Michael A. Balmuth - Vice Chairman of the Board, President, Chief Executive Officer John G. Call - Chief Financial Officer, Senior Vice President, Corporate Secretary Michael O'Sullivan - Executive Vice President, Chief Administrative Officer Norman A. Ferber - Chairman of the Board Gary L. Cribb - Executive Vice President and Chief Operations Officer

Adrianne Shapira - Goldman Sachs Brian Tunick - J.P. Morgan Sean Noughton - Analyst Kimberly Greenberger - Citigroup Paul Lejuez - Credit Suisse Jeff Black - Lehman Brothers Dana Telsey - Telsey Advisory Group Patrick McKeever - MKM Partners William Keller - FTN Midwest Research Richard Jaffe - Stifel Nicolaus David Mann - Johnson Rice & Company Marni Shapiro - The Retail Tracker Mark Montagna - C.L. King & Associates Seth Black - Analyst

Good morning. Welcome to the Ross Stores second quarter 2008 earnings release conference call. The call will begin with prepared comments by Michael Balmuth, Vice Chairman, President, and Chief Executive Officer, followed by a question-and-answer session. (Operator Instructions) At this time, I would like to turn the call over to Mr. Balmuth. Michael A. Balmuth: Good morning. Thank you for joining us today. Also on our call are Norman Ferber, Chairman of the Board; Gary Cribb, Executive Vice President and Chief Operations Officer; Michael O'Sullivan, Executive Vice President and Chief Administrative Officer; John Call, Senior Vice President and Chief Financial Officer; and from Investor Relations, Katie Loughnot and Bobbi Chaville. I’ll will begin with a brief review of our second quarter and first half performance, followed by our outlook for the balance of the year. John Call, our CFO, will provide more details on our second quarter results and guidance for the back half of the year. Afterwards, we’ll be happy to respond to any questions you may have. Before we begin, I want to note that our comments on this call will contain forward-looking statements regarding expectations about future growth and financial results and other matters that are based on management’s current forecasts of aspects of the company’s future business. These forward-looking statements are subject to risks and uncertainties that could cause our actual results to differ materially from historical results or current expectations. These risk factors are detailed in today’s press release and our fiscal 2007 Form 10-K and fiscal 2008 Form 10-Q and 8-Ks on file with the SEC. We are pleased to report strong sales and earnings growth for both the second quarter and year-to-date periods. Earnings per share for the 13 weeks ended August 2, 2008 grew 46% to $0.54 from $0.37 per share for the 13 weeks ended August 4, 2007. Net earnings for the second quarter of 2008 rose 40% to a record $71.3 million, compared to $50.9 million in the second half of 2007. Sales in the second quarter grew 14% to $1.64 billion, with comparable store sales up 6% from the prior year period. For the six months ended August 2, 2008, earnings per share grew 33% to $1.13, up from $0.85 in the first half of 2007. Net earnings for the first six months of 2008 grew 28% to a record $150.8 million, compared to $117.9 million for the same year-to-date period in 2007. Sales for the first six months of 2008 increased 12% to $3.197 billion, with comparable store sales up 5%. We believe that our solid financial results were driven mainly by our ability to offer compelling bargains on fresh and exciting name brand fashions for the family and the home. The tax rebate checks and favorable weather also benefited sales during the quarter. Dresses, accessories, and shoes were the strongest merchandise categories, all posting double-digit increases in comparable store sales during the quarter. The best-performing markets were Texas and the mid-Atlantic, with same-store sales percentage gains in the low double-digits to mid-teens. California comparable store sales grew 4% in the quarter. We are pleased that we were able to leverage these solid sales gains into strong earnings growth. Operating margin in the second quarter increased by about 130 basis points to 7.1%, as a 180 basis point gain in gross margin was partially offset by a 50 basis point increase in selling, general, and administrative expenses. John Call will provide additional details on these margin trends in a few minutes. As we ended the second quarter, total consolidated inventories were down about 5%, with in-store inventories down on average about 14%. Pack-away levels on an average per-store basis were down about 7% from the prior year. As expected, we opened 26 new stores in the second quarter, 25 Ross Dress For Less and one dd’s DISCOUNTS. Year-to-date, we have added 51 Ross and three dd's and we ended the quarter with a total of 943 locations. Our second quarter sales trends at dd’s DISCOUNTS were in line with our forecast but continued to have mixed results. Comparable stores posted positive gains that were slightly lower than expected while the newer stores performed somewhat better than planned. We continue to closely monitor dd's performance as we examine the target customer of this young chain and where and how to best position its growth. Now let’s talk about our financial condition. We are pleased to report that both our balance sheet and cash flows remain healthy. We ended the period with $312 million of cash and short-term investments. Our cash position is benefiting from higher earnings and reduced working capital needs as we operate the business on lower inventories. During the second quarter, we repurchased 2 million shares of common stock for an aggregate purchase price of $75 million. Year-to-date, we have bought back a total of 4.6 million shares for an aggregate price of $153 million. We remain on track to complete half of our current two-year, $600 million buy-back program, or about $300 million this year. In addition, we expect to complete this full two-year buy-back without taking on any incremental long-term debt. Now, John Call will provide some additional details on our second quarter results and guidance for the back half of the year. John G. Call: Thank you, Michael. As Michael discussed, second quarter operating margin improved by about 130 basis points, driven by a 180 basis point increase in gross margin that was partially offset by a 50 basis point increase in selling, general, and administrative costs. The improvement in gross margin during the second quarter was driven mainly by higher merchandise margin, which increased about 185 basis points. Our merchandise margin comparison was affected by timing issues related to markdowns taken in the first quarter of 2007 that sold during last year’s second quarter. Because we are on the cost method of accounting, markdowns do not reduce gross margin until they sell. Therefore, almost the entire improvement in markdown performance in the first half of 2008 is reflected in our second quarter results. This comparison is normalized when we look at our merchandise margin for the first half, which improved by almost 100 basis points. This primarily reflects our tight inventory control that is driving faster turns and lower markdowns. Gross margin in the quarter also benefited from lower distribution costs as a percent of sales. Partially offsetting these favorable trends were higher incentive plan accruals and an increase in freight expense versus the prior year. As expected, we saw higher selling, general, and administrative costs as a percent of sales versus last year. A portion of this increase was driven by the prior year comparison, which benefited about 25 basis points from insurance proceeds and lower legal settlement costs. Our incentive plan accrual in the second quarter was also higher due to the strong ahead-of-plan earnings in the period. Finally, versus the prior year, both our second quarter and first half results benefited from a favorable interest comparison, a slightly lower tax rate, and reduction in diluted shares outstanding from our buy-back. Let’s now turn to our third quarter guidance for the 13 weeks ending November 1, 2008. As noted in today’s press release, we believe it is prudent to remain defensively positioned as we enter the second half of the year, based on the uncertain macro environment and the uncertain retail environment, which no longer have the benefit of a tax rebate check. As a result, we are maintaining our original target of comparable store sales gains of 2% to 3% for both the third and the fourth quarter. Based on these second half sales assumptions, earnings per share are projected to increase 17% to 22% to a range of $0.42 to $0.44 for the 13 weeks ending November 1, 2008, up from $0.36 in the prior year. For the 13 weeks ending January 31, 2009, earnings per share are forecast to increase 11% to 60% to a range of $0.78 to $0.81, up from $0.70 in the prior year. Our growth rate for the fourth quarter takes into consideration the risk of a highly promotional holiday period. In addition, we start to anniversary the improvement that began in the fourth quarter of 2007 when our tight inventory controls started to drive faster churn and better gross margins. The assumptions that support our third quarter earnings per share projections are as follows: total sales are expected to grow about 8% to 9%, driven by a combination of new store growth and, as mentioned, a 2% to 3% increase in same-store sales for the quarter. Same-store sales for each month of the quarter are also planned up 2% to 3%. We are forecasting about 23 net new stores to open during the period, including 21 Ross Dress For Less locations and two dd’s DISCOUNTS. Operating margin is expected to increase about 30 to 50 basis points for a forecasted range of 5.7% to 5.9%, compared to 5.4% last year. This projected operating margin increase assumes strong gross margin gains, driven mainly by higher merchandise margins and lower distribution costs. These improvements are projected to be partially offset by an increase in selling, general, and administrative costs as a percent of sales. Expenses in the third quarter are expected to be pressured by our prior year comparison and other quarterly timing issues. In the third quarter of 2007, SG&A benefited by about 25 basis points due to income from a construction related settlement at one of our distribution facilities. We are forecasting no interest income or expense for the third quarter compared to the first half, which realized a benefit from higher interest income versus the prior year. While we still expect our tax rate for the fiscal year to be relatively flat in 2007 at approximately 39%, we now have more variability in our quarterly tax rate since adopting FIN-48. Our first two quarters benefited from a slightly lower tax rate versus the prior year, while the third quarter rate is expected to increase to about 39%, up from 38% last year. Diluted shares are now targeted to be about $131.5 million in the third quarter and $132 million for fiscal 2008. Now I will turn the call back to Michael for some closing comments. Michael A. Balmuth: Thank you, John. As we enter the fall season, we remain very pleased with the resilience of our off-price business model in today’s tough retail climate. We believe that our ability to deliver compelling name-brand bargains throughout our stores was the main driver of our solid performance in the first half of the year. Our year-to-date performance and longer term history both show that we can manage successfully in many types of business climates with less volatility in our financial results than a comparable full price retailer. During these times, we benefit from the increased supply of great brands at significant discounts like we continue to see today. This makes our stores attractive destinations for customers seeking great values for their family and their home, as shown by our solid year-to-date sales performance. In addition, our strong inventory management has enabled us to buy even closer to need today and operate our stores with leaner inventory levels. This in turn has increased our open to buy capacity, giving us even more flexibility to take advantage of the great close-outs available in the market. As a result, we have realized faster turns and lower markdowns with a more rapid flow of fresh and exciting bargains to our stores. Based on our first six months results, and second half guidance, fiscal 2008 earnings per share are now projected to increase 23% to 25% to $2.33 to $2.38, up from $1.90 in fiscal 2007. In closing, we remain confident that the solid execution of our merchandising strategies, always the key ingredient for success in this business, along with continued tight inventory and expense controls will enable us to maximize our prospects for sales and earnings growth over the balance of 2008 and beyond. At this point, we would like to open up the call and respond to any questions you may have.

(Operator Instructions) Your first question comes from Adrianne Shapira. Adrianne Shapira - Goldman Sachs: Thank you. Very impressive on the inventory control. We were just wondering if you could shed some light in terms of the level of markdowns in that inventory, because to your point about the cost method of accounting, how we should think about gross margins going forward. John G. Call: As I mentioned, for the first half gross margin was up by about 100 basis points. Going forward, if we continue our focus, which we plan to do, on keeping our inventories tight, the experience around gross margins should continue to some extent. I would say not to the extent that we experience in the first half because in the fourth quarter of last year, we begin to anniversary some of that tighter inventory performance. Adrianne Shapira - Goldman Sachs: Right, but can you give us a sense of the percentage of markdowns within the inventory today, the currency of the inventory? John G. Call: Sure. Clearance levels are down kind of low-double-digits right now, low teens. Adrianne Shapira - Goldman Sachs: Great, that’s helpful. And then just on the regional, you called out California, up 4%. Can you just give us a sense of how that’s been trending and then perhaps also talk about the regional performance in perhaps some of the other markets, like Florida, Nevada, sort of home inflicted markets? Michael A. Balmuth: Sure. So as we said in the announcement that California for the quarter was up 4. Our strongest markets outside of California were Texas, which was up 14; we experienced up 12% in the mid-Atlantic and then had various regions there were high-single-digits. And the second question was Florida -- so Florida for the quarter was up 4%. Adrianne Shapira - Goldman Sachs: Thank you.

Your next question comes from the line of Brian Tunick. Brian Tunick - J.P. Morgan: I guess a couple of questions -- first is pretty impressive to hear these mid-Atlantic stores are the second best performing region. Maybe just talk about what’s happening there. Obviously that’s been a region that struggled for you guys. And we haven’t seen any micro-merchandising roll out yet, is that correct? And then second question is on the 2% to 3% comp guidance for the back half -- can you guys get operating leverage on the SG&A side on that number? Michael O'Sullivan: I’ll take the first question on the mid-Atlantic. The comp in the mid-Atlantic, the comp growth is running well above average, both in the first quarter and the second quarter. We are obviously happy with that and we’ve made some changes to the assortment, more [inaudible] goods, which we think have helped. But you know, I think we need to see a more sustained improvement over multiple quarters before we sort of declare victory. I think we are happy at this point but we need a few more quarters before we see it or take away a strong trend from it. The second part of your question was about are we using any micro-merchandising tools in that market at this point and the answer is no, not yet. John G. Call: Brian, on the other part of your question related to SG&A leverage in the back half, our expectation will be third quarter would look somewhat similar to this quarter, relative to expense levels. I would say for the year, we should be kind of flattish in store operating costs and depending on how the year tracks, we could have a little bit of deleverage from increase in incentive comps.

Your next question comes from the line of Sean [Noughton]. Sean Noughton - Analyst: Just a couple of quick questions; one is as we start to see some of these retailers get into some trouble here in California and then essentially the Florida markets, have you guys seen any impact to your business year-to-date on some of those businesses that are potentially having inventory liquidation sales, et cetera? Michael A. Balmuth: We haven’t seen any impact that we could quantify. Historically what would happen on something like this, as they go through their liquidation events, we might see some slight negative and then as the store closes, we see a pick-up in business. But nothing material to date. Sean Noughton - Analyst: Okay. And then secondly, you mentioned before that operating margins could return to 8% to 8.5% potentially some day, you know, three to five years down the road. What is potentially holding that back from any sort of acceleration in increasing the operating margin gains? Michael A. Balmuth: We have said that we believe over a period of time we can get back to kind of the mid-8 levels. Clearly we are well on track this year with operating margins up 130 basis points in the second quarter, and as you look to the year, operating margins probably up in the 60 basis points range. We’re tracking to those levels. We think the key drivers to returning those levels of EBIT margin would be store productivity, which would be probably the easiest driver to get there, and obviously looking to manage our expense line. Sean Noughton - Analyst: Okay, and then final question -- is there any change in the mix of brand that you are seeing that’s available? Is there any change from a better assortment of brand that you are seeing out there in the marketplace today? Michael A. Balmuth: A slight -- there’s been -- it’s been a very good buyer’s market and a slight change in the availability of brands but it’s really more quality goods available from the normal [resource] structure. Sean Noughton - Analyst: Okay. Thank you very much.

Your next question comes from the line of Kimberly Greenberger. Kimberly Greenberger - Citigroup: Thank you and congratulations on a great quarter. I was wondering, John, if you could specifically comment on the increase in incentive plan compensation this quarter. Can you just give us the basis points associated with that? And did you have an opportunity to -- I don’t know if I want to use the word over-accrue but maybe get a little bit more aggressive on your accrual here in the second quarter because you had some room to do so? And then secondarily on the merchandise margin, do you look at that -- at the new level of merchandise margin you achieved here in the second quarter as a sustainable level or is there a risk of some give-back next year in the second quarter? Thanks. John G. Call: Kimberly, your first question related to our incentive plan costs relative to the deleverage in G&A -- it was about half of that number and we accrue incentive plan costs based on what our expected earnings will be and clearly if you look at the year we had a higher proportion of those earnings in the second quarter based on this performance. Commenting on the sustainability of gross margin, as we mentioned in the prepared comments, there were some timing issues around markdowns in ’07 and we were up against those markdowns specifically in the second quarter of ’07 for markdowns that were actually taken in the first quarter and sold through during the second quarter. We think if we continue to manage our inventories tightly, we think that certainly gross margin can be sustained. Having said that, we’ll be up against those levels in the fourth quarter and into next year, but we are pleased with where we are to date. Kimberly Greenberger - Citigroup: So John, are you saying that your fourth quarter ’07, first quarter and second quarter ’08 gross margin levels you would consider to be a normalized level, and whether or not we are flat, up or down against those numbers going forward will I guess depend on your ability to just continue to execute your strategy. But you don’t see any reason why you couldn’t achieve those numbers? John G. Call: I think obviously turn relates to the top line and if we can keep the top line [relevant], we can turn the inventories, which will result in lower markdown levels. Again with that, keeping our eye on inventories and making sure we are tight on our inventory balance as well. Michael A. Balmuth: And I would add that we are planning to run our inventories down even against last year’s levels in the high single digits in the back half of the year. So we think we have put ourselves in a position to sustain the gross margin improvements we’ve had in markdowns. Kimberly Greenberger - Citigroup: Thanks, Michael and I just had a quick follow-up for Mike O’Sullivan on the micro-merchandising effort. I think that you were saying that some of the first categories that you are testing on the micro-merchandising are starting to hit stores here in August. Are you still on track for that or is that being pushed out? And how is the early phase of that going if you are starting to deliver? Michael O'Sullivan: Sure. You’re right -- the first pilot rollout of micro-merchandising is schedule for the fall, which obviously began August 1st in our calendar, so yes, it started. It’s early days to give you any sort of conclusions on it. The only thing I would say is what we said on previous calls, is that this pilot phase is really a chance for us to sort of learn how to use the tools to make some adjustments, so that when we roll out to other parts of the business in ’09 and ’10, those tools can be more effective. And just as a reminder, this pilot really covers about 15% of the business in terms of product categories. So that’s how we are thinking about it at this point. Kimberly Greenberger - Citigroup: Great. Thanks and good luck here in the second half.

Your next question comes from the line of Paul Lejuez. Paul Lejuez - Credit Suisse: Just looking at the spread between California comps and the rest of the chain, it seems to be getting a little bit wider. Just wondering what the plan is for the second half of the year in terms of California versus the overall chain. And then, if you could maybe just give us an update on what you are seeing in terms of women’s apparel and home product. Thanks. John G. Call: Paul, relative to the comp guidance in the back half, we really don’t split out kind of state by state levels. I will say we are pleased with California based on what we read is going on elsewhere in California. We are actually pretty pleased with our performance for the first half. Michael A. Balmuth: And relative to home product and women’s product, with what’s going on with a lot of home retailers across the country, there’s more product available in home than has been normal in any type of business environment. And apparel still continues to be as we would normally expect in this kind of environment, to be a solid buying environment also. Home is a bit of a surprise.

Your next question comes from the line of Jeff Black. Jeff Black - Lehman Brothers: I have a question on dd's -- to what extent is dd's still a drag on the overall margin? Are we to take it, Michael, that you think that business has kind of stabilized, given the new store improvements? And when do you think we see a real improvement in dd's? Is that something we might see in ’09 or is it too early to say? Thanks. Michael O'Sullivan: I’ll answer that question. It’s worth remembering that we doubled the size of the chain in ’07, so we -- as we said before, we are using ’08 to kind of absorb that growth to make some adjustments to the business, to monitor performance and we’ve done some additional research to understand the customer a bit better. The business has hit plan this year but the performance within that has been a little bit mixed, as Michael described in his remarks. So we really want to use the rest of the year to continue to look at the performance of the business and to match that up against what we’ve seen from the customer recently, and based upon that, I think we will think about how to best position this business for growth, where and how to position the business for growth. Jeff Black - Lehman Brothers: Have we publicly discussed how much though this is dragging, if any, on the overall operating margin? John G. Call: Yeah, we’ve said that dd's is this year a drag to operating margins, about 30 to 35 basis points. Jeff Black - Lehman Brothers: And we are saying that you are hitting that this year and the business is performing within that range? John G. Call: Yeah, that’s correct. Jeff Black - Lehman Brothers: Okay. Thank you.

Your next question comes from the line of Dana Telsey. Dana Telsey - Telsey Advisory Group: Can you talk a little bit about -- if you think about inventory and what’s available out there, close-out goods versus off-price goods, is there more of a mix shift going on either between close-out and off-price? And is that also a contributor to the margins? And then also, if you think about your sales growth, how much of the sales growth is from existing customers, how much from new customers, and is your marketing taking advantage of any of that? Thank you. Michael A. Balmuth: I’m a little confused with close-out versus off-price but I’m assuming you meant close-outs versus regular price? Dana Telsey - Telsey Advisory Group: Exactly, yes. Michael A. Balmuth: All right. So certainly in this kind of environment, having more close-outs available of a quality nature is an advantage, so some of our margin improvement is from close-outs. Our intent is to buy as many close-outs as we can and the idea of running tighter inventories gives us the ability long-term, not just on a short-term basis, to be more actively pursuing close-outs in the market in a more aggressive way than perhaps we were -- not perhaps, for sure we were before. So I think we are positioned going forward to take advantage of close-outs better than we were. I don’t know that we can quantify the -- Michael, maybe you want to -- Michael O'Sullivan: It’s a good question about is our ahead-of-sales business coming from new customers or existing customers. Like Michael was about to say, I don’t think we really know. What I can tell you is we do do research on our customer pretty regularly and the one thing we know for certain is that our customers shop a lot of stores. They have plenty of choices. There’s a lot of cross-shopping, particularly within the apparel business. And what really drives our sales and our success is if we are able to differentiate ourselves versus all those other retailers where they could buy goods, and if we are able to put better goods in front of them, better bargains in front of them. That’s what really drives it. Now, whether that’s driving it with customers who used to buy far less or never used to come to Ross at all versus customers who always used to come to Ross and are just coming more often, I don’t think we can really -- we can’t really get a handle on that. Michael A. Balmuth: And relative to marketing, we really haven’t done anything different than our normal game plan in marketing and that’s how -- we don’t think that’s really changed the tone of our business right now. We think we are satisfying our customers a little better. Dana Telsey - Telsey Advisory Group: Thank you very much.

Your next question comes from the line of Patrick McKeever. Patrick McKeever - MKM Partners: Thank you. I’m just wondering if you might make some general comments about back to school and what you are expecting. I know you said that August is planned up 2% to 3% in line with the quarter overall but just wondering if you might add some color around back to school. TJX said that they thought the business would come later this year. I’m wondering if you share that opinion. And then on the quarterly -- on the monthly comps in the third quarter, you are saying 2% to 3% each month of the quarter, and there I’m just wondering why we shouldn’t expect some acceleration in comps in, particularly in October, given the easy negative 1% comparison. Thanks. Michael A. Balmuth: I’ll take the first part on back to school. On a general comment, whether it’s going to be later or not, we plan the months fairly similarly, so we think it’s going to be not that way. It hasn’t been the best frankly -- the first half of the year hasn’t been the best junior season around the country and so we think back to school will be okay. We have some concerns because there’s less disposable dollars in kids’ pockets today but we think it will be reasonable. But for us, we haven’t delineated a timeframe different than a year ago for the trend of the business. John G. Call: And if we look at the layout of our comps for the quarter, you have to remember we had a sales tax issue in the state of Florida, so if you normalize for that, the quarters are all fairly -- the months are all fairly even throughout the period on a comparative basis. Patrick McKeever - MKM Partners: John, you mean just Florida not doing the tax-free holiday this year? John G. Call: Yeah, that’s correct. Actually, it was last year, not this year. Patrick McKeever - MKM Partners: Okay, and then a question on categories, merchandise categories -- what are some of the weaker merchandise categories right now and has there been any change I guess in trend over the past few months? Michael A. Balmuth: Really, there hasn’t been any major change. The weakest business in the company at this point is the junior business and it’s been that way for a while. We have a very developed junior business and -- but we’ve been able to get through it by offsetting it in other businesses. Patrick McKeever - MKM Partners: Okay. Thanks, Michael.

Your next question comes from the line of William Keller. William Keller - FTN Midwest Research: Thinking about inventory and the way it’s come down over the last few quarters, especially in this environment where it sounds like availability is quite good, how should we be thinking about go-forward when perhaps the buying environment is not quite as robust as it is now? Michael A. Balmuth: Thinking about it -- tell me where you’d like me to go on this. William Keller - FTN Midwest Research: I guess can the inventory declines continue? Can you continue to run at this level or at some point are things going to have to snap back a bit when availability perhaps is a little less robust? Michael A. Balmuth: I can tell you this -- it’s not going to snap back. We’ve learned to run our business on less inventory and we are not going to forget that lesson. William Keller - FTN Midwest Research: Okay. Very good. Last thing, on working capital, which came down significantly in this quarter, is there something -- and you break out current assets in the release but not so much current liabilities. Is there anything one-time nature, is that sustainable change as well? John G. Call: The biggest driver of the working capital increase is actually inventory management and with inventory management, we have more -- and a faster turn, we have more accounts payable leverage. So last year in the quarter, AP leverage was like 56%. This year it’s 67%. We believe that level in the 60s is sustainable. William Keller - FTN Midwest Research: Excellent. Thank you very much.

Your next question comes from the line of Richard Jaffe. Richard Jaffe - Stifel Nicolaus: I guess a question -- you know, you guys have been doing this for a while, the environment seems very difficult, you are managing through it very effectively with leaner inventories and taking advantage of some of the opportunities in the marketplace but I’m wondering how you see both the fall season and spring ’09 unfolding as you compare it to your experience in other downturns, say 2001 or even the late, the early 90s, late 80s? Michael A. Balmuth: How we see it in terms of what, Richard? Richard Jaffe - Stifel Nicolaus: How long this challenging environment will remain, how long -- Michael A. Balmuth: Okay. Richard Jaffe - Stifel Nicolaus: -- buying opportunities will continue, how you see the environment unfolding from a positive and a negative standpoint. Michael A. Balmuth: Obviously not being economists, it’s difficult for us to predict but what’s going on at external retail is -- other retail, despite the economy, is going to have an impact on that and certainly with the recent chapter 11, you know, not knowing how many doors are going to fully get closed out of these things and what other chapter 11s could be forthcoming, the environment might be better than most of us think for the retailers who are surviving. So it’s hard for me to really answer the question beyond that. I mean, certainly we don’t see -- who knows if post the election, things are going to get better in the economy? I don’t think anyone is really forecasting that, so we continue to watch other retailers and run conservative inventories and try and take advantage of opportunities to do the best job that we can in this type of environment. Richard Jaffe - Stifel Nicolaus: A follow-on with that -- in the past, department stores have been, when under pressure, been very promotional and have put pressure on your stores. They became price competitive with Ross. Do you see that as a possibility for the fourth quarter or do you see the consolidation of department stores offsetting that somewhat? Michael A. Balmuth: I don’t know if it ever offsets it but certainly we’ve positioned ourselves conservatively for the fourth quarter because we have some concerns based on history, as you are bringing up. But we’ll see. If they’ve managed their inventory effectively, it will be less promotional. It won’t be as bad as you are possibly alluding to. Richard Jaffe - Stifel Nicolaus: We’ll see then. Thank you very much.

Your next question comes from the line of David Mann. David Mann - Johnson Rice & Company: On the earlier question on dd's, how much of the improvement of that operating drag is really necessary for you to get back to the mid 8% kind of operating margin? Michael A. Balmuth: David, give me that one again? So -- David Mann - Johnson Rice & Company: You have an operating drag at dd's. Is that an obstacle to you getting back to the mid-8s in operating margin? Michael A. Balmuth: So as we look at these, obviously we’d expect some performance. The question is, is it an obstacle? I would say as we continue to improve that area of our company, it will certainly help. I would not say it is necessarily an obstacle to get back to that level of mid-8s. I mean, as we said, right now we are down 30, 35 basis points. We continue to improve that business. Obviously that should lessen. I think the biggest driver of getting back to the mid-8s is how we operate [inaudible]. David Mann - Johnson Rice & Company: Okay. On the SG&A, I think you said that the bonus was about half of the year-over-year increase. If I remember correctly, your original plan for the quarter was about a 10 basis point increase. Can you just clarify what other SG&A offsets there might have been? And on the corporate line, did you lever your corporate overhead? John G. Call: So going through the G&A line again, about half of the deleverage came from, I’ll call it a one-time occurrence in the quarter last year where we had recovery from some insurance proceeds and settled a legal matter [inaudible]. The other piece comes from, as you mentioned, the incentive plan costs. We were able to lever back office costs during the quarter. Having said that, store operating costs are relatively flat based on the reallocation of payroll from the fourth quarter into the second quarter, based on some things we are doing to match our payroll dollars to the functional activities that takes place in the store, as opposed to merely allocating those dollars based on sales. David Mann - Johnson Rice & Company: Okay, great and then one last housekeeping -- I think in past quarters you have talked about specifically how shrink changed in the quarter. Can you give us that as well as how much freight negatively hurt you? John G. Call: The freight drag in the quarter was between 10 and 20 basis points and shrink, pretty minimal. David Mann - Johnson Rice & Company: Very good. Thank you.

Your next question comes from the line of Marni Shapiro. Marni Shapiro - The Retail Tracker: One quick SG&A question -- you talked about some pressure in the third quarter. I was curious if that would carry into the fourth quarter as well. And then Michael, if you could just talk about the marketplace -- are you able to test and try and play with a little bit some different categories, opportunities, price points, brands that maybe weren’t available to Ross Stores or maybe you didn’t think the Ross Stores customer would be interested in, given the environment and all the availability out there. John G. Call: I’ll take the first part. I did mention that in the third quarter, that we would expect some pressure from SG&A. In the fourth quarter, that reverses and we get a bit of leverage in the fourth quarter. Michael A. Balmuth: In this environment -- and I’m not even sure it’s just based on the environment. It’s based on our more appetite to be testing price points and values really that represent higher price points. We are doing a little more of that across the store in various categories in this time and we are somewhat encouraged because it really just really reminds all of us that we are in a value business, not a price point business and it helps us position our assortments better going forward. So yes, I answer to your question, we are doing some of that. Marni Shapiro - The Retail Tracker: Great. Good luck with back to school, guys.

Your next question comes from the line of Mark Montagna. Mark Montagna - C.L. King & Associates: Just a question regarding inventory -- it sounds like in the fourth quarter, you are expecting the declines to moderate a bit. When you get to the comparisons versus right now you are having the double-digit declines. Can we expect you to still be able to reduce inventory by mid-single-digits, once you start anniversarying these tougher declines? Michael A. Balmuth: Yes. Mark Montagna - C.L. King & Associates: Could it be high-single-digits? Michael A. Balmuth: It could be. Mark Montagna - C.L. King & Associates: Okay. I’m assuming it probably can’t be double-digits then? Michael A. Balmuth: We’re not anticipating it. Mark Montagna - C.L. King & Associates: Okay. Then, just a housekeeping question regarding CapEx -- can you tell us what your expected CapEx and D&A is for this year? John G. Call: We’re expecting CapEx, Mark, at probably around $240 million this year. Mark Montagna - C.L. King & Associates: Okay. How about D&A? John G. Call: In terms of absolute dollars? Mark Montagna - C.L. King & Associates: Yes. John G. Call: Just a second -- we would expect D&A of around probably between $150 million and $160 million. Mark Montagna - C.L. King & Associates: Okay, thanks. That’s all I had.

Your next question comes from the line of Kimberly Greenberger. Kimberly Greenberger - Citigroup: I just had a couple of quick follow-ups; John, could you take a look at the 6% comp in the quarter and give us the breakout between the transaction count increase and the increase in the average dollar value of the transaction? And then secondarily, could you just give us a little bit more color on the gross margin line, the basis points associated with occupancy leverage, the improvement at distribution centers, and the offset in the higher incentive comp accrual in that gross margin bucket, that would be great. John G. Call: Sure. So for the quarter, the 6% comp was driven principally by volume. Our average transaction was relatively [flat]. In terms of breakout, on the -- in the gross margin line, gross margin merchandise margin was up 185 basis points I think, as we said in the prepared comments. And from the other elements, we said freight was pressuring gross margin by between 10 and 20 basis points. Distribution costs were actually better by around 50, 60 basis points. About half of that was really related to some timing issues around capitalization and distribution costs into our pack away inventory. And then incentive plan comps and buying comps put pressure on by about 50 basis points. So we get a 180 basis point improvement during the quarter. Kimberly Greenberger - Citigroup: And did you mention occupancy in there, John? John G. Call: Occupancy was relatively flat. Kimberly Greenberger - Citigroup: Great. Thanks.

(Operator Instructions) And your next question comes from the line of Seth Black. Seth Black - Analyst: Thanks. I just have a quick follow-up on the pack-away side -- Michael, how do we feel just qualitatively about the content of what you have in pack-away now, and how might that benefit things going forward on the gross margin side, if in fact we think we are getting better merchandise in pack-away than we’ve had in prior years. Just any color around that would be helpful. Thanks. Michael A. Balmuth: Well, I would say we feel pretty good about what we have there but I would say normally we do, so that’s why we put it there. But the reality of it is, if in fact we have bought it smart and bought it and we -- you know, our instincts when we bought it turn out to be correct when it hits the selling floor, I would say it probably would have more of an effect on top line than margin, the way I look at it. Because we are packing -- we are not necessarily packing away at the same price lines, moderate versus better a year ago. So it will be a top line issue, I think, is the way I would look at it. Hopefully we’ve packed away wisely. Seth Black - Analyst: Great. Thank you.

At this time, there are no further questions. Michael A. Balmuth: Thank you all and have a very good day.

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