Ross Stores 2Q13 Earnings Call Notes

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. The quotes are generally pieces of information that I find interesting or helpful to understanding the company, industry or economy and are not meant to provide summaries of the full content of the call. Other posts in this series can be found by clicking here. Full transcripts can be found at Seeking Alpha.

“he 4% comparable store sales gain was mainly driven by growth in the size of the average basket. Operating margin grew about 80 basis points in the quarter to a record 13.6%”

“While we are pleased with our better-than-expected year-to-date results, we believe it is prudent to maintain a somewhat cautious outlook for the remainder of the year for a number of reasons. These include the ongoing uncertainty in the macroeconomic environment, our own challenging multi-year comparisons and the potential for a more promotional and competitive retail climate.”

“This is especially true for the fourth quarter, which has a compressed holiday selling period due to 6 fewer shopping days between Thanksgiving and Christmas this year.”

“As an off-price retailer, we have the flexibility to buy closer to need”

“We thought it was typically promotional, okay, not unusually rugged, okay, but fairly typical. I think coming out of the second quarter, where all the major department stores and discounters struggled in the second quarter. They have plenty of time to be preparing ramping up for a more promotional fourth quarter than they did — than they were able to for the second quarter, which kind of — I think quite a lot of people caught offguard.”

“we’ve reduced inventories by about, actually, a little bit over 40%, since the back half of 2007. And, actually, this year, we’re planning to reduce inventories further, sort of in the low single-digit range…in terms of what will be the driver of being able to reduce inventories further, the DCs may help, but I also think that just improved merchandising in terms of making sure we have the right product in the right store will also be a key enabler as well.”

“We’ve been comfortable at the level of product we’ve seen so far this year. I only expect that it should be a little more advantageous than it’s been even.”

“over the last few years…traffic has been the major driver of that comp growth. So clearly, that would never going to on forever. At some point, traffic was going to moderate, and that’s kind of how we viewed the last couple of quarters”

“on the flip side, we’re pretty happy that we’re seeing increases in the average basket, which suggests that when customers are coming to the store, they are finding opportunities to spend more.”

“we’ve always thought the best marketing for us is sort of unpaid marketing, word of mouth. And that really comes from making sure we have great value in the stores, the customer buys the goods, they go and tell their friends, et cetera. ”

“The customers who dd’s caters to is somewhat below the Ross customer.”

“we do think there’s some risks in the back half, but the overall retail environment will get more promotional not only, driven by J. C. Penney but potentially with other retailers, too. And we try to factor that risk into our guidance.”

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