Ross Stores Earnings Call Insights: Traffic vs Ticket and Home-Related Business

Ross Stores (NASDAQ:ROST) recently reported its first quarter earnings and discussed the following topics in its earnings conference call.

Traffic vs Ticket

Daniel Hofkin – William Blair: Nice results and just a couple quick questions. As it relates to the sales trend over the balance of the year, I know sounds like you’re keeping the 1% to 2% full year comp plan. How would you expect traffic versus ticket to contribute for the year as a whole?

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John G. Call – Group SVP and CFO: Daniel, in the first quarter, traffic was fairly flat. The contribution came from the average basket, which was up slightly. That kind of stuff was tough to predict. We think we do a good job of putting attractive bargains from the customers that helps drive traffic, so we don’t plan our business around necessarily what we think traffic (indiscernible) is going to do, but the customers tend to self-select. So I’ll expect more the same; comps up 1% to 2%, traffic flat to up slightly.

Daniel Hofkin – William Blair: And as it relates to margin expectations for the second quarter, for the full-year, can you shed any more light in terms of between gross and SG&A what your expectations are?

John G. Call – Group SVP and CFO: Sure. implicit in the guidance is inventories as we said would be down kind of low-single digits. That implies faster occurrence on 1 to 2 comps, so we would expect some incremental gross margin increase partially offset by some deleverage in G&A.

Home-Related Business

Michael Baker – Deutsche Bank: So, two questions; one, can you talk to us (indiscernible) home related business, which I think had been in area where you (added as well), but were making some changes there. Are we starting to see any benefit or traction from those changes? And then secondly, can you tell us how your new markets are performing, Chicago in particular? You’ve been there now for at least a year. I think its part of the comp base. So, can you talk to us about how those stores are comping and how your initial productivity is, etcetera?

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Michael Balmuth – Vice Chairman and CEO: So, Mike on your first question about home, we actually feel good about the progress that we are making in home. As we came into the year, we had a plan to strengthen assortments in the home business and that plan is on-track. So, we are feeling good about the progress we are making there. On your second question regarding new markets, as you referenced we entered the Mid-West region in October of 2011, so it’s still relatively early, but everything we have seen so far in terms of sales, customer research, on the ground customer feedback has been positive. So, we are feeling good about how those markets are doing. At this point although as you mentioned there are a few stores that have (turned comp), they haven’t been comped for very long. So, I wouldn’t call out those or talk about those specifically.

Michael Baker – Deutsche Bank: But your new markets are in line, above plans, below plans as expected.

Michael Balmuth – Vice Chairman and CEO: They are on plan to slightly better.