Key questions from the second quarter earnings call conducted by Ross Stores, Inc.on August 22, 2007.

Michelle Clark (Morgan Stanley): Can you breakdown the components of gross margin by basis point contribution during the second quarter?

John Call: Merchandise margin was flat, although we did benefit 10 basis points from a lower shrink accrual. We also had occupancy leverage due to lower pre-opening ramp than we anticipated on the Albertsons conversion. That was about 20 basis points on the plus side. We also levered buying comparables by about 10 basis points. The offsets to those pluses were our freight costs were 20 basis points to the bad, a continuation of our first quarter trend. As we look to the back half, we will anniversary those higher freight costs, so we will not have that drag in the third and fourth quarters. The distribution centers delevered by about 20 basis points and that relates to a certain packaway carrying cost that follow those goods through to when they sell. Our packaway levels were down from our first quarter to second quarter. Therefore, we got a hit at the P&L. That is a timing issue. We expect that to reverse in the third quarter as well. For the year, we expect the DCs to still be on plan to deliver about 10 basis points of improvement on top of the 35 basis points we got last year.

Michelle Clark (Morgan Stanley): What are you seeing in terms of August sales trends and have you seen any pick-up relative to July?

John Call: We expect August comparables to come in about 2% to 4%. In the first part of the year, we do not comment on minimum sales trends. We will give you more color on that when we report sales for August.

Michelle Clark (Morgan Stanley): What do you think is causing the slower than expected ramp at the dd's locations?

Michael O’Sullivan: It is important to separate out the comparable stores from the new ones. The 26 comparable stores are performing well, close to plan, so we are happy with those. The new stores, the March opening group where we had eight new dd's stores open and we had mixed results among those eight stores. It is only eight stores and they have only been open for five months. We are diagnosing the performance of those stores, but there is not any clear pattern at this point. Michael was just flagging the fact that the performance had been a little mixed.

Michelle Clark (Morgan Stanley): Will we continue to see dd's openings in new markets through the rest of this year?

Michael O’Sullivan: Of the eight new stores, two were in new markets. It is not that all eight were in new markets and that is the pattern. It was only two stores. Throughout the remainder of the year, we will be opening additional new stores in additional new markets and indeed we did open additional dd's stores in June and July, but those stores have only been open a few weeks, so we would not comment on their performance at all.

Jeff Black (Lehman Brothers): What do your comparables assume going forward from California and Florida and are you seeing any weakness specifically in California that would lead you to lower that comparable rate?

Gary Cribb: When we look at California and Florida, we separate the two. California is performing better than the company today. Florida continues to trail the chain in the minus low single-digit area and we have seen that trend for a while now.

Jeff Black (Lehman Brothers): Is there anything in traffic conversion overall that you are getting a clue on now that makes you want to pull the trigger and lower the comparable guidance here?

Gary Cribb: Part of our conservative outlook is there is a lot of uncertainty as it relates to the economic markets and a lot of our fellow retailers have had negative projections for the back half, but we are hopeful that we will do better. We are just taking the prudent conservative posture.

Jeff Klinefelter (Piper Jaffray): The home category has been noted as an area of strength for you for several months. It has also been noted by many other retailers in department stores. Do you see any opportunities for you to chase expanded assortments within home or what categories specifically represent opportunity now going into the second half?

Michael Balmuth: There are opportunities, more than normal in the market there. That is a broad-based within the home business and that is a good thing for us. the opportunities we have isolated are much more in the gift giving part of home and we have a much stronger position in those for the holiday period.

Jeff Klinefelter (Piper Jaffray): With the weakness in Florida, some of it being the housing market-driven consumer sentiment changes in spending, do you have opportunities to go in and do some stepped-up level of marketing or any special event marketing to try to take the opportunity to deliver more value to some of these consumers?

Michael Balmuth: We have a focus at our company and it is more on improved assortments and tailoring our assortments to what we think the customer wants and putting the best bargains out. We would not take a marketing advantage down there. We would look specifically for merchandising opportunities that were more sustained in the area as opposed to just increasing marketing to drive our business.

Brian Tunick (JP Morgan): Is the competition in the buy of the goods out there or more on the promotional cadence?

Michael Balmuth: It is promotion. There are discounts that could happen based on the more recent lowering of sales and earnings expectations by the more mainstream sets of key retail information sector. On the buy side, that is not the issue. The off-price, basically what we watch for is the promotional beat out there in department stores and when you have these kind of macroeconomic issues coupled with a drop in sales projections, there is a potential for mainstream retailers to become more aggressive promotionally and that is what we are referring.

Brian Tunick (JP Morgan): Can you expand on the micro-merchandising rollout and where are you in that timing?