Michael Balmuth - Vice Chairman, President & Chief Executive Officer John Call - Senior Vice President & Chief Financial Officer Michael O’Sullivan - Executive Vice President & Chief Administrative Officer Norman Ferber - Chairman of the Board Gary Cribb - Executive Vice President & Chief Operations Officer Bobbi Chaville - Senior Director of Investor Relations

Jeff Black - Barclays Capital Sean Noughton - Piper Jaffray Stacy Pak - SP Research Brian Tunick - J.P. Morgan Tracy Kogan - Credit Suisse Michelle Clark - Morgan Stanley Laura Champine - Cowen and Company Richard Jaffe - Stifel Nicolaus & Company, Inc. Kimberly Greenberger - Citigroup Dana Telsey - Telsey Advisory Group Adrianne Shapira - Goldman Sachs Marnie Shapiro - The Retail Tracker David Mann - Johnson Rice & Company

Good morning. Welcome to the Ross Stores second quarter 2009 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.

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 Bobbi Chaville, Senior Director of Investor Relations. We'll begin with a brief review of our second quarter performance followed by our outlook for the balance of 2009. 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 forecast 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 2008 Form 10-K and 2009 Form 10-Q and 8-Ks on file with the SEC. We are extremely pleased to report that earnings per share for the 13 weeks ended August 1, 2009 rose 52% to $0.82 from $0.54 per share last year. This sizeable gain is especially notable considering it was on top of 46% earnings per share growth in the prior year. Net earnings for the current quarter increased 45% to a record $103.4 million. Second quarter sales grew 8% to $1.769 billion, with comparable store sales up a solid 3% on top of a 6% gain in the prior year. For the six months ended August 1, 2009, earnings per share grew 37% to $1.55, up from $1.13 in the first half of 2008. Net earnings for the first six months rose 29% to a record $194.8 million, up from $150.8 million last year. Sales for the first six months of 2009 increased 8% to $3.460 billion, with comparable store sales up 3% on top of a 5% gain in 2008. This exceptionally strong performance for the second quarter and first six months was well ahead of plan. Our ability to deliver compelling bargains while operating the business on much lower inventories continues to be the primary driver of our outstanding sales and earnings results. Second quarter operating margin grew about 260 basis points to 9.7%, driven by a 240 basis point improvement in gross margin and a 20 basis point decrease in selling, general and administrative costs versus the prior year. John will provide some additional details on operating margin trends in a few minutes. For the second quarter, dresses and shoes were the top performing merchandise categories, with strong double-digit and low teen same-store sales gains respectively. The Mid-Atlantic and the Southeast were the strongest regions, with comparable store sales up in the mid to high single digits. California same-store sales increased 3% in the quarter. At the end of the second quarter total consolidated inventories were down 9%, with average sell-in-store inventories down about 17%. Packaway was about 36% of total inventories, down from 37% at the end of last year's second quarter. Now I'd like to update you on dd's DISCOUNTS. We are pleased to report that the very strong sales and profit performance in the first quarter at dd's continued throughout the second quarter, with year-to-date results well ahead of expectations. This improvement is mainly due to a combination of higher sales productivity and healthier gross margins. Like Ross, dd's is also benefiting from our ability to deliver a faster flow of fresh and exciting product to our stores while operating on lower inventory levels. We are now forecasting the earnings drag from dd's to be 10 basis points or less in 2009 compared to an approximate 35 basis point drag in 2008. Going forward we will continue to strength our dd's DISCOUNTS merchandise offerings with compelling values that appeal to the bargain-driven shopper while keeping inventories below last year's levels. These initiatives are expected to drive further improvement in dd's sales and profitability, and we remain excited about the long-term growth prospects of this young chain. Now let's talk about the company's flexible condition. Both our balance sheet and cash flows remain healthy. We entered the quarter with $522 million of cash and short-term investments. Our cash position is benefiting from reduced working capital needs as we operate the business on lower inventories. We remain committed to returning cash to stockholders through both our discussed and share repurchase programs. During the second quarter and first six months of 2009 we repurchased 1.9 million and 4.2 million shares of common stock, respectively, for an aggregate purchase price of $154 million year-to-date. We remain on track to complete the remaining $146 million authorization by the end of the fiscal year. I'd like to turn now to our updated outlook for the second half. As noted in today's press release, we are raising our sales and earnings forecast for the balance of the year. We believe we are well positioned for the important back-to-school and holiday periods for a number of reasons. As noted earlier, despite tough prior year comparisons, we delivered exceptional sales and earnings growth for the first six months. Going forward we start to anniversary much easier sales comparisons. After rising 5% in the first half of last year, same-store sales were flat and down 1%, respectively, in the third and fourth quarters of 2008. Most importantly, we are well positioned in the value retailing sector and excited about our merchandise offerings and the availability of great products as we enter the fall season. As a result, we are projecting comparable store sales for both the third and fourth quarters of this year to increase 5% to 6%, up from our previous range of 2% to 3%. Based on the strong sales assumptions, earnings per share for the third quarter ending October 31, 2009 are now forecast to grow 30% to 43% to $0.57 to $0.63, up from $0.44 in the prior year. For the fourth quarter ending January 30, 2010, earnings per share are projected to increase 16% to 24% to $0.88 to $0.94 compared to $0.76 last year. Now John will provide some additional color on our second quarter results and details on our third and fourth quarter guidance.

Thank you, Michael. As Michael mentioned, second quarter operating margin improved by about 260 basis points, driven by a 240 basis point decline in cost of goods sold and a 20 basis point decrease in selling, general and administrative costs. The very strong and better than expected improvement in gross margin was mainly due to higher merchandise margin, which grew about 145 basis points over the prior year. Again, as Michael noted, the main driver of these results is our ability to deliver compelling bargains while operating our stores on reduced inventory levels. Freight costs, which declined about 75 basis points, were the next biggest component of margin improvement during the period. As we saw in the first quarter, freight expense has benefited mainly from a combination of lower oil prices and improved transportation rates compared to last year. We also realized about 25 basis points of leverage on occupancy expenses and a 5 basis point decline in distribution expenses as a percent of sales. Partially offsetting these favorable margin results was a 10 basis point increase in buying and incentive costs. In addition, strict cost controls helped to drive favorable expense trends that resulted in approximately 20 basis points of selling, general and administrative expense leverage in the quarter, mainly in store operating costs. Lower interest rates on our cash balances versus the prior year resulted in net interest expense of $1.4 million in the period. Finally, our buyback program drove a 5% reduction in diluted shares outstanding. Now let's turn to our second half guidance. While our EPS targets for both the third and fourth quarters reflect solid year-over-year growth in operating margin, the forecasted improvement is less than we delivered in the first half of the year. Let me provide some detail on the reasons supporting these projections. First, freight costs year-to-date are about 70 basis points lower than the prior year due to a combination of favorable fuel and transportation rates versus last year's first half. In the third quarter this benefit is expected to be about half of what we saw in the first six months as fuel prices started to decline in the third quarter of last year. In the fourth quarter, any benefit from freight is expected to be negligible. Second, after benefiting first half margins by about 10 basis points, our guidance assumes that shrink costs will hurt profit margins by about 35 basis points in the third quarter and will be flat in the fourth quarter. This reflects actual shortage results in 2008 that came in lower than what we had accrued over the prior four quarters. Truing up the shortage reserve to these actual physical inventory results benefited the 2008 third quarter by about 35 basis points. We are optimistic about the progress we are making with our shortage initiatives and believe we are adequately reserved for shrink this year. That said, until we complete our physical inventory in September we believe it is prudent to assume no year-over-year improvement in shrink, especially considering today's tough retail climate. And lastly, incentive cost comparisons become more challenging in the back half. Year-to-date incentive costs in 2009 are up about 20 basis points over the prior year. In the second half these expenses are planned to increase 40 to 50 basis points over last year's back half, when same-store sales and earnings growth slowed, especially in the fourth quarter. Now I'd like to review our third quarter operating statement assumptions that support our EPS guidance. Total sales are expected to increase about 9% to 10% driven by a combination of new store growth and, as mentioned, same-store sales that are up 5% to 6%. We are forecasting about 18 new stores to open during the period, including 16 Ross Dress For Less and 2 dd's DISCOUNTS. By month, we are planning comparable store sales in August to be up 4% to 5% on top of a 3% gain from the same period last year. For September and October we are projecting same-store sales to increase 6% to 7% and 5% to 6%, respectively, compared to a 2% decline in both months last year. Operating margin for the third quarter is expected to increase about 100 to 150 basis points from 6.1% last year. Similar to the first half of 2009 and in order of magnitude, we are planning this improvement to be driven by a combination of our merchandise gross margin, somewhat lower freight costs and leverage from selling, general and administrative expenses. Net interest expense for the third quarter is planned to be approximately $2 million. And our tax rate is expected to be about 39%. We are also forecasting weighted average diluted shares outstanding to decline 4% to 5% to about 125 million. Based on our record sales and earnings results for the first six months, along with today's higher sales and earnings targets for the second half, we are now projecting earnings per share for the fiscal year ending January 30, 2010 to increase 29% to 34% to $3.12. This targeted EPS range compares to $2.33 in fiscal 2008. Now I'll turn the call back to Michael.

Thank you, John. Our exceptional performance to date this year, especially considering the very difficult macroeconomic and retail climates, reflects that consumers have not stopped shopping but that they have become more focused than ever on getting the very best value for their shopping dollar. We believe we are also benefiting from the large number of recent store closures by numerous retailers that have gone out of business over the past several months as their former customers seek new shopping destinations. As an off-price retailer, Ross is very well positioned to take advantage of the increasing number of value-focused consumers today. To maximize our opportunities in this environment, we've continued to do what we do best and have done all year - deliver the most compelling bargains possible in clean, well-run, easy-to-shop stores, keep inventories as lean as possible, and strictly manage expenses throughout our organization. Also, our supply of desirable product is very plentiful today. We have never had a problem acquiring enough quality name-brand merchandise to drive our business. Going forward, we will continue to make strategic investments in our merchant organization. This enables us to continually expand our market coverage in the vendor community while enhancing relationships with a broad network of existing and newer resources. We currently have hundreds of Ross and dd's merchants combined sourcing product from thousands of manufacturers and vendors. Our goal is to always ensure that we have as much access as possible to a wide array of fresh and exciting name-brand bargains. Looking ahead, we remain confident that the compelling values we offer will continue to resonate with our customers, even as the economy improves, as long as we continue to execute our strategies well. This is and always has been the key to maximizing our prospects for sales and earnings growth while also optimizing stockholder returns over both the short and the long term. 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 Jeff Black - Barclays Capital. Jeff Black - Barclays Capital: John or Michael, if you could just remind us, how much of the product classifications are currently being touched by the micro-merchandising initiative and what are the learnings thus far this year as you expand that out? What I'm really get at is the margin is up at 9-ish this year; as we look ahead to next year, what prevents us from going higher or what gets us to the next level? Michael O'Sullivan: We've rolled out micro-merchandising to about two-thirds of the chain in terms of product category and we expect to have rolled out to the whole chain by the end of the year. We're monitoring it very closely. We're very happy with how it's working. It's doing the right things in terms of sending the right product to the right stores. But with that said, we always believed it would take a couple of seasons for it to have a meaningful impact in the stores, so we continue to believe we won't really see a significant benefit until 2010. In terms of our current business, I think if you're looking for drivers of our current business I wouldn't look at micro-merchandising. I think it might be having a margin benefit, but the real benefits we're getting are from the lower inventory that Michael mentioned, pressure assortments, the better merchandise, the trade-down customer, the exit of the other retailers. All of those factors I think are really what's driving our current trend. Jeff Black - Barclays Capital: And then just in terms of the comp trend, if you could just comment on what's driving those, more specifically, traffic, full price, etc.?

In terms of comp trends, our traffic is up high single digits, offset by the basket, which is down low single digits, driving the comp number. So that trend has continued.

Your next question comes from Sean Noughton - Piper Jaffray. Sean Noughton - Piper Jaffray: Another follow up on the gross margins; obviously, very impressive in the quarter. Can you remind us, obviously, as the freight benefit mitigates in the back half, can you remind us of the gross margin benefit you had in Q3 and Q4 of last year?

Sure. You're right, Sean, that freight benefit will decrease somewhat in the back half. We're looking for about 35 basis points of benefit in the third quarter. And actually it evens out in the fourth quarter, so we're up against the numbers we had last year; so roughly no benefit in the fourth quarter. Sean Noughton - Piper Jaffray: And then obviously it sounds like things are going well at dd's. Are there any plans to potentially accelerate the store growth within this particular concept? Michael O'Sullivan: Yes, we're very happy with how dd's has been performing. As you know, we made a number of adjustments to the business last year which we're very happy with. And in addition, I think the economic slowdown has meant that dd's proposition is particularly strong with the customer. So, as we look forward, I think it's very likely you can assume that we're going to ramp up that business. And in the balance of this year we're going to look at what's specifically happening in terms of how many stores and what market, so we'll work through that. But I think it's a fair assumption that in the next couple of years you'll see us take up the growth of dd's. Sean Noughton - Piper Jaffray: And then in terms of the overall size of dd's, is it fair to assume that that business could be a few hundred stores or how are you guys thinking about that business? Michael O'Sullivan: You know, it's still a relatively new business, so be careful with the answer I'm going to give you, but we've modeling it out. We feel confident there's probably 500 stores in terms of full potential of dd's. But, as I say, it's early days so it's hard to be precise about a number. Sean Noughton - Piper Jaffray: Sure. And then lastly maybe a strategy question on the merchandising. We've seen success, obviously, with exclusive brands within the discount and mid-tier channels of distribution. Do you believe there is an opportunity for Ross to potentially capture some additional margin and market share from an exclusive brand partnership, and is that something you guys are considering?

It's really not in our strategy today. Our strategy is department specialty store brands for less, and we would like to be putting in store labels that are in other mainstream stores.

Your next question comes from Stacy Pak - SP Research. Stacy Pak - SP Research: I guess the first question is just on the merchandise margin. In Q2 it creates pretty good performance; I think you said up 145 basis points. And it looks like it was on a pretty big number last year. So I just kind of wanted to gather your thoughts on merchandise margin potential in the back half. Is there any reason why that should slow down? I mean, I obviously heard your comments on freight, etc.

Yes, as I said, freight is included in that number. But relative to just flat merchandise margin, yes, we see no reason why it wouldn't continue. We're pretty bullish on where we are right now from a merchandising standpoint. Stacy Pak - SP Research: And on the dd's, I think previously you had said a 20 basis point drag. Was all of the change in forecast achieved in what you just did in Q2 or is there some improvement that you're projecting going forward? Michael O'Sullivan: Yes, Stacy. What we've done is we've taken dd's trends and we feel pretty comfortable with forecasting that trend for the year based upon that updated forecast. That's how we get from I think it's 25 to 30 basis points drag that we mentioned before; we now think it's going to be 10 basis points or less. So it was forecasting dd's trends continuing for the rest of the year. So assuming that happens, assuming dd's meets forecast sales, we're pretty comfortable with that estimate. Stacy Pak - SP Research: Can you say what the dd's drag was in Q2 versus last year?

Typically, Stacy, we'll talk about that number on an annual basis and avoid the quarterly discussion because of movement between quarters. Stacy Pak - SP Research: And then can you also just comment on some of the Ross markets outside of California, what you're seeing, what you're learning, what you're feeling?

As it relates to Ross or dd's? Stacy Pak - SP Research: Ross.

Sure. Our strongest markets are the Southeast and the Mid-Atlantic. We performed in the mid to high single digits in those markets. In some of the tougher housing markets, some of the tougher-hit housing markets like Florida and the Southwest, they're underperforming the chain but have stabilized.

Your next question comes from Brian Tunick - J.P. Morgan. Brian Tunick - J.P. Morgan: I guess your 5% to 6% comp plans for the back half, that sounds like some of the biggest comp plans that any retailer has mentioned for the second half. Do you guys expect that to be driven from a continuation of dresses and shoes primarily or do you need or are you seeing other product categories starting to show a lift here? And then the second question, on the inventory per store, where do you think you get to a number where that starts to actually hurt the ability to generate these kinds of comps? And do you expect inventories per store to be able to be down again in 2010 and keep turning inventory faster?

The back half, shoes and dresses we expect to be very strong, but we are seeing a lift being fairly broad-based across the store. But certainly shoes and dresses are leading the pack and we would expect them to. Relative to inventory, we will continue to cut our inventory. Will there be a place where we can't? We don't see it yet. We're going to continue to push the needle. We're finding a lot of very good things in our stores. We're getting a lot more fresh product to our stores out of it. Certainly, financially it's a good deal. But from having a flexible model in terms of merchandise procurement, it all works with what our concept is. So we're going to continue to push the needle. Brian Tunick - J.P. Morgan: And then my final question, on the Mid-Atlantic stores, where are you from an average productivity and four-wall margin versus the rest of the Ross chain? Michael O'Sullivan: Yes, Brian, the Mid-Atlantic's trend has been above the chain for about 18 months now, so we're very happy with what's been happening in the Mid-Atlantic. And the Mid-Atlantic's also been benefiting from some of the inventory reductions we've taken, so its margins have actually been very strong. Now, you know, it continues to be below average. But at any one point in time half of our regions are above average and half are below average, so I think we're pretty happy with it's trend and its profitability despite the fact that it's still slightly below average. Brian Tunick - J.P. Morgan: Is that giving you more confidence that you can become a national player sooner rather than later?

Yes.

Your next question comes from Tracy Kogan - Credit Suisse.

I had two questions. The first is a follow up on a previous question about margins. I was wondering if you could give us a sense for what your longer-term operating margin goals are. We're projecting you this year to be pretty close to your peak and just wondering where you see the opportunity to go there? And then secondly I'm wondering what you're seeing on the real estate side and if you may accelerate your Ross openings next year based on getting better deals?

I had two questions. The first is a follow up on a previous question about margins. I was wondering if you could give us a sense for what your longer-term operating margin goals are. We're projecting you this year to be pretty close to your peak and just wondering where you see the opportunity to go there? And then secondly I'm wondering what you're seeing on the real estate side and if you may accelerate your Ross openings next year based on getting better deals?

On the margin side, Tracy, clearly we've made a lot of good progress over the last couple of years. We really haven't reached our peak, which was back in the late '90s - 10.5% - but we're a long ways from that point in time. We don't want to put caps on necessarily that level. As you mentioned, our improvement has come from gross margin due to great inventory control. We do have micro-merchandising coming online across the enterprise, across the Ross chain, in 2010 which would expect some increases there. Having said all that, we believe we can sustain current levels and we believe that we can deliver low to mid-teen EPS over the longer term through a combination of store rollouts, keeping our eyes on inventory and expenses, and continuing the buyback. Michael O'Sullivan: And then, Tracy, on your second quarter about real estate, obviously there's been a lot of turmoil in the real estate market. Certainly, we're seeing downward pressure on rents. There's more vacant stores in terms of existing rental space. To some degree that's being offset by less new development. So we're kind of sorting through all that. I think, that said, we're happy with our own trend. As we've said in the past, our plan is to continue to grow Ross Stores in its existing markets through 2010. That's still the plan. So in the back half of this year we'll sort of look at the longer-term plan in terms of number of stores and markets.

Your next question comes from Michelle Clark - Morgan Stanley. Michelle Clark - Morgan Stanley: My first question is on traffic. Can you just discuss traffic trends sequentially, so how Q2 compared to Q1? And then I had a follow up question.

The traffic relative to Q1, Michelle, was up slightly. We're up kind of high singles Q1 again in Q2. So sequentially just marginally up. Michelle Clark - Morgan Stanley: And any specific regions as to where you're seeing that acceleration?

Pretty much across the board. Michelle Clark - Morgan Stanley: And then secondly, can you just update us on your leverage points for SG&A - is it still a plus 3 comp - and then on occupancy?

Yes. Both occupancy and expense kind of over the long term our leverage point has been about 3. Obviously, this year we've been able to lever at a lower level, but I think for long-term modeling purposes we'd look at a 3.

Your next question comes from Laura Champine - Cowen and Company. Laura Champine - Cowen and Company: I heard in the prepared comments your commentary that although you're seeing some effect from the trade down, you don't think that customer goes away when the economy improves. Is there any way to quantify the percentage of sales being driven by trade down or how that's impacting your traffic trend? Michael O'Sullivan: No. It's very hard to isolate that. We believe it's happening. We're seeing good things in terms of traffic which would suggest it's happening. But there are other things happening, too. There are retailers who've gone out of business and we're picking up some of those customers and some share from them. So I wish we could isolate it, but I just don't think we can. Laura Champine - Cowen and Company: Can you comment on your comp trends coming out of previous recessions and what kind of deceleration or acceleration - [break in audio]

Laura, are you still with us?

Would you like me to move on to the next question?

Let's continue the current question if she's still on the line. Michael O'Sullivan: Could you just repeat your question? I believe we can move on to the next question.

Your next question comes from Richard Jaffe - Stifel Nicolaus & Company, Inc. Richard Jaffe - Stifel Nicolaus & Company, Inc.: Just a question on dd's DISCOUNTS. Could you guys break out some of the metrics there, if they've changed at all, how that compares to Ross stores in terms of average ticket or average price, units per transaction, the kinds of real estate you've seen that's working out? I know you've sort of gone through a couple of experimental locations with dd's and it sounds like have settled into a model that works. Can you give us some sense of how that distinguishes itself from Ross and how we can envision the growth for one versus the other? Michael O'Sullivan: Rich, on the metrics, we don't typically disclose dd's metrics. It's less than 5% of our business, so we're not yet at a point where we think it makes sense to break out those separately. In terms of the real estate, yes, the real estate profile for dd's is certainly different to Ross. It tends to be more in a city, more urban locations, higher density, different kinds of malls with different [inaudible]. It's a 22,000 square foot box, which makes it smaller than Ross. So it's quite a different profile. Richard Jaffe - Stifel Nicolaus & Company, Inc.: And the average price remains below Ross stores? Is that reasonable? Michael O'Sullivan: Oh, yes. The dd's average price has always typically been lower than Ross. Richard Jaffe - Stifel Nicolaus & Company, Inc.: Roughly 20% to 30%? Is that a good ballpark? Michael O'Sullivan: I think about 20% is about the right number.

Your next question comes from Kimberly Greenberger - Citigroup. Kimberly Greenberger - Citigroup: Michael, I was hoping you could address the pricing that's happening in the marketplace. I guess, with the basket in the store down and your merchandise margin up, you're getting incredible deals from vendors. If you can look back at past recessions and just let us know how that typically changes through a recovery; is it that the deals maybe aren't quite as good, but pricing in the entire marketplace firms up so your basket is rather up instead of down?

Could you give me that again, please? Kimberly Greenberger - Citigroup: The average ticket is down but your merchandise margin is up, so we have to presume that that's because you're getting great deals from your vendors.

Kimberly, just one clarification. Although the basket is down, the average price per SKU is roughly flat. Kimberly Greenberger - Citigroup: Okay. So your AUR is flat. Has the pricing from your vendors been down in order to boost the merchandise margin?

Our pricing from our vendors has been actually down - very well-priced merchandise.

Kimberly, what I'd say is we're getting the margin improvement through faster turns and lower markdowns. Most of the benefit we get on pricing we'll pass along to the customer. There's some [inaudible] we'll pass along. And it's really been driven by lower inventory management and quicker turn in the store. Kimberly Greenberger - Citigroup: And where are we in that improvement process? I guess if you could sort of quantify, are we 80% of the way there? Are we only halfway there? What's the incremental [opportunity] here?

As Michael, I think, answered previously, we'll keep pushing it and make that determination. We've made some pretty significant improvements in terms of managing inventories down; for the back half we expect them to be down kind of similar to the front half. And we'll keep pushing it. Kimberly Greenberger - Citigroup: And then just one last question on dd's. Previously you had talked about really solid performance in dd's in the state of California with lagging performance outside of California. Have you seen improvement in those stores outside of California? Michael O'Sullivan: Yes. The performance in the stores outside of California have been extremely strong, so we're in line with the California stores, actually, in terms of trend. So we're very happy. Kimberly Greenberger - Citigroup: Is there anything you can attribute that to, Michael? Michael O'Sullivan: You know, I think there's a few things I'd call out. As you know, Kimberly, we took a little bit of a step back with dd's in 2007; decided we should really slow down the growth of the business a little bit. We did a lot of research and analysis to make sure that we really understood the customer better. That led to some changes to our real estate profile and to our merchandise assortment. We also cut back on inventories very significantly, as we did at Ross, and we started to see some of the benefits of that in the middle of last year. And then the economy slowed down, so I think dd's has also been helped by the external environment. The dd's customer in particular has been quite squeezed by the economic slowdown, and we think the value that dd's offers is just very, very strong compared with what else is out there.

Your next question comes from Dana Telsey - Telsey Advisory Group. Dana Telsey - Telsey Advisory Group: Can you talk a little bit about new store performance, what you're seeing? I know in some new markets you'd always wanted to evaluate how to improve productivity. Are you seeing improvements there? And any update on any of the systems initiatives? Michael O'Sullivan: In terms of new stores, yes, we've seen pretty good performance from our 2008 new stores and our 2009 new stores we're very happy with, although I have to say they're still very, very, very new. But we're happy with the trend in new stores. And then on systems, I think you're probably referring to micro-merchandising. The major systems project we've had in the last couple of years has been micro-merchandising. As I mentioned earlier, we've rolled that out to two-thirds of the chain and to the full chain by the end of the year. We're very happy with how that's operating, and we think it will add benefit to the business starting in 2010 and then growing over time.

Your next question comes from Adrianne Shapira - Goldman Sachs. Adrianne Shapira - Goldman Sachs: I just had a question. As you look opportunistically in the back half, that 5% to 6% in comps, I'm just wondering if you can comment on what you're seeing in terms of early back-to-school trends here in August month-to-date.

Adrianne, our policy is really not to comment in-month in terms of how sales are going, but clearly, as reflected in our guidance, we tend to believe the trends should continue from the first half relative to the back half. We're up against easier comparisons, as Michael mentioned in his prepared remarks. That gives us the confidence we'll continue the trend. Adrianne Shapira - Goldman Sachs: And could you just tell me, in terms of the traffic, any sense new customers, existing customers, how you're tracking that? Michael O'Sullivan: It's almost impossible to track that. We know traffic is up. We're pretty confident some of it is coming from retailers who've closed down. We're also confident some of it's coming from customers who are trading down from other retailers. But breaking out those individual segments is pretty impossible.

Your next question comes from Marnie Shapiro - The Retail Tracker. Marnie Shapiro - The Retail Tracker: A lot of questions have been asked, but I have one small question, if you could touch a little bit on the non-apparel areas most particularly. You've touched on a few of them - shoes - but if you could talk about the home segment a little bit more and what's selling? Is the top of that basics or is it more decorative type of stuff? And if you could talk a little bit about things like jewelry and accessories, bags and things like that.

Okay. Well, on home, home is fairly broad based. And home I would say it's a little less decorative than in prior seasons, but that's the amount of difference. And I think in home we are getting a benefit from stores who have gone out of business, most specifically, Linens 'N Things. Your second was commenting on jewelry and accessories? Marnie Shapiro - The Retail Tracker: Yes, handbags and things like that, because your assortment has looked pretty good there.

Yes, we've been very happy with the progress we've made there, especially over the last 12 to 18 months. And it's certainly performing above the baseline in the company; we've been very pleased. Fine jewelry is not a full-chain business and the results there, as with accessories, have been encouraging.

(Operator Instructions) Your next question comes from David Mann - Johnson Rice & Company. David Mann - Johnson Rice & Company: If I could just clarify what you said earlier about inventory per store reduction, I think in the past you've basically said that that would run its course, the benefits from that, by the end of this year. So is it now the case that you believe that next year that you can take it down and we can see continued margin benefits?

I don't recall exactly what we've said in the past, but our belief is that we will learn. We will continue to take it down, okay? I don't have a view at all that we've hit the bottom. David Mann - Johnson Rice & Company: You mean continue into next year? Is that correct?

Yes, continuing into next year. So you can expect significant reductions the rest of this fall and there'll be meaningful reductions next year, too. David Mann - Johnson Rice & Company: And then in terms of the growth in Ross now in terms of store size, given you've taken down inventory so much, have you come up with a new prototype size for the store given how much less inventory is going into new stores?

We operate with a broad range of prototypes to fit whatever market we're going to go into. Inventory is relative to where we think sales potential could be so in an area where sales are more robust we would tend to put a larger square footage store. In an area where we don't think the density is as much, we'd put a smaller prototype in. So we have a fairly flexible model that enables us to build a right-size building. David Mann - Johnson Rice & Company: And then one other question on cash flow. It looks like you're going to continue to be building cash even with the size buyback you have and the dividend. Any thoughts about accelerating the buyback given the buildup of cash that's likely to happen with your guidance?

Yes, David. We believe we'll complete the buyback we currently have outlined. We typically address that, the future buybacks, when we go through our planning cycle. So I would say for the rest of this year we'd continue the buyback and dividend program and address that as we end the year.

There are no further questions at this time.

Well, thank you all and have a very good day.

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