ROST - Earnings call 4 2023 | Ross Stores, Inc.

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Operator

Good afternoon, and welcome to the Ross Stores Fourth Quarter and Fiscal 2022 Earnings Release Conference Call. [Operator Instructions]

Before we get started, on behalf of Ross Stores, I would like to note that the comments made on this call will contain forward-looking statements regarding expectations about future growth and financial results, including sales and earnings forecasts, new store openings and other matters that are based on the company's current forecast of aspects of its future business. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from historical performance or current expectations. Risk factors are included in today's press release and the company's fiscal 2021 Form 10-K and fiscal 2022 Form 10-Qs and 8-Ks on file with the SEC. And now I'd like to turn the call over to Barbara Rentler. Officer. Executive Chief

Barbara Rentler

a call for President, fourth outlook quarter of our and our on questions we'll Afterwards, President are Hartshorn, Group Michael Chief Joining Operating be call Officer; performance, begin respond review President by Vice you Kao, Connie Chief Officer; Vice to have. Relations. XXXX any followed Adam our with Group today We'll our XXXX. and Financial happy me to and today Investor Orvos, and Executive may

per As release, holiday noted results of income Sales same $XXX a of ended season, results comparable top were Earnings XXXX. X% X% to our during our guidance These on of compare offerings. the million. million share January increase earnings the $XXX value to of XX were a customers' per our quarter today's sales in $X.XX and to improved for up billion in on for press stronger XX, XXXX fourth fourth very assortment positive response for earnings net net fourth competitive quarter $X.XX exceeded of $X.X weeks for and on earnings due period sales XXXX. the store share the with quarter

unfavorable incentive by of prior XXXX. with billion and year, costs $X.X improvement fiscal was compared store in in XX.X% compared in income freight sales robust of This XXXX. offset were expenses. to a partially were packaway-related for earnings $X.X comparable XXXX margin XX% the driven of mainly $X.XX to increase year. Sales For were billion net by that Fourth down operating on $X.XX share per on the timing quarter billion, $XX.X was earnings net X% per X.X% versus XXXX lower share

to additional fourth quarter turn our details on Now results. let's

Inventory that prior quarter For improved while to Ross, but to was the holiday a sales quarter lower-income compared XXXX due customers. XX% the year. dd's results inventories strongest are dd's pressures primarily XX% trends DISCOUNTS similar to with packaway store continuing XXXX of down was during down represented inventories area, year. the period, compared from merchandise Average to trail slightly on while versus Florida to the to impact half Ross' were season, best-performing moderated region. to last selling levels consolidated shoes have of holiday first inventories inflationary the last the Similar continue ongoing merchandise larger total significantly

marketplace. take well we believe to also numerous are of We in the opportunities advantage the positioned buying

shares today's and total noted of program million billion repurchased release, quarter of respectively, March $XXX the These price made million $X.X the a to were XX.X purchases As the stock, year. in for X-year X.X pursuant for million in aggregate of the in fiscal $XXX company million XXXX. of announced an and common purchase

expect to the million under complete in remaining XXXX. We $XXX fiscal this authorization

also our March quarterly by Board stockholders as to payable increased on be XX, to record XX, of XXXX, recently $X.XXX X% per Our to and of share XXXX. March cash dividend

stockholder value enhancing increased returns of our in strength reflects and confidence to cash and future the sheet Our our balance continued stock well and repurchase as program projected commitment flows. dividend as our

fiscal quarter further will XXXX. additional fourth on provide Adam our outlook our results and on color Now details for

Adam Orvos

Thank you, Barbara.

year. As the X% This growth a for relatively of traffic previously in increase flat compared the year. store as basket top mentioned, gain comparable to of last due X% on rose was in to quarter size was the sales average slight prior the

and versus to in XX.X% XX timing primarily occupancy operating the margin points quarter distribution sold fourth a the due last from opening XX basis grew domestic X.X% deleverage Houston earlier, goods basis points respectively. Buying of XX costs by XX discussed of which combination Barbara more was grew Cost somewhat rose XXXX. merchandise expenses with than from costs as points offset packaway-related to earlier these by margin, freight in and of for lower As due up freight our and improved of expenses XX Distribution factors. due from basis higher center incentive of also to year, costs while points, points, Partially the compensation. offsetting levered XX by X basis ocean benefit basis XXX primarily period markdowns. due the again, lower higher delevered points basis points SG&A expense. to by lower year basis incentive

outlook our discuss fiscal Now let's for XXXX.

in highly the release, macroeconomic our environments geopolitical press uncertain. and noted Barbara remain As

believe result, business. prudent we a when our planning As it is conservative to remain

range in week. of weeks flat. to January approximately the per If plan, earnings Incorporated planning year. from share we do of to to $X.XX in be share to the perform $X.XX sales XXXX. store the earnings better XXXX to important is for is ending hope are XXXX in guidance sales $X.XX extra fiscal XX, we expect comparable for this XXXX, we is in line $X.XX this It XX relatively compared fiscal While to that be an estimated note benefit per a XX-week to range with

basis to include year about This and sales effect full range be sales of flat. is costs. the for deleveraging Based on operating the the flattish week. XXXX, the on the to in for Also higher points Our XX.X%. in compensation, the are be weeks ending wages, XX.X% lower January for freight an are plans, February from benefit ending store XX this expected is the same-store XXXX resetting margin baseline to guidance these to incorporated sales XXrd relatively of incentive sales XX grow Total reflects of for estimated the year margin the planned X% XXXX. X, for Operating guidance weeks XX, following: XX X% planned the to assumptions Comparable by

approximately to DISCOUNTS. expect Ross For XX XXXX, of dd's about XX open new locations we XXX comprised and

our XX% diluted interest shares million. XX As about to to Net is about be stock-based for expected expense usual, these is to stores. do amortization inclusive of are million the $XXX plans to to Depreciation year. estimated or be rate and to tax be approximately be forecast is XX% The outstanding $XXX million. amortization include close about not older openings income relocate $XXX and projected

XXXX are addition, the planned merchant million make to our capital efficiencies and further to growth chain throughout expenditures we investments In increase be approximately support in and as $XXX processes our stores, to supply business. for long-term

turn now to to our quarter. Let's low impact guidance first inflation continues for to the income our customer. Elevated moderate

to are then respectively. sales XX interest estimated year. deleveraging last also perform X quarter. We would The a decrease ending margin in plan, packaway-related for As planning first plan are $XX first such, XX% reflects is X% of we in $X.XX versus be freight stores This benefit weeks guidance margin and of to forecast sales XXXX, XXXX we Ross new gain assumptions a flat Net XX.X% the dd's expected last to quarter in costs and store be be quarter timing our during to year's DISCOUNTS versus decline If up this XX, line following: X.X% $X.XX add Total quarter We first unfavorable relatively with year. to to plan, period. XXXX X% for to to expect per comparable the earnings is wages. operating and operating to effect sales of be April million. be income consisting $X.XX the statement Further, our XX compares costs. The from share line and XXXX. XX support first of lower to same-store the merchandise the X% to perform expect X.X% to quarter the planned last compared sales include of first with higher that

to Our tax rate approximately expected XX% about are million. to forecast to XX% diluted is be shares be $XXX and

will Barbara I Rentler the Now comments. call closing back turn to for

Barbara Rentler

faced of our from the own disruptions you, unprecedented up, only impacted as their COVID Thank household Adam. the inflationary shopping as not These past a discretionary range wide pandemic, factors over supply challenges sum business, but also income behaviors. budgets, negatively years, our well their we customers' ongoing and To have headwinds. X have chain

stronger most As our available competitive are to response, result, increased In evolving product shoppers our our preferences. continuing customers' stores. bargains our an focus with today on while seeking based our when a visiting even on values the delivering mix merchants our fine-tuning assortments adjust are

throughout inventory any point, us we'd expenses maximize strongly our both have. the measures enable to sales we strictly beyond. At open these Looking ahead, We will may operating believe this and have like for that on potential controlling up and focus significantly our increased to company. the XXXX respond profit and to and questions in growth call you

Operator

of Bank our comes Lorraine with [Operator the first America. Hutchinson Instructions] And line from of question

Lorraine Maikis

And of remains I year into baked have guidance much pre-COVID wanted for both year gross for year versus and much recovery next do ask then How the this margin. about after? how the components freight, to you your opportunity the levels? within

Adam Orvos

Yes.

freight from last significantly question. related the will So Adam. anniversary QX as costs Lorraine, fiscal the we benefit year. merchandise is for ocean XXXX from cost clearly and Thanks this to margin, lower higher

still will increase costs significant short levels we've drop, years. over higher harvest in the of clearly pre-pandemic these and a term. the on faced last portion dropped they've ocean the While dramatically side, But the likely X they'll than we'll be

side, the side. as be elevated wages but domestic than of still the ocean domestic and pre-pandemic, because On wages freight, will some higher -- on tangible back it XXXX not as of in harvest we'll fuel cost the

Lorraine Maikis

So you'd opportunity fiscal remain for 'XX? will say some

Adam Orvos

they sides in a tailwind to depending XXXX. but XXXX. for us will far how that be That left much not And prudent of kind in move I'll see XXXX. ahead, Probably on go clearly both it on for what's

Operator

JPMorgan. comes question Matthew line from with next of the Boss the And

Matthew Boss

Congrats a on nice quarter.

a for this customer traffic Have saw cited? on And X% in in during volatility material just stance maybe the fourth just outlook Or starting So quarter to on of is year positive taking that inflecting more the a cadence you a XQ can you comps seen you back relative you to flat historically to for same-store sales prudent and plan. change X% that quarter? territory, both given speak the behavior then post-holiday? the to the Barbara,

Michael Hartshorn

it's Matthew, Hartshorn. Michael

first planning this commentary, we business. year. to, both conservative business. the quarter, out how and of us in mode highly and firmly It's maximize believe top On and it's see from the Internally, an a the year, said familiar in the in in plays as that We to economy it we'll the we and start environment, for with. open-to-buy said both in believe line to cost with underlying us, the chase macro in the guidance commentary, perspective uncertain well the puts the bottom be a us inflation ahead the and it have our uncertain we're an for prudent lasting playbook know the inventory in will allow as we to line managing

in data, across was that quarter. In and as of quarter, the in traffic the traffic relatively flat we said fourth relatively commentary, terms consistent was the

Matthew Boss

maybe a Great. just margin. gross then on And follow-up

I are you margins that within any what about is to beyond how to this in impact price. do recovery, you So in there I'm of back some this X% model Maybe freight double-digit to think we thinking underlying need really if guide? how X% Meaning, with cited? exclude we get to about structural mean, growth is get trying to the underlying we if algorithm? change the this can that mix best year's year, to think merchandise about think earnings there's you any changes comp at

Michael Hartshorn

costs the extent, ocean in pre-pandemic Let the we still a of on transportation to as the big lanes. large preceding also, model. strong but number expect freights improvements Longer a sustained a highly a be bit persistence the this year. little certainly, they me inflationary sales ocean talk with growth, we'd year, We term, business. costs expect operating and see levels We, benefit above remain but to and dependent to coming freight the this again, will long-term margin see mentioned, down, about

benefit So be beyond that could a XXXX.

easing We freight guidance. year, horizon to But risen, are fuel pandemic. longer costs. and somewhat Wage in than the see pressures they see over growing did rates these embedded expect dependent domestic during lower have pace but on and that's is at this a costs we a also our slower

that's more efficient wage pressure, costs. we that finding a the ways be will some business to perspective from those of offsetting in expect be are ongoing an it We but

line we taken can in EBIT top those be time, we together, growth profitability and very sales will believe our of drive equation. margins important over but that all it So grow to

Operator

Baird. the comes And question with of the next Altschwager Mark line from

Mark Altschwager

the apparel backdrop, categories In especially inventory, general spring. merchandise terms look of of competitive leaner heading some the the on and into discretionary retailers bigger

and comps cycling Just incorporating market recapture thinking curious some last that's how into of year? on your potential for share

Barbara Rentler

Sure.

think helped of that gives drive big for customer. think to really I then And however will value regaining, part that us back driving businesses the general I of in capturing merchandise depends on our and possible organ store. that quarter that's we I we're continue pulling in to gives mean sales, focus that. brand our way entire a That the such our that, opportunity us best on really fact grow fourth -- to making on we there's since market compounded think potentially it's to want throughout of us delivering focus. is merchandise for the do is really But sense perform really is sales to business. the marketplace, sure lot what those say which the it an really that share, a us with best enable to the

parts from it market I share, coming what back think from retail us whether departmental gain stores whatever other that's coming a it's really will box is. that big it's of or help

go really that's line top to sales. key think forward success our drive I for the

Operator

comes Paul Lejuez Our line Citigroup. the with Instructions] [Operator of next question from

Paul Lejuez

some any income shop lower seeing transactions or curious you showing the folks traffic but 'XX income if of folks comp of about customers up in you're stores? seeing signs the some perspective. maybe how changing you in a trade-down curious the drivers was F is up, also thinking traffic I'm know Are I you're flat, a at from all ticket customer your of versus higher maybe base said show less.

Michael Hartshorn

our the across we in see on shift there Paul, a customer, isn't different trends what material income demographics. trade-down in the spending data,

the that the there trade the We we the business. typically this about at On how customers the any -- is business trade components that based on don't So down business of don't us, our for transaction. down we're thinking impacting going see evidence forward. plan point the

that's you is As lead Barbara the value will said, value if we're to and to deals customer, off-price offer higher lead basket thinking a on great traffic, business focus about how and will better going it to our the a forward.

Paul Lejuez

share comps XQ? Texas you it. Florida, just what your about apparel Also Got home versus California, can And curious were in performance.

Barbara Rentler

apparel, and Sure. is chain business overall, The slightly penetration that has relatively part were the above non-apparel the of home thing drove really of performance then what's the our well. part home performed And was that gifting highest sales And Home that average. similar. of

Adam Orvos

And Paul, geography on strongest as was market. the we mentioned, the Florida, it side,

not chain lot the said, that line slightly the and our other Regarding numbers by large the area. With see in markets, change a Texas of in average geographic performed average. California above with all tracked deviation we did

Operator

of The is next question Binetti from the line Michael with Credit Suisse.

Michael Binetti

for thinking product Could the freight you about year, the the merch unpack here margin, how you're guess, the margin. I excluding

framework cost. basis this same-store the and say, composition the the and points, takes guys think, you in or a worse think the -- the the of Just on the X us on how margin then this And the can to on lower simple are the on impact puts that sales you upside what the Michael, memory, X takes Michael marry us -- comp, buys I in freight the and give to trying margins inventory I to XX when of one, Adam, should for know what's normal up flow to point about on about or how year? you Can resetting than seeing year? the think pricing you -- I incentive pointed comp? and puts model point the guess, guys you buckets What's better flat of just trying of through product some year? I would wages, speak lead and pretty upside this always comp higher to

Michael Hartshorn

right. expansion. EBIT is margin XX to point basis X got approximately of XX it of points you exactly comp Michael,

So that changed. hasn't

Adam Orvos

jump Michael, And in. I'll

moving operating in So XXXX. like margin, the parts on

the of So amount flat first cause will comp, deleverage. we're all, some which planning of

As incentive you at mentioned, cost levels. our we target have to reset

us, was top XXXX year plan. overperformed So XXXX of we was for clearly an significantly where on that underperforming our and a

comments wage earlier, stores we've increases, So Michael increases that's news reset mitigate expect on driving centers. been we by freight, we've while then more within for mentioned side. dramatic easing able our and my seen our improvement the And the not that other will XXXX, baseline at fully efficiencies. levels. And earlier ocean sides on to target those distribution both in we both but on good stores

Barbara Rentler

-- company. our the terms customers But that spend. value buying, because And know that the our what is inflationary of best possible. that much we And spend at driving you we're is that in marketplace. on know a highly in possible giving under her -- the so we depends the merchandise way I Michael, of way discretionary enough, lot such her is really on pressures then on doing on the we're our customer very and looking there's mix now emphasize across out are really we're so and value really value best and impacting that definitely can't the I this broad-based can buys, it focused

a And how it's values about buys that so and she making best about and our are that that, that store. we're correct and to good, that's feels she compelling better, we really have thinking what sure strategy that to come great the really

And the come can point to us. a of AUR is there would take we brands good, opening really so have down expect that value since best is strategy. on strategy not get better, us It so AUR based price those that really from the that she direct it out path she's

Michael Binetti

to stands what to Barb, some compete to that early biggest better, to an above the year? see is this there you how flat, drive that if a that after I the maybe go year help the -- with it's opportunity out comp you chase on are ability question to think about in could from you opportunities anything share market

Barbara Rentler

well, a -- think things. few I there's think I

assortments. internal year within issues, had last our Just our own obviously, internally, we

last important think a I now mix share, Based and perspective. first probably drive we issues would able is should foremost, we customers. Then issues a getting what that of strategy outside chase, So the history of the merchandise in corrected in us and market, values the is, now off right again, there's is pricing that's us is sales that is and market correcting everyone we're tell whether and just X to wrong is of what that better, that the where balance those things all and carrier boxes our do And from really any take since we and to went and big we and the come there which -- offering it's time really understanding is then our customer execute or rightsizing which if merchandising hitting that a market bucket share. from can lot you now. as game in know, of best, be year, everyone

So really kind for market. the in from correct and a our last straight that's I us value the customer of is that think formula closeouts get to deal those maximizing great so to the getting our issues year

And we team. a listen, have merchant remember, very large

We merchants. have XXX

And and the so strong -- relationships market. in

is that gain to to we'll on and those on think want come customer and us to to from we the on do then the I we get to track ourselves us for give ourselves share. expect time and get maximize be grow market really So to the continue she's what and things, And now set. if

Operator

Instructions] Stanley. the next comes [Operator Straton line question Our Alex with of from Morgan

Alexandra Straton

is seeing levers but have year? you headwinds top returning line growth ways hear. this typical specific examples do to some earnings would freight exploring kind offset but offset mentioned you pre-COVID algorithm? that Maybe levers efficiencies, are helpful or that is -- some be algorithm, to underperforming the differently, broadly while the to like sounds and sales you know to wage there It of I and margin put recovery you're key any COGS what to SG&A of in

Michael Hartshorn

Sure.

You'll about one capital and spend we're this included there biggest see of year, in that the $XXX have increases technology we million investments our that in are making.

room in be of facing can mark technology they associates how providing activities instance, examples how at some and be receive efficient stores, and would in distribution the back customer our activities. on all goods, centers. our looking for store making in automation sure down those we continue would level our to associates have that And more make to focusing of It and

So have the those we have over to P&L. continue drive an are the efficiencies as as have of road will And we work a a -- of examples. few that on organization map into those years, and

Operator

with next question Boruchow the of from Fargo. comes line And Ike the Wells

Jesse Sobelson

at to This on Jesse Ike. tailwind Sobelson for a environment quarter, beginning believe guys. turn the year's first I of into buying for you the beginning is last just was

So how versus the look time this then versus ago? and does X months year maybe today last environment

Barbara Rentler

now lot types a all different environment very is broad-based. I merchandise. across buying The good. mean and of classifications Sure. It's right products. of very there's It's

in good last differently upon has So would though say year, of environment the been product it probably the is really the carrier at when people as back in, there, it late that kind now. timed and gets -- the buying their So of in. way depending as control receiving was few right? beginning right environment issue, kind because for of months the last all what couldn't vendors it came going goods perhaps came just freight to that, everyone I started the and were of type was

this of vendor of stores get through here year. has a newness in-store, it's would the in for merchandise promoting been they'd in move their a I lot next think take to but while. have forward like to the So community point inventories at to to and still that time, a lot line them

very I it's think now. I So think it's good

understand a and coming think the that having the good, good position take kind of felt opposed that at and carrier from same and they that for trying result vendors everybody it kind that the issues like to and what understand a time. been of forward looks as inventory to go I as are work want it's what to will think be I then while through

So...

Operator

line next of from the Yih the comes with And question Adrienne Barclays.

Adrienne Yih-Tennant

Great.

run know but duration. think, that's Barbara, do just super rate $XXX sort still more or fair it you. conducive, is you of stay maybe And issue kind What week? want sales kind shorter would million First, a packaway of environment the to to just a $XXX then X-month Is I And timing. XXrd I with know on the use this not up thinking in housekeeping. I And for to packaway I'm that short it norm. XX% ended at is have for that guys below or you of less if the because whatever million

then for And shrink. one is last the

I do where shrink once a sales but a is normal percent to a think you it what year, today? as Sorry in it backdrop, of interrupt.

Barbara Rentler

Okay. No problem.

favorable access quite what key to really, packaway be you right? what buying you lot broad some frankly, want, environment put there, feel in that So the to time there packaway that have a the this is late XX%, like. feel you're we all art, good feel we and looks the good about. have it's overall deals about time and And home that along, And buy you in being you'll in very very, brands, at values. remember now, of that right But were go packaway very our to you year, of packaway. of as can we that The part beginning and which that last had about. And would those that see goods now, great the we put DCs, you very really buying with packaway packaway product our took have is going into XX% judicious you with an you increased right in we have how goods very great we to

feel say we about position in I'd good the today. we're So

amount and really tremendous of like a place. good in we're have we We feel liquidity a

Michael Hartshorn

Adrienne, on shrink.

where or whether equipment tags in don't our is security disclose but invest, it constantly what So it we a strength, no we externally, stores. it's the place is

stores, front of year. higher in our as slightly store we in been you've closed this have we see was If shrink the out people the our and you year

Adam Orvos

Adrienne... And

Barbara Rentler

go ahead. Yes,

Adam Orvos

I was the to jump in week. on XXrd just going Well,

So than a you said. what higher little bit

an somewhat week. lighter additional call rata, and think but can average it bit week that February January, little about a You as it, pro week, calibrated then downward than in an it's,

Operator

And next with comes Chuck line the the Grom from Gordon question of Haskett.

Charles Grom

demographic Curious that lower in be in performed talk and stores a about for better higher second store next last. guys month cuts tax much markets. SNAP could this if a income potential a and months. refunds demographic couple of markets there's you follow-up, And Curious of how of headwind lot next over year the versus lower

Michael Hartshorn

Yes, we'll have to see.

that dd's how refunds, does they especially our into just have business, for an the tax come have out and that but the see tax We refunds where we'll out. it, to impact, lower. started we're be plays week, to On coming last could certainly

this in across see tax impacted by to customer different and income demographics. asked answered I certainly, SNAP a have think a be shift that material both can plays question out. we spending it demographics. But we'll not So that is I you On refunds the question, how the think with I other around earlier benefits. Paul, And your have seen a

Operator

line the Sachs. Roach with from of comes question next Goldman the Brooke And

Brooke Roach

to like still value that bit the you that you're you offer buying the can that sounds you quarter? market share to that's looking ensure you you optimize that you can opportunities consumer that continue to and actions value? it take with Barbara, after of about see a that rightsize talk available that to to And contextualize the Can little that value. saw to the offering team that rate your also markdowns you're in more the higher go

Barbara Rentler

marketplace, in out lot the there's buyers really are Sure. the Well, merchandise great obviously, of deals. for when a looking

offering value starts to the the with getting the then deals and that prices good really customer. that the it the and wants being market, at customer So relationships having in

what's it's than bargains. And been So think I the important think world critical today. on that's before. I today us for delivering in it's going critical even branded It's for always been more

just as value. of terms the In -- rightsizing just a concept the rightsizing value of

question? telling the off and put in. that's and think the retail it's Brooke, customer that whether based -- adjustments it's things or things second assortment watching that it of turn, want what us, from really watching whether we she's out the in things and was vote making the what products And I then watching the in putting there the she

Brooke Roach

question does just line sounds from how was second perspective. require of think the those getting a some making It markdown. The markdown time that like about adjustments to

markdown the you does so as And through have increase move year-on-year to XXXX?

Barbara Rentler

-- took okay, We I understood.

wait, somewhat slightly markdowns really fourth the value were took out that we they quarter. were in of that higher, took somewhat somewhat we much right, we made fourth everything. if And higher we took wasn't quarter clean they they of And came we markdowns, everything came weren't we the the So higher. didn't that out that sure when we higher,

you're taking receipts, The rightsizing markdowns. your if which sales. be additional And key so drives to is going values wouldn't expect to forward, you drive

if values which which we'll So position. sales, drive will put return the enough, we right healthy us have quick and a will in drive receipts,

Operator

And question line comes from of next the Telsey Dana with our the Group. Telsey

Dana Telsey

real Party about for you the or of locations And outlook? openings you? your store we in space Bed opportunity from or some XXXX it of the As portfolio in obviously Bath about availabilities all heard regions or does the the for change XXXX City. this think a stores, cadence the have either estate an Is the or

Michael Hartshorn

point, I our City, been Bath, bankruptcies Bed and certainly, store Party like historically, it opportunities retail new any they us say at outlook. provided that's would have changed this Beyond there's hasn't locations. Dana, time for

locations, in commentary, can But if about about new site And XXX certainly it's Ross potential XXXX, portfolio. it new we Ross to we dd's. basis. said We will for it's store-by-store and we on think XX the XX as we think location, review dd's appropriate and about add our a as

Dana Telsey

as Barbara, the Got mix, category through what do it. as go opportunities just what And on weakest? on the was side then, we category the XXXX? you see And

Barbara Rentler

much are we a good, I the home I from If was year very performed shoes obviously, shoes The carrier look mean same things gifting at helped year. I level. which issues, to business X-year mean, some good. and was basis, this also some very pretty drive at better. the had before sales us

things key get with I didn't the our and the with carrier balance mix think we went is in customer on have the year to assortments, the think last I the that what some And wants. issues that. that category to of

allows that products are just with ensure to we as to she's assortment what So think wants, quick we're and lot the the when these that, do sometimes make to there's her on goods really some I to things in more of be sure enough, oftentimes, advantage able it's towards target now making fast being bolder and moving moves. continue enough things evolve it those the identifying and moves in making making she marketplace, that you of move delivering a

would exactly broader we went right? not been way I about saying fine-tuning in thinking getting I'm that But -- the what were career now more it. I'm talking pants casual, if versus that's ago, we have and even then if want and people more with how thinking to kind be just we our wasn't So all line to delivery issues wanted It this things inventories thinking carriers the them else, classifications think we like about that few -- just balanced. to a on I'm and everything that them be were and of there. months would about it

back then ourselves where be. in making position a inventory and year an the our with customer buy that's come clean from made think we into we wants in fourth thing market sees giving the to go ourselves moves is and the I the number to And in those So to getting quarter into it. and ourselves it it the going repositioned of sure want getting hand-in-hand the again then lot line. We and way flexibility clean -- X

Operator

from BMO comes Siegel question the line Capital next of with our Simeon And Markets.

Simeon Siegel

maybe? like driven mix look dumb like-for-like versus Could AUR AUR And you a discuss shift question. what then

interest impact I in expecting think I nice a large And well. as a Is it the rates? think And strategy? does higher all if pretty you're quarter. cash return your came with jump capital is, that cash nice any just how pieces? income year or a this given thoughts maybe just the heard of higher on number moving this I of And your nicely use function correctly, balance broader

Michael Hartshorn

income Sure. cash securities. in balances. The by That's interest is entirely our driven government-backed invested

risen, a have benefit there. rates interest we're as getting So

as of do, invest in we're we to first terms guess growth. In cash, allocation, the just business I support how of and we about general will, use capital profitable thinking always

shareholder mature tranches those then 'XX first over And as reliable as payouts also few do pay we manner time, the debt COVID-related over very that 'XX deliberate the to a in and and grows, over that We our business we'd years in said, grow when deliberately mature. plan I to to expect next begins time. down as and

Barbara Rentler

our been of in has our the terms all then AUR different shifts AUR, And business. the relatively flat despite parts and moving in

coming than valuing businesses. of a shoes because of obviously, products higher other or our areas other up AUR differently has that some differently some So from some businesses comes in

where we're how thinking stand it. So about that's really we today,

Operator

comes And our of the UBS. Sole question line next with Jay from

Jay Sole

elaborate if that just year. be mentioned first wages impact store this like, at a a of about quarter some on corporate level the the warehousing you're what versus would of can a wondering Great. at little the the higher a that in you helpful. talk EBIT versus seeing Can you on the I'm margin bit you level driver level, as say,

Michael Hartshorn

those all mean had some increasing we I been staffing market-by-market continue the appropriate. to approach seen for item biggest down there we pressure line a stores, we've X during for take the slow that center, was to pressure it's them in Sure. considerably. we COVID competitive and wages across saw a of and where What the market the is And time. distribution

overall, In wages addition, wages. driven wages the confident I there's feel -- the of minimum by what local half are about about in those we totality us for increases. store know, minimum point at our includes year. would we in as in workforce have and and this minimum statutory say good you place wage that for almost base, statewide it's really But municipality and both growing

Operator

comes with next from line Laura Capital. our question the Champine Loop of And

Laura Champine

are one, you first guide? line Crossing but you'll this currently with trending my your in fingers, quarter answer

Michael Hartshorn

We wouldn't.

is, practice inter-quarter Our not on to trends. Laura, comment

Laura Champine

full year this comp Is roughly the year? the would for guidance Understood. flat traffic to flat that assume that be is

Michael Hartshorn

again, we the -- plan transaction. around traffic don't or business We

that the over the one, store. top that is What's be the to customers of a has the basket. store, bringing always the to year of, to grown has bargains the increasing size customer basket stimulus provide average the of store will the view years more been if great the the customer, Our in year, coming last when into even more branded buying and combination we several and happened two, they're last they're on is when

Laura Champine

this can year? one. this year The me this year markdowns -- margin, gross last whole gross compared that last made, to as I the consistent Let the see is taking if you've and is get a with for margin commentary that more

Adam Orvos

our merchandise that the but be markdown dependent merchandise be we're will Laura, goods. by of component in freight that level reductions at on biggest ocean and seeing part if we levels marketplace. the guide margin, we will in The don't margin sales highly moving obviously, we our really cost said, deliver plan the as right

Operator

question comes line of Bernstein. And with our next Aneesha Sherman from the

Aneesha Sherman

X% algo? you beyond structural in the is algo decelerate stack which historical little Or full year? kind So the comps lower for CAGR guidance comp the even believe you higher around the of something XX still implies of a of think X%, bit -- being that year a do a just Are performance. about pre-COVID your quite over bit there that than X-year a comp will term, is this medium you the than still

with past? margins has in embedded you've sensitivity wages that talked And higher about sensitivity but comp, talked the changed? it of your about is structure, a the still now then, Michael, sensitivity you Or similar cost what to into as

Michael Hartshorn

environment. to the comment on Aneesha, on hard it's in guidance, structural this

year, conservative we that year. very us how plays blasting a we'll in really see inflationary in out of to the later function economy environment a macro that wanting and the As a guide be it's

in read So uncertain we I to this Obviously, hope way beat at don't think into to there's the that environment. good to We a it's business think an anything point. guidance. run our

the of the then COVID is XX beat a historically as that as points X% to can earlier, we said comp we'll to upside. the I we be we doesn't certainly longer leverage to prior it to grow algorithm, comp term, P&L. basis terms long-term change that And did if think XX to In X% able

Operator

final line Tarlowe And Corey Jefferies. comes the from with of our question

Corey Tarlowe

better? across I your you're few what million do there coming you're maybe so CapEx. better year out way maybe You did Is had availability it X mentioned then you're within just best any as and now a know those better, but in that this times. to And or around, Historically, think, availability. think or strategy, year, expecting casual, pretty robust, particular another parse well seeing $XXX is shoes usually bit I whether then a lastly, well, done there any good, was segment And million. formal in $XXX is CapEx. that's on to little in this like $XXX And quite I million in

curious what just a know the is really maybe incremental is out I you could what there. in little So else going there be? but bit parse to about you talked spend automation, just

Barbara Rentler

with shoes. So let start me

So that again, the remember athletic would industry shoes delivering, than XXXX brand issues better the shoe whole is had but based. that with issue. say in carrier broad the business, I shoe the business pretty we performed shoes, slightly

demands first customers' pretty is and thing. want brands broad-based the other that to wear. shoes meeting it So That's they athletic, not just but

buckets. best, the in pretty In availability better, is good, broad-based a terms of X all

is little that's So but on -- going unusual, at a this of out that what there right moment. I kind think that's

Adam Orvos

CapEx. on Corey, And

in and but plan distribution building store as customer with technology convenience XX% the line, inflated our $XXX I those the XX% technology to ramp the as support are bit new long-term stores, distribution we're about And a of other new So centers from capabilities investments. merchandising and a existing opening investments XXX consistent roughly tools additional side levels little that's and say from standpoint, we will million capacity ramp-up making probably a then would stores, in not with in only a also levels growth organization. stores, standpoint up new is the our and be XX% mix our pre-pandemic --

Operator

session. the question-and-answer to And I over Rentler Barbara at would And this the of time, now to back we call end like have remarks. closing reached for the turn

Barbara Rentler

and today in us joining Stores. for interest Ross Thanks your

Operator

That conference. concludes our

Thank your disconnect participation, you great your at a lines time. may You this and day. for have

Ross Stores (ROST) 28 Feb 232023 Q4 Earnings call transcript