Ross 2009 Annual Report Download - page 27

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— 25 —
Stores. Total stores open at the end of 2009, 2008, and 2007 were 1,005, 956, and 890, respectively. The number of stores at
the end of fiscal 2009, 2008, and 2007 increased by 5%, 7%, and 12% from the respective prior years. Our expansion strategy
is to open additional stores based on market penetration, local demographic characteristics, competition, expected store
profitability, and the ability to leverage overhead expenses. We continually evaluate opportunistic real estate acquisitions and
opportunities for potential new store locations. We also evaluate our current store locations and determine store closures based
on similar criteria.
2009 2008 2007
Stores at the beginning of the period 956 890 797
Stores opened in the period 56 77 98
Stores closed in the period (7) (11) (5)
Stores at the end of the period 1,005 956 890
Selling square footage at the end of the period (000) 23,700 22,500 21,100
Sales. Sales for fiscal 2009 increased $698.1 million, or 10.8%, compared to the prior year due to the opening of 49 net new
stores during 2009, and a 6% increase in sales from “comparable” stores (defined as stores that have been open for more than
14 complete months). Sales for fiscal 2008 increased $510.9 million, or 8.6%, compared to the prior year due to the opening of
66 net new stores during 2008, and a 2% increase in sales from comparable stores.
Our sales mix is shown below for fiscal 2009, 2008, and 2007:
2009 2008 2007
Ladies 30% 32% 32%
Home accents and bed and bath 24% 23% 23%
Men’s 13% 14% 15%
Accessories, lingerie, fine jewelry, and fragrances 13% 12% 11%
Shoes 11% 10% 10%
Children’s 9% 9% 9%
Total 100% 100% 100%
We expect to address the competitive climate for off-price apparel and home goods by pursuing and refining our existing
strategies and by continuing to strengthen our organization, to diversify our merchandise mix, and to more fully develop our
organization and systems to improve regional and local merchandise offerings. Although our strategies and store expansion
program contributed to sales gains in fiscal 2009, 2008, and 2007, we cannot be sure that they will result in a continuation of
sales growth or an increase in net earnings.
Cost of goods sold. Cost of goods sold in fiscal 2009 increased $370.7 million compared to the prior year mainly due to
increased sales from the opening of 49 net new stores during the year, and a 6% increase in sales from comparable stores.
Cost of goods sold as a percentage of sales for fiscal 2009 decreased approximately 230 basis points from the prior year. This
improvement was mainly the result of a 170 basis point increase in merchandise gross margin, which includes a 40 basis point
benefit from lower shortage. In addition, freight costs declined by about 50 basis points, occupancy leveraged 35 basis points,
and distribution costs declined by about 10 basis points. These improvements were partially offset by a 35 basis point increase
in buying expenses due in part to higher incentive costs versus the prior year.