Ross 2011 Annual Report Download - page 25

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23
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
Overview
Ross Stores, Inc. operates two off-price retail chains — Ross Dress for Less® (“Ross”) and dd’s DISCOUNTS®. Ross is the
largest off-price apparel and home fashion chain in the United States with 1,037 locations in 29 states, the District of Columbia,
and Guam. Ross offers first-quality, in-season, name brand and designer apparel, accessories, footwear and home fashions
for the entire family at everyday savings of 20% to 60% off department and specialty store regular prices. We also operate 88
dd’s DISCOUNTS locations in seven states that feature a more moderately-priced assortment of first-quality, in-season, name
brand apparel, accessories, footwear, and home fashions for the entire family 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 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 the five largest off-price retailers in the United States increased 6%
during 2011 on top of an 8% increase in 2010. The 6% off-price growth in 2011 compares favorably to total national apparel sales
which increased 4%, 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 2011 and 2010 were driven mainly by an increased
focus on value by consumers over the past few years. Our sales and earnings gains in 2011 continued to benefit from efficient
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 the 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 2012, 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 maximize our profitability.
We refer to our fiscal years ended January 28, 2012, January 29, 2011, and January 30, 2010 as fiscal 2011, fiscal 2010, and fiscal
2009, respectively. Fiscal 2011, 2010, and 2009 each had 52 weeks.
Results of Operations
The following table summarizes the financial results for fiscal 2011, 2010, and 2009:
2011 2010 2009
Sales
Sales (millions) $ 8,608 $ 7,866 $ 7,184
Sales growth 9.4% 9.5% 10.8%
Comparable store sales growth 5% 5% 6%
Costs and expenses (as a percent of sales)
Cost of goods sold 72.5% 72.8% 74.2%
Selling, general and administrative 15.2% 15.6% 15.7%
Interest expense, net 0.1% 0.1% 0.1%
Earnings before taxes (as a percent of sales) 12.2% 11.4% 10.0%
Net earnings (as a percent of sales) 7.6% 7.1% 6.2%
All share and per share amounts have been adjusted for the two-for-one stock split effective December 15, 2011.