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Ross Stores, Inc. (NASDAQ:ROST)
Q1 2018 Earnings Conference Call
May 24, 2018, 4:15 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good afternoon and welcome to the Ross Stores First Quarter 2018 Earnings Release Conference Call. The call will begin with prepared comments by management followed by a question-and-answer session. If you would like to ask a question during this time, press "*1" on your telephone keypad. If you would like to withdraw your question, press "#".

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 forecasts 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 2017 Form 10-K and fiscal 2018 Form 8-K on file with the SEC.

Now I'd like to turn the call over to Barbara Rentler, Chief Executive Officer.

Barbara Rentler -- Chief Executive Officer

Good afternoon. Joining me on our call today are Michael O'Sullivan, President and Chief Operating Officer, Gary Cribb, Group Executive Vice President, Stores and Loss Prevention, John Call, Executive Vice President, Finance and Legal, Michael Hartshorn, Executive Vice President and Chief Financial Officer, and Connie Kao, Vice President of Investor Relations.

We'll begin our call today 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.

As noted in today's press release, despite unfavorable weather throughout the period, we achieved above planned growth in both sales and earnings in the first quarter. Earnings per share for the 13 weeks ended May 5, 2018 were $1.11, up from $0.82 for the 13 weeks ended April 29, 2017. Net earnings were $418 million, up from $321 million in the prior year.

These earnings per share results include a $0.17 per share benefit from recently enacted tax legislation and a $0.02 per share benefit from the favorable timing of packaway related costs that we expect to reverse in subsequent quarters.

Total sales for the quarter increased 9% to #3.6 billion. Comparable store sales for the 13 weeks ended May 5, 2018 rose 3% over the 13-week period ended May 6, 2017. This growth compares to a same-store sales gain of 3% for the 13 weeks ended April 29, 2017. We estimate that unfavorable weather throughout the quarter reduced our comparable store sales by over 1%. For the first quarter, the strongest merchandise category at Ross was men's while geographic trends were very broad-based when normalized for weather.

Operating margin for the period of 15.1% was down slightly from the prior year, as an improvement in merchandise growth margin and favorable timing of packaway related expenses were offset by higher freight costs and wage-related investments.

As we ended the first quarter, total consolidated inventories were up 19% over the prior year, mainly due to higher packaway levels as our buyers were able to take advantage of numerous opportunities in the marketplace. Average in-store inventories were up 2% as planned due to an earlier Mother's Day this year, while packaway, as a percentage of total inventories, was 49% compared to 46% last year.

We are also pleased to report that dd's DISCOUNTS delivered another quarter of solid growth in sales and operating profits. Our store expansion program is on schedule with the addition of 23 new Ross and six dd's DISCOUNTS locations in the first quarter. We remain on track to open a total of approximately 100 locations in 2018, comprised of 75 Ross and 25 dd's DISCOUNTS. As usual, these numbers do not reflect our plans to close or relocate about ten older stores.

Now Michael Hartshorn will provide further color on our first quarter results and details on our second quarter guidance.

Michael Hartshorn -- Group Senior Vice President and Chief Financial Officer

Thank you, Barbara. Let's start with our first quarter results. Our 3% comparable store sales gain was driven by higher traffic and an increase in the size of the average basket. First quarter operating margin of 15.1% was down 5 basis points from last year.

The cost of goods sold improved 20 basis points in the quarter, driven by 30 basis points of higher merchandise margin and distribution costs that declined by 15 basis points, mainly due to the previously mentioned favorable timing of packaway related expenses. Occupancy also levered by 15 basis points. These gains were partially offset by a 20 basis point increase in freight costs and 20 basis points in higher buying expenses. Selling, general, and administrative expenses for the period increased 25 points, mainly due to higher wage-related costs.

During the first quarter, we repurchased 3.3 million shares of common stock for a total purchase price of $255 million. We remain on track to buy back a total of $1.075 billion in stock for the year.

Let's turn now to our second quarter guidance. For the 13 weeks ending August 4, 2018, we are forecasting same store sales to increase 1% to 2% over the 13 weeks ended August 5, 2017. Earnings per share for the second quarter are projected to be in the range of $0.95 to $0.99, which includes the benefit from lower taxes. The operating statement assumptions for our second quarter guidance include the following: total sales are projected to grow 5% to 6%; we expect to open 30 new stores during the period, including 22 Ross and 8 dd's DISCOUNTS locations.

If same store sales are in line with our guidance, then we project operating margin to be in the range of 13.3% to 13.5%. The forecasted decline from last year's 14.9% reflects the unfavorable timing of packaway related costs as well as our previously announced wage and benefit investments. We expect net interest income of about $900,000.00, our tax rate is expected to be approximately 24% to 25%, and weighted average diluted shares outstanding are projected to be about 375 million.

Based on our first quarter results and second quarter guidance, we now project earnings per share for the 52 weeks ending February 2, 2019 to be in the range of $3.92 to $4.05, compared to $3.55 for the 53 weeks ended February 3, 2018. As a reminder, our fiscal 2018 guidance includes the benefit from lower taxes. In addition, last year's 53rd week added approximately $0.10 to earnings per share for 2017.

Now I'll turn the call back to Barbara for closing comments.

Barbara Rentler -- Chief Executive Officer

Thank you, Michael. To sum up, despite unfavorable weather throughout the period, both first quarter sales and earnings per share outperformed our plan. Looking ahead, we expect the retail landscape, both brick-and-mortar and online, to remain very competitive throughout 2018. In addition, we face robust, multi-year sales comparisons as the year progresses. That said, we remain confident in the strength of the off-price sector and our ongoing ability to perform well in this space. Our focus will remain on offering customers the outstanding values they have come to expect, which has allowed us to achieve profitable growth in sales, earnings, and market share over time.

At this point, we'd like to open up the call and respond to any questions you might have.

Questions and Answers:

Operator

At this time, I would like to remind everyone, in order to ask a question, press "*1" on your telephone keypad. We'll pause for just a moment to compile the Q&A roster. In order to allow everyone time for questions, we ask that you please limit yourself to one question each.

Your first question comes from the line of Matthew Boss from JP Morgan. Go ahead please. Your line is open.

Matthew Boss -- JP Morgan -- Analyst

Great. Thanks. On gross margin, can you speak to drivers of the 30 basis points in merchandise margin in the first quarter? Any change in freight? And then just larger picture, if we look through tax reform this year, I guess has anything changed with your double-digit bottom line algorithm if you are able to drive the 3% to 4% comps?

Michael Hartshorn -- Group Senior Vice President and Chief Financial Officer

Sure. So, Matt, it's Michael Hartshorn. Let me answer those in pieces. On merchandise margin, as we mentioned in the comments, those were up 30 basis points in Q1. That was driven by better buying. In addition, we benefited from a very clean inventory position entering the quarter.

In terms of freight cost, freight has been a headwind for over a year. Our outlook has not changed. A number of factors are contributing to the increase. Like others, we have seen significant increases in market rates due to very tight capacity. This capacity seems to be driven by driver shortages, impacts of increased regulation, and perhaps a stronger economy. In addition, diesel fuel costs were up about 20% from last year in the quarter. So we expect freight to be a headwind for the remainder of the year and that is reflected in our guidance.

On your last question, certainly this year reflects the benefit of tax reform. Our current guidance reflects a 10% to 14% EPS growth that includes about a $0.69 benefit from tax reform. Going behind this year, there's nothing that's changed our long-term model.

Matthew Boss -- JP Morgan -- Analyst

Great. Best of luck. I'll see you next week.

Operator

Your next question comes from the line of Brian Tunick from RBC. Go ahead please. Your line is open.

Brian Tunick -- RBC -- Analyst

Great. Thanks. Good afternoon. I guess curious, as we sat here on the Northeast with all the Nor'easters, to hear you guys talk about unfavorable weather, can you maybe give us a little more clarity on what markets? Was it just year-over-year in some of your key markets? Just give us a little more color on the weather issues. And then curious on the packaway inventory growth, if you can give us a better sense of maybe what categories or just a "good, better, best" situation. Just give us a better feel for the packaway inventory growth. Thank you very much.

Michael O'Sullivan -- President and Chief Operating Officer

Sure, Brian. On weather, as we said in our remarks, we estimate the impact to overall chain was over 1%. For us, every major region actually had negative weather comparisons during the quarter with one exception, I'd say. That was the Pacific Northwest. So the areas, as you can imagine, that were impacted the most included the Mid-Atlantic and also the Midwest.

Barbara Rentler -- Chief Executive Officer

And then as it pertains to packaway, what I would say to you is that there's an abundance of merchandise in the marketplace. So we were able to take advantage of those opportunities. And they're pretty broad-based in terms of different types of products. So it isn't just one classification. And I think the merchants have been out there in the market looking to see what's available and felt that the timing was right to buy those goods, as that's a big part of their job.

Brian Tunick -- RBC -- Analyst

And will there be any implications for the back half regarding packaway or distribution expenses?

Michael Hartshorn -- Group Senior Vice President and Chief Financial Officer

In terms of distribution expenses, so we had a $0.02 benefit in the first quarter based on how we capitalized packaway costs and we'd expect that to reverse and be a negative impact over the remainder of the year.

Brian Tunick -- RBC -- Analyst

Great. Thanks very much and good luck.

Operator

Your next question comes from the line of Lorraine Hutchinson from Bank of America. Go ahead please. Your line is open.

Lorraine Hutchinson -- Bank of America Merrill Lynch -- Analyst

Thank you. Good afternoon. Can you talk a little bit about the composition of the comp? How much of that was traffic versus basket and what drove the basket increase?

Michael Hartshorn -- Group Senior Vice President and Chief Financial Officer

Sure, Lorraine. As we mentioned in our prepared remarks, the 3% comp was driven by higher traffic and an increase in the size of the average basket. The higher basket was primarily driven by higher units per transaction. With AUR, it was down slightly, and the decrease in AUR was driven by mix of business.

Lorraine Hutchinson -- Bank of America Merrill Lynch -- Analyst

Thank you.

Operator

Your next question comes from the line of Kimberly Greenberger from Morgan Stanley. Go ahead please. Your line is open.

Kimberly Greenberger -- Morgan Stanley -- Analyst

Great. Thank you so much. I wanted to just ask about the SG&A leverage. 25 basis points. Obviously I think your guidance this year includes some ongoing deleverage. Is there any guidance you have sort of, on a quarter by quarter basis, how we should think about that? And then I just wanted to follow up on the weather question. Could we assume that you're seeing some pick-up here in May, assuming that weather has normalized, so far here in Q2? Thanks so much.

Michael Hartshorn -- Group Senior Vice President and Chief Financial Officer

Sure, Kimberly. On SG&A, the 25 basis point increase reflects a couple different things. It's the lapping of market-based increase, the wage increases we made last year, as well as the impact of statutory increases that included California increasing to $11.00 in January. It also includes a piece of wage investments that we're making this year. Our guidance for the remainder of the year would include further deleverage as the year progresses as a result of the associate investments we announced at the beginning of the year, which includes going to $11.00 throughout the company, payment of one-time bonuses, and also improvements to our paid leave programs.

And then in terms of weather beyond the quarter, our practice is not to comment about post-quarter trends.

Kimberly Greenberger -- Morgan Stanley -- Analyst

Okay. Thank you.

Operator

Your next question comes from the line of Ike Boruchow from Wells Fargo. Go ahead please. Your line is open.

Ike Boruchow -- Wells Fargo -- Analyst

Hi. Good afternoon, everyone. I'm not sure who wants to take this question but you guys have talked a little bit over the past couple quarters around the beauty category becoming more of an opportunity for you to buy into. Any updates there on that category, specifically to Q1? And then just updated thoughts as you move forward?

Barbara Rentler -- Chief Executive Officer

Sure. The beauty category has been a growing category for everyone as the market has shifted around a lot. We feel good about the beauty category and ourselves, as well as many other people in the industry, feel that it's an opportunity as the market itself is shifting from department stores to other sectors.

Ike Boruchow -- Wells Fargo -- Analyst

Thanks.

Operator

Your next question comes from the line of Paul Trussell from Deutsche Bank. Go ahead please. Your line is open.

Paul Trussell -- Deutsche Bank -- Analyst

Good afternoon. Thanks for taking our question. Just on the second quarter guidance, I believe you outline EBIT rates in the 13.3% to 13.5% range or so, down 140, 150 basis points or so at the midpoint year-over-year. Can you just kind of rank or quantify for us to what extent that contraction is wages versus freight versus the packaway expenses in Q2 and any other puts and takes we should be mindful of?

Michael Hartshorn -- Group Senior Vice President and Chief Financial Officer

Sure. On the components, we wouldn't break down the specific levels but I will repeat, I think what you just said is there's three main drivers. Most importantly, the wage and benefit investments. A portion of those will happen in the second quarter so actually the deleverage will increase as we progress through the year. So that's the first main impact in the second quarter. It also includes, as we mentioned, the negative impact of timing of packaway related costs and freight will continue to be a headwind for us.

Paul Trussell -- Deutsche Bank -- Analyst

Okay. Thank you. Best of luck.

Operator

Your next question comes from the line of Paul Lejuez from Citigroup. Go ahead please. Your line is open.

Paul Lejuez -- Citigroup -- Analyst

Hey, thanks, guys. Going back to the traffic versus ticket question. I'm curious if you saw any difference in the Ross business versus dd's on those metrics. And then secondly, I'm also curious if you track how your performance is at centers where you're co-located with another off-pricer. If you could maybe share how those stores of yours are performing in the co-located locations with a TJ concept or Burlington versus those that are in a separate center. Thanks.

Michael Hartshorn -- Group Senior Vice President and Chief Financial Officer

Sure, Paul. I would say that dd's and Ross, they were proportional in terms of mix of transaction, AUR, traffic, etc. We co-locate in about a third of our chain with either TJ Maxx, Marshalls, or Burlington and those stores perform in line with the rest of the chain.

Paul Lejuez -- Citigroup -- Analyst

Thanks. Any comment on home versus apparel during the quarter?

Michael Hartshorn -- Group Senior Vice President and Chief Financial Officer

Overall, non-apparel was slightly above apparel given the weather.

Paul Lejuez -- Citigroup -- Analyst

Got you. Thanks. Good luck, guys.

Operator

Your next question comes from the line of Oliver Chen from Cowen & Company. Go ahead please. Your line is open.

Oliver Chen -- Cowen & Company -- Analyst

Hi. On the gross margin line, the buying expenses, do you expect that trend to continue and what was underlying some of that? Also, as you think ahead, particularly in all the opportunities available in non-apparel businesses such as home, what are your thoughts about the opportunity you have ahead and how you can seek to maximize your store space as you look at different, new opportunities where customers still love value in other categories? Thank you.

Michael Hartshorn -- Group Senior Vice President and Chief Financial Officer

Oliver, on buying, expenses can fluctuate quarter to quarter. In the first quarter, there was some, I'd say, negative timing impact but it also reflects mainly that we're going to continue to make ongoing investments in our buying organization.

Barbara Rentler -- Chief Executive Officer

And as it pertains to opportunities in non-apparel areas such as home, actually, Oliver, we think that our opportunities are very broad-based, in addition to home, in the entire box. So in terms of maximizing space in the stores, we really decide what businesses we want to drive and then we figure out how it fits within the box.

Oliver Chen -- Cowen & Company -- Analyst

Got it. So which businesses do you want to drive?

Barbara Rentler -- Chief Executive Officer

I think on this call I really wouldn't be saying which businesses we want to drive. I would just leave it with it's broad-based. It's not just focused on one area.

Oliver Chen -- Cowen & Company -- Analyst

Okay. Thank you. Got it. Best regards.

Operator

Your next question comes from the line of Marni Shapiro from Retail Tracker. Go ahead please. Your line is open.

Marni Shapiro -- Retail Tracker -- Analyst

Hey, guys. I had a quick question about the sizes business. Historically, this has always been a business you guys have done well with and you've had in your stores forever. There's quite a buzz around the business right now. So I'm curious just how it's done for you. Are you finding availabilities starting to be more plentiful or easier to find? And what's your thinking strategically about the business?

Barbara Rentler -- Chief Executive Officer

Sizes business, Marni. You mean like women's special sizes? Petites and women's also?

Marni Shapiro -- Retail Tracker -- Analyst

Exactly. And even on the men's side. The Big & Tall business on the men's side as well.

Barbara Rentler -- Chief Executive Officer

Sure. Listen, women's world or plus sizes in the United States is a total growing business. So I would think in apparel, it's certainly an opportunity. In terms of availability, right now there's just a lot of availability pretty much in most classifications of products. So supply is pretty plentiful. It's very broad-based with supply. So from that perspective, there would be merchandise out there. In terms of opportunity, we grow as the customer base, off of what the customer is telling us and those are the businesses we go after.

Marni Shapiro -- Retail Tracker -- Analyst

Fantastic. That's great. And is there any reason to believe that merchandise margins will be pressured? I know you have headwinds as far as wages and freight costs and things like that, but there is a lot of availability in merchandise. It seems like generally the environment, while competitive, isn't in fire sale mode. So is there any reason to believe that merchandise margins shouldn't be OK rest of year?

Michael Hartshorn -- Group Senior Vice President and Chief Financial Officer

Marni, our guidance assumes that merchandise margins are relatively flat for the remainder of the year.

Marni Shapiro -- Retail Tracker -- Analyst

Alright. Thanks, guys. Best of luck.

Operator

Your next question comes from the line of Laura Champine from Loop Capital. Go ahead please. Your line is open.

Laura Champine -- Loop Capital -- Analyst

Good afternoon. Just one more question on the weather. Can you break down sort of the methodology that you used to determine that it was about a 1% hit? How do you get there? Or greater than 1% hit.

Michael Hartshorn -- Group Senior Vice President and Chief Financial Officer

Sure. So we use weather services to do that. And also obviously storms are easier to calculate but that's our methodology.

Laura Champine -- Loop Capital -- Analyst

Any more detail?

Michael Hartshorn -- Group Senior Vice President and Chief Financial Officer

The only thing I would add, that includes both temperature and precipitation.

Laura Champine -- Loop Capital -- Analyst

Got it. Thank you.

Operator

Your next question comes from the line of Bob Drbul from Guggenheim Securities. Go ahead please. Your line is open.

Robert Drbul -- Guggenheim Securities -- Analyst

Hi. Good evening. Just two questions, I guess. The first one is on the current marketplace or the competitive store closures, is that providing additional opportunity for you to get product from different vendors? And I think the second question is, as you continue to expand stores, your store base, the ability to attract talent, whether it's managers or even the labor component and the associates within the stores, are you seeing any pressure there that you can talk to?

Michael O'Sullivan -- President and Chief Operating Officer

So, Bob, it's Michael O'Sullivan. First of all, in terms of the store closures, it's hard to tell what contribution that's having to availability. Availability is driven by a number of things. It's possible. Let me step back. I think the struggles that the rest of the retail industry is having certainly is helping to drive availability. On store closures specifically, it's hard to calibrate that particular component.

In terms of availability of labor, we're very happy with our ability to attract and retain people throughout all levels in the company.

Robert Drbul -- Guggenheim Securities -- Analyst

Great. Thank you very much.

Operator

Your next question comes from the line of Simeon Siegel from Nomura Instinet. Go ahead please. Your line is open.

Daniel Stroller -- Nomura Instinet -- Analyst

Hey, this is Dan Stroller on for Simeon. Thanks for taking our question. We just wanted to know if there's been any notable change, either recently or over the past several years, in what brands your shoppers are gravitating toward. Basically trying to figure out if your top-selling brands really turned over much and gone out of favor for new or up-and-coming brands. Thanks.

Barbara Rentler -- Chief Executive Officer

For competitive reasons, we really wouldn't talk about brands on the call.

Daniel Stroller -- Nomura Instinet -- Analyst

Okay. And then on the consumer base, anything you're seeing in terms of frequency of visits of existing shoppers or, I guess, customer acquisition? Any initiative there? That would be very helpful. Thanks.

Michael O'Sullivan -- President and Chief Operating Officer

Sure. We slice and dice our customer data all the time. We're often out there doing research and I would say there's nothing to call out in terms of any changes to consumer behavior or demographics or anything of that nature at this point.

Daniel Stroller -- Nomura Instinet -- Analyst

Got it. Thank you very much.

Operator

Your next question comes from the line of Michael Binetti from Credit Suisse. Go ahead please. Your line is open.

Michael Binetti -- Credit Suisse -- Analyst

Hey, guys. Good afternoon. Thanks for taking our questions here. Could you speak a little bit more to the change in AUR and the mix base delta there? I think a lot of the competitive set is speaking to positive AURs at this point, across both off-price and department stores frankly. So I'm wondering if there's some kind of category divergence that you guys are pursuing that's causing some puts and takes on your AUR and if you think that that continues to remain a headwind through this year? If you see some reason why the categories that you guys have in inventory, with the change in the inventory line, could take some pressure off on that line?

Michael Hartshorn -- Group Senior Vice President and Chief Financial Officer

Yeah. So I would say AUR obviously can change from quarter to quarter so it's not something that's, I would say, strategic. So as we look out for the rest of the year, it'll be based on category performance. So hard to say at this point. I'd say over the last couple of years, based on the categories that have done well, AUR has been down but just slightly.

Michael Binetti -- Credit Suisse -- Analyst

I was a little surprised that AUR was still a headwind in the first quarter. With the weather, maybe you didn't move into some of the categories in the spring that I thought would have been a little bit -- there would have been a little bit higher AUR in the comp. Was that a surprise to you at all or no?

Michael O'Sullivan -- President and Chief Operating Officer

Not really. I mean, our strategy, Michael, over a long period of time has been to be as sharply priced as possible to drive sales. And that's the approach we took in Q1, as we've historically taken. And based upon that, we're pretty happy with a 3% on top of the 3% comp that we got last year.

Michael Binetti -- Credit Suisse -- Analyst

Sure. Then can you just help us with one last one on the model. Any kind of calendar shift cadence that we should think to? I think in 2013 you said you had about a 1 percentage point benefit to sales in the first half, in sales, not comps, and then a 1 point drag in the second half. Is it a similar map this year that we should have in our models?

Michael Hartshorn -- Group Senior Vice President and Chief Financial Officer

Yeah, I would say it's similar. So to be clear, we reported on a restated basis. And you can see this in the difference between our total sales and our comp sales. So for the year, I think it's accurate that the first half has a larger negative impact than the second half. So, for us, the difference between restating that week and not is worth about 200 basis points in the first quarter.

Michael Binetti -- Credit Suisse -- Analyst

Alright. Thanks a lot.

Operator

Again, if you would like to ask a question, press "*1" on your telephone keypad. Your next question comes from the line of Jerry Merriman from Bernstein. Go ahead please. Your line is open.

Jamie Merriman -- Sanford C. Bernstein -- Analyst

Thanks. It's Jamie Merriman. My question is just about your marketing strategy. As you work on attracting younger consumers into the business, is that pivoting at all? And, if so, how? Thanks.

Michael O'Sullivan -- President and Chief Operating Officer

So, Jamie, I would say that our marketing approach, in terms of the types of media that we're using, has been evolving over time and will likely continue to evolve, obviously moving to less traditional forms of media. Some of that's still experimental. We'll see how those media perform. But I would expect that, over time, you're gonna see more of that shift for us, as indeed you'll see from other advertisers as well.

Jamie Merriman -- Sanford C. Bernstein -- Analyst

And have you found that that may be able to be a little bit more targeted and then therefore lower costs on an acquisition basis? Or is it too early to see benefits like that?

Michael O'Sullivan -- President and Chief Operating Officer

I think it depends on the market. It depends upon the individual type of media you're talking about and what exactly we're trying to do, in terms of who you're trying to target. So the answer can be yes, depending upon the situation, or it can be no, depending upon the situation. And that's kind of what I mean by saying that some of those channels are fairly experimental and that's why we're sort of evolving into them rather than making significant changes at this point.

Jamie Merriman -- Sanford C. Bernstein -- Analyst

Okay. Thanks very much.

Operator

There are no further telephone questions at this time. I will turn the call back over to the presenters. One did just pop in. Your next question comes from the line of Sandra Parker. I think she just removed herself again from the queue. Sorry.

Barbara Rentler -- Chief Executive Officer

Okay. Thank you for joining us today and for your interest in Ross Stores. Have a great day.

Operator

This concludes today's conference call. You may now disconnect.

Duration: 32 minutes

Call participants:

Barbara Rentler -- Chief Executive Officer

Michael Hartshorn -- Group Senior Vice President and Chief Financial Officer

Michael O'Sullivan -- President and Chief Operating Officer

Matthew Boss -- JP Morgan -- Analyst

Brian Tunick -- RBC -- Analyst

Lorraine Hutchinson -- Bank of America Merrill Lynch -- Analyst

Kimberly Greenberger -- Morgan Stanley -- Analyst

Ike Boruchow -- Wells Fargo -- Analyst

Paul Trussell -- Deutsche Bank -- Analyst

Paul Lejuez -- Citigroup -- Analyst

Oliver Chen -- Cowen & Company -- Analyst

Marni Shapiro -- Retail Tracker -- Analyst

Laura Champine -- Loop Capital -- Analyst

Robert Drbul -- Guggenheim Securities -- Analyst

Daniel Stroller -- Nomura Instinet -- Analyst

Michael Binetti -- Credit Suisse -- Analyst

Jamie Merriman -- Sanford C. Bernstein -- Analyst

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