Operator: Good morning and welcome to the Ross Stores' First Quarter 2011 Earnings Release Conference Call. The call will begin with prepared comments by management followed by a question-and-answer session. All lines have been placed on mute to prevent any background noise.
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, 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 expectation. Risk factors are included in today’s press release and the Company's fiscal 2010 Form 10-K and 2011 Form 8-Ks on file with the SEC.
Now, I would like to turn the call over to Mr. Michael Balmuth, Vice Chairman and Chief Executive Officer.
Michael Balmuth - VC and CEO: Good morning. Thank you for joining us today. Also on our call are Norman Ferber, Chairman of the Board; Michael O'Sullivan, President and Chief Operating Officer; Gary Cribb, Executive Vice President, Stores and Loss Prevention; John Call, Senior Vice President and Chief Financial Officer; and Bobbi Chaville, Senior Director of Investor Relations.
We'll begin with a review of our first quarter performance, followed by our outlook for the second quarter and fiscal year. Afterwards, we'll be happy to respond to any questions you may have.
Today, we reported first quarter earnings per share of $1.48 up from a $1.16 per share for the 2010 first quarter. These results represent a robust 28% increase on top of an exceptional 61% gain in the prior year. Net earnings for the current year quarter grew 22% to $173 million up from a $142.3 million last year.
Our 2011 first quarter sales increased 7% to $2.075 billion with comparable store sales up 3% on top of an outstanding 10% gain in the prior year.
Both sales and earnings in the first quarter were better than expected, with solid gains on top of very tough prior year comparisons. These results were mainly driven by our ongoing ability to deliver a wide array of compelling name-brand bargains to today's value-focused customers, while operating our business on leaner in-store inventories.
Dresses, Shoes and Home were the top performing merchandise categories with same store sales gains in the mid single to low double digit percentage range while Florida and Texas were the strongest regions also posting high single to low double digit increases in comparable store sales.
Operating margin grew about 160 basis points to a record 13.7% due to a 130 basis point increase in gross margin and a 30 basis point improvement in selling, general and administrative cost as a percent of sales. John will provide some additional details in a few minutes.
As we entered the first quarter total consolidated inventories were up 29%. This increase was driven by higher packaway that was 48% of total inventories, up from 33% at this time last year as our buyers continued to find great deals in the marketplace.