ROST
#I think the way I would look at the situation is whenever we buy packaway, whether it was this past fourth quarter or any fourth quarter, those are the metrics we look at: price, value, timing of when we want to bring it in.
So we're just going through the same process we normally go through.
So when we went out and there were goods available, we went to see if we thought it met the criteria of where we thought we were going, and in some places ---+ you're assuming that the vendors have merchandise, they're going to move on a price.
Right.
So sometimes vendors move on the price based on their needs.
It's the end of the quarter, it's the end of a half.
So there's a lot of variables that we can't control.
The only thing I can say is that we bought what we thought was appropriate.
We ended with 47% versus 45%.
We feel comfortable with that number, and ultimately, we're only going to buy what we think is the right price.
Packaway is very hard to nail down.
In a quarter in the EOM, there has to be ---+ there is some art to buying packaway.
You have to feel comfortable that after you have put that in there, when you go to bring that out, whether it's four months later, eight months later, six months later, depending on the product, that the value is right.
There's a lot of variables that we can't determine, as we're out in the marketplace, but that's really what the buyers do every day of the week.
So that was really our assessment in the fourth quarter of how we felt about packaway.
Now, whether vendors will move off the price as we get further into the next season.
Maybe, maybe some people will hold inventory over.
I can't answer those questions for the vendors.
I can only answer what we feel comfortable in doing, which is the same thing we've done every season.
Not really, <UNK>.
Vendors aren't going to be quick to be telling us that they're going to have more or less inventory.
So it's really ---+ each vendor does their own thing.
I can't really determine that, to be honest with you.
So <UNK>, as you say, next year, we haven't released guidance for 2017 yet.
But I think we've said before that we would expect that over the next few years as the economy ---+ or if the economy picks up, that we may see more expense pressures, not just us, but in general, companies and retailers will face more expense pressures, including higher wage rates.
Obviously, as we start to plan 2017, which won't be for some time, but as we start to plan for 2017, we'll start to look at what are the kinds of things we can put in place to offset those kinds of expense pressures.
Too early to comment on those now, but that's the process that we would go through.
Well, just to be clear, we ended the year with EPS up 14%, despite the wage increase on a 4% comp.
Certainly in between a 3% and 4% comp, we think we can get to double-digit EPS growth over the longer term.
It's worth underlining that point.
Our guidance this year is obviously 1% to 2% comp, and that's what's driving the EPS guidance.
As <UNK> <UNK> just said, at a more normalized comp, I think we've said in the past that our long-term model includes a 3% to 4% comp.
At those levels, we expect low double-digit EPS growth.
For us, it's a bit of mix, but it's also, we continue to operate with lower inventory levels, which means we're taking less markdowns, we're turning faster, and it has an impact on AUR, you're selling at higher prices.
I'd say so between those two, mix and our lower markdowns, is what's driving the higher AUR.
<UNK>, on capital, at least over the next couple years it will look very similar to what we said for 2016, in the, call it $425 million to $450 million range, I would say.
So nothing extraordinary currently in our longer ---+ at least over the next couple years.
On the other two pieces of your question, customers, we operate in a very ---+ we operate in a pretty large and very competitively fragmented marketplace.
So when we ask our customers if you hadn't spent that $30 at Ross today, where would you have spent it.
We get a long, long list of companies that they would have spent that money at.
So from a cross-shopping point of view, we're competing with everyone, which is why we need to make sure we have the best possible values out there.
In terms of your ---+
It depends on the particular store, the particular market that we're looking at.
Nationally, I think you could probably just pick our closest peers, and nationally, obviously, they would show up on that list.
But the point I'm trying to make is, none of them account for a very large share of that list, that the list itself is very fragmented and spread between many, many competitors, which is why we need to make sure that we're sharp versus all those competitors.
The last part of your question, though, big box department stores going out of business, and how that affects any of our individual stores, it's really hard to say, because the truth is that there are lots of things that go into the business that an individual store does, including traffic levels to that strip mall, the competitive intensity in that strip mall.
Sometimes, actually having more off-price competitors in that strip mall can actually be helpful.
So it's hard to say whether or not a large retailer nearby going out of business helps us or hurts us.
It depends who replaces them in that space, what happened to the traffic level in that strip mall, et cetera.
Sure, so the fact that we brought down our average inventory per store by about 40% over the last several years has presented us with a few opportunities to make the stores easier to shop, so we've certainly been doing that.
Expand into faster-growing or new categories.
Again, we've been doing that.
And then as you're referencing, also to reduce the store size.
Obviously that's feasible for new stores rather than existing stores, but we've also been doing that to some degree as well.
I would say the lower inventory levels have given us the opportunity to do a number of things with regard to the size of the store and how we use the space in the store.
Home performed better than the Company, and it was really driven by gift-giving in Q4.
The thing about the home category, it's so broad-based.
There's so many product classifications in there.
When you think about it versus apparel, there's just more things to go into, which is why I feel that home is a good category for us to grow.
So what we said in the past, <UNK>, it hasn't changed for 2016, that at a 3% comp we should be able to lever SG&A and 4% comp for occupancy costs.
Yes, to be clear, I was just referring to the fact that the overall economy, there seemed to be a number of sort of concerns and questions out there about the overall economy, and we don't know to what degree that will impact retail and our business over the coming 12 months.
Yes, that's actually one of the things ---+ as we put together the budget for this year, as you'd expect, one of the things that we looked at were any efficiencies, any areas of the DC, any processes in the DC that we could reengineer or automate, and certainly, that's one of the areas that we've pursued, in terms of coming up with offsetting savings.
I would say it's just one of the areas.
There are other areas in the Company as well such as stores, processes in stores, G&A, supply costs, et cetera, that we've also looked aggressively at.
So the absolute dollars of packaway did drop during the quarter, <UNK>.
So as we've talked about in the past, we capitalized the cost to store and process packaway, including fixed cost, and for us, we charged gross margin or charged cost of goods sold when it sells.
So for us, the absolute dollar value of packaway fell during the quarter, which means we had to take a charge, and that was greater than the previous year.
Of the 100 basis points of distribution center deleverage in the quarter, all of that was related to the packaway timing.
Sure.
So we don't have any plans right now to launch a loyalty program.
We're always willing to look at new ideas.
But frankly over time, we found the most effective way to build customer loyalty with the off-price customer is to consistently offer great deals, great bargains.
So more than anything else, that's how we build loyalty.
Juniors performed in line with the chain average, and it was up against very strong compares in the prior year, so we're pleased with the junior business.
As it pertains to the mix, you're talking about the actual mix we own in our assortment.
It's hard to tell.
Go ahead.
I would say, <UNK>, that most of the port issues were really in the first quarter of last year.
And given that timing, I think there would be very little that we bought that long ago, that would still be in packaway.
That said, the port slowdowns could have had some knock-on effects in terms of inventory that became available in subsequent quarters.
Hard for us to identify and quantify that, but certainly anything that we bought in more recent quarters could well still be in our packaway balance.
It's hard to tell at a certain point what was coming from just business being off in the department store sector.
The supply that came from there, and the supply that came from the port.
After a while, it just became one large supply.
Thank you for joining us today, and for your interest in Ross Stores.
Have a great day.
