Good afternoon, and welcome to the Ross Stores Fourth Quarter and Fiscal Year 2016 Earnings Release Conference Call. [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 2015 Form 10-K and fiscal 2016 Form 10-Q and 8-Ks on file with the SEC. Now I'd like to turn the call over to Barbara Rentler, Chief Executive Officer.

Good afternoon. Joining me on our call today are Michael Balmuth, Executive Chairman; Michael O'Sullivan, President and Chief Operating Officer; Gary Cribb, Executive Vice President, Stores and Loss Prevention; John Call, Executive Vice President, Finance and Legal; Michael Hartshorn, Group Senior Vice President and Chief Financial Officer; and Connie Kao, Vice President, Investor Relations. We'll begin our call today with a review of our fourth quarter and 2016 performance, followed by our outlook for 2017. Afterwards, we'll be happy to respond to any questions you may have. As noted in today's press release, we are very pleased with our better-than-expected sales and earnings results for both the fourth quarter and fiscal year, especially given our strong multiyear comparison and the highly competitive and promotional holiday season. Our results continue to benefit from our ability to offer customers great values on a wide assortment of gifts and fashions for the family and the home. Earnings per share for the fourth quarter grew 17% to $0.77 on net earnings that rose 14% to $301 million. Sales for the quarter increased 8% to $3.5 billion, with comparable store sales up 4% on top of last year's 4% gain. For the 2016 fiscal year, earnings per share grew 13% to $2.83, while net earnings rose 10% to $1.1 billion. Sales grew 8% to $12.9 billion, with comparable sales up 4% on top of a 4% gain in 2015. dd's DISCOUNTS customers also responded positively to its merchandise assortment, which led to solid growth in sales and operating profit at dd's for both the quarter and fiscal 2016. For the fourth quarter, Shoes and Men's were the best-performing merchandise categories at Ross, while the Midwest and Southeast were the strongest regions. Our fourth quarter operating margin of 13.6% was up 90 basis points from last year. This improvement was mainly driven by our above-plan sales, along with a favorable comparison of packaway-related costs versus last year's fourth quarter. For the full year, operating margin increased 40 basis points to a new record of 14%. As we ended 2016, total consolidated inventories were up 7% over the prior year, with packaway levels at 49% of total inventories compared to 47% last year. Average in-store inventories were up slightly at year-end. As noted in today's press release, our board authorized a new program to repurchase $1.75 billion of our common stock over the next 2 fiscal years. This represents a 25% increase over the prior 2-year $1.4 billion authorization that was completed at the end of the fourth quarter. The board also approved an increase in the quarterly cash dividend to $0.16 per share, up 19% on top of a 15% increase in the prior year. The continued growth of our shareholder payouts reflects our ongoing confidence in the company's ability to generate significant amounts of cash after funding our growth and the other capital needs of our business. We have repurchased stock as planned every year since 1993 and raised our cash dividend annually since its inception in 1994. This consistent record also reflects our unwavering commitment to enhancing stockholder value and returns. Now Michael Hartshorn will provide further color on our 2016 results and details on our fiscal 2017 full year and first quarter guidance.

Thank you, Barbara. Let's start with our fourth quarter results. Our 4% comparable store sales gain was driven by a combination of higher traffic and an increase in the size of the average basket. As Barbara mentioned, fourth quarter operating margin increased 90 basis points to 13.6%. Cost of goods sold improved by 110 basis points in the quarter, driven primarily by 65 basis points of lower distribution expenses, mainly from the timing of packaway-related costs that negatively impacted last year's fourth quarter. Merchandise margin improved by 15 basis points, while buying and occupancy costs were lower by 40 and 5 basis points, respectively. These improvements were partially offset by a 15 basis point increase in freight costs. Selling, general and administrative expenses during the period increased approximately 20 basis points due mainly to higher wages. Turning to our stock buyback program. During the fourth quarter, we repurchased 2.6 million shares for a total purchase price of $170 million, which completed our previous 2-year $1.4 billion stock repurchase program. For the year, we repurchased a total of 11.6 million shares for an aggregate price of $700 million. Let's turn now to our guidance for 2017. Earnings per share for fiscal 2017 are forecast to be $3.02 to $3.15, up 7% to 11% from $2.83 in fiscal 2016. Incorporated in this guidance range is an estimated benefit to earnings per share of approximately $0.08 from the 53rd week in 2017 and $0.03 in lower tax rate related to our adoption of the new share-based payment accounting standard. The operating statement assumptions for fiscal 2017 include the following. Total sales for the 53 weeks ending February 3, 2018 are forecast to grow 6% to 7%. Comparable store sales, on a 52-week basis ending January 27, 2018, are expected to increase 1% to 2% on top of a 4% gain in 2016. We plan to add about 70 Ross and 20 dd's DISCOUNTS locations. As usual, these numbers do not reflect our plans to close or relocate about 10 older stores. If same-store sales are in line with our guidance of up 1% to 2%, then we would project operating margin for 2017 to be in the range of 13.9% to 14.1%. This EBIT margin range assumes merchandise margin for 2017 will be relatively flat on top of strong growth over the past several years. Also incorporated in this operating margin guidance is an estimated benefit of about 15 basis points from the 53rd week. Net interest expense is estimated to be $13 million. Our tax rate is projected to be approximately 37% to 38%. We expect average diluted shares outstanding to be about 386 million. Capital expenditures in 2017 are projected to be approximately $400 million. And depreciation and amortization expense, inclusive of stock-based amortization, is forecast to be about $400 million, up from $377 million in 2016. Let's move now to our first quarter guidance. For the 13 weeks ending April 29, 2017, we are projecting same-store sales to be up 1% to 2%. Earnings per share for the period are forecast to be $0.76 to $0.79. Included in this guidance is an estimated $0.02 benefit from a lower tax rate related to the aforementioned adoption of the new share-based payment accounting standard. Other assumptions that support our first quarter guidance include the following. Total sales are projected to increase 4% to 5%. We expect to open 23 new Ross and 5 dd's DISCOUNTS locations during the quarter. First quarter operating margin is projected to be 14.7% to 14.9% compared to last year's 15.4%. The forecasted decline in EBIT is mainly due to higher wage and freight costs. In addition, net interest expense for the quarter is estimated to be about $3.5 million. Our tax rate is expected to be approximately 36% to 37%, resulting from the previously mentioned accounting change. And finally, weighted average diluted shares outstanding are projected to be around 390 million. Now I'll turn the call back to Barbara for closing comments.

Thank you, Michael. Again, we are very pleased with our better-than-expected financial performance for both the fourth quarter and fiscal year. As previously mentioned, this is notable considering our own robust sales and earnings growth over the past several years and the ongoing competitive retail climate. As we look ahead to 2017, there continues to be a great deal of uncertainty in the political, macroeconomic and retail climates. In addition, we face tough prior year sales and earnings comparisons. As a result, while we hope to do better, we believe it is prudent to remain somewhat cautious in planning our business for the coming year. Nevertheless, we are confident that the off-price sector will remain a strong-performing segment of retail, especially given consumers' continued focus on value. This, combined with our proven ability to deliver exceptional values our customers have come to expect, makes us optimistic about our prospects for future growth. As a result, over the longer term, we continue to believe we can achieve average annual earnings per share gain in the low double-digit percentage range. At this point, we'd like to open up the call and respond to any questions you may have.

[Operator Instructions] Your first question is from Kimberly Greenberger from Morgan Stanley.

I'm wondering -- Michael, I think you mentioned that inventory at the end of the fourth quarter in-store is up slightly. That seems to be -- I think over the last several quarters and the last several years, it was down slightly. It seems like maybe you're getting to the point where inventory is turning about as fast as it can turn in-store, and so now you're maybe looking a little bit more at sort of stable inventory to up slightly. Is it a change in strategy? Or was there something going on with the timing? And then if you, might comment, you obviously can choose not to, but if you saw any sort of softness in -- I think there was a delay in tax return payments. It seems to be affecting some retailers in, let's say, the second and third week of February. Do you see any kind of mid-month softness? And if so, have you seen a re-acceleration since then?

Sure, Kimberly. On inventory, I think at the end of the year, it's timing. As you know, we've reduced inventory by over 40% over the last number of years. I think our perspective is, at this point, that we'd expect stable inventories going forward. There's not additional room for improvement in that strategy or process. So I think as we look forward to 2017, we'd expect our in-store inventory levels to be relatively flat year-over-year. In terms of tax refunds, it's been our practice not to comment on intra-quarter trends.

The next question is from Omar Saad from Evercore ISI.

I wanted to see if I could get you to give a little bit more color on the comment you made around merchandise margins. It sounded like you think they're going to flatten out a little bit this year after some nice expansion over the recent years. Is there something going on in the mix dynamic there? It sounds like basket is still rising, but I'm not sure about unit prices. But I would love kind of any detail of how you're thinking about the evolution of the merchant margin component of gross margin.

Sure, Omar. As we -- we said in our comments the planning assumption going into the year, that they'd be relatively flat. And that's very simply based on anniversary-ing many years of strong merchandise margin gains as well as what we believe to be an ongoing challenging and promotional retail environment.

Okay, great. And then can I ask about the home category? You're seeing a lot of retailers really go after this category. It's a big and important category for you guys, too, of course. I mean, are you seeing any changes in the dynamics around that part of the business? Or do you still feel that's a key component of another growth strategy going forward?

Sure. I think home is definitely a very important category for us and has been an important category in all of this year. But what I would also add to that -- and we feel good about home. But what I would also add to that is we believe that we have growth opportunities beyond home throughout the rest of our business.

The next question is from Laura Champine from Roe Equity Research.

There's obviously a lot of speculation about a potential tax or tariff on imports. What's your thinking on that? And what would your strategy be if something like that were to be rolled out?

Sure, Laura. Obviously, for us, direct imports comprise a very small portion of our overall business. I'd say it's still too early to speculate on what specific tax policies will actually get enacted, but we'll continue to watch it closely. For us, volatility has historically been a good thing for us.

The next question is from Lorraine Hutchinson from Bank of America.

You called out a couple of pressures for first quarter margins, freight and wages. Can you expand on that and just talk a little bit about how you see that playing out through the year, what the drivers are and how big of an impact it'll have on earnings?

Sure. So we said in the commentary that EBIT is planned down 50 to 70 basis points. For us, if sales perform in line with the 1% to 2% comp, we would lose some leverage on fixed costs. In addition, we expect wages to be a greater headwind in the first half of the year than the back half as we raised wages in the middle of 2016. And then further, we expect freight costs to be a headwind in 2017, as we've seen higher carrier rates. In terms of the full year guidance, stripping out the 53rd week and the impact of the accounting change, we're guiding up 3% to 7% on a 1% to 2% comp. That's very consistent how we've guided the previous years. That, with the 53rd week included, shows EBIT margin relatively flat, and then without the 53rd week, it's down slightly.

The next question is from Michael Binetti from UBS.

Can we talk a little bit about how you're thinking about the year and maybe even -- maybe just in the front half as far as near-term planning? We've got the department stores who seem to be focused on lowering markdown levels in their stores and are certainly buying inventories lighter. We did hear from a big competitor, Target, today talking about getting much more aggressive on pricing, I think, including categories where you guys would overlap. So how do you think about your competitive positioning here? And how are you thinking about relative pricing spread strategy in the near term given some diverging strategies in the marketplace right now?

Sure. I think the way we think about pricing is the way we always think about pricing. I mean, we go out and we look in the competitive market, and we see what's out there. And we're in the value business, so our job is to make sure that the merchants are out there, understanding the pricing and then buying so that we keep that value differential. So that is part of their ongoing job, the way they do it in the fourth quarter. We've been in this promotional -- highly promotional environment for an extended period of time, so Target is kind of an addition into the picture. But that is what we do every day for a living. And so going in with a conservative sales plan gives us the ability to chase back. And when we're chasing back, we're chasing back at values that we know are competitive to the outside world.

Right. And I think one thing that's been a little bit more noticeable, I guess, from the public companies that are brands that sell into the department stores, there seems to be a fairly urgent focus on getting inventories down and getting in front of a couple years of -- quite a bit of excess. If we see that those brands do what they're planning and start reducing the inventories that they bring into the country, how do you think about -- obviously, in the near term, you'll always say there's good supply in the channel. But is there anything you should be thinking about longer term if the inventory availability were to tighten up on a strategic basis more medium or longer term from those retailers?

Sure. Let me -- so first, on the short term, in terms of as people tighten up on their supply, whether it's the vendors or in department stores, supply comes from struggle with full-line retailers forecasting their sales. So in the shorter term, that's where a lot of goods come from store closures, Penney's closed stores, [indiscernible] closed stores. So in the short term, that's where the supply comes from. In the longer term, as we think about supply, we speculate about everything that could happen with a lot of changes that are going on out there. We're always studying the retail landscape and how that might change, and we're looking at that constantly. We don't see near-term supply issues in the next 2 to 3 years. So that's kind of how we're looking at supply at this moment in time. And over time, we may need to be more creative in terms of supply, but that's how we look at it today. Michael O'Sullivan: And over the longer term, one of the things you've heard us talk about in the past is investing in our merchant organization. That's something we plan to continue to do. And we regard that as, frankly, the best defense, the best strategic asset for long-term success in the off-price sector.

That next question is from Matthew Boss from JPMorgan.

On the SG&A front, is expense leverage possible this year at 3% same-store sales? Or do we need to think about that higher fixed cost hurdle this year just given the wages? Just any other investments to consider or headwinds in the SG&A line.

Sure, Matthew. So for SG&A, in 2016, the costs were up about 15 basis points. Obviously, that was slightly above our 3% leverage point. That said, we were obviously pleased with our overall operating margin expansion. Our guidance for 2017 projects SG&A leverage at about the 3% leverage point, which is consistent with our historical levels.

The next question is from Simeon Siegel from Nomura/Instinet.

Do you know and could you share roughly what percent of your traffic increase is coming from new customers versus repeat visits? And maybe what's your average -- your shoppers' average trips per year? How does that look now versus the past several years? Michael O'Sullivan: It's hard to break that out, Simeon. We do regular customer research, where we try and identify existing customers versus new customers. But it gets pretty murky in terms of if someone had shopped off-price a couple of years ago, do they still count as an existing customer or are they a new customer? The one thing that we take from the research is that what the new customers and the existing customers are both looking for is the same set of things. It's the same set of, well, basically great values. But in terms of splitting them out like that, it's a little more difficult to answer that question.

Okay, great. And then just -- you ended the year with just meaningfully higher cash, recognizing the authorization of quarterly dividend. Any other uses of cash we should consider? Or just -- or do we assume the growing cash continues to flow to the dividends and repurchases? And do you guys have a target payout ratio you could share?

Yes. I mean, I would answer it generally to say we have a long history of delivering excess cash to shareholders, and we've done that in a planned and deliberate fashion. So anytime we look at the deployment of cash, we're looking at it over kind of a longer period. But that process is, at the same time, of maintaining a very strong balance sheet. So I would not expect that to change going forward. And the significant increases in our dividend and share buyback programs announced today reflect that commitment.

The next question is from Brian Tunick from RBC.

I guess 2 questions. Curious, I guess, Barbara, on the merchandise categories. I know, certainly, here in Q1 from last year, there was some noise around some of the missy and sportswear products. Can you maybe talk about -- do you think there's a great opportunity here in the first quarter to course-correct some of the issues last year, even though we have a later Easter? And then second question. On store plans for 2017, can you maybe discuss are you guys planning to enter new markets, both for Ross and dd's, and how we should be thinking about the rollout from a geographic perspective?

Sure. I'll take the first part, ladies sportswear. We feel like in 2016, we made progress in improving our assortments, and we believe that we've made the right adjustments for our ladies merchandising strategy. And that will take us to leading to further improvement in 2017. Michael O'Sullivan: On the store plans, Brian, our store plans for new stores this year are very much in line with the last few years, 18 to 19 new stores a year in terms of new market. So as we categorize it, the Midwest, for some years now, has been our major new market and major new region. That continues to be how we think about new markets. There's no additional new markets outside of the Midwest that we're planning to move into this year.

And same for dd's? Michael O'Sullivan: That's right.

The next question is from Paul Lejuez from Citi.

We saw a bunch of Macy's stores close about a year ago, 40 stores. Just curious if you've tracked how your stores in those markets have performed. Separately, if you could just talk about what were your weaker regions and categories in the fourth quarter.

I'll start with the regional performance, Paul. As we mentioned, the Midwest and the Southeast were strongest. The Midwest, obviously, has been a very strong region for us, as the best-performing category over the last 3 years or so. Southeast likely benefited from favorable weather. I'd call out other major markets. California was in line. Texas performed below the chain average in Q4. For us, beyond the possible impact of the oil industry, we believe there were other factors that impacted the region, including the stronger dollar as well as negative weather during the quarter. Michael O'Sullivan: And Paul, on your question about store closures, it's difficult to respond to, specifically, the Macy's example that you gave, specifically how that affected our stores. There's just too much noise to pick out the impact of those individual store closures. What I would say, though, is in general, with store closures -- competitor store closures, there's a short-term effect, which is as that competitor store is doing a going-out-of-business sale, that can impact our business negatively for the weeks that that's happening. But then obviously, once that store is closed, there's one less competitor in the market, so in general, it tends to be a good thing for us in the medium to long term.

The next question is from Oliver Chen from Cowen and Company.

Regarding these new stores, are there any thoughts on how the store, the future looks versus your existing store base? And also, as you just continue to have a great store base, what are your thoughts for remodels or how you continue to add at your existing stores? And any in-store initiatives, whether that be the cash wrap, the dressing room or managing shrink to your liking, in terms of what we should think about for next year? Michael O'Sullivan: Sure. So Oliver, in terms of how we think about our stores, we think of our stores very much in terms of a sort of evolution rather than a revolution. We look at different parts of the store, and we look at opportunities, particularly in areas that are growing or categories that are growing very rapidly, to maybe give them more room within the store, maybe give them new indiscernible], that kind of thing. We also look at opportunities to update other aspects of the store, whether it's the front end or signage. But we do those on a sort of evolutionary basis, so it's not something that really happens overnight. There are individual initiatives, obviously, that roll out from year to year but nothing dramatic that I would call your attention to at this point.

Okay. And on the Accessories front here, have you been pleased with the execution? And are there opportunities? Or where do you think that category is heading with respect to what your buyers are seeing versus consumer demand?

Our accessory business continues to be difficult. It trails the chain in the fourth quarter. In terms of what we see in the outside world, accessories is really driven by handbags, and handbags tends to be a weaker business in the outside world.

The next question is from Adrienne Yih from Wolfe Research. Adrienne Yih-Tennant: My question is on packaway. I was wondering if you had any notable advantage from buying opportunistically last year, either in margin or in helping comp? And then what is your open-to-buy -- in-season open-to-buy for the spring season?

In general, in packaway, we see it as a sales driver, not a margin driver. So that's what I think about it.

And in terms of spring, we're well positioned to take advantage of packaway opportunities.

The next question is from Ike Boruchow from Wells Fargo.

Just to piggyback on Tunick's question that he asked, can you maybe update us on how the merchants are buying within the ladies apparel category right now? I think I remember you had talked about merchants taking a more conservative buying approach after the spring execution issues last year. So just trying to figure out, are we back to normal at this point within that category or still not quite yet?

In terms of our buying approach, I guess I would say back to normal, whatever you're defining back to normal as. The merchants are out there shopping the market and buying it the way they see it. So I guess if that's how you're defining back to normal, that would be true.

The next question is from Roxanne Meyer from MKM Partners.

My question is on CapEx this year. I'm just wondering, your guide from new stores and relocations, if there are any major projects that are being earmarked. And then in terms of the comp, the average transaction size being up, if you could break it down between AUR and units.

Sure, Roxanne. On CapEx, so we're guiding at about $400 million. That's higher than 2016, which was the lowest level since 2011. So that was lower than normal. In terms of the breakout of the $400 million, about 30% is new stores; 30% is for store refreshes and maintenance capital; 15% for supply chain investments; and 25% for, call it, technology and other G&A capital. In terms of the components of sales, as we mentioned in our prepared remarks, the 4% comp was driven by higher traffic and an increase in the size of the average basket. The higher basket was driven by higher units per transaction, with AUR down slightly compared to last year.

The next question is from Bob Drbul from Guggenheim Securities.

I was just wondering if you could expand on the success you've seen in the most recent quarter in the footwear business. And with some of the store closures of competitors out there, are you seeing more willingness for brands that haven't sold you significantly in the past to be a little bit more open with availability for you?

Sure. As it pertains to the footwear business, similar to our last 2 prior quarters, our shoe performance was very broad-based. In terms of the marketplace and competitors being open to selling us, I think we've shown over the years that we have really good vendor relationship. And I would say that most brands are open to doing business with us. Yes, they're open to doing business with us.

The next question is from Mike Baker from Deutsche Bank.

I was going to ask you about the buying environment, and a number of relatively high-profile vendors have sort of said they're not as open to selling to off-price as much as they were in the past. Now I don't need to go down the list, but I'm sure you guys have heard the public comments from some big public vendors. So how does that impact you? I mean, have you, frankly, seen some of these vendors pull back already to selling to you guys? And does that change the way you think about going to market in the future?

It's actually been a very positive buying environment. With the difficult fourth quarter, obviously, there's supply in the marketplace. So I would say that overall, high-profile or broad-based all the way through moderate vendors, there's still been a willingness for people to sell us merchandise.

Is there a concern that, as you go through the year, that slows down when you have all these vendors saying publicly that they just don't want to sell as much to off-price?

I think -- I'm sorry, go ahead, Michael. Michael O'Sullivan: Yes, that's always a concern. We're always concerned about supply. But one point Barbara had made a little bit -- a little while ago is that what really drives supply is other retailers and their inability to forecast their own sales. And if they're not able to forecast their own sales, that tends to mean there's greater supply availability.

Yes, okay. Understood. If I could ask one more follow-up. Easter is 3 weeks later this year. Historically, that tended to help you guys as people have a longer season in which to buy Easter-related products.

Mike, I think historically, weather has had a more meaningful impact on performance during the first quarter than the timing of Easter, which is what we've seen in the past.

The next question is from Marni Shapiro from Retail Tracker.

I'm curious. I know online is not a conversation for you as far as sales, but you do have sign-ups online and customers that are coming into stores. I'm curious, are you seeing a growing file of people signing up online or even in stores? And what are you doing with these lists? And are you considering any kind of consumer outreach or anything like that beyond just emails? Michael O'Sullivan: So Marni, we do have a database of customer emails. We do use that for some of our marketing activities. But more broadly, beyond that, we also, over the last few years, have been experimenting with other forms of sort of online marketing, whether it's direct online advertising or social media marketing. So that's how we think about it. There has been -- we've been investing more in those media channels over the last few years, and that's driven a lot of the growth and a lot of the customer sign-up. But it's really a marketing activity rather than a sort of, in any way -- it's not teeing up e-commerce in any way. It's really about marketing.

That makes sense. And are you guys finding any change in the hiring landscape out there as some of the department stores try to be off-pricers? I'm saying try with all seriousness. I don't think they're excelling at it. Michael O'Sullivan: I'll let Barbara answer on the merchant side. On the operating side, no, no impact at all.

Are you trying to ask me if they're trying to steal our people, Marni?

Kind of. Are you finding it -- or are you having to pay more, are you finding it more difficult to find people?

Listen. I think we have a very strong -- a strong merchant team. I think we have -- Ross has a great culture. We have a lot of long-tenured employees. And I think that in terms of the retail landscape and hiring people, there are obviously a lot of people out there that are now looking for jobs, and so we are kind of sorting our way through that. I think, listen, it's a very competitive market for talent, and so I think people do look to try to steal our talent. But we do run pretty low turnover rates. And I think Ross -- I can't be objective here. I think Ross is a great place to work. It's a great place to work. So yes, so hopefully, that answers your question.

The next question is from Lindsay Drucker Mann from Goldman Sachs.

I wanted to ask on wages. On the wage inflation, you called out for calendar '17, is the majority of that from mandated minimum wage increases? Or are there any other factors at play?

So Lindsay, last year, we took our wages across the board in the company up to $10 an hour based on tenure. Obviously, it includes mandated minimum wages, and our upcoming guidance takes into consideration the mandates that we're aware of today.

Is there anything incremental that you guys expect outside of mandated increases in terms of your own effort to raise wages?

Not at this point.

Okay. And then, Barbara, in your comments, you referred a couple of times to the really intense competitive environment, and I was just curious. I think that you've oftentimes and the environment often has been competitive. Is your characterization of the competitive environment today any different than what you might have described it in the past? In other words, is it any more competitive or any worse than what you're used to seeing?

I think the competitive environment for the last 2 years has been pretty intense, and I don't foresee that going away. I think that's kind of what business is about now. And I think that's built into how you have to think about your business and how we think about our business and how we think about our values and how we chase our business. But I think it's been competitive for a long time, and I think that's now the norm of business as usual.

The next question is from Dana Telsey from Telsey Advisory Group.

As you think about the store footprint, the Ross Stores and dd's, are you seeing -- are you changing anything in terms of size of stores? And what's happening on the occupancy cost fund, percentage rents versus fixed rents? And then just as you think about new store openings and the annualized new store opening rate, has anything changed there?

I'll take the first part. Over the last 10 years, we've decreased the size of our stores by about 15%, and the decrease is really just based on the reductions of inventory that we've seen over the years. Today, as we go out and look for new stores, we rightsize them based on the market and demographics, et cetera. Michael O'Sullivan: On the other part of your question, Dana, I would say that occupancy costs are fairly stable at this point. They have good availability. In terms of locations, but rents are fairly stable. And our new store opening rate is about -- we add about 6% more stores every year on the base of stores that we have. We open 18 to 19 stores, which is about 6% increase each year. And I would expect it will stay more or less at that level for the next few years.

The next question is from David Glick from Buckingham.

Most of my questions have been answered. Just a quick follow-up there. dd's is approaching 200 stores. And when you look at the mix of stores that you opened, are you at the point where that is a part of your business that you may want to accelerate the store opening rate? Michael O'Sullivan: As Barbara said in her remarks, we were very happy with dd's performance in Q4 and for the full year 2016. It turned in a very solid sales and profit performance. And actually, over a longer period of time, we've been pleased with that business. But we've always been fairly deliberate about how we roll out and grow our businesses. This was true with Ross, and that's also true with dd's. That on a base of about 200 stores. We feel pretty comfortable being able to open 20-ish, 20, 21, 22 stores. I think it's unlikely that we would accelerate that. I think there are constraints in terms of being able to do that in a high-quality way, whether it's real estate locations or building the operational team. We prefer to open and roll out dd's in a much more deliberate way. Yes, that's my answer.

The next question is from Christian Buss from Crédit Suisse. And there are no further questions at this time. I will turn the call back over to Barbara Rentler for closing remarks.

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

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