 2008, and 2007 were 52 weeks.
Results of Operations
The following table summarizes the financial results for fiscal years ended 2009, 2008, and 2007.
2009 2008 2007
Sales
Sales (millions) $ 7,184 $ 6,486 $ 5,975
Sales growth 10.8% 8.6% 7.3%
Comparable store sales growth 6% 2% 1%
Costs and expenses (as a percent of sales)
Cost of goods sold 74.2% 76.4% 77.3%
Selling, general and administrative 15.7% 16.0% 15.7%
Interest expense (income), net 0.1% 0.0% (0.1%)
Earnings before taxes (as a percent of sales) 10.0% 7.6% 7.1%
Net earnings (as a percent of sales) 6.2% 4.7% 4.4%