Ross 2010 Annual Report Download - page 24

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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 fi scal 2010, we operated
988 Ross Dress for Less® (“Ross”) locations in 27 states and Guam, and 67 dd’s DISCOUNTS® stores in six states. Ross offers
fi rst-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
fi rst-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 refi ne our existing off-price strategies to maintain or improve profi tability and improve
fi nancial 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 fi ve of the largest off-price retailers in the United States increased 8%
during 2010 on top of a 7% increase in 2009. This compares to total national apparel sales which increased 2% during 2010
compared to a 5% decrease in 2009, according to data published by the NPD Group, Inc., a leading provider of comprehensive
consumer and retail information worldwide.
We believe that the stronger relative sales gains of the off-price retailers during 2009 and 2010 were driven mainly by an increased
focus on value by consumers over the past two years. Our sales and earnings gains in 2010 continued to benefi t from effi cient
execution of our off-price model throughout all areas of our business. 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 2011, we are planning further reductions in average store inventory levels while continuing to maintain strict
controls on operating expenses as part of our strategy to help us maximize our profi tability.
We refer to our fi scal years ended January 29, 2011, January 30, 2010, and January 31, 2009 as fi scal 2010, fi scal 2009, and
fi scal 2008, respectively. Fiscal 2010, 2009, and 2008 each had 52 weeks.
Results of Operations
The following table summarizes the fi nancial results for fi scal 2010, 2009, and 2008.
2010 2009 2008
Sales
Sales (millions) $ 7,866 $ 7,184 $ 6,486
Sales growth 9.5% 10.8% 8.6%
Comparable store sales growth 5% 6% 2%
Costs and expenses (as a percent of sales)
Cost of goods sold 72.8% 74. 2% 76.4%
Selling, general and administrative 15.6% 15.7% 16.0%
Interest expense, net 0.1% 0.1% 0.0%
Earnings before taxes (as a percent of sales) 11.4% 10.0% 7.6%
Net earnings (as a percent of sales) 7.1% 6.2% 4.7%