Good morning, and welcome to the Ross Stores Fourth Quarter and Fiscal Year 2012 Earnings Release Conference Call. The call will begin with prepared comments by management, followed by a question-and-answer session. [Operator Instructions] Before we get started, on behalf of Ross Stores, I would like to note that the comments made on this call will contain forward-looking statements regarding expectations about future growth and financial results, including sales and earnings forecasts and other matters that are based on the company's current forecast of aspects of its future business. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from historical performance or current expectations. Risk factors are included in today's press release and the company's fiscal 2011 Form 10-K, the fiscal 2012 Form 10-Qs and fiscal 2012 and 2013 Form 8-Ks on file with the SEC. Now I'd like to turn the call over to Michael Balmuth, Vice Chairman and Chief Executive Officer.

Good morning. Joining me on our call today are Norman Ferber, Chairman of the Board; Michael O'Sullivan, President and Chief Operating Officer; Gary Cribb, Executive Vice President, Stores and Loss Prevention; John Call, Group Senior Vice President and Chief Financial Officer; Michael Hartshorn, Senior Vice President and Deputy Chief Financial Officer; and Connie Wong, Director, Investor Relations. We will begin with a review of our fourth quarter and 2012 performance followed by our outlook for 2013. Afterward, we'll be happy to respond to any questions you may have. We are pleased with the record sales and earnings we delivered in the fourth quarter and 2012 fiscal year, especially considering they were achieved on top of strong multiyear gains. Results for both periods benefited from our ongoing ability to deliver compelling bargains on a wide assortment of exciting name-brand fashions for the family and the home to today's value-focused consumers. Earnings per share for the 14 weeks ended February 2, 2013, grew to $1.07, up from $0.85 for the 13 weeks ended January 28, 2012. For the 53 weeks ended February 2, 2013, earnings per share were $3.53, compared to $2.86 for the 52 weeks ended January 28, 2012. Both the quarter and the fiscal year include a per share benefit of approximately $0.10 from the 53rd week. Net earnings for the 2012 fourth quarter were $236.6 million, up from $192 million in the prior year, while fiscal 2012 net earnings grew to $786.8 million, compared to $657.2 million in fiscal 2011. Sales for the 14 weeks ended February 2, 2013, grew 15% to $2,761,000,000, with comparable store sales up 5% on top of a 7% increase in the fourth quarter of 2011. For the 53-week fiscal year ended February 2, 2013, sales increased 13% to $9,721,000,000, with a same-store sales gain of 6%, compared to a 5% rise in 2011. For the quarter and the full year, Juniors was the best-performing merchandise category, while geographically, the strength was broad-based. Earnings before interest and taxes for the 2012 fourth quarter grew to 13.7% of sales, up from 13.0% in the fourth quarter of 2011. For fiscal 2012, operating margin rose to a record 13.1%, a gain of 75 basis points on top of an 85-basis-point increase in fiscal 2011. Profit margins for both the quarter and the full year mainly benefited from higher merchandise gross margin, leverage on operating expenses from the strong gains in same-store sales and the impact of the 53rd week. John will provide some additional color on these operating margin trends in a few minutes. As we ended 2012, total consolidated inventories were up 7% compared to the prior year, while packaway levels were about 47% of total inventories, down from 49% at the end of 2011. On average, in-store inventories were down approximately 5% during 2012. Our expansion program remained on track during the year, with the net addition of 54 Ross and 20 dd's DISCOUNTS. We continued our growth in new markets, which accounted for about 1/3 of these new store openings. We are pleased to report that dd's DISCOUNTS also delivered another year of solid gains in sales and operating profitability in 2012. Like Ross, dd's continues to benefit from our ability to offer a wide assortment of terrific bargains while also operating the business on reduced inventory levels. Now let's turn to our financial condition. Operating cash flows provided the resources to make capital investments in new store growth and infrastructure, as well as fund our ongoing stock repurchase and dividend programs. In January 2013, our Board of Directors approved a new program authorizing up to $1.1 billion to be used to repurchase shares of our common stock over the next 2 years through fiscal 2014. This represents a 22% increase over the prior 2-year $900 million program that was completed in January of 2013. The board also raised our quarterly cash dividend to $0.17 per share, up 21% on top of a 27% increase in the prior year. The growth of our stock repurchase and dividend programs has been driven by the significant amounts of cash our business generates after self-funding store growth and other capital needs. We have repurchased stock as planned every year since 1993, and this is the 19th consecutive increase in our quarterly cash dividend. This consistent record reflects our unwavering commitment to enhancing stockholder value and returns. Now John will provide further color on our fourth quarter and fiscal 2012 results and details on our first quarter and fiscal year 2013 guidance.

Thank you, Michael. Our 5% comparable store sales gain in the fourth quarter was driven by low single-digit growth in the number of transactions, combined with a mid-single-digit increase in the size of the average basket. Operating margin grew by about 70 basis points in the quarter to 13.7%. Cost of goods sold improved by about 55 basis points, benefiting from a 40-basis-point increase in merchandise margin, 35 basis points from leverage of occupancy and 10 and 5 basis points, respectively, from lower freight and shortage accrual. These improvements were partially offset by 25 basis points mainly from the timing of incentive costs and 10 basis points from increased distribution expenses due to timing of packaway-related costs. Selling, general and administrative costs for the quarter declined about 15 basis points, driven by 25 basis points of leverage on store operating expenses, partially offset by 10 basis points due to the timing of incentive accruals and higher legal costs. As Michael mentioned, for fiscal 2012, operating margin rose to a record 13.1%, up 75 basis points over the prior year. Total cost of goods sold improved by about 40 basis points, driven by a 40-basis-point gain in merchandise gross margin, 25 basis points of leverage on occupancy and 15 basis points in lower distribution costs. These favorable items were partially offset by 25 basis points in higher buying costs, 10 basis points in increased freight expense and 5 basis points in higher shortage accrual related to the year-over-year third quarter true-up in our shrink reserve. Selling, general and administrative costs for the full year improved by 35 basis points, primarily due to leverage on store operating expenses from the 6% increase in comparable sales. Turning to our stock buyback program. During the fourth quarter, we repurchased 2.1 million shares for a total purchase price of $116 million. For the 2012 fiscal year, we repurchased 7.5 million shares for a total price of $450 million, which, as Michael mentioned, completed the $900 million program authorized in early 2011. We added 74 net new stores in fiscal 2012, ending the year with 1,091 Ross Dress for Less locations in 33 states and 108 dd's DISCOUNTS in 8 states. Now I'll spend a few moments summarizing the underlying assumptions that support the 2013 EPS targets we communicated in early February. A more detailed version is available in the written transcript of our January sales release recorded comments on our website. Our fiscal year 2013 earnings per share forecast of $3.65 to $3.80 was based on comparable store sales that are forecast to increase 1% to 2% on top of a strong 6% gain in 2012; total sales that are projected to grow 4% to 5% for the 52 weeks ending February 1, 2014, compared to the 53 weeks ended January 2, 2013. The year-over-year increase in total revenues is being affected by the 53rd week, which added approximately $149 million in sales in the 2012 fourth quarter and fiscal year. We are planning to add approximately 60 new Ross and 20 new dd's DISCOUNTS locations, with about 1/3 of these stores projected to open in the same new markets we entered in 2011 and 2012. As usual, these numbers do not reflect our plans to close or relocate about 10 older stores. Our fiscal 2013 EBIT target is 12.7% to 12.9%, compared to 13.1% in 2012, which benefited by about 20 basis points from the 53rd week. If same-store sales perform in line with our forecast for a 1% to 2% increase, we would expect some slight deleveraging of expenses while merchandise gross margin is targeted to be relatively flat versus 2012. Net interest expense is expected to be about $1 million. Our tax rate is planned to be approximately 38%, and we expect average diluted shares outstanding of about 217 million. Capital expenditures in 2013 are forecast to increase to approximately $670 million, up from $424 million in 2012. In addition to supporting our ongoing investments in new and existing stores, we will be building 2 new distribution centers over the next 2 years. During 2013, we also expect to buy out the lease for 1 of our existing distribution facilities, relocate our corporate headquarters and complete construction of a new data center. Our first quarter guidance that we issued at the beginning of February was for same-store sales to be up 1% to 2%. We also projected earnings per share to be in the range of $1 to $1.04, compared to $0.93 in the first quarter of 2012. Earlier this month, we reported a slight decline of 1% in February same-store sales, which we believe was mainly due to the delay in income tax refunds. With sales improving as the month progressed, we reiterated our guidance for first quarter EPS of $1 to $1.04 and same-store sales that were projected to be down 1% to 2% in March and up 5% to 6% in April. This monthly forecast reflects a shift in Easter holiday, is on top of last year's strong same-store sales gains of 10% in March and 7% in April. Finally, as noted in today's press release, beginning with the second quarter of fiscal 2013, we will no longer report monthly sales. Quarterly comparable store sales will be provided with regularly scheduled earnings releases and conference calls. Reporting sales quarterly aligns us with the majority of other retailers who have already adopted this practice, while also increasing the focus on longer-term performance. Now I'll turn the call back to Michael for some closing comments.

Thank you, John. Again, we are pleased with our strong 2012 performance. Looking ahead, in order to operate successfully in today's very uncertain macroeconomic and political environment, we will focus on the execution of our proven off-price model that has enabled us to perform well in a variety of business climates. Investing in our merchandise organization is still our #1 priority. Experience showed that this is the key to increasing our access to the best name-brand bargains in the marketplace, while further expanding our very large vendor base. To enhance sales and maximize gross margin, we will also continue to operate our stores with lower inventories, with selling store levels planned down in the low single-digit range for 2013. In addition, our ongoing focus on fine-tuning our systems and processes to plan and allocate at a much more detailed level remains more important than ever today. This is especially true as we continue to grow in new markets and operate our stores with less inventory. We also continue to implement numerous productivity enhancements and efficiencies throughout the business. These initiatives are driving down costs in our distribution centers, stores organization and back-office functions. To sum up, we will stay intently focused on our core off-price mission of offering compelling discounts on wide assortments of name-brand fashions to today's increasingly value-focused shoppers. We know that delivering great bargains will always be the key to maximizing our opportunities for growth in sales and profits 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 might have.

[Operator Instructions] And your first question comes from the line of Lorraine Hutchinson with Bank of America.

Just wanted an update on the new store performance that you're seeing in some of these new markets. How are those sales trending? And also, can you just comment on the number of new markets that you'll enter in 2013? Michael O'Sullivan: It's Michael O'Sullivan. I'll take that. Overall, we're very happy with what we've seen in new markets. As a reminder, we first opened stores in new markets in the end of 2011. So it's still relatively recent, but the performance since then, we've been very happy with. In terms of additional new markets, we're actually not planning any additional new markets in 2013. We are going to be opening additional stores in the new markets that we've entered over the past couple of years, but no additional markets.

Your next question comes from the line of Daniel Hofkin with William Blair & Co.

Just I guess a couple of questions in terms of merchandise categories, departments. Can you talk about where you see opportunities potentially for improved performance relative to what you're already doing and how you're kind of progressing against those improvement targets so far? And then my second question relates to store growth. Would you expect this number of stores to kind of be similar in an absolute sense such that the growth rate might trickle down a little bit?

The biggest opportunity for improvement within our merchandise departments is really where we struggled in the back half of last year, which was on -- in our home business. And I would say what we're seeing so far and the changes we've put in place, we're on track to see our improvement as we move through the year. Michael O'Sullivan: And then Daniel, on your second question about the number of new stores, I think at least for the next few years, you should assume that the number of new stores will be approximately at the same level as we have -- that we're planning to open this year.

Your next question comes from the line of Ike Boruchow from Sterne Agee.

Can you guys help us think about your inventory levels right now? Do you feel comfortable with your apparel merchandise assortment today, given the unseasonable weather outside? Do you see much risk if the weather continues at this pace and doesn't turn for another several weeks or so? And then also, what is your expectation for packaway as a percent of total inventory as the year progresses? Just curious.

We're pretty comfortable with our inventory levels as it relates to seasonal merchandise. For years, we've been pushing it back based on how the seasonality seems to be moving back. And so, we find ourselves in a relatively comfortable spot, a couple of markets maybe, a small level of concern, but nothing material.

And Ike, as far as packaway levels are concerned, obviously, they're opportunistic in terms of what bargains we see out there. But from a planning perspective, we'll assume similar levels to what we had last year.

Your next question comes from the line of Kimberly Greenberger with Morgan Stanley.

This is actually Heather Balsky calling for Kimberly. We were just wondering how did home perform in the fourth quarter and how do you think that compares versus last year? And what are any strategies you have in place for home in 2013?

Home trailed the company in the fourth quarter, and our strategies going forward are really to improve the executional mistakes we made. We've made some organizational adjustments, but we've made some executional mistakes within our assortments. So this is a year of getting back to basics in that business.

Do you have any examples of execution issues that you kind of are looking to improve?

Just the assortments were substandard, and so we've adjusted those.

Your next question comes from the line of Brian Tunick with JPMorgan.

Just 3 quick questions. I guess first on dd's, maybe you could just help us understand the earnings contribution you saw this year and maybe what you're seeing from the maturity curve of how your older dd's have been ramping. Second question is sort of as you look at the mid-tier department stores or the discounters, where you think you've taken market share, what are you seeing in terms of pricing? I know you like to maintain that delta, so just wondering what you're seeing from a market share perspective. And the third thing, if John could just give us maybe what he thinks a normal CapEx number could look like in 2014? Michael O'Sullivan: So Brian, on the first question you asked regarding dd's, so dd's has been profitable for the last couple of years and has been making a contribution to our overall earnings during that period. We expect the same in 2013, in fact, a little more -- a little growth in that earnings contribution. But with all that said, dd's is still a relatively small part of the business and therefore, really isn't material. So it's making contribution, but it's very small.

Relative to where we're taking share from, I think we're taking it -- grabbing it from a bunch of people. But clearly based on the more recent mid-tier results, it is more mid-tier. And it looks like within the mid-tier, it's hard -- it's fully hard to isolate, but clearly one retailer has had a bigger drop. So we're probably getting a little more share from there, but not sure. And what we're seeing about pricing around the horn is nothing wildly aggressive overall versus what we would expect at this time of the year. Things really normally heat up as you get closer to Easter, so probably I could better answer that on the next call.

Brian, as it relates to CapEx, as we mentioned in the comments, we're planning $670 million in CapEx this year, which is a peak level for us. 2014, we expect that level to come back down to more -- slightly more normalized levels around to what we spent in 2012 and then descend from there going forward as we complete the build-out of the distribution center.

Your next question comes from the line of Mike Baker with Deutsche Bank.

So I wanted to ask about February, the miss there and how you have confidence that it was related to the income tax issue. And I guess, what gives you confidence that you'll still make your quarterly estimates with February being a little bit weaker and the weather in March presumably colder in most of your markets? Michael O'Sullivan: Mike, in terms of February, I think as we announced a couple of weeks ago, February's comp was minus 1, which is really just at the low end of our guidance. And again, as we -- the color we provided in that release was that we saw some slowness in the business, really at the beginning of the month and then things picked up as the month progressed. And we believe that, that slowness was driven by the delay in tax refunds, and that's why things started to pick up as the month progressed.

And as it relates to March, I know you don't comment into a quarter typically. But with a lot of noise around the income tax and payroll taxes and weather and all that, I guess the question is what gives you the confidence that you'll still hit the quarterly numbers with February at the low end?

I think really it will just come from how our business accelerated as we moved through the month of February, and we wouldn't be able to comment on anything further beyond the end of February.

If I can ask one more while I'm still on the line, just can you flesh out that, that comment on maybe some pockets of inventory where there was a concern. I presume that means you have a lot spring product that isn't selling because the weather is cooler in some markets. Is that what that was related to...?

No, actually, I said the opposite. Actually, I believe I said the opposite. My belief is -- our belief is that we are well positioned with our spring inventory. Okay? There's only a couple places where I have even a slight, very slight concern, but really, as a whole, not at all. And those, what I said, it was really immaterial to...

Okay. Yes, I just wanted to clarify. I understand it's immaterial. But just for my own knowledge, when you say a slight concern, is that too much inventory or too little inventory, I guess, is the question.

You know something, I probably have situations of both, okay, and we always do. Okay? So it's not any real difference from our normal position entering a spring season where there are weather issues every year in both directions in the first few months of spring.

Your next question comes from the line of Marni Shapiro with The Retail Tracker.

I have a really quick store question. Have you guys -- in the course of leases coming up and looking across your fleet, can you talk about on average how many stores you've been closing every year, renovating every year and what the plan is for this year and the next couple of years?

Sure. I'll take that. So this past year, we said in the comments, we look to close about 10 stores that are older, aged buildings, and that number moves around based on opportunities. As far as refurbs go -- on average, we look to about that same number as we move forward with closures. As far as remodels are concerned, we last year did, finished in the first quarter, the chain relative to the sign program that we implemented [indiscernible]. And then we're always looking at our buildings to ensure that we have the right experience for our customer, and we'll continue see iterations as we move forward.

So as I think about -- so the 10 stores is about average go forward. And at this point, you feel the chain's pretty -- very healthy. The sign program is completed. There's no big expense or a push going forward over the next year or so?

That's a pretty average number. As leases age and as demographics shift, we are constantly looking at those. But we don't have any -- we don't feel we have any large exposure and feel the chain is positioned well.

Your next question comes from the line of David Mann with Johnson Rice.

A couple of questions. In terms of micro-merchandising, can you give us your view on where we are in terms of -- or where you are in terms of driving benefits to margin from that initiative, perhaps what inning we're in? Michael O'Sullivan: Sure. So, David, as you know, we've had our micro-merchandising systems and processes in place for 2 or 3 years now. And I think we said early on that as we gather more history, gather more data, those systems and processes become more effective. And that's kind of what we experienced over the past few years. We think there's still some opportunity with our micro-merchandising tools. I think Michael had mentioned in his remarks that we're trimming inventories again this year, and that's at least partially enabled by the micro-merchandising tools that we have. Now in terms of sort of next generation, what more can we do, we're also looking at opportunities there in terms of making further improvements and enhancements to our micro-merchandising and more broadly, to our planning systems.

Great. In terms of SG&A, I think in the past, you've talked about the ability to lever at a 1 to 2 comp. It sounds like this year, there'll be slight deleveraging. Can you just talk a little bit about the changes there and are there any cost-saving opportunities that you could put in place to maintain that historical leverage point?

Sure, David. As we look to 2013 on a 1 to 2 comp, we do delever occupancy a bit, so it's not necessarily G&A. G&A tends to be -- could come pretty close to leveraging G&A, but occupancy was a bigger drag from an expense standpoint.

Okay. Great. And then one last question. On your businesses in January and February, especially dd's with the lower income customer, was that more adversely affected or did you see a more adverse effect from the tax issues that you called out? And did dd's pretty much recover by the end of February as you would have expected? Michael O'Sullivan: Dd's experienced a similar pattern to the pattern we described for Ross. But slowness was -- the slowness happened earlier in the month and then started to pick up as the month progressed.

Your next question comes from the line of Oliver Chen with Citigroup.

Regarding the comp forecast and the plus 1 to 2, it sounds like you've been having a great run rate with the average dollar sale trending up. So what's happening in terms of that forecast? Are your expectations that, that traffic is the offset to basket? And if you could just give us some more color around that, we'd appreciate it.

So in terms of, kind of dollar basket versus traffic, the dollar basket has grown a bit. We see that traffic was a real main driver for comps through fiscal 2012. As we started February, traffic was down but picked up as we went through the month.

So throughout the year, is your expectation that the traffic could weigh on the comp to offset benefits from the mix?

We think that traffic should drive the comp. I mean, we're not -- from a pricing standpoint, I think we're relatively flat to slightly up, but traffic should drive the comp.

And then you've also talked about fortifying the merchandise organization. Is that coming in the form of incremental hiring or what's the strategy for that to happen?

It's coming -- some incremental hiring, some splitting of businesses that we have, and we have people internally that we move up. And this is something that we've got built into our forecast and we've been doing for multiple years, but it's built into our forecast for this year.

Final question, trade-down. Have you guys been -- how would you speak to us strategically with respect to the customer environment? Do you feel like your concept is benefiting from customers trading down into your concepts? On the flip side, are there lots trading out given all the consumer pressure?

I think over the last several years, the customer has been a trade-down customer that has come to our doors, and we've satisfied them. And so I think actually for our business, that's been a good thing. The second part of your question was...? I'm sorry.

Regarding your average unit retail being more modest, do you feel like there's also been customers that have been trading kind of out of being able to even afford your products as well?

I would say that's hard to measure, Oliver. Clearly, the results have been good, but difficult to measure trade-down versus fallout. Clearly, we have more traffic in the stores that increase the comp.

Your next question comes from the line of Jeff Stein with Northcoast Research.

Just a few questions. First of all, wondering if you could help us understand roughly what percent of your apparel mix was targeted at the Junior customer or what percent you generated with the Junior customer in 2012 versus '11?

That's not something we would feel comfortable disclosing in this forum.

Okay. Can you give us, just roughly, what kind of growth rate in comp you saw from the Junior category last year?

It's considerably higher than the rest of apparel.

Okay, fair enough. And just kind of wondering, with the weather having been the way it is, it sounds like your inventories are in pretty good shape, but we're also hearing a lot of bigger box retailers have been canceling orders. And I'm wondering if you are seeing perhaps greater-than-normal opportunities within the categories you play in at this point in spring as a result of those cancellations?

I think I'd answer it as it's a very good buying time.

I'm sorry, I didn't catch that.

It's a very good time to be a buyer in off-price right now.

Okay. And one quick question for John, wondering how much the extra week added to your SG&A and how it affected gross margin in the fourth quarter?

In the fourth quarter, the benefit was probably about 65 basis points to the total EBIT line, and we haven't broken that out between G&A and margin.

Your next question comes from the line of Laura Champine with Canaccord.

Could you give us, of the 80 stores that you plan on launching this year, what percentage go to West Coast, Midwest and the Southeast, respectively?

Sorry, Laura, could you repeat that question? You broke up at the beginning.

Sure. I'm just looking at the regional split of the 80 new stores that you're launching this year, West Coast versus Midwest versus Southeast? Michael O'Sullivan: So of those 80 stores, about 1/3 will be in what we call the new markets, which is essentially the Midwest markets. There'll be a handful in the Southeast, not very many, and then the balance will be our existing markets.

Any sign at all yet of cannibalization when you put a store in California? Michael O'Sullivan: No, not really. Obviously, if we put a store very close to an existing store, then we might see a little bit of cannibalization, but it typically lasts for a few months. And then within a year, that original store is back to where it was. But overall, I think what your question is really getting at is are we saturated in any markets? And the answer is no, we're not. We still have plenty of opportunity in our existing markets.

Your next question comes from the line of Roxanne Meyer with UBS.

My question is on your strategy to open 2 new DCs. I'm just wondering if you can elaborate on that strategy, where those DCs are going to be located, any benefits that you think you're going to gain from those DCs and just how we should think about the return on this investment? Michael O'Sullivan: So Roxanne, the last time we opened a DC was about 5 years ago in Southern California, and we're just getting to a point in our growth where we need to add capacity. And we need to add capacity on the West Coast and on the East Coast, which is why we're opening 2 DCs. We are staggering them. So rather than trying to open them both at the same time, one will happen next year and the other a year after. In terms of benefits, obviously, there's a capacity benefit. It enables us to continue to support our growth. And we -- obviously, we expect the new DCs to be very productive once we scale them up. So yes, we should see some benefit from those long term.

Your next question comes from the line of Rob Wilson with Tiburon Research.

John, in your SEC filings, you have a disclosure for merchandise purchase obligations, and that number has been increasing year-over-year the last 3 quarters. And I'm just curious as to why that number would be materially increasing versus the prior year.

That does reflect increased purchases. It could reflect packaway buys. It could reflect increased store size, for all those reasons.

Does it reflect maybe more made-for merchandise in your stores today than maybe the prior years?

No, not necessarily, not necessarily. It might have to do with timing. But clearly, as the need increases, we increase those obligations.

Have you ever disclosed or do you disclose your made-for merchandise mix?

No, we don't.

Okay. One final question. Why would interest expense only be $1 million this year versus a much higher number last year?

Sure. With the building of our distribution centers, a lot of interest is capitalized into building those DCs.

Your next question comes from the line of Alex Fuhrman with Piper Jaffray.

Wanted to talk a little bit about just some of the competitive forces you're seeing out there, especially with one of the other big off-price competitors making a move into e-commerce recently, curious to how that changes your conversations with the brands that you both sell and also, how that affects, really, how you're going after your customers from a marketing standpoint, given this introduction to e-commerce coming from your competitor?

Our conversations with our vendors are really between us and our vendors, okay, so it really doesn't -- I wouldn't elaborate, but I would not expect that it's changing much of our conversation anyway. But I wouldn't get too much detail on that. What was... Michael O'Sullivan: And then on the other part of your question, Alex, marketing. So most of the online activity that we see that we categorize as off-price is actually at very high price points, higher price points than we compete in. So in terms of our marketing to our customer, it really isn't affected. Our customer is looking for a bargain, and our marketing focuses on reminding them that if they come to Ross, they'll find a bargain.

Your next question comes from the line of Richard Jaffe with Stifel.

Just a question on dd and Ross. As dd becomes much more of its own business, is there an opportunity to share resources, whether it's vendors or packaway or buying power with Ross stores? Is there any kind of crossover or are they really very independent silos?

Very independent silos, occasionally some crossover, but separate buying organizations.

And then separate packaway as well, they both have their own...?

Separate. Totally separate.

Your next question comes from the line of Patrick McKeever with MKM Partners.

On the -- just I guess a couple of quick follow-ups to questions that have already been asked in a broad way. But on the new distribution centers, will that involve any change in your distribution approach? I think you currently distribute -- all distribution centers distribute to all stores. Will that change with the DCs in different parts of the country and the growth that you've seen in your store base into new markets, that sort of thing? Michael O'Sullivan: Nothing dramatic, Patrick. Now obviously, we tweak things here and there. So even with our 15 DCs, there are some product areas that we only process in 1 or 2 DCs. And so, that kind of thing, where it makes sense to sort of tweak the model, we do, but nothing radical in terms of the overall approach.

But it still makes sense even as you've grown, let's say, into the Midwest, to distribute to all stores from all distribution centers? Michael O'Sullivan: Yes, that's right.

And then just a quick one on -- actually, I don't think this question has been asked yet. But on Penney's, are you seeing any difference in performance from your stores that are near Penney's versus those that are not so near? Michael O'Sullivan: No, we've looked at that several times over the past 12 months. And what we found is that stores that are near a J.C. Penney are doing very well and stores that are not near a J.C. Penney are doing very well. I mean, all of our stores are doing -- did very well last year. I think what that tells us is that, sure, we meant -- we're almost certainly getting some kind of benefit. But there are many other things that are going on that are also driving that comp.

[Operator Instructions] And your next question comes from the line of Evren Kopelman from Wells Fargo.

I have a modeling question. Some of the retailers have talked about with this year, with the extra week, every quarter starting a week later. People are seeing different effects in terms of, especially in Q1, that late -- early May week being a different size than the early February week that's being dropped off. How is that impacting your model and what kind of impact in Q2 and 3 as well, if you could touch on that?

It impacts it somewhat, but not enough to comment on. I mean, we -- our forecast 1 or 2 comp for the year, 1 to 2 this quarter so, Evren, not really a material impact.

Okay. And then secondly, we're seeing some footwear trends, these wedge sneakers taking hold. Have you seen any pickup in your footwear category?

Our footwear business has been strong for a while. And so I'm sure that's a piece of it, but our footwear business has been strong.

Your next question comes from the line of Mark Montagna from Avondale Partners.

Just have a question about your home department. It sounds like it was a little bit of a laggard last year versus the apparel. Can you just walk us through what transitions you made regarding the home department last year, perhaps from a buying standpoint, and what your anticipation is for this year, when you think that, that might be on track with the standards that you would expect?

We made some actually organizational changes in there during the course of the year. We've also added a few more senior level merchants as we've started this year. And with those changes and other changes we've made, specifically on mix within our assortment by classification, we would expect as we move through the year that our assortments would be more in keeping with what we -- our expectation would be within our racks.

Do you think that it would take a full year to get the transition or given that you're off-price and you buy much closer to need, that perhaps maybe it takes half a year? I'm trying to get a better gauge as to...

Actually, home is really less -- is really more upfront product purchased in home than there is anywhere else in our store, so it's further out. It is a further out business. Or I think saying closer to a year is appropriate.

Okay. And then when you gave the monthly guidance for first quarter back on February 7, were you factoring in tax refund delays at that point? Michael O'Sullivan: We were factoring in a number of factors, a lot of uncertainty. That's why we gave a range and why for February we said flattish because we knew there was some uncertainty out there. So inasmuch as we're able to sort of take into account those different areas of uncertainty, our guidance tries to capture it.

Okay. And then just the last question. In fourth quarter, it seemed as though with the mall retailers being more promotional than planned, it sounds like yourself and T.J. and the other off-price retailers were able to maintain price. So I just want to verify that, that was accurate, that you did not have to stoop lower on promotions or markdowns, I guess. And would that really indicate that off-price is gaining pricing power and that price gap between off-price and traditional retailers maybe is shrinking and that it can be maintained at a smaller gap?

I would say that -- look, our margins were fine. We didn't have to do anything to adjust our pricing to meet the more promotional environment. And your assumption or your hypothesis, I'd say, is probably true.

I'm showing there are no further questions at this time. I'll turn it back over to management for any closing comments.

Thank you for joining us today and for your interest in Ross Stores. Have a great day.

Ladies and gentlemen, this concludes today's conference call. You may now disconnect.