Ross 2010 Annual Report Download - page 11

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9
We have established merchandise assortments that we believe are attractive to our target customers. Although we offer fewer
classifi cations of merchandise than most department stores, we generally offer a large selection of brand names within each
classifi cation with a wide assortment of vendors, labels, prices, colors, styles, and fabrics within each size or item. The mix
of comparable store sales by department in fi scal 2010 was approximately as follows: Ladies 29%, Home Accents and Bed
and Bath 25%, Men’s 13%, Accessories, Lingerie, Fine Jewelry, and Fragrances 12%, Shoes 12%, 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, fi ne jewelry.
Purchasing. We have a combined network of approximately 7,800 merchandise vendors and manufacturers for both Ross and
dd’s DISCOUNTS and believe we have adequate sources of fi rst-quality merchandise to meet our requirements. We purchase the
vast majority of our merchandise directly from manufacturers, and we have not experienced any diffi culty in obtaining suffi cient
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 designer 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, specialty, and discount 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 fl exible requirements further enable our
buyers to obtain signifi cant discounts on in-season purchases.
The majority of the apparel and apparel-related 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 fi scal 2010, we continued our emphasis on this important sourcing strategy in response to compelling opportunities available
in the marketplace. Packaway accounted for approximately 47% and 38% of total inventories as of January 29, 2011 and January
30, 2010. This growth refl ects our merchants’ continued ability to take advantage of a large amount of close-out opportunities in
the marketplace. We believe the strong discounts we are able to offer on packaway merchandise are one of the key drivers of our
business results.
In 2009 we completed a chain-wide rollout of information system enhancements and process changes to improve our
merchandising capabilities. We continue to utilize these tools which 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 fi ne tune our merchandise
offerings to address more localized customer preferences and thereby gradually increase sales productivity and gross profi t
margins in both newer and existing regions and markets.