What was the primary driver of sales growth in the quarter?

The primary driver of sales growth was the opening of 92 net new stores during the twelve months ended August 4, 2007, complemented by a 2% increase in comparable store sales for the quarter.

How did the company manage its cost of goods sold?

Cost of goods sold as a percentage of sales remained stable for the quarter due to a favorable merchandise gross margin (benefiting from a lower inventory shortage provision), lower occupancy costs, and improved buying/compensation expenses, which offset increased distribution and freight costs. For the six-month period, it decreased due to improved gross margin (lower markdowns and shortage provision) and buying/compensation expenses, partially offset by freight and distribution costs.

What is the company's outlook regarding its store expansion?

Ross Stores plans to continue its strategy of steady store base expansion, opening additional stores based on market penetration and demographic characteristics. They opened 66 new stores in the first six months of 2007 and forecast approximately $290 million in total capital expenditures for 2007 to support this growth.

How is the company returning value to shareholders?

The company is returning value to shareholders through a stock repurchase program, having spent approximately $100.6 million in the first six months of the fiscal year. They also declared and paid quarterly cash dividends, with the Board declaring a $.075 per common share dividend in August 2007.

ROST 10-Q Quarterly Report Q2 FY2008 — Revenue, Net Income, EPS

Summary

Ross Stores, Inc. reported solid performance for the second quarter of fiscal year 2007, with a notable increase in sales and earnings compared to the prior year. Sales grew by 10.4% to $1.44 billion for the quarter and 9.8% to $2.86 billion for the first half of the year. This growth was driven by a combination of new store openings and a modest increase in comparable store sales. Net earnings saw a significant rise, with diluted EPS reaching $0.37 for the quarter, up from $0.32 in the prior year, and $0.85 for the year-to-date period, up from $0.73. The company's strategic focus on its off-price model continues to resonate with consumers, as evidenced by the strong sales performance in a growing retail sector. Management's disciplined approach to managing costs, particularly in cost of goods sold and SG&A as a percentage of sales, contributed to improved profitability. While inventory levels increased, the company maintained a healthy working capital position. The company also continued its share repurchase program and dividend payments, returning value to shareholders.

Key Highlights

1Total sales for the three months ended August 4, 2007, increased by 10.4% to $1.44 billion, and for the six months ended August 4, 2007, increased by 9.8% to $2.86 billion.
2Net earnings for the quarter increased to $50.9 million from $45.4 million in the prior year, with diluted EPS rising to $0.37 from $0.32.
3Comparable store sales increased by 2% for the quarter and 1% for the six-month period, indicating positive performance from existing locations.
4The company opened 33 net new stores during the quarter, expanding its total store count to 862 as of August 4, 2007.
5Cost of goods sold as a percentage of sales remained stable for the quarter and decreased slightly for the six-month period, demonstrating effective cost management.
6Selling, general, and administrative expenses as a percentage of sales saw a slight decrease for the quarter, indicating improved operational efficiency.
7The company repurchased approximately $100.6 million of common stock during the first six months of the fiscal year, demonstrating a commitment to shareholder returns.

ROSS STORES, INC. Quarterly Report for Q2 Ended Aug 4, 2007

Summary

Key Highlights

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