Ross Stores, Inc. (NASDAQ:ROST) Q2 2023 Earnings Call Transcript

Brooke Roach: Good afternoon, and thank you for taking our question. Barbara, you talked about the opportunity to continue to improve your assortment as you move forward, following some early gains. Is there any change in your mix this quarter between good, better, best? And how are you planning those buys between the assortment of good-better-best into the second-half of the year? Thank you.

Barbara Rentler: Change in good-better-best. I don’t really think there was a significant change in our good-better-best strategy. Best has been out there in the market a while there’s been a lot of availability. So a lot of what for this past quarter that was effect of what you would have seen on the floor in terms of the three buckets was the amount of merchandise that we chased and the availability in the market. And so since the availability in the market is pretty broad-based between good-better-best, I mean, as usual, not every class, every price point. I think the assortments are more reflective of what we’ve been able to chase. And I would say the same thing for fall. Obviously, we have a strategy around balance. But when you’re chasing as much as we’re chasing that kind of really goes to what the customer is voting on and what we can what we can get in the market.

I think the merchants in Q2 did a very good job of getting values on the floor, chasing back into more flex you wanted, and trying to hit the appropriate levels of each one of those buckets because the customer votes every day. So we could want a particular good-better-best on the floor that’s not necessarily what the customer wants. So I think the merchants have really been out in the market and really looking for great deals, which have been out there and so it fluctuates and I would expect it would fluctuate in Q3 and Q4, but we are looking for each one of those buckets and great deals in all of them.

Operator: And the next question comes from the line of Dana Telsey with Telsey Advisory Group. Please proceed with your question.

Dana Telsey: Hi, good afternoon, everyone, and nice to see the nice results. As you think about the current environment, I believe last time Barbara, you had mentioned the focus on value that the consumers are searching for and you could do a better job of it. How much is the improvement that we saw this quarter is the comparison given the increase in traffic, how much of it was the consumer, and how much of it on your journey of better value for better brands, how much of it is your progress there, and where are you versus relative to where you want to be? And then just any updates on new-store productivity levels, how those are doing versus your plan? Thank you.

Adam Orvos: Gain on the productivity levels, they haven’t changed. They’ve averaged between 60% and 65% of average mature store for the chain and that has not changed over time. So on traffic, your question on traffic. So, traffic was the main driver of the comp for the quarter.

Barbara Rentler: Where is the customer on the journey? I think the customer with moderating inflation is feeling a little bit more room to spend money. But again, our customers are moderate-to-low-income customers. So they still faces inflation in front of her because she has just the higher costs from necessity she has to spend. So I think on our journey with the customer in terms of better value and better values on the floor, I think it’s a continual process, right? The customer votes and the merchants are out buying goods and responding to what she is voting on. So, I think from — in second quarter versus first quarter, I think the merchant team did a better job of offering her broader assortments and better values and I think we’ll continue to make progress on that and it will seek its own level.