Rost Stores 3Q13 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.

“comparable store sales up 2%”

“more retailers are planning to open earlier than prior years on Thanksgiving Day, and there are 6 fewer shopping days in 2013 between Thanksgiving and Christmas. More importantly, a number of retailers have reported disappointing results over the past few quarters. We believe all of these factors combined will create the most intensely competitive and promotional holiday selling period in recent years.”

“Where we look at is, as you said, there’s a shorter calendar, also business toughened up for department stores and discount stores in the second quarter, giving them ample time to get very well prepared for a promotional fourth quarter with, again, no shortened days between Thanksgiving and Christmas”

“it all depends how severe and bloody it gets. Okay. Remember, once — it’s a very short selling season this year between Thanksgiving and Christmas. So once the games begin, there’s not a lot any of us can really do, and we run an every-day low-price business.”

“I don’t think so. I think [customers have] been under pressure for a number of years now.”

“the third quarter is tricky. As the quarter goes on, there are few reasons for the customer to shop until the weather turns cold.”

“our marketing strategy and our marketing message has been very consistent over the years. The message is really that we offer the best value in apparel and home fashions all the time. There’s no gimmicks, no spin, just a straightforward message. And we found that, that works pretty well with our customers. They understand the message. And when they come to the store, we kind of deliver on that message. So no real change in terms of the — just the every day value message that we’re providing for the customer.”

“We have been experimenting and investing in social media over the last couple of years. We found historically that word of mouth is actually the best marketing that we have, and we found social media is a good vehicle to sort of promote word of mouth. So we’ve been doing a number of things in that space.”

“there are really 3 things that have driven our operating margin over the last 2 years, lower markdowns from managing inventories more tightly, lower shrink from a bunch of initiatives we put in place and expense leverage on — ahead of planned sales. I think that in each of those areas there might be some incremental upside. At this point, I think it’ll be fairly small, but there’ll be some incremental upside. So really most of the benefit from here on is from sales leverage.”

“I think it’s likely that we’ll trim inventories a little bit more. We think that’s worked well for us. It’s increased the freshness of the products in front of the customer. It’s helped to drive sales and to drive margins. So I think we still think there’s some opportunity there. But yes, it’s smaller than the — obviously, we’ve taken out close to 40% of inventory per store.”

“As to traffic counts, I think Michael alluded to the fact that traffic was flattish for the period.”

“when we position ourselves relatively cautiously, when we keep our inventories tight, our expenses tight that actually if it’s a promotional environment we can do okay, and we can hit our guidance. And actually if it turns out we’re wrong, we’ve shown that we’re pretty good at chasing business. And we hope the sales trend is stronger.”

“certainly nationally the large size business is growing very rapidly.”

“things just don’t look that rosy out there.”

“we run our inventories tighter. That’s what we do in off pricing.”

“this is what we’ve done whenever we have felt the environment would be tricky, tricky being more promotional. We’ve tighten things up and got more conservative, and it’s just served us very well.”

“It’s a very good buying market. Okay. And yes, there’s a lot of opportunities…as business slows down, okay — and you all see more than I do what’s happened around us — the supply lines obviously were not geared for that slowdown. So there was excess supply.”

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