Good afternoon, and welcome to the Ross Stores Fourth Quarter and Fiscal Year 2017 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 2016 Form 10-K and fiscal 2017 Form 10-Qs 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 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 2017 performance, followed by our outlook for 2018. Afterwards, we'll be happy to respond to any questions you may have. .

As noted in today's press release, despite our own difficult multiyear comparison and a very competitive retail climate, sales and earnings were well ahead of our expectations for both the fourth quarter and the full year.

We are pleased with these results, which reflect our ongoing success in delivering broad assortments of compelling bargains to today's value-driven shoppers. .

Earnings per share for the 14 weeks ended February 3, 2018, were $1.19, up from $0.77 in the 13 weeks ended January 28, 2017. For the 53 weeks ended February 3, 2018, earnings per share grew to $3.55 compared to $2.83 in the 52 weeks ended January 28, 2017.

Both the quarter and fiscal year include a per share benefit of approximately $0.10 from the 53rd week and $0.21 from the recently enacted tax reform legislation. .

Excluding these items, earnings per share on a 52-week basis for both the 2017 fourth quarter and fiscal year periods grew 14% over the prior year. Net earnings for the 2017 fourth quarter were $451 million, up from $301 million in the prior year. Fiscal 2017 net earnings grew to $1.4 billion compared to $1.1 billion in fiscal 2016. .

Total sales for the 14 weeks ended February 3, 2018, grew 16% to $4.1 billion with comparable store sales for the 13 weeks ended January 27, 2018, up 5% on top of a 4% increase in the prior year.

For the 53 weeks fiscal year ended February 3, 2018, sales increased 10% to $14.1 billion with same-store sales for the 52 weeks ended January 27, 2018, up 4% versus the 4% increase in 2016. For the fourth quarter, sales trends at Ross were fairly broad-based across all major merchandise categories with Children's performing the best.

Geographically, Florida was the strongest region. .

Our fourth quarter operating margin of 14.6% was up 95 basis points from last year. This improvement was mainly driven by strong merchandise margin and expense leverage from solid gains in same-store sales as well as the impact of the 53rd week. For the full year, operating margin increased 50 basis points to a record 14.5%.

dd's DISCOUNTS' customers also continued to respond positively to its merchandise assortments, leading to another quarter and year of robust gains in both sales and operating profits. .

As we ended 2017, total consolidated inventories were up 9% over the prior year with packaway levels at 49% of the total, similar to last year. As planned, average in-store inventories were up 1%. As noted in today's release, we plan to make competitive wage and benefit-related investments.

These include raising our minimum wage to $11 an hour, providing onetime bonuses for eligible hourly and store associates and improving our paid leave programs.

We believe these actions will allow us to continue to attract and retain a talented and growing workforce of over 82,000 associates who have been critical to our past performance and will be key to our future success. .

Further, our board recently approved an increase in our stock repurchase authorization for 2018 to $1,075,000, 000, up from the previous $875 million. The board also approved a higher quarterly cash dividend of $0.225 per share, up 41% over the prior year.

The increases of our shareholder payouts for 2018 reflect the current strength of our balance sheet and our ongoing ability to generate significant amounts of cash after funding growth and other capital needs of the 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 continuing commitment to enhancing stockholder value and returns. .

Now Michael Hartshorn will provide further color on our 2017 results and details on our fiscal 2018 full year and first quarter guidance. .

Thank you, Barbara. .

Let's start with our fourth quarter results. Our 5% 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 95 basis points to 14.6%, which includes a 70 basis point benefit from the 53rd week.

Cost of goods sold improved 50 basis points in the quarter, driven by 40 basis points of higher merchandise margin and occupancy costs that were lower by 45 basis points. These gains were partially offset by a 20 basis point increase in buying cost and higher freight expenses of 15 basis points.

Selling, general and administrative expenses during the quarter were lower by 45 basis points due mainly to leverage from both the 5% same-store sales gain and the impact of the 53rd week. .

For the fiscal year, operating margin increased 50 basis points to a record 14.5%, which includes an approximate benefit of 20 basis points from the 53rd week. .

As Barbara mentioned earlier, fourth quarter and fiscal 2017 earnings per share results are inclusive of an approximate $0.10 benefit from the 53rd week and $0.21 related to the recently enacted federal tax reform legislation.

The tax savings amount is comprised of a onetime earnings per share benefit of $0.14 from a revaluation of deferred taxes and $0.07 from a lower fourth quarter tax rate. During the quarter, we repurchased 3 million shares of common stock for a total purchase price of $226 million.

For the full year, we repurchased 13.5 million shares for an aggregate price of $875 million. .

Let's turn now to our outlook for 2018. Our guidance reflects the positive impact from recent tax legislation and the aforementioned competitive wage and benefit-related investments. For the 52 weeks ending February 2, 2019, we are forecasting earnings per share to be $3.86 to $4.03, up from $3.55 for the 53 weeks ending February 3, 2018. .

total sales are projected to grow 3% to 4% for the 52 weeks ending February 2, 2019, compared to the 53 weeks ended February 3, 2018. This year-over-year increase in total revenue is being affected by the 53rd week, which added approximately $219 million to sales in the 2017 fourth quarter and fiscal year. .

Comparable store sales are expected to increase 1% to 2% on top of 4% gains in each of the past 3 years. We plan to add about 100 new stores this year consisting of 75 Ross and 25 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 project that operating margin for 2018 would be in the range of 13.3% to 13.5% compared to 14.5% in 2017, which, again, benefited by 20 basis points from the 53rd week.

The forecasted decline reflects our plans for relatively flat merchandise gross margin and the impact of the previously mentioned competitive wage and benefit investments. .

Net interest expense is estimated to be about $600,000. Our tax rate is projected to decrease to approximately 24% to 25% due to tax reform legislation. We expect average diluted shares outstanding to be about 374 million.

Capital expenditures in 2018 are projected to be approximately $475 million and depreciation and amortization expense inclusive of stock-based amortization is forecast to be about $430 million. .

total sales are projected to increase 6% to 7%, we expect to open 23 new Ross and 6 dd's DISCOUNT locations during the quarter. First quarter operating margin is projected to be 14.6% to 14.8% versus last year's 15.2%. In addition, net interest expense for the quarter is estimated to be about $600,000.

Our tax rate is expected to decrease to approximately 23% to 24%, again, due to tax reform legislation. And finally, weighted average diluted shares outstanding are projected to be around 378 million. .

Now I'll turn the call back to Barbara for closing comments. .

Thank you, Michael. .

Again, we are pleased with our better-than-expected sales and earnings gains for both the fourth quarter and fiscal year. As previously mentioned, these strong results were driven by our ongoing ability to deliver the best bargains possible to today's value-focused shoppers.

As we enter 2018, we continue to face tough multiyear comparisons and fierce competitions from both online and brick-and-mortar retailers. As a result, we continue to take a prudent approach to forecasting our business, so we certainly hope to do better. Longer term, we remain very confident in the strength of our business model.

Our performance over the past several years demonstrates our proven ability to keep ongoing profitable market share gains by consistently offering the exceptional values our customers have come to expect. This remains our top priority as we know it will always be the key to our success.

Looking out over the next several years, we continue to believe that with the proper execution of our strategies, 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 comes from Daniel Hofkin with William Blair. .

Just a couple of quick questions. I guess first, Barbara, per your comment about competition, obviously, remaining intense.

Are you seeing any evidence of that becoming more intense in recent quarters, either brick-and-mortar or online? Or is it just sort of a steady trend there and that's -- you don't expect it to abate? And then just a question on your longer-term store targets. I think it's been a few years since you've kind of updated comments on those.

I was wondering kind of how you're thinking about that at this point. .

Sure, Daniel. You have a couple of questions there. On the competition being intense, look, I think competition has been intense for a few years. I think competition will remain intense. I think as we go forward, online, department stores doing better, I think whether it's highly promotional remains to be seen, but yes, I do think it will be intense. .

And Daniel, it's Mike O'Sullivan. On your -- the second part of your question about our store potential. We believe we have potential for about 2,500 stores between Ross and dd's, that's 2,000 Ross, 500 dd's. Right now, we're at about 1,600 stores. And each year, we open up approximately 90 net new stores.

So if you just do the math on that, this isn't how we would actually open them, but if you did the math on that, you have about 10 years worth of growth. So at this point, no. No plans to make any changes to that store potential number. .

Your next question comes from Bob Drbul with Guggenheim Securities. .

This is Andrew Roberge on for Bob Drbul. I think you guys mentioned that Florida was one of the top-performing states. Could you quantify if any of that was a rebound from the hurricanes in the prior quarter? And then I guess our second question.

Any color around the performance by category, whether that'd be cold weather or any additional color on that'd be great. .

Sure. On regional performance. As we mentioned in the commentary, Florida was the strongest region and some of that was a benefit somewhat from the bounce back from the hurricane. I'd say, outside of Florida, similar to the merchandise performance as we mentioned in our commentary, it was fairly broad-based.

Of the major markets, California was just slightly below the chain average. Texas had a strong quarter with comps above the chain average. And then I'd mentioned the Midwest, which continue to perform well for us on top of many years of being the highest comping region.

Merchandise performance, we called out Children's apparel and nonapparel had similar comps during the quarter. .

But specifically as it pertains to cold weather, based on the weather, cold weather assortments performed well. .

Your next question comes from Marni Shapiro with Retail Tracker. .

Could you talk a little bit -- Barbara, a little bit one question for you and then one real estate question.

But do you feel like there are any segments that you are missing in your stores or that are underdeveloped in the stores? And then can you talk a little bit about real estate? Because you've been pretty consistent with the store openings, but have you changed the size or the thoughts as to where you're opening the stores over the last year or so?.

Marni, in terms of merchandise segments, I don't really think there's whole segments that, I think, we're missing. We're always looking to enhance the treasure hunt and to add different products and classifications to the assortments.

And so underdeveloped businesses often start as a couple of things you try and then they grow out into different businesses. But again, overall, I don't feel like anything particular is missing. And we continue to try new areas to grow. .

And then, Marni, on your real estate question. As you know, we -- over the last several years, we've opened up a fairly steady pace, about 90 new stores a year. In 2018, it'll be closer to 100, which is more of a factor of timing and opportunity in terms of finding additional locations. In terms of anything that's changing.

I would say, for some time now, we've been fairly flexible in terms of new store openings, in terms of size and also in terms of the type of location that we're moving into. And that's partly been driven by the fact -- as other retailers have gone out of business, that's created some opportunities for us to move into existing buildings.

And that's basically triggered the need to be more flexible. But other than that flexibility, no other additional changes that I would call out. .

Your next question comes from Lorraine Hutchinson with Bank of America. .

My first question is on the higher basket that you mentioned. Have you seen any progress on AUR flattening out? I know that's been a headwind for a while. .

Sure, Lorraine. As we mentioned in the remarks, the 5 comp was driven by higher traffic and an increase in the basket. The basket was driven by higher units per transaction, and AUR was very similar to the trend. Throughout the year, it was down slightly. And that decrease was really a function of mix of business. .

Okay. And then just following up on the $11 wage increase. Are you seeing tightness in labor in your markets right now? I guess maybe just a little bit of the why behind the decision to go to $11. .

So the direct answer to your question, Lorraine, is no. We're not seeing tightness across the board. There are always individual markets where there's tight labor market and where we have to respond. But across the board, we're pretty happy with the candidate pool that we're seeing for new hires and with our retention level of existing associates.

So with that answer, let me give you a couple of reasons for why we're raising the minimum entry wage rate, why we're paying the onetime bonuses and improving the benefits programs.

Firstly, although we're current -- as I say, we're currently happy with the hiring pipeline and our ability to retain existing associates, we recognize the labor market is pretty dynamic and competitive. And there's no doubt with the stressing economy as well as the effects of tax reform that those things are going to continue to push out wage rates.

And it's important for us to keep pace with those changes. Secondly, we've been pretty successful over a long period of time. And with that success, our associates have been able to sort of benefit from competitive wages and benefits as well as career enhancement opportunities over time.

And we think with that -- with our continued success and with the tax rate changes, now is a good time to sort of further recognize and reward our associates who helped drive that success. So -- and I guess the bottom line answer to your question is, we're happy with our ability to hire and retain associates today, but we want to keep it that way.

And that's why we're making the changes that we're making. .

Your next question comes from Ike Boruchow with Wells Fargo. .

So I piggyback on the wage question.

I guess, Michael, could you maybe help us out? What percentage of the store associates you have are already at $11 an hour wage versus the increase you're going to give to everyone else? And then I was wondering if maybe you could just help us with the -- maybe the EPS or the margin impact that's embedded in your guidance for the year from the higher wage.

.

Sure, Ike. We wouldn't say specifically for competitive reasons, both on the question of how many of the associates are already at the minimum wage. I would call out that California is already at $11, so that's 20%, 25% of our store base. As far as guidance for the year, we didn't provide a specific wage and benefit impact.

But just to reiterate, we're showing EBIT down 105 to 125 basis points. And that includes 20 basis points from the 53rd week comparison. We would also expect the leverage on a 1 to 2 comp.

And so beyond those factors, our guidance includes the impact from these competitive wage and benefit investments, then I'd also call out, we expect freight cost to be a headwind this year. .

Your next question comes from Kimberly Greenberger with Morgan Stanley. .

Mike, could you tell us when the $11 per hour wage will be worked into the system, so that we know if it's fully impacting Q1 or perhaps not until Q2? And then secondarily, I'm wondering if you can just talk about the freight in the -- or trucking headwinds that you're seeing.

I think you have been experiencing some freight headwinds now for the last few years. They've generally been modest sort of in this range.

Are you seeing any acceleration in those pressures? And how are you looking to manage that expense?.

Sure, Kimberly. On the timing. The wage and benefit investments will be -- have a larger impact half the first quarter. That said, the first quarter does have things like California that's already at the $11. In terms of freight cost, the increase in freight cost that we've seen is driven by higher market rates, which is a function of tight capacity.

That appears to us to be a combination of an improving economy, regulatory impacts and driver shortages. In addition, at least in Q4, diesel prices were at a 3-year high. Our expectation is we would continue to see, I would say, similar pressure to what we saw in 2017, and we've built that into our guidance. .

Okay, Michael.

And can you remind us for 2017, was that a 15 basis point headwind on the full year as well as the fourth quarter?.

So for 2017, the impact to the freight cost was -- for the fourth quarter, it was 15 basis points. And the full year was 25 basis points. .

Your next question comes from Adrienne Yih with Wolfe Research. .

My question is on the ability to pass through some of these cost increases, be they freight or some of these wage increases.

As the frontline distribution channel sort of cleans up their inventory and attempts to get a little bit more pricing discipline as they kind of move up their price points, does that give you some ability to pass through some of these expense increases through your AUR?.

Sure. Sure, Adrienne. Really, well, we look at it as close to the AUR pricing is, our business is built off of a great branded values bargain. So we're in a price differential business with department stores and specialty stores. So our focus is on 2 things.

It's on having that meaningful price differential and offering the right values that our customers come to expect. So I don't think it's a straight pass through on to the customer because customers absolutely want certain types of value. So I don't think it's pass through to customers now. .

number one, managing down the costs; and number two, the sales growth. Now the final point I'd make about some of these cost increases is that they've been driven largely by a stronger economy. And that should be positive to retail.

To the extent that our customer ends up having more money in their pockets, that should help the top line, which goes back to that point about using sales to leverage expenses. .

Your next question comes from Simeon Siegel with Nomura Instinet. .

Sorry if I missed it, but what are your expectations for the Q1 gross margins? And then Barbara, has there been any change in the concentration of your top vendors versus prior years? And would you expect anything to change going forward?.

Simeon, we didn't provide the first quarter, only for the full year. .

And in terms of our mix of top vendors. I mean, obviously, we do business at over 8,000 resources. And we wouldn't comment on the specifics of our mix of vendor, but no one vendor represents more than 3% of our sales, so... .

And I guess more just talking about not the specific vendors but as the concentration of top vendors.

Does that change?.

No. .

No. .

Your next question comes from Matthew Boss with JPMorgan. .

I just had a larger picture question.

As we think about the close-out availability, I guess do you see expansion of e-commerce as creating incremental opportunity, I mean, to just the best way to think about it? And then secondly, on the department stores, if they were to maintain this leaner inventory positioning and promotions were pared back over time, how do you think this impacts your business as well? So just e-commerce and department stores, any impact positive or negative as we think about off-price in your business?.

Well, sure. First of all, there's been plenty of availability in the marketplace, so we haven't seen any supply issues. In terms of goods coming from e-commerce or coming from department stores, it's hard to differentiate where the availability is coming from.

In terms of department stores, if they keep their inventories in line and they promote less, they would be promoting less because their business is better. And if their business is better, what usually goes hand-in-hand with that is that merchants -- the vendor community has more confidence to go out and produce more goods.

So typically, that's where supply would come from. So if their business gets better, the supply should be better for us. .

Your next question comes from Paul Lejuez with Citi. .

Can you give any color on your store openings this year maybe by region? Talk about California, Florida, Texas. What percent those states make up of the openings this year? And how do you think about that Ross versus dd's? And then just a second, curious about the CapEx.

Can you talk about the breakdown CapEx spend this year versus last year, what that looks like?.

Sure, Paul. I'll start with the capital question. So about 30% -- of the $475 million, about 30% is new stores. 30% is for, I'll call it, maintenance capital and store refreshes. 15% for supply chain-related investments and then 25% is technology and other G&A.

The technology is focused on refreshing some of our enterprise systems and also information security. And then in terms of store roll out, we typically don't provide by state-level details.

I'll say that we're focused, again, on about 1/3 in the new markets and then 1/3 we -- you saw a quarter is dd's store openings and the rest is in our existing markets. .

And then how are you guys thinking about the next time we'll see you guys entering new market for Ross?.

Well, we -- at the moment -- well, for the last 5 years, our major new region, if you like, has been the Midwest. So for us, that's really the focus of sort of new market openings. Now if I address your question slightly to when will we start opening outside of the Midwest, it's going to be several years.

So for the next -- certainly, for the next few years, new markets for us are going to be in the Midwest. And the other point I would make is, out of the 90 net new store openings, so 100 gross, only about 1/4 of those are in our new region. The other 3/4 are in existing markets or region. .

Your next question comes from Jamie Merriman with Bernstein. .

You've alluded a couple times about the wage increase maybe more broadly and impact that you're seeing on the economy.

Do you think you're seeing any evidence of what's happening more broadly in the market in terms of wage increase starting to benefit the business yet? Or is your expectation of that still to come?.

There are so many factors, Jamie, that go into the sales line. So many things that can affect our sales and our comp. It's hard to isolate one individual factor. For example, to split out the impact of wage rate increases versus reductions in unemployment versus other factors that may be driving sales.

So any conceptually, it's pretty -- it's good to see if the customer has more money in their pockets because of wages or because of lower taxes that, that should help us. But as I say, it's pretty hard for us to isolate and evaluate the contribution that that's making to sales. .

Okay. And just thinking through the comp guidance, it seems like there are still maybe more to play for if you do start to see more of that comes through.

Is that the right way to think about it?.

Certainly. We always hope that on the comp line, that we'll do better. And yes, when we put together our guidance, we try and weigh these factors, the positives and the negatives. On the positive side, the growing economy, the lower tax rates, the higher wage rates.

But on the negative side, there are some reasons for caution, too, whether it's the strong economy might drive inflation and the cost of living or improved results from some retailers may not be sustainable. It may cause a more promotional environment. There are positives and negatives that went into our guidance.

But certainly, we always hope to do better in our guidance. And I think we've demonstrated, certainly, over the last few years, that if the business is there, we can chase it. So even if we guide to 1 to 2 and manage the business as if we're going to go 1 to 2, we'll always chase if the business exists and try to overachieve those with that guidance. .

Your next question comes from Omar Saad with Evercore ISI. .

I kind of want to ask you a slightly philosophical question.

If we are coming off a period where there was a lot of excess inventory in play and disintermediation from the rise of digital, and we are entering a period where brands are a little bit more -- a little bit careful -- more careful department stores, the industry as a whole, a little bit more careful planning inventory.

Can you help us think about historically with a better macroeconomic backdrop, maybe help us think historically how the business model has performed in those periods where the economy maybe is healthier or consumer demand is healthier, but the inventory availability maybe not be as robust as it has been the last couple of years?.

Sure, Omar. So I think if we look back historically at our performance, we've done well as a business when the economy is doing poorly. And we've done well as a business when the economy is doing well. And the drivers of our performance do change based upon how the economy is doing.

So when the economy is doing well, typically, what happens is the price differentiation between us and department stores and other competitors actually increases. So we actually offer even better value, and that drives business to the store. The other thing that tends to happen in an improving economy is the vendors tend to make more product.

So that can also help us to fuel those sales. Obviously, in a negative economy, you end up with the flip side happening. You end up with the market becoming more promotional, which makes life difficult. But you also end up with supply because, obviously, some of the sales expectations of the department stores and other retailers aren't met.

So I kind of feel like if you look at the history, we've kind of done well in both types of economy. So it's not clear to us in an improving economy that we would face any serious problems. .

Do you -- point blank, do you prefer one to the other or are you indifferent?.

I don't know. .

We're flexible. .

Yes. That's right. .

Your next question comes from Dana Telsey with Telsey Advisory. .

As you think about occupancy costs, which it sounds like improved in this fourth quarter, what are you seeing in terms of new store occupancy costs and how those are faring versus renewal of existing leases? And also as you think about the online business, just from online-only entities gaining some share, are you benefiting from the returns? Are they showing of an off-price in terms of the returns? And how does that margin compared to a traditional margin?.

Sure, Dana. I'll start with occupancy cost. I'd answer the question more generally. What we've seen is that rents have stabilized and occupancy costs have stabilized both in new rentals and renegotiation of things that are coming up for lease renewal. This year, we're actually able to level occupancy cost at -- below our historical 4% comp level.

Going forward, we see occupancy cost at right around the 4% in 2018. .

And then Dana, on your question about online returns. It's possible that return merchandise if it's high quality and unspoiled, it could be finding its way into the off-price channel. As long as it represents great value, we'd be interested in that product.

And that could be, I underline the word could, be one of the additional things that's contributing to the abundant availability that we're seeing. It -- as Barbara mentioned in her earlier answer, it's hard for us to separate out and identify where specific product was originally intended for.

What we see at the end of the day is, first, quality, unspoiled merchandise that's available for sale. And obviously, if they represent a good bargain, we're interested in that. .

Your next question comes from Albert Chen with Cowen and Company. .

This is Courtney Willson on for Oliver today. We just had a question on marketing in 2018.

Are you anticipating any changes to the strategy as you continue to build out your store base or if you're planning any change in the spend versus historical level? And then as you do open new stores, are you anticipating 2018 new store productivity to remain at similar levels to 2017?.

Courtney, on your marketing question. Our marketing strategy and message over the years has been very consistent. The message is that we offer the best values in apparel and home fashions. I wouldn't expect that message or that message will not change and our marketing programs, the communication will not change.

That said, we will look for ways, and we always do look for ways to make the message more effective, whether that's in terms of the creative or the media strategy. But the underlying message to the customer that we offer great value will be consistent. .

And then on the new store productivity. Given that our focus on new stores are in similar approach over the last couple of years, the new store productivity has been somewhat consistent, around 60% to 65% for us. .

Your next question comes from Brian Tunick with RBC. .

I guess maybe Barbara, for you. Can you maybe talk about what categories might have led -- and then the company in 2017? And maybe what do you think are the biggest opportunities in 2018? And then on top of that, maybe talk about the Home business.

Do you have any longer-term goals of what you think Home could grow as a percentage of the company? And then maybe, Michael, on the traffic side.

Just curious, any anecdotal estimates on how much competitor, bankruptcies or store closings might have aided your traffic gains this past year?.

Sure, Brian. In terms of categories that lagged the company throughout the year. I would say the biggest category that lagged was Accessories, although as the year went on, in the fourth quarter improved. But in terms of total company, clearly, Accessories was the business that lagged the most.

Opportunities for 2018, we're feeling is very broad-based, both Apparel and Home. We feel good about our Apparel business. It's moving in the right direction and always has more work to do, particularly in Ladies but it is moving in the right direction. And in terms of our Home business growing as a percent of the company.

Home has been -- had good business for a number of years now. We see that continuing to grow. We don't have a particular percent of the company in mind, just that we know it's a growth area, and we feel good about it. .

Brian, then on impact of store closures. We are seeing a benefit to stores in proximity to the closed stores. But given the number of stores that left is not meaningful to either our overall comp or traffic statistics. .

There are no further questions at this time. I would turn the call back over to the presenters. .

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..