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PLEASANTON, CA-”Ross Dress for Less” resulted in more for locally based Ross Stores Inc. in the opening quarter of the year. Total quarterly sales came close to $1.3 billion, up 15% compared with the same quarter a year ago. Comp-store sales increased 6% for the quarter.

The increases occurred in “many geographic markets and categories,” Michael Balmuth, vice chairman, president and CEO, said during a conference call. He notes that same-store sales in the Southwest and Texas made double-digit gains for the quarter. The best performing categories were shoes, juniors and home goods, all also experiencing double-digit same-store growth as the year began.

The chain, which operates 726 Ross stores and 20 dd’s Discount units, added 25 new units during first quarter. Looking ahead, Balmuth projects sales to increase between 10% and 11% in second quarter. “We expect same-store sales to increase between 3% and 4% in June and between 4% and 5% in July,” he says.

For the back half of the year, the company projects same-store sales to rise between 3% and 4% in third quarter and between 2% and 3% in fourth quarter. This year’s fourth quarter includes 14 weeks, versus 13 in 2005. “The extra week,” Balmuth says, “is expected to contribute an additional $80 million to revenue.”

Among the company’s ongoing objectives are strengthening performance in the Southeast and Mid-Atlantic regions, continuation of a micro-merchandising effort that “gets the merchandise mix closer to customer demand at the local level,” and reducing shrinkage and inventory levels. Within the Southeast, performance in the Florida stores continues to be strong.

“Our inventory levels were too high in first quarter,” Balmuth acknowledges, calling the condition “an inventory planning mistake. We believe we have built in efficiencies to bring that under control for the rest of the year.” Regarding shrinkage, the company plans to conduct a physical inventory at all locations this September.

Meanwhile, it is increasing electronic surveillance at stores. And, “in the worst stores,” Balmuth says, “we have hired extra security personnel to monitor both internal and external theft. We expect much better results from the September inventory, but our third-quarter forecast does not assume an improvement in the shrink rate.”

Of the Federated/May consolidation, he says, “we were impacted when closing stores first started sales, but there has been less and less impact since then. The consolidation,” he adds, “will ultimately be good for our product availability,” which consists overwhelmingly of branded product, and which he says is already good.

Net earnings for first quarter were $59.2 million, up from just below $50.1 million in the same quarter a year ago. “We expect to earnings per share to be up between 16% and 22% for full year 2006, and to have increases of between 15% and 20% over the next several years,” Balmuth concluded.

In early afternoon trading on May 17, the day of the Ross earnings report, shares of ROST were trading at $27.86 a share on the Nasdaq. That represents a decline of 3.9% since the Nasdaq opened that day, one in which the Nasdaq was also losing ground.

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