Q1 2021 Ross Stores Inc Earnings Call
Good afternoon, and welcome to the Ross stores first quarter 2021 earnings release Conference call.
We'll begin with prepared comments by management, followed by a question and answer session.
You ask a question during the session at 22 Press Star 1 on your telephone before we get started on behalf of Ross stores I'd like to note that.
The comments made on this call will contain forward looking statements regarding expectations about future growth of financial results, including sales and earnings forecasts, New store opening COVID-19 related costs and other factors sort of 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 of the company's fiscal 2020 from turnkey in fiscal 2021 form 8-K filed with the U S E T.
To turn the call over to Barbara <unk>, Chief Executive Officer.
Good afternoon, joining me in I'll call today from Michael Hartshorn Group President of Chief Operating Officer, Travis Marquette Executive Vice President and Chief Financial Officer at Connie Kao Group, Vice President Investor Relations.
I'll begin our call today with a review of our first quarter performance, followed by our outlook for the second quarter end fiscal year.
Afterwards, we'll be happy to respond to any questions you may have.
As noted in today's press release first quarter sales significantly exceeded our expectations as we benefited considerably from a combination of government stimulus payments ongoing vaccine rollout easing of COVID-19 restrictions and pent up consumer demand.
In addition customers responded enthusiastically to the broad assortment of great bargains to be offered throughout our stores.
Earnings per share for the 13 weeks ended May 1.2021 grew 17% to $1.34 on net income of $476 million.
This compares to $1.15 per share or net earnings of 421 million, but of 13 week ended may 4 at 2019.
Total sales for the quarter were $4.5 billion with comparable store sales up a robust 13% versus 2019.
As previously announced financial results and guidance throughout fiscal 'twenty, 1 will be compared against fiscal 2019.
We believe the significant impact from the extended closure of our operations in the spring of 'twenty 'twenty and the disruptions caused by COVID-19 throughout last year make this a more relevant basis for comparison.
But the first quarter home was the best performing major merchandise area, while the Midwest was the strongest region.
Similar to Ross Dd's discounts business trend significantly improved during the quarter.
Results are far above our expectations with outstanding sales gains and a rebound at operating profits for the period.
At quarter end consolidated inventories were down 6% versus 2019.
Pack away at levels ended at 34 per cent of the total compared to 44%, but at the same period in 2019, as we use a substantial amount of pack away merchandise to support ahead of planned sales.
Average selling store inventories were down 1% relative to 2019.
As noted in today's release, our board authorized a new program to repurchase $1.5 billion of our common stock.
Fiscal 'twenty 'twenty, 2 with plans to buy back $650 million this year and $850 million in 'twenty 'twenty 2.
The reinstatement of our share repurchase program reflects the current strength of our balance sheet confidence in the company's ability to generate excess cash after funding growth and other capital needs of the business.
And our long standing commitment to enhancing stockholder value and returns.
Turning to store growth, our 'twenty 'twenty 1 expansion program is unchanged with plans to open approximately 20 total locations comprised of 40, Ross and 20 Dd's discounts.
As usual these numbers do not reflect of plants to close or relocate about 10 stores.
As a reminder, our conservative opening plants this year, especially for the spring season reset in 2020 during the onset of the pandemic when it was impossible to predict when the health crisis would subside.
Looking forward to 2022, we expect to return to our normal annual opening program of approximately 100 new stores.
Now Travis Marquette will provide further details on our first quarter results second quarter guidance and outlook for the year.
Thank you Barbara.
As previously mentioned comparable store sales increased 13% in the quarter driven by a larger average basket, while traffic was down slightly compared to 2019 at accelerated significantly relative to the fourth quarter.
Operating margin was well above plan at 14, 2% compared to $14.1 per cent for the same period in 2019.
Cost of goods sold Levered 35 basis points in the quarter.
Merchandise margin was up 85 basis points in occupancy Levered by 60.
These improvements were partially offset by higher fleet costs of 75 basis points, mainly driven by the ongoing industry wide supply chain congestion.
In addition distribution expenses grew 25 basis points, primarily due to higher wages, while bond costs increased by 10.
SG&A for the quarter of de Levered by 25 basis points, mainly due to the operating expenses associated with the pandemic and higher incentive costs, given our better than expected first quarter results.
Total net COVID-19 related expenses for the period were approximately 35 basis points, the vast majority of which impacted SG&A.
Now, let's discuss our guidance.
As Barbara just mentioned our projections compared to the same period in 2019.
For the 13 weeks ended July 31, 2021, we are forecasting comparable store sales to be up 5% to 7%.
Earnings per share for the second quarter are projected to be in the range of 80 to 89.
The operating statement assumptions that support our second quarter guidance include the phone.
Total sales are projected to grow 9 to 12 per cent.
We are projecting operating margin to be 9.2 to 9.9% compared to 13, 7% in 2019.
This forecast reflects ongoing expense headwinds from increased freight costs and higher wages.
In addition, COVID-19 related expenses are projected to negatively impact EBIT margins by approximately 100 basis points in the period as we return to pre pandemic store operating standards, while still maintaining many of the extra cleaning routines.
We expect to open 30 stores during the second quarter, consisting of 22, Ross and 8 Dd's discounts.
Net interest expense is estimated to be about $19 million.
Our tax rate is expected to be approximately <unk> 25 per cent.
And weighted average diluted shares outstanding are projected to be about $355 million.
For the full year, we are projecting annual comparable store sales gains of 7% to 9% versus 2019 and earnings per share of $3.93.
$4.20.
Operating statement assumptions that support our fiscal 'twenty 'twenty 1 guidance include the following.
Total sales are projected to grow of 11% to 13%.
We project at operating margin for 2021 will be in the range of $10.7 to 11, 2% compared to 13, 4% from 2019.
The forecast of decline again reflects our expectations for continued freight wage and COVID-19 cost headwinds through the balance of the year.
Net interest expense is estimated to be about $75 million.
Our tax rate is projected to be approximately 24% to 25 per cent.
And we expect average diluted shares outstanding to be about $354 million.
Now I'll turn the call back to Barbara for closing comments.
Thank you Travis.
To sum up we're optimistic about our prospects of the balance of the year and hope to do better than our forecast.
This confidence is based on our recent results and ongoing improvements in the macroeconomic environment bolstered by vaccine Rollouts and the easing of pandemic related restrictions.
That said, it's difficult to predict the lasting impact from the factors that benefited our first quarter sales results, especially.
Especially the recent government stimulus payments.
As always we will remain nimble to address the dynamic consumer and retail landscape, while staying focused on delivering the great bargains are customer has come to expect from us.
Longer term, we remain confident about our opportunity to gain market share as we expect to benefit significantly from the favorable competitive climate given the large number of retail store closures and bankruptcies in recent years.
This along with the consumers' heightened focus on value and convenience bodes well for our ability to achieve solid results into the future at this point, we'd like to open up the call and respond to any questions you might have.
As a reminder to ask a question you will need to press star 1 on your telephone.
To withdraw your question Ross the payout or cash number.
To allow everyone time for questions. We ask that you. Please limit yourself to 1 question.
These standby of old compile the Q&A roster.
Your first question comes from Matthew Boss from J P. Morgan.
Great. Thanks, and congrats on the on the really strong improvement.
So Barbara maybe could you speak to the cadence of business and any notable changes in traffic or category of demand as the quarter progressed and then Travis on gross margin I guess, maybe just how best to think about the puts and takes in the second quarter that youre embedding relative to 2019.
Sure Matt there, so let's start with category demand.
It was really broad broad based acceleration across all merchandise areas with obviously home, having having very strong performance.
Our Austin for other people across the country, but what we did see is a major improvement in apparel and as we feel at the economy starts to open up that apparel will continue to strengthen as time goes on.
With a lot of change in trends.
We're monitoring that and we're flexing of moving the business around based off of what the customer is telling us. So we feel in in totality, we feel overall pretty good about the business go forward in terms of traffic Travis you want to take the traffic piece Yeah. Yeah, just let me breakdown of comp a little bit I mentioned comp was 13% at was driven by large larger average.
Basket size.
That was partially offset by lower number of transactions traffic was down slightly compared to 2019, but at accelerated significantly.
Compared to the fourth quarter.
The increase of the average basket was driven by items per transaction.
Average unit retail was up slightly.
And then I think then I think your next question was around just the guidance operating margin guidance for Q2.
Yeah, just any puts and takes on the second quarter.
Yeah I mean.
Second quarter again.
Overall guidance reflects.
Couple of things 1 obviously the comp store gain is expected to be lower than what we saw in the first quarter and therefore, we will get a little bit less leverage on the business.
In addition.
Uh huh.
Covid costs, we expect to also be higher although that will primarily impact SG&A. We also expect to see continued significant pressure on freight.
So all of that in the first quarter, both in ocean freight as well as overall freight.
I think that those pressures will continue.
Great Best of luck.
Your next question comes from Mark <unk> from Baird.
Good afternoon, and thanks for taking my question I appreciate all the detailed guidance I guess.
Overall, if I have all of the numbers down correctly I think the guide implies.
EBIT margins down about 250 basis points this year versus versus 2019 could you characterize how much of the step down is related to the COVID-19 costs, which are hopefully temporary versus some of the more cash.
Pressures on freight and wages that could persist moving forward just trying to think about how that EBIT margin.
Progressed as we move beyond this year. Thank you.
Mark It's Michael Hartshorn, we're obviously optimistic about our prospects for the balance of the year end, we hope to do better than our sales and.
Margin forecast, we do expect expense headwinds through the balance of the year and if you breakdown the COVID-19 caused at some point.
Those will not to continue but we expect them to be in place our guidance assumes that theyre in place throughout throughout the year.
Wage cost, we would expect to persist and at some point.
Sure.
We would expect to persist throughout the year end, we'll see how that balances out over the coming years, but overall the recovery to 2019 margin levels is highly dependent on strong sales performance in over time and again the persistence of the cost inflation, we're seeing today, especially in things like free.
Yeah.
Your next question comes from Adrian <unk> from Barclays.
Yes.
Good afternoon, let me add my congratulations on the top line improvement.
Barbara My first question is for you on the merchandize margin of 85 basis points I just wanted to make sure that that is separate and aside. So you don't have inbound freight in that number because obviously, we got a separate number for total freight. So that's number 1 and then can you give us the components of AUR versus.
You see all of that I'm imagining your AUR is up meaningfully or you're getting a relative pricing umbrella from frontline, meaning that if your 20 to 60 per cent of frontline and frontline is clean that you're able to maybe clear at a higher price and lastly was mix from home versus apparel.
Did home grow faster and was that an impact on the.
Merchandize margin. Thank you so much.
Yes. This is Charles let me just take a couple of those that you mentioned 1 just in terms of whats included in merchandize margin. When you say inbound freight ocean freight is included in that number.
And so that's embedded and we had mentioned previously that we expected meaningful headwinds promotion free and we saw those and expect those to continue as we move through the year.
And then I think you also had a question about apparel versus non apparel and sort of the mix.
We saw broad based improvements across the store.
But.
Non apparel home continued to be the strongest category, but we definitely saw an improvement in apparel as well as we are.
As we moved through the quarter and then Adrian on on AUR AUR was up slightly.
During the during the quarter.
Okay Alright.
Go ahead.
Just relative.
Other parts of your asking price relative to department stores, because they promoted at lesser AUR is up.
Yes.
Rising umbrella.
Yeah. So so our AUR is up it's up slightly.
But compared so that is just we just offered a great too.
2 department store pricing at this point in time of the price value equation is ease of business that we're in the relativity to it.
But there's at this in a moment our price values are actually stronger than they normally would be to department stores.
Okay, great and if I may just on hourly payroll.
Yeah, I don't really know how to ask a bit because I know I know these are sensitive numbers, but if we were to look at free as a percentage of sales and now I'm talking about the outbound trade because now I know that the inbound freight inside the merch margin.
That that line that debt deleverage 75 basis points versus the line items that is wage or hourly payroll what would be the sort of at.
Order of magnitude like is it at the payroll line 3 times as much as the free wine or something like that just mentally like I can understand like if 1 of them at moving materially higher than the other which has the bigger impact on the P&L. Thank you very much Adrian and Michael Hartshorn again, we wouldn't give you specifics other than what we've <unk>.
Provided in the guidance other than to say okay.
Both both freight and wages first on on freight given the robust overall economic rebound. There continue continues to be significant supply chain congestion and cost having a free versus our original expectations and so our current guidance assumes additional escalation as we move through.
The year on on wages.
That also remains very dynamic we've made market by market adjustments in our stores as we always have to attract talent.
Housing labor.
<unk> is very competitive and we've made additional adjustments in all of our distribution distribution centers and that's also reflected in our guidance.
Okay. Thank you very much.
Yes.
As a reminder to ask a question press star 1 on your telephone where there are 2 of.
A lot of every 1 time for questions. We ask that you. Please limit yourself to 1 question each.
Your next question comes from Kimberly Greenberger of Morgan Stanley.
Okay, great. Thank you so much.
Barbara obviously, the prudent planning for sales going forward at very Conservative plan.
Compared to the very robust first quarter of that that seems very very prudent to us I'm wondering.
Are you seeing any slowdown so far here in the second quarter debt.
At sort of underscoring your desire to plan more conservatively or are you just looking forward and saying okay. There there were some really.
Sort of 1 time benefits as it were of that happened here in the first quarter. So it's just naturally prudent for us to plan more conservatively.
Kimberly I think we're at I think we're thinking more about you know the first quarter and the lasting impact from some of those factors you know at the stimulus payments that were out there and and what does that really mean as we go forward. So we're comfortable with with the number of where we sit today, but that's really some of those pent up demand some of those.
Things that we're not sure of how that goes forward with completely at this point.
Yeah, I know it's at very.
Very uncertain path forward. Thank you for that at.
Michael you talked about.
You've got a plan this year for Covid cost of basically continue through the year. So I'm wondering if you can just sort of isolate the COVID-19 costs and based on what you experienced here.
In the first quarter and then whatever you've got in your forecast for the second third and fourth quarter can you could you just give us a rough dollar amount of what you're budgeting this year for Covid cost.
And and.
Would it be fair to assume that those costs would roll off in future years.
Hi, Kimberly this is Travis.
Let me just kind of do a little bit of a reset remind folks kind of how we talk about COVID-19 costs. We report COVID-19 costs as net which is to say that they include pandemic related increases in cost per things like.
Personal protective equipment extra cleaning, but there are offsets within that number as well for cost savings that we took for things like travel and when we closed our fitting rooms.
As the pandemic subsides apparel is becoming more important.
We think it's important to take some actions, including reopening of fitting rooms, which is going to eliminate some of the cost savings that we had before and it drives up the overall the overall COVID-19 cost number.
For Q1.
Reported the Covid costs were about 35 basis points on the corner.
For Q2 and going forward, we're estimating knows that they will be around 100 basis points for the balance of the year again that assumes where.
Where we are today that we have not removed and we've not built into the plan to remove any of the additional cleaning activities and protocols that we've put into place having said that we will continue to monitor guidance from the CDC and other health experts, we will continue to prioritize the health and safety of our associates and our customers.
Debt to the extent that that guidance changes then we'll we could reevaluate some of those protocols.
And adjust those plans and Kimberly to answer your question on how long they last those costs are not permanent so.
As the pandemic.
Resides those costs would come back out of the business.
Fantastic. Thanks, so much.
Your next question comes from Chuck Grom from Gordon Haskett.
Hey, Thanks, Great quarter. My question is from on the first quarter. You know you originally got at 2 comps down 1 of the 5% and you're far exceeded that of <unk>.
So if you guys could just unpack the outperformance either by category, how much of a bank with stimulus.
Just wanted to ask that question of effects.
Yes, that's right.
Okay.
Looking ahead Barbara.
Okay. So so if you're talking about by by merchandise category.
Oh, yes.
Yes.
We will start there. So at was it was very broad based obviously homeless home is you know accelerated for everyone and we still feel very good about home as we go forward, but the additional acceleration really came out of reach.
Came out of apparel and that was also very broad base has the customer kind of came from just Brian activewear moving into more real what I would call real apparel from even though its casual but still.
At our classifications of products, so and that was broad based and so that's why we feel good about apparel as we go forward.
And then just overall in the quarter.
As Barbara mentioned in her opening comments there are a number of factors that led to the increase.
Obviously, the stimulus very difficult to put a number on $400 billion.
Of stimulus to the consumer debt.
Continues.
We will continue federal stimulus Theres also states that have stimulus. So that will continue through the second quarter, if not if not throughout the year with some of the child.
Credits.
There is the vaccine ramping up.
And so customers are becoming more and more confident returning to brick and mortar stores, we expect that to continue as the vaccination rates increase.
If you look at our regional performance as we said in the commentary Midwest at the top performing region.
Of our biggest states, California performance improved significantly versus the prior quarter as government restrictions eased and as comp was comp was relatively similar to the chain seen average. So there is a lot of different factors driving the comp in the first quarter.
Great. Thanks, so much.
Your next question comes from Lorraine Hutchinson from Bank of America.
Thanks, Good afternoon, Barbara could you discuss the availability of product in the better trend in categories. And then do you think there's sufficient availability for you to start rebuilding your pack away balances until the ball Kay.
Oh sure.
Avail building into better trending businesses.
I would say all I would say overall of the availability is there to chase.
We have of large merchant team and so they're out there looking for at the goods constantly I think there's 2 things about at 1 is you know the the trends are shifting in front of us. So things are moving very very quickly I should start with that and the trends towards just say like back of active apparel to other parts of sportswear are shifting quickly and so far I.
I'd say, we yes, we have been able to chase chase the business get we need get the availability of that's out there. It's more of getting the combination of kind of getting ahead of the trends that at a shifting of the outside world that we're shifting with it and that we get ahead of it but yes, I feel comfortable that the availability is there and the businesses that the customer wants at this moment of time.
And then at say it again at the railroads second question.
Let me just.
Wondering how you expected pack away to evolve over the coming quarters, if there is sufficient availability.
For you to be at the rebuild that.
We think we'll build pack away over time closer to historical levels, but I do think it will take time as were as we are very much chasing the business.
And if that chase for it to continue.
It would take us a little bit of times at his pathway fluctuates also it's not only that the availabilities. There. It's that it's the right product the right values of right. You know we'd have to have all of the right metrics to be going at the pathway at the same time. So I do think it'll take a little bit of time, but but there is sufficient availability to be driving our business end to buy pack away at and you know.
The total picture.
Your next question comes from Ike <unk> from Wells Fargo.
Hey, guys just a quick 1 for Travis was on the free headwinds you gave us for Q1, just curious should we assume at that should be run rated through the rest of the year or should that cost headwind essentially moderate based on the contracts you guys have.
Hi, Kyle.
Michael I'll take that first the even the contracted rates were significantly higher than in 2019 levels.
In addition.
Like other retailers were incurring higher cost to move freight really both internationally and domestically. We're spending we have higher cost to land freight when expected so given the.
Robust overall economic rebound.
As I said earlier in the call we expect our freight.
Cost of escalate for the remainder of the of the year end Thats included in our guidance.
Thanks.
Next question comes from Michael Binetti from Credit Suisse.
Hey, guys. Thanks for taking my questions here.
Just 2 quick ones, we see the sales guidance I appreciate the conservatism I think it's been the right move through the year here and what's the visibility of where it is but if sales trends do remain.
Strong as strong as they were in <unk> relative to what you thought.
A pretty significant upside sales scenario can you tell us how to think about sales flow through in the model relative to the framework you've told us about in the past and then Barbara just a comment you made earlier.
Why not extend of the relative value backed up to the normal rate relative to the department stores.
Why hold at lowers if theyre moving higher just so we can think alongside of that.
Sure listen Department stores didn't promote as much for the first time at a very long time, and so I think we'd have to see.
What that you know what that looks like because you know their of their promotional cadence at promoter for years and years of year. So so we'd have 1 quarter under their belt with her at the AUR is probably higher and they haven't promoted I think we have to see what happens in the future and also I think it's important while we can get great values to the customer you know price value is at.
Absolutely critical to our customer and so we're going to value of the goods. The way, we think the bouts of customer expects from where the customer expects them to be and so you know raising the AUR end and changing your value equation is of very delicate thing and so I think having 1 quarter.
Underneath our belt with lots of money stimulus of lots of things going on and they're driving sales.
I think I think its of it very very much remains to be seen and it is very important in off price and critical in our business model off of that price value of the customers very savvy.
Shopping all the time, so again not sustained yet in department stores don't know, how that's really kind of land and then with all of the money and the stimulus out there don't know how to take that as a go forward strategy is to read at this moment of time.
And at this is Travis in terms of the operating margin flow through on above.
Sales of above plan, we continue to expect comp outperformance to drive increased operating margin flow through of compared to the guidance that we provided but I don't think at we would necessarily expect it to be quite as strong as we saw in Q1, but we do expect operating margin improvement as comp exceeded our plans.
And then the flow through on this guidance we'd look.
Would look like it has historically.
Thank you.
Your next question comes from Marni Shapiro from retail tracker.
Hey, guys congrats.
And Barbara at the Department stores, we don't know, where Theyre, calling Nick Langley I talked of promotions.
Yes.
If you could give me a little bit of guidance around your traffic during the quarter and what youre seeing around things like our schools reopened the Easter holiday did you see of pop around when the stimulus checks pop keep came into hand or around mother's day, just trying to get of feeling about the cadence of the traffic of it's an everyday or.
She also being sparked to come into the store by events.
Yes.
But I can talk a bit about the trends again generally we don't we don't provide sort of detailed traffic trends by month, but given the timing of tax refunds and stimulus payments you can imagine net sales were stronger later in the quarter than at.
At the beginning in terms of traffic trends again traffic for us as transactions at.
Mirrors pretty close to our sales trends.
Fantastic Best of luck for the summer guys.
Our next question comes from Laura Champine from loop capital.
Hi, Thanks for taking my question.
To that previous point Travis when you when you guys set the guidance for Q2 sales did you just take the trend before the stimulus and extrapolate out there or how did you what was the basis of that Q2 sales guide.
Of the.
Comp sales kind of number again I think Michael.
We've talked about of there are a number of factors that drove the Q1 performance.
At stimulus pent up demand vaccine, rollouts et cetera, and it's difficult to precisely predict how long some of those will last and so.
We took that into account in and projected forward, what we think of.
Our current plan at best guess for Q2, and we certainly hope to do better.
Got it in the back half related to that is there anything in your your expectations for the benefit from the enhanced child tax credit and end historically when this sort of stimulus has come through.
Do you see at in your numbers.
Well I would say, it's hard to stay at this point.
We've not seen this type of stimulus even in the first quarter.
Hum in and of very long time.
As Travis said.
We set a baseline and we clearly hope we can do better than these.
The guidance that we put out.
Understood. Thank you.
Your next question comes from Jay <unk> from UBS.
Great. Thanks. So much my question is about the full year guidance, specifically about the fourth quarter.
When we get to the fourth quarter net of January you'll be lapping the stimulus that happened in January how are you thinking about what impact that might have on the business of 4 quarter in the fourth quarter and how my fourth quarter sales and gross margin compare to what we saw.
This past year.
Yes, I think we will provide guidance as we move through the year right now.
We provide guidance.
Guidance quarter by quarter. So we'll have more to say as we move through the year on the fourth quarter.
Would you think that the January sales would be down year over year.
We wouldn't comment at this point.
Got it okay, well then maybe if I can ask 1 more.
Are you still seeing right now the impacts of the stimulus is there any way to measure whether whatever youre seeing in may of sort of still a tailwind from the stimulus that was distributed in March and April or is now some other factor of become a bigger driver here in may.
Yes, we wouldnt as Barbara said at the beginning we don't comment on it's our practice not to comment on intra quarter trends I can tell you.
Certainly in the first quarter, we think stimulus head of.
At a significant impact.
Other factors that we called out earlier.
Got it okay. Thank you so much.
Your next question comes from Paul Trussell from Deutsche Bank.
Hi, Good afternoon. This is at Christina Cotai on for Paul I, just wanted to add my congrats on a great quarter.
I wanted to circle back to merchandise margin and the strength that has been there for the last 3 quarters. How do you see the current environment evolving from just of buying perspective, and can you just speak to the sustainability of these trends to potentially drive pre COVID-19 gross profit margins. If you essentially maintain these strong sales trends.
Yeah in terms of merchandize margin again, the buying environment remains very dynamic.
Of our margins will vary significantly based on our overall sales performance.
We've talked over the last several quarters at the buying environment has been quite strong and we've benefited from that obviously in the first quarter. We also benefited from significant above planned sales, which drove faster turns and fewer markdowns. So those were all positive.
In terms of how long that sustains.
Well, we'll see I mean, we have our best guests built into the guidance end and we obviously hope to do better at extent, we do we would expect to see some some further benefit.
Got it that's helpful and.
I was wondering if you could talk a little bit about more of what youre seeing as it relates to just general consumer willingness to return to your stores do you have any data on this you know what portion of your pre pandemic shoppers have returned to shop with you regularly and are you seeing any demographic changes, perhaps all of their consumers are returning to your stores is back.
Things are being rolled out here relatively quickly.
On the on the consumer while we are seeing is the consumer we've seen our consumer shop less but they are buying more.
During their shopping trips the demographics of our customer base did skew younger during the peak of the pandemic given older customers hesitancy to shop in brick and mortar stores.
We believe customers of all ages of returning to stores with the increase vaccination rates and that's especially true with older customers, where the vaccination rates are much higher overall, we know that she continues to prioritize value and convenience when deciding where to shop and with the.
Large number of retail closures.
She obviously has fewer places to shop now.
Right best of luck.
Your next question comes from Paul that's from from Citi.
Hey, Thanks, It's Tracy Kogan filling in for Paul.
2 questions I was hoping first you could talk about.
The marketing spend in the quarter and whether you've leveraged that spend and what your expectations of off of the here and then secondly can you talk about the rent deals that you saw I guess part of deals you signed last year for that 1 think of this year.
And and how that's trended as you're signing new deals right now thanks.
Sure on the on the leases.
The real estate market is good.
You know both from a supply standpoint end.
What we're seeing in leases I wouldn't say specifically on a call like this but.
The significant of the.
Uh huh.
Rent.
The favorability given the number of leases across the whole chain would not be significant on an overall leverage for instance.
On sales on marketing.
You know for US marketing continues to be of good reminder, to our customers over and overall our strategic tuck.
Our investment here.
It has been to move to more digital I wouldn't provide more specifics on an on marketing.
On this call.
Just going back to the real estate at any changes from what you were seeing last year versus this year in terms of favorability.
We're getting better.
I'd say I'd say the store is still developing Tracy so we'll see how it develops over the over the next couple of years. Obviously the availability is good and we hope to take advantage of that given all of the store closures.
Got it thanks very much guys.
Your next question comes from Dana Telsey Telsey Advisory group.
Good afternoon, everyone of nice to see the progress.
It was mentioned about Dd's and the release of I think of little bit at the beginning what are you seeing in dt's. It sounds like it took a an upturn for the for the better both in terms of sales and operating profits and anything to note there on store openings of Dd's versus Ross and what you're what you're seeing either in terms of favorability of leases.
And also productivity this year at Alaska. This year, the 2 L O L. L Y. Thank you.
Dana I would say that the story is very similar for <unk>, we did see strong gains in sales and operating.
<unk> for the period versus our expectations I would also say that Dd's has the similar wage freight and COVID-19 cost expense pressures.
That we're seeing in Ross and I would say we feel.
I feel really good about the Dd's performance in terms of new store productivity, we don't breakout of DD, specifically, but overall new store productivity continues to be in the 60 to 65 per cent range that we've talked about historically on the real estate rollout, we would expect to beyond this year dd's grow duties at 20 to 25 stores per year.
Thank you.
Your next question comes from Yeah.
From Barclays.
Okay. Thank you so much for taking the question I was just hoping you could update us on your thoughts as to potentially continuing to bring down your debt balance given at your where the cash balance currently stands at any further thoughts on.
Improving debt balance sheet. Thank you.
Sure are our expectation is that we're going to pay down our existing debt. So we're not going to refinance it.
The timing if it's economically advantageous to pay off early we would consider it but if it's not we would expect to pay off.
Our existing debt at maturity.
Thank you so much.
That was our last question I will turn the call over to Barbara revenue for closing comments.
Thank you for joining us today and for your interest in Ross stores have of.
Good day.
This concludes today's conference call.
Thank you for participating you may now disconnect.
Okay.
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