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Ross Stores, Inc. ROST
Q1 2013 Earnings Call Transcript

Transcript Call Date 05/23/2013

Operator: Good afternoon, and welcome to the Ross Stores First Quarter 2013 Earnings Release Conference Call. The call will begin with prepared comments by management followed by a question-and-answer session.

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 the aspects of the 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 2012 Form 10-K and fiscal 2013 Form 8-Ks on file with the SEC.

I would now like to turn the call over to Michael O'Sullivan, President and Chief Operating Officer.

Michael B. O'Sullivan - President and COO: Good afternoon. Thank you for joining us. I will be presenting the prepared remarks today along with John Call, our group Senior Vice President and Chief Financial Officer. Michael Balmuth, our Vice Chairman and CEO is under the weather and cannot be with us this afternoon.

Also on the call are Norman Ferber, Chairman of the Board; Gary Cribb, Executive Vice President, Stores and Loss Prevention; Michael Hartshorn, Senior Vice President and Deputy CFO; and Connie Wong, Director of Investor Relations.

We will begin with a brief review of our first quarter performance followed by our outlook for the second quarter and fiscal year. Afterwards we will be happy to respond to any questions you may have.

As noted in today's press release, we're pleased with the slightly better than expected sales and earnings we delivered in the first quarter, especially considering this growth was achieved on top of strong prior year gains. These results continue to be driven by our ongoing ability to offer terrific bargains to today's value-oriented consumers.

Earnings per share for the 13 weeks ended May 4, 2013 were $1.07, a 15% increase on top of the 26% gain in the prior year. Net earnings for 2013 first quarter grew 12% to $234.6 million. First quarter sales rose 8% to $2.540 billion up from $2.357 billion in the first quarter of 2012.

Comparable store sales for the 13 weeks ended May 4, 2013 rose 3% over the 13 weeks ended May 5, 2012. This compared to a robust 9% same-store sales gain for the 13 weeks ended April 28, 2012. The strongest merchandise categories during the quarter were juniors and accessories while the best performing regions with the Pacific Northwest, Southwest and California.

Earnings before interest and taxes grew to a record 14.9% of sales, up from 14.4% in the first quarter of 2012. This increased level of profitability was mainly driven by higher merchandise gross margin and also benefited from favorable timing of expenses. John, will provide some additional color on these operating margin trends in a few minutes.

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