Good morning. Welcome to the Ross Stores second quarter 2006 earnings release conference call. The call will begin with prepared comments by Michael Balmuth, Vice Chairman, President and Chief Executive Officer, followed by a question-and-answer session. (Operator Instructions) At this time, I would like to turn the call over to Michael Balmuth, Vice Chairman, President and Chief Executive Officer. Sir, you may begin your conference.

Good morning. Joining me on our call today are Norman Ferber, Chairman of the Board, Gary Cribb, Executive Vice President and Chief Operations Officer, Michael O’Sullivan, Executive Vice President and Chief Administrative Officer, John Call, Senior Vice President and Chief Financial Officer, and Katie Loughnot, Vice President of Investor Relations. We’ll begin our call today with a review of our second quarter and year-to-date performance, followed by our outlook and guidance for the third quarter and back half of 2006. We will also discuss our longer-range plans and objectives. Afterwards, we’ll be happy to respond to any questions you may have. Before we begin, I want to note that our comments on this call will contain forward-looking statements regarding expectations about future growth and financial results and other matters that are based on management’s current forecast of aspects of the company’s future business. These forward-looking statements are subject to risks and uncertainties that could cause our actual results to differ materially from historical results or current expectations. These risk factors are detailed in today’s press release and our fiscal 2005 Form 10 K and fiscal 2006 Form 8 Ks and NQs on file with the SEC. Today, we reported 2006 second quarter earnings per share of $0.32, compared to $0.29 in the second quarter of 2005. Net earnings for the second quarter of 2006 were $45.4 million compared to $42.3 million in the prior year. Our second quarter 2006 results are inclusive of a $3.3 million, or an equivalent of about $0.01 per share, in stock option related expenses recognized pursuant to FAS 123(R), share-based payment. Before these costs, earnings per share for the period grew 14%. Sales for the second quarter increased 12%, to $1.308 billion, with comparable store sales up 4% on top of a 7% increase in…

Thank you. The floor is now open for questions. (Operator Instructions) Thank you. Our first question is coming from Jeff Black with Lehman Brothers. Please go ahead. Jeff Black – Lehman Brothers: Yeah, thank you very much. Good afternoon. I guess, Michael, we’ve had a lot of headwinds on the margin and on sales and I would just love to understand at what point do we step back and say, you know, we really need to lower operating expenses to drive earnings growth on a lower comp. I mean, could you share with us some of the initiatives and tell us, is that an important priority? Because it really was kind of third on your list, if I heard it right. Thanks.

You know, we’ve been in a several year turn around of our business. We’re making progress on several initiatives. Reducing expenses is part of that. Whether I repeated it first, second or third doesn’t mean it’s less important to us. So we’re going through a thorough review of both expenses and merchandising and we understand that we have to make improvement in this area and we’re working toward it. Jeff Black – Lehman Brothers: Are there any specific areas you could call out that, you know, we’re working on and secondly, in your 15% to 20% earnings target, what level of comp, you know, comparable sales, are you assuming there? Thanks. Michael O’Sullivan: The specific initiatives that we’re working on, transportation is probably one of the key areas that we’re focused on. Not going to go into the details of it, but we believe that, based on what we see and what we’re focused and working on, that we’ll be able to realize significant improvements there. We also continue to focus in on shortage. That’s one of our biggest challenges that we faced a year ago and we’ve implemented many initiatives today in our stores, focused on both internal and external theft and, as Michael stated in his opening comments, that we are hopeful that, when we get our September results, that we’ll see the improvement that we’ve anticipated. Jeff Black – Lehman Brothers: Then on the comp guidance? You know, the 15% to 20%, what kind of comp are we assuming you can achieve long-term here?

When we laid out our plan, we’re assuming about 3% comp. Jeff Black – Lehman Brothers: Okay. Great. Thanks. Good luck, guys.

Thank you. Our next question is from Ken Guyer with Piper Jaffray. Please go ahead. Ken Guyer – Piper Jaffray: Good morning. I guess I have just a couple questions for you. First of all I was wondering, given recent consolidation within the industry and what seems to be an environment that has seen an increase in both promotional and brand-building marketing in the department store moderate retail channels, I was wondering if there’s anything that you are planning on doing different in terms of reaching out to your customer? Michael O’Sullivan: you know, we look at our marketing profile continually and as we go through this thorough review in the store, we certainly would be looking, in addition to merchandising, we will be looking at our marketing initiatives by market and being sure that we’ve positioned ourselves the way we want. Ken Guyer – Piper Jaffray: Okay, what is your marketing spend as a percentage of sales currently and then also what is the breakdown, kind of, of the media mix? You know, within TV, print, advertising, that type of thing. Michael O’Sullivan: Sure. Overall that runs about a point of sales and the mix is strongly weighted to TV. Ken Guyer – Piper Jaffray: Great, and then I guess lastly I was wondering if you could give us an update on kind of the product availability situation now with the consolidation being at least partially completed? Michael O’Sullivan: Yeah. We’ve had no problems purchasing product. There’s plenty of merchandise around. We’ve basically had our problems controlling our inventories so we have had no issue at all. It seems like a reasonably decent buyers market. Ken Guyer – Piper Jaffray: Great. Thank you very much.

Thank you. Our next question comes from Brian Tunick with J.P. Morgan. Please go ahead. Brian Tunick – J.P. Morgan: Great. Thanks. Two questions. I guess, Michael, trying to understand your comments a couple of weeks ago relative to the sudden slowdown in your business. Is that any category specifically? Can you talk about transactions, maybe, versus ticket? Then the second question, maybe talk about how your stores are comping relative to maturity, your new stores entering the comp dates versus your older stores? Thanks very much.

So, Brian, let me take the first one, which is the transaction data. Sales for the quarter, the average retails were roughly flat so the comp was driven by an increase in the number of transactions but also in the number of SKUs in the basket that the customer left with. The second part of your question? Brian Tunick – J.P. Morgan: How comps look relative to the mature stores versus the new stores entering the comp base, and you really didn’t sort of answer my question. It was last week, or two weeks ago, comments that you saw a sudden slowdown in your business. So we’re just trying to understand what happened in July, you know, to your business do you think?

July business, it slowed down in a very broad-based manner, okay? Both departmentally and geographically. So when that happens at a transitional time in the year you have to take a breath and watch it a little, get through the back-to-school period and understand fully whether it’s a late back-to-school, whatever it is. We are assessing it and tearing it apart right now. Michael O'Sullivan : Then on your other question, the new markets are comping comparable to the chain, if that’s what you were getting at. Brian Tunick – J.P. Morgan: Okay. Thanks.

Thank you. Our next question is coming from Kimberly Greenberger with Citigroup. Please go ahead.

Great. Thanks. Good morning. Michael, I know you said you’re assessing the slowdown in your sales. Any sort of initial gut feeling that you have on that? Secondarily, how long do you expect it to take in order to resolve the inventory overage that you talked about? In light of the earnings shortfall in the second half of the year, how are you thinking about bonuses? Thanks.

Okay. I think it’s too early for me – I have to get through back-to-school before I would have a strong point of view on what transpired in July. Could you tell me the second one again, please? I’m sorry.

Yeah. You indicated that the inventory in stores is running, continues to run above your plan. When do you expect to have that in line?

Well, I think by the end of August, okay? We were minus 5 coming out of July and we see ourselves moving into where we want to be coming out of August, and then ride it that way through the rest of the season.

Okay, and then thoughts about how you’re thinking about bonuses for the second half and is there an opportunity maybe to reverse prior quarter accruals? Michael O’Sullivan: If we look at the year, Kimberly, we’re basically within the guidance we started with for the year so I don’t see reversing a bonus accrual.

Okay. Thanks.

Thank you. Our next question is coming from Marni Shapiro with Retail Tracker. Please go ahead. Marni Shapiro – Retail Tracker: Hey, guys. Can you talk a little bit about the regions where the newer stores were struggling for Ross Stores? If you’ve seen any improvements there and any changes that you’ve made? If you could also talk specifically about apparel. What is working well, and where do you see the weakness as you come into August even? Michael O’Sullivan: The newer regions are comping with the trend, with the chain. That was the first part of it, Marni? Could you repeat the first question – question, Marni? Marni Shapiro – Retail Tracker: The regions where you were seeing some softness last year, the newer regions? You were going back to assess them before you grew them aggressively. How is the business in those areas today? Michael O’Sullivan: As I was saying, it’s comping with the chain. We still have a lot of work to do to get it ahead, okay, there’s some catch-up there but it’s improving somewhat. Marni Shapiro – Retail Tracker: Okay. Michael O’Sullivan: Okay.

Thank you. Our next question is coming from Mark Montag with TLC. Please go ahead.

Hi. Just a question about dd’s. You had mentioned that sales were up and above plan but I’m wondering, how are you doing in terms of the operational improvements with dd’s? Is it improving to the point where it’s hitting your objectives? Michael O’Sullivan: We’re seeing some improvement. We’ve been working diligently at it and we’re looking at our expansion program for next year.

Okay. So does that mean that you’re on target with where you’re trying to get? Are you behind? Michael O’Sullivan: Pretty much. Pretty much.

Okay. All right. So would that mean that we could perhaps expect a greater expansion rate next year or still slow? Michael O’Sullivan: We’ll probably wrap that up at the end of the year and talk more about it, but we’re feeling pretty good about the concept.

Okay. All right. Thank you.

Thank you. Our next question is coming from Ben Strom with DE Research. Please go ahead. Ben Strom – DE Research: Hi. Thank you. Could you just dive in a little bit to the residual inventory, maybe by category, where you’re really having a build-up and where some of the issues are, if possible, like women’s bottoms, denim, etc.? Michael O’Sullivan: We’ve looked at that. It’s pretty broad-based in terms of the over inventory that we saw, so I wouldn’t call it any one specific category. Ben Strom – DE Research: Okay. Michael O’Sullivan: As Michael said, we’re working to get that back in line and we’re on plan to do that. Ben Strom – DE Research: Okay. So nothing stands out. Michael O’Sullivan: No. Ben Strom – DE Research: Okay. Thank you.

Thank you. Our next question is coming from David Mann with Johnson Rice. Please go ahead. David Mann – Johnson Rice: Yes. In terms of your comments on shrink, have you been able to do any cycle counts which have given you any confidence that your shrink accrual may be too high? Michael O’Sullivan: Relative to cycle counts, we don’t do – we really don’t do any cycle counts per se and we have been testing, if you will, the initiatives that we have in place which leads us to be hopeful that, come September, we’ll improve. We’ll show improvement. Relative to the accrual piece, John –

Yes. Go hand-in-hand with what Gary said. So there, you know, we have some indication that we should be hopeful but again, you know, we’ll know when we know in the third quarter. David Mann – Johnson Rice: And any improvement in shrink is not in your guidance, right?

That is correct. David Mann – Johnson Rice: Okay. Thank you.

Thank you. Our next question is coming from Margaret Mager with Goldman Sachs. Margaret Mager – Goldman Sachs: Hi, it’s Margaret Mager at Goldman Sachs. Can you talk about specifically the new store productivity? Is this a material drag on the business at this juncture? What is the thought about the appropriate level of square footage expansion, not just near term, but longer term? I have one more follow up to this. Michael O’Sullivan: I think we’ve said in the past that there are a number of new stores, certainly not all, but a number of new stores in the region of 50 to 60 which have opened in the past few years that are performing at levels lower than we would have expected. We’re doing two sets of things to address that. There are some short-term things that we’re doing and they include looking at what products are selling well in those stores and what products aren’t, and obviously investing more in those products that are, merchandise categories that are. We’re also looking at new stores in terms of stores that we’re opening and how we inventory those stores in terms of assortment. There are a number of short-term things we’re doing and we believe that those will help. But we also think that there’s some long-term steps that we need to make to make those improvements sustainable and when Michael mentioned merchandising earlier, that’s kind of the project name that we’ve given to those longer term activities. But realistically, those longer terms steps are – they’re going to take a couple of years to come to fruition. So that’s kind of the approach that we’re taking in those new market stores. Margaret Mager – Goldman Sachs: So, to my question. Is it a material drag or is it sort of a disappointment across the whole chain, or is the new stores really a standout negative at this point? Then how does this translate into how you think about expansion longer term? Michael O’Sullivan: On the expansion piece, I think we said on an earlier call that, until we figure this out, we’re going to sort of continue to expand within our existing markets, where we fundamentally believe we can succeed within all the markets that we’re in today and that’s where we’re focusing over the next couple of years. As we improve our ability to merchandise new stores and new markets, we’ll start to expand into other new markets, but I think we said that would be 2008 at the earliest. Margaret Mager – Goldman Sachs: Okay.

But, Margaret. Margaret, this is John. So what is going on with our new stores, what it causes us to do is our average store volumes remained relatively flat, maybe up a point or so, and so that put pressure on the expense line so when you have costs faster than average store volumes and we’re working to address that issue. Margaret Mager – Goldman Sachs: Okay. All right. I guess, you know, at some point, as a management team, do you take a step back and say, you know what? It’s been a number of years now of disappointments for a variety of reasons and, you know, you can point to systems, inventory management, failed – a variety of things over a number of years. At some point do you step back and say, something has changed secularly and we have to re-think things in a much bigger way. Like for example, gross margins just cannot go back to 25% so, you know, at what point do you start to change your thinking in a much bigger way than just let’s try these tactical things to try to improve, you know, our current situation? Michael O’Sullivan: Margaret, the truth is we do that all the time. So we’re always scanning the environment, we’re always looking at our own performance; we’re always looking at peer retailers’ performance, to understand strategically, has anything changed? We do that in a reasonably rigorous way and, you know, from a customer point of view, has anything changed. Having looked at all those things, customer, competitor, supply issues, we don’t believe anything has fundamentally changed in our business. Our model continues to be, we think, a successful model. Perhaps there have been things that have gone wrong in a couple years, absolutely, and we’ve spoken about those. The steps that we’ve taken are intended to address those. But do we think that strategically something has fundamentally changed? We don’t. Margaret Mager – Goldman Sachs: Okay. Well, I appreciate your thoughts. Take care.

Thank you. Our next question is coming from Rob Wilson with Tiburon Research Group. Please go ahead. Rob Wilson – Tiburon Research Group: Yes, thank you. Speaking of change, has anything changed on how you’re spending your TV advertising dollars over the last year, or potentially going forward? Michael O’Sullivan: Over the last year, nothing has changed and, as we said before, we’re looking at how we’re handling our marketing now and so something could change going forward, but we’re not prepared to talk about it. Rob Wilson – Tiburon Research Group: Has there been a thought of direct mail? Michael O’Sullivan: No. Rob Wilson – Tiburon Research Group: Okay, and finally, I’m kind of new to your story so I look at your inventory levels and I look at the numbers and I say wow, they’re well-controlled the last six or seven quarters. Can you help me understand why you think inventory levels are a problem?

Yes. We believe that we have residual mark-downs related to a lack of churn which relates to too much inventory in the stores. I think that we think we can tweak that, bring that down and make sure we get the profitability on the sale. That was one of the drags that we were disappointed about during the first half, not being able to convert.

Rob, by having a material difference in how fast we’re moving products through our stores we have – we can see statistically that we can live with less, and that’s really what we’ve been talking about and by the fact that we didn’t live with less earlier, we’re putting too much product in front of the customer even though it might appear to you that we are controlling it well, in our minds we had a material year-over-year inventory level difference because of speed. Rob Wilson – Tiburon Research Group: Okay. That helps. Thank you.

Thank you. (Operator Instructions) Our next question is coming from Kim Dao with Pioneer. Please go ahead.

Good morning. This question is for Norman. Norman, I’m wondering if you could please comment on the Board’s view of the company’s performance over the past three years and maybe what you think is an appropriate timeframe for correcting the issues that have developed over that period.

I think as the Board looks at the difficulties that we accomplished in 2004, we knew that 2005 and 2006 would be decent years and we knew there’d be some residual issues. I think we’ve seen some residual issues. As everyone is working diligently to correct them and the Board basically has confidence that this company can come back, as it’s come back in the past, and we can show sustainable 15% to 20% earnings per share growth going forward. So I’d say the Board is confident in the model and confident in the management team.

The Board also doesn’t seem to have retail experience outside of Ross, certainly not of any great depth. Have you considered expanding the size of the Board to add some folks with greater depth of retail experience?

Well, we do have people in the Board who’ve had a lot of retail experience such as Stuart Moldaw and Michael Bush, just two, including myself. But we’re always looking at potentially expanding the Board and that’s something that the Board consistently looks at. But at this point, I don’t think that there’s a jugular issue at this point for this company. We’ve got some short-term issues; we’ve got some long-term challenges and opportunities and those are what we’re focused on.

You know, because it just seems that the core business that Ross is in is a very good business and it seems surprising to underperform for so long?

Well, I’d say that a lot of the underperformance is so long has to do with errors that we made in just things in DC expenditures in 2004 that we have been paying for, although we’ve shown some increase on an earnings per share basis, we’re reasonably up for the last couple of years, our operating margin obviously, you know, has shrunk somewhat and primarily the areas that it shrunk in is in margin and distribution center expenses and shrinkage. Those are very heavy areas, and we believe that just in those areas right off the bat there’s tremendous opportunity to get back to very close to where we were. So I think over time, I think we’ll be fine.

Great. Thank you.

Thank you. Our next question is coming from Michael Hidalgo with Tiero Capital. Please go ahead. Michael Hidalgo – Tiero Capital: Good morning. Would you please discuss California particularly in light of some of the strange and hot weather they’ve had there and just remind us what percentage of your overall business that is? Michael O’Sullivan: Would you please repeat that question? You didn’t come through clearly there, Michael. Michael Hidalgo – Tiero Capital: California. Would you please discuss how the business has been performing in light of the hot weather that has been there and remind us how much of your business California accounts for? Michael O’Sullivan: Yeah, in the second quarter California comped at a 3 comp which compares with the chain at 4% so slightly below chain. In terms of the size of the – it’s about 30% of the chain between northern and southern California. Michael Hidalgo – Tiero Capital: Okay, but was there any – did you see any sort of dramatic effect? I mean, I was out there several weeks ago and it was very hot relative to historical – Michael O’Sullivan: Like we said, we saw a decline in sales strength in July. We’re not – we’re not meteorologists. We don’t know to what degree to assign that sales trend to the weather or to other issues so our starting point is let’s make sure our assortments are right and then if the weather turns, we’ll be in even better shape. Michael Hidalgo – Tiero Capital: All right. Thank you.

Thank you. Our next question is coming from Dana Telsey with Telsey Advisory Group. Please go ahead. Dana Telsey – Telsey Advisory Group: Good morning, everyone. As we think about the changes that you’re undergoing and some merchandising changes and the benefits in the systems, how do you look – in terms of the timing, why does it take so long to implement and reap some of the benefits? Is there a timeline or schedule that we should look for, like Step 1, this is in place, Step 2, that’s in place, so we’re able to gauge, too, to see that it’s on track? Thank you. Michael O’Sullivan: I think from a merchandising end, if I’m thinking, Dana, that you’re talking about the system changes we’ve gone through, you know, they’re not inhibiting our business at all. So you can take your timeline to the end and say it’s fine. Now micro-merchandising will take us a few years and we’re developing our full timeline on that and when we get further along we’ll share it, but I hope that answers it. Michael O’Sullivan: Let me elaborate just a little bit, because think if we were back in 2004 and you were asking that question, we would have said to you the No. 1 priority is stabilize the systems and get them to provide the information the business needs. That’s done, so we’re through that. We’re kind of in a mode now of sort of getting the system to do some extra things that we’ve never gotten it to do before and that’s helping us. Because the next phase, I think, over the next few years, is to get it to support things like micro-merchandising which, again, are more sophisticated, if you like, but we believe will help our business significantly. So that’s kind of how I characterize the evolution as sort of how we’re thinking about the systems. Dana Telsey – Telsey Advisory Group: Thank you.

Thank you. Our next question is coming from Kimberly Greenberger with Citigroup. Please go ahead.

Great. Thanks. John, I was hoping you could detail for us the basis point movement in DC, shrink rate, etc., on gross margin? Also do the same in SG&A?

Sure. Dana Telsey – Telsey Advisory Group: Then Michael, if I could just ask you one follow up. August, how does the 2% month to date comp compare relative to your original expectations and do you have any thoughts there? Thanks.

Okay, Kimberly, I’ll walk you though the leverage points. Merchandise margin was up about 20 basis points before shrink and freight. You take those, shrink and freight together, total gross margin was down about 20, offset by improvements in DC is about 40 basis points. We had in the gross margin line around 10 basis points of option expense. Related to the store – or the expense leverage, as I said before, average store volumes are putting pressure and headwinds on operating comps. They were up. We had another 15 basis points in options expense on that line as well. So that’ll give you some perspective.

Relative to our sales trends, the 2% relates to – it’s approximately 2% to 3% below what our expectations were for the month. We’re only halfway through it so we’ll see how back-to-school performs the rest of the way. Dana Telsey – Telsey Advisory Group: Okay and then, John, just on occupancy. I’m just trying to understand how, with a 4% comp increase, how you could be de-leveraging on the occupancy line?

A couple of things going on. There’s a slight of accounting wherein now we have to expense the pre-opening pieces of the rent, just putting some pressure on it. We have newer stores coming to model with higher rents. They’re putting some pressure on it as well. It’s been a pretty consistent theme over the past couple of quarters and probably will continue through the rest of year relative to the de-leverage on that line item. Dana Telsey – Telsey Advisory Group: Thanks.

Thank you. Our next question is coming from Frank Alonso with T. Rowe Price. Go ahead. Frank Alonso – T. Rowe Price: Hi, guys. Just real quick can you kind of elaborate a little bit on – you mentioned exploring some longer-term financing for distribution centers from the other assets. You know, why would you do that? Do you want to free up cash to accelerate share repurchase? I’m just kind of curious because it doesn’t seem like you need the capital unless you’d be looking to buy back more stock which, I mean, certainly makes sense as the stock’s kind of languished here for a few years.

Frank, let me describe what we’re doing and then tell you why we’re doing it. We’re looking – in the process of arranging some long-term financing, looking for about $150 million in senior debt. We have commitments around that. We will finalize a definitive agreement in the third quarter and probably draw that down in the fourth quarter. Our view is taking longer-term financing on bricks and mortar makes sense and the shareholders expect it to make sense from leverage perspective. Obviously, we’re not that leveraged but we think a bit of leverage is probably smart. Relative to our buyback, our philosophy has always been to deliver excess cash we generate back to shareholders in terms of a buyback and I doubt if we will deviate from that. Frank Alonso – T. Rowe Price: So there’s no chance you would accelerate beyond the pace at which you’re doing despite the return you would get by kind of buying back the beast you know, if you will?

Yeah, we don’t tend to be market timers. Occassionally when there has been a huge dislocation, we’ll go stepped up but you know we just have to look at that stuff. Frank Alonso – T. Rowe Price: Okay. Thanks.

Thank you. Our next question is coming from Mark Montag with TLC. Please go ahead.

Hi, just a follow up question. You had mentioned earlier that you expect to grow earnings 15% to 20% on a 3% comp and now you had just mentioned about de-leveraging on a 4% comp and that – I thought you said that trend would continue. So I’m trying to reconcile those different statements and how you can, I think you said get a 3% comp with – and grow EPS 15% to 20%? Michael O’Sullivan: So the statement related to occupancy de-leverage specifically. We have other offsets throughout the P&L that would give those operating margin improvements. Clearly a disappointment was in the merchandise margin line. We should have had greater follow through on the over plan sales and that’s were we are disappointed. Having said that, earnings per share without option expense was up 23% in the first half so within kind of where we thought it would be on the year. As we looked at the year lowering our guidance given us a little bit more room to be more conservative, I still that we’ll be within the original guidance that we first set out in the beginning of the year.

Okay, so just to confirm you – to grow 15% to 20%, you do think all you need is a 3% comp? Michael O’Sullivan: Yeah, over the longer term. We think that’s the case as the shrink initiatives kick in, the DC initiatives kick in. You know, we need to make improvements there.

Okay. All right. Thanks.

Thank you. (Operator Instructions) Our next question is coming from Kim Dao with Pioneer. Please go ahead.

Hi, just a follow up. If your top line is growing based on current plans for square footage, growth rate and comps somewhere between 8% and 11%, and your margins are 300 basis points below the peak, why is it acceptable to only grow EPS by around 15%?

The statement was 15 to 20, Kim.

All right, why is that an acceptable number? Michael O’Sullivan: We think that that level in growing – we believe that’s a controllable level. We believe that gives us the return that we need and we think to exceed that level would take - we think 3% is probably appropriate, and to – the other way you’d drive that is adding more stores and at this point in time, we don’t think that’s a prudent move.

It just seems that that implies a pretty gradual level of margin recovery. Michael O’Sullivan: That’s what we’ve said over a period of time. It’s going to take several years to get it back.

And there‘s no sense of urgency that it should get back sooner? Michael O’Sullivan: Three’s a huge sense of urgency. I think we plan on 30 to 50 basis points per month per year, and we don’t take that lightly. We feel there’s a very strong sense of urgency around that.

So if you could do 30 to 50 basis points a year then really your EPS should grow a lot faster. Michael O’Sullivan: Well, you know, Kim, we can walk through that specifically. Stores grow. Add comp to that, to a 3. Total sales are growing, 9 to 11. Operating margin continues to expand 30 to 50 basis points. You get earnings of between 14% and 18%. You do a buyback, that adds another 2%. That gets you 15% to 20% from an operating standpoint.

Yeah, I think I would beg to differ on the math but anyway, thank you.

Thank you. There appears to be no further questions. At this time, I’ll turn the floor back over to you]for further closing remarks.

Thank you all for attending. Have a good day.

Thank you. That does conclude today’s teleconference. You may disconnect your lines at this time. Have a wonderful day.