Comment on the changing landscape with respect to department stores and other major chains, in terms of consolidation.

Looking at this year on short-term basis, there is some negative as Federated closes some locations and runs going out of business sales and they have started that in January and continue it in Q1. The positive is that there has been inventory as May Company resources, many of those also were Federated resources, have additional product. Additionally, it creates a situation where the sector becomes more important to the marketplace and so there aren''t specific vendors but across the board it enhances the relationships that the company’s sector would have with the marketplace.

What’s the company’s comment to the 185 basis points margin improvement in the quarter? Discuss the contribution from improved merchandise margin as opposed to occupancy leverage and distribution center expenses.

Gross margin for the quarter benefited from a 100 basis points improvement in merchandise gross margin inclusive of about 70 basis points of higher shrink and freight. Distribution costs improved by about 30 basis points, and the company had about 55 basis points of leverage in occupancy and buying.

Comment on your current distribution center capacity. ?

The company now has four DCs. Ross Stores has enough capacity to take itself beyond 2007 and any future plans will depend on what growth looks like after 2007.

Can you give an update on the engineered standards?

Engineered standards are going exactly as planned. The company completed the roll out in January. It is seeing the gradual improvement that has been planned all along and anticipates over the next couple of years Ross Stores will continue to see that same type of improvement.

Have you seen big turnover in the DCs?

The turnover is right in line with what the company has seen historically and it plans on. It''s right in line with expectations.

Comment on the price points in your differentiation Ross to dd’s and what will be the key opportunities to improve the economics there?

The biggest issue is probably a 12% to 15% differential on average price between the two companies and it creates the problems in moving more units, selling more units, processing more units, throughout the whole network. There are cost issues there that the company is working through and trying to come up with better ways to run the business.

dd''s is clustering an opportunity to keep the stores in the same market for shipping, for freight benefits, for management benefits. Is that part of the plan?

The plan is to keep it in the same markets because there are opportunities in those markets. That''s the company’s corporate strategy. Ross Stores wants to stay in existing markets. There’s no reason to expand beyond existing markets there.

What is the impact of Easter on March?

Essentially the company is going to push a lot of sales into April and it has forecasted March for the month to be up 1% to 2%, and April to be up 7% to 8%. So it''s fairly significant.

Was that pilferage in your store from employees, customers or was there a book physical inventory reconciliation issue?

A little bit of both. A portion of the shrink was related to the systems and distribution channels experienced in the past. The management believes that''s completely behind the company now. The company also quantifies how much of it was in-store related shrink, both internal and external, and is targeting both of those issues. The company hasn’t talked about exactly where shrink was running. Historically, Ross Stores has been below retail average of 2%. Shrink for the year 2005 comps is about 35 basis points.

Comment on the systems changes that you want to make to address localization of merchandising in your Southeast stores especially in light of the challenges you have had with your systems vis-à-vis merchandising more broadly across Ross?

The objective of what the company wants to do is make sure that the merchandise assortment in each store is more tailored to that particular store''s needs and trends. The company is looking through the different ways of doing that and looking at a balance of making that as effective as possible without incurring incremental risk. Part of the way to manage that risk is to be very cautious about how to pilot changes.