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Operator
Good afternoon and welcome to the Ross Stores first quarter 2021 earnings release conference call. The call will begin with prepared comments by management, followed by a question and answer session. To ask a question during the session, you will need to press star one on your telephone. 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, new store openings, COVID-related costs, 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 on the company's fiscal 2020 form 10-K and fiscal 2021 form 8-Ks on file with the SEC. Now I'd like to turn the call over to Barbara Lentner, Chief Executive Officer.
Barbara Lentner
Good afternoon. Joining me on our call today are Michael Hartron, Group President and Chief Operating Officer, Travis Marquette, Executive Vice President and Chief Financial Officer, and Connie Cowell, Group Vice President, Investor Relations. We'll begin our call today with a review of our first quarter performance, followed by our outlook for the second quarter and fiscal year. Afterwards, we'll be happy to respond to any questions you may have. As noted in today's press release, First quarter sales significantly exceeded our expectations as we benefited considerably from a combination of government stimulus payments, ongoing vaccine rollouts, easing of COVID restrictions, and pent-up consumer demand. In addition, customers responded enthusiastically to the broad assortments of great bargains we offered throughout our stores. Earnings per share for the 13 weeks ended May 1, 2021, grew 17% to $1.34, a net income of $476 million. This compares to $1.15 per share or net earnings of $421 million for the 13 weeks ended May 4th, 2019. Total sales for the quarter were $4.5 billion with comparable store sales up a robust 13% versus 2019. As previously announced, financial results and guidance throughout fiscal 21 will be compared against fiscal 2019. We believe the significant impact from the extended closure of our operations in the spring of 2020 and the disruptions caused by COVID-19 throughout last year make this a more relevant basis for comparison. For the first quarter, home was the best performing major merchandise area, while the Midwest was the strongest region. Similar to Roth, DD's discounts business trends significantly improved during the quarter. Results were far above our expectations with outstanding sales gains and a rebound in operating profits for the period. At quarter end, consolidated inventories were down 6% versus 2019. Packaway levels ended at 34% of the total compared to 44% for the same period in 2019, as we used a substantial amount of pack-away merchandise to support ahead-of-plan sales. Average selling store inventories were down 1% relative to 2019. As noted in today's release, our Board authorized a new program to repurchase $1.5 billion of our common stock through fiscal 2022 with plans to buy back $650 million this year and $850 million in 2022. The reinstatement of our share repurchase program reflects the current strength of our balance sheet, confidence in the company's ability to generate excess cash after funding growth and other capital needs of the business, and our longstanding commitment to enhancing stockholder value and returns. Turning to store growth, our 2021 expansion program is unchanged, with plans to open approximately 20 total locations comprised of 40 Ross and 20 DDs discounts. As usual, these numbers do not reflect our plans to close or relocate about 10 stores. As a reminder, our conservative opening plans this year, especially for the spring season, were set in 2020 during the onset of the pandemic when it was impossible to predict when the health crisis would subside. Looking forward to 2022, we expect to return to our normal annual opening program of approximately 100 new stores. Now, Travis Marquette will provide further details on our first quarter results, second quarter guidance, and outlook for the year.
Michael Hartron
Thank you, Barbara. As previously mentioned, comparable store sales increased 13% in the quarter, driven by a larger average basket. While traffic was down slightly compared to 2019, it accelerated significantly relative to the fourth quarter. Operating margin was well above plan at 14.2% compared to 14.1% for the same period in 2019. Cost of goods sold levered 35 basis points in the quarter. Merchandise margin was up 85 basis points and occupancy levered by 60. These improvements were partially offset by higher freight costs of 75 basis points mainly driven by the ongoing industry-wide supply chain congestion. In addition, distribution expenses grew 25 basis points, primarily due to higher wages, while buying costs increased by 10. SG&A for the quarter delevered by 25 basis points, mainly due to the operating expenses associated with the pandemic and higher incentive costs given our better-than-expected first quarter results. Total net COVID-related expenses for the period were approximately 35 basis points, the vast majority of which impacted SG&A. Now let's discuss our guidance. As Barbara just mentioned, our projections compare to the same period in 2019. For the 13 weeks ended July 31st, 2021, we are forecasting comparable store sales to be up 5% to 7%. Earnings per share for the second quarter are projected to be in the range of 80 to 89 cents. The operating statement assumptions that support our second quarter guidance include the following. Total sales are projected to grow 9 to 12%. We are projecting operating margin to be 9.2 to 9.9% compared to 13.7% in 2019. This forecast reflects ongoing expense headwinds from increased rate costs and higher wages. In addition, COVID-related expenses are projected to negatively impact EBIT margins by approximately 100 basis points in the period as we return to pre-pandemic store operating standards while still maintaining many of the extra cleaning routines. We expect to open 30 stores during the second quarter, consisting of 22 raw and eight DDs discount. Net interest expense is estimated to be about $19 million. our tax rate is expected to be approximately 25%. And weighted average diluted shares outstanding are projected to be about $355 million. For the full year, we are projecting annual comparable store sales gains of 7% to 9% versus 2019, and earnings per share of $3.93 to $4.20. Operating statement assumptions that support our fiscal 2021 guidance include the following. Total sales are projected to grow 11 to 13%. We project that operating margin for 2021 will be in the range of 10.7 to 11.2% compared to 13.4% in 2019. The forecasted decline, again, reflects our expectations for continued freight, wage, and COVID cost headwinds through the balance of the year. Net interest expense is estimated to be about $75 million. Our tax rate is projected to be approximately 24% to 25%, and we expect average diluted shares outstanding to be about $354 million. Now I'll turn the call back to Barbara for closing comments.
Barbara Lentner
Thank you, Travis. To sum up, we're optimistic about our prospects for the balance of the year and hope to do better than our forecast. This confidence is based on our recent results and ongoing improvements in the macroeconomic environment bolstered by vaccine rollouts and the easing of pandemic-related restrictions. That said, it's difficult to predict the lasting impact from the factors that benefited our first quarter sales results, especially the recent government stimulus payments. As always, we'll remain nimble to address the dynamic consumer and retail landscape, while staying focused on delivering the great bargains our customer has come to expect from us. Longer term, we remain confident about our opportunity to gain market share as we expect to benefit significantly from a favorable competitive climate given the large number of retail store closures and bankruptcies in recent years. This, along with the consumer's heightened focus on value and convenience, bodes well for our ability to achieve solid results into the future. At this point, we'd like to open up the call and respond to any questions you may have.
Operator
As a reminder, to ask a question, you will need to press star 1 on your telephone. To withdraw your question, press the pound or hash key. In order to allow everyone time for questions, we ask that you please note yourselves to one question. Please stand by while we compile the Q&A roster. Your first question comes from Matthew Voss from JP Morgan.
Matthew Voss
Great, thanks, and congrats on the really strong improvement. So, Barbara, maybe could you speak to the cadence of business and any notable changes in traffic or category demand as the quarter progressed? And then, Travis, on gross margin, I guess maybe just how best to think about the puts and takes in the second quarter that you're embedding relative to 2019. Sure, Matthew.
Barbara Lentner
So let's start with category demands. There was really broad base acceleration across all merchandise areas, with obviously home having very strong performance for us and for other people across the country. But what we did see is a major improvement in apparel. And as we feel as the economy starts to open up, that apparel will continue to strengthen as time goes on. With a lot of change in trends, we're monitoring that, and we're flexing and moving the business around based off of what the customer is telling us. So we feel, in totality, we feel overall pretty good about the business go forward. In terms of traffic, Travis, you want to take the traffic piece?
Michael Hartron
Yeah, just let me break on comp a little bit. I mentioned comp was 13%. It was driven by larger average basket size. That was partially upset by lower number of transactions. Traffic was down slightly compared to 2019, but it accelerated significantly compared to the fourth quarter. The increase in the average basket was driven by items per transaction, as average unit retail was up slightly. And then I think your next question was around just the guidance, the operating margin guidance for Q2.
Matthew Voss
Yeah, just any puts and takes on the second quarter.
Michael Hartron
Yeah, I mean, second quarter, again, the overall guidance reflects a couple of things. One, obviously, the comp store gain is expected to be lower than what we saw in the first quarter, and therefore we'll get a little bit less leverage on the business. In addition... On COVID costs, we expect to also be higher, although that will primarily impact SG&A. We also expect to see continued significant pressure on freight. We saw that in the first quarter, both in ocean freight as well as overall freight, and we think that those pressures will continue. Great.
Matthew Voss
Best of luck.
Operator
Your next question comes from Mark Altschweiger from Barrett.
Mark Altschweiger
Good afternoon. Thanks for taking my question. Appreciate all the detailed guidance. Overall, if I have all the numbers down correctly, I think the guide implies EBIT margins down about 250 basis points this year versus 2019. Could you characterize that? I mean, how much of the step down is related to the COVID costs, which are hopefully temporary, versus some of the more pressures on freight and wages that could persist moving forward, just trying to think about how that EBIT margin might progress as we move beyond this year. Thank you.
Charles
Mark, it's Michael Hartshorn. We're obviously optimistic about our prospects for the balance of the year, and we hope to do better than our sales and margin forecast. We do expect expense headwinds through the balance of the year, and if you break down the COVID cost at some point, Those will not to continue, but we expect them to be in place. Our guidance assumes that they're in place throughout the year. Wage costs, we would expect to persist. And at some point, freight, we would expect to persist throughout the year, and we'll see how that balances out over the coming years. But overall, the recovery to 2019 margin levels It's highly dependent on strong sales performance and over time. And again, the persistence of the cost inflation we're seeing today, especially in things like freight.
Operator
Your next question comes from Adrian from Barclays.
Michael Hartshorn
Good afternoon. Let me add my congratulations on the top line improvement. Barbara, my first question is for you on the merchandise margin of up 85 basis points. I just want to make sure that that is separate and assigned, so you don't have inbound freight in that number, because obviously we've got a separate number for total freight, so that's number one. And then can you give us the components of AUR versus AUC on that? I'm imagining your AUR is up meaningfully. Are you getting a relative pricing umbrella from frontline, meaning that if you're 20% to 60% off Frontline and Frontline's clean, that you're able to maybe clear at a higher price? And lastly, was mix from home versus apparel, did home grow faster, and was that an impact on the merchandise margin? Thank you so much.
Michael Hartron
Yeah, this is Charles. Let me just take a couple of those that you mentioned. One, just in terms of what's included in merchandise margin, when you say inbound freight, ocean freight is included in that number? And so that's embedded, and we had mentioned previously that we expected meaningful headwinds from ocean freight, and we saw those and expect those to continue as we move through the year. And then I think you also had a question about apparel versus non-apparel and sort of the mix. You know, we saw broad-based improvements across the store, but, you know, non-apparel home continued to be the strongest category, but we definitely saw an improvement in apparel as well as we moved through the quarter.
Charles
And then, Adrienne, on AUR, AUR was up slightly during the quarter. Okay.
Barbara Lentner
All right. Go ahead. Just relative, the other part that you're asking about is relative to department stores because they promoted less than AUR is up?
Michael Hartshorn
Yes.
Barbara Lentner
The pricing umbrella. Yeah. So our AUR is up slightly. But compared, so that is just, we just offered a greater value to department store pricing at this point in time. You know, the price value equation is the business that we're in, the relativity to it. But at this moment, our price values are actually stronger than they normally would be to department stores.
Michael Hartshorn
Okay, great. And if I may, just on hourly payroll, you know, I don't really know how to ask this, because I know these are sensitive numbers. But if we were to look at freight as a percent of sales, and now I'm talking about the outbound freight because now I know that the inbound freight's inside the March margin, that line that deleveraged 75 basis points versus the line item that is wage or hourly payroll, what would be the sort of order of magnitude? Like is the payroll line three times as much as the freight line or something like that, just so mentally I can understand if one of them is moving materially higher than the other, which has a bigger impact on the P&L. Thank you very much.
Charles
Adrian and Michael Hartshorn again. We wouldn't give you specifics other than what we provided in the guidance, other than to say both freight and wages. First on freight, given the robust overall economic rebound, there continues to be significant supply chain congestion. and costs have increased versus our original expectations, and so our current guidance assumes additional escalation as we move through the year. On wages, that also remains very dynamic. We've made market-by-market adjustments in our stores, as we always have, to attract talent. Warehousing labor is very competitive, and we've made additional adjustments in all of our distribution centers, and that's also reflected in our guidance.
Michael Hartshorn
Okay, thank you very much.
Operator
As a reminder, to ask a question, press star 1 on your telephone. In order to allow everyone time for questions, we ask that you please lend yourselves to one question each. Your next question comes from Kimberly Greenberger from Morgan Stanley.
Kimberly
Okay, great. Thank you so much. Barbara, obviously the prudent planning for sales going forward, the very conservative plan, compared to the very robust first quarter, that seems very, very prudent to us. I'm wondering, are you seeing any slowdowns so far here in the second quarter that sort of – underscoring your desire to plan more conservatively? Or are you just looking forward and saying, okay, there were some really sort of one-time benefits, as it were, that happened here in the first quarter, so it's just naturally prudent for us to plan more conservatively?
Barbara Lentner
Kimberly, I think we're thinking more about, you know, the first quarter and the the lasting impact from some of those factors, you know, the stimulus payments that were out there, and what does that really mean as we go forward? So we're comfortable with the number of where we sit today, but that's really some of those pent-up demands, some of those things that we're not sure how that goes forward with completely at this point.
Kimberly
Yeah, I know. It's a very uncertain path forward. Thank you for that. Michael, you talked about you've got a plan this year for COVID costs to basically continue through the year. So I'm wondering if you can just sort of isolate the COVID costs and based on what you experienced here in the first quarter, and then whatever you've got in your forecast for the second, third and fourth quarter, can you, could you just give us a rough dollar amount of what you're budgeting this year for COVID costs? And, and would it be fair to assume that, that those costs would roll off in future years.
Michael Hartron
Hi, Kimberly, this is Travis. But let me just kind of do a little bit of a reset, remind folks kind of how we talk about COVID costs. You know, we report COVID costs as net, which is to say that they include pandemic-related increases in costs for things like person protective equipment, extra cleaning. But there are offsets within that number as well for cost savings that we took for things like travel and when we closed our fitting rooms. As the pandemic subsides, apparel is becoming more important. We think it's important to take some actions, including reopening our fitting rooms, which is going to eliminate some of the cost savings that we had before, and it drives up the overall COVID cost number. For Q1, as we reported, the COVID costs were about 35 basis points on the quarter. For Q2 and going forward, we're estimating those that will be around 100 basis points for the balance of the year. Again, that assumes where we are today that we have not removed and we've not built into the plan to remove any of the additional cleaning activities and protocols that we've put into place. Having said that, you know, we will continue to monitor guidance from the CDC and other health experts. We'll continue to prioritize the health and safety of our associates and our customers. But to the extent that that guidance changes, then we could reevaluate some of those protocols and adjust those plans.
Charles
And Kimberly, to answer your question on how long they last, those costs are not permanent. So as the pandemic resides, those costs would come back out of the business.
Kimberly
Fantastic. Thanks so much.
Operator
Your next question comes from Chuck Brown from Gordon Haskett.
Chuck Brown
Hey, thanks. Great quarter. My question is just on the first quarter. You know, you originally got it to comps down 1% to 5%, and you far exceeded that up 13%. I'm just curious if you guys could just unpack the outperformance, either by category, how much you think was stimulus. I just wanted to ask that question. Thanks.
Barbara Lentner
Go ahead, Barbara. Okay. So if you're talking about by merchandise category? Yeah, if we could... So we'll start there. So it was very broad-based. Obviously, home is, you know, accelerated for everyone, and we still feel very good about home as we go forward. But the additional acceleration really came out of apparel, and that was also very broad-based. As the customer, you know, kind of came from just wearing active wear, moving into more real, what I would call real apparel, or even though it's casual, but still real. broader classifications of products, and that was broad-based, and so that's why we feel good about apparel as we go forward.
Charles
And then just overall in the quarter, as Barbara mentioned in her opening comments, there are a number of factors that led to the increase. Obviously, the stimulus, very difficult to put a number on $400 billion of stimulus to the consumer that continues We'll continue federal stimulus. There's also states that have stimulus, so that will continue through the second quarter, if not throughout the year with some of the child credits. There is the vaccine ramping up, and so customers are becoming more and more confident returning to brick-and-mortar stores. We expect that to continue as the vaccination rates increase. If you look at our regional performance, as we said in the commentary, Midwest was the top-performing region. Of our biggest states, California performance improved significantly versus the prior quarter as government restrictions eased and its comp was relatively similar to the chain average. So there's a lot of different factors driving the comp in the first quarter.
Chuck Brown
Great. Thanks very much.
Operator
Your next question comes from Lorraine Hutchinson from Bank of America.
Lorraine Hutchinson
Thanks. Good afternoon. Barbara, could you discuss the availability of product in the better trending categories? And then do you think there's sufficient availability for you to start rebuilding your pack-away balances into the back half?
Barbara Lentner
Sure. Availability in the better trending businesses, you know, I would say overall the availability is there to chase. You know, we have a large merchant team, and so they're out there looking for the goods constantly. I think there's two things about it. One is, you know, the trends are shifting in front of us. So things are moving very, very quickly. I should start with that. And the trends towards just, say, like active apparel to other parts of sportswear are shifting quickly. And so far I would say, yes, we have been able to chase the business, get what we need, get the availability that's out there. It's more getting the combination of kind of getting ahead of the trend as it's shifting in the outside world, that we're shifting with it and that we get ahead of it. But, yes, I feel comfortable that the availability is there in the businesses that the customer wants at this moment in time. And then say it again, Lorraine, what was the second question?
Lorraine Hutchinson
I was just wondering how you expected PacAway to evolve over the coming quarters, if there's sufficient availability for you to be able to rebuild that.
Barbara Lentner
We think we'll build PacAway over time. closer to historical levels, but I do think it'll take time as we are very much chasing the business. And if that chase were to continue, you know, I think it would take us a little bit of time because PacAway fluctuates also. It's not only that the availability is there, it's that it's the right product, the right value, the right, you know, it has to have all the right metrics to be going to PacAway at the same time. So I do think it'll take a little bit of time, but there is sufficient availability to be driving our business by PacAway and, you know, the total picture.
Operator
Your next question comes from Ike Berusha from Wells Fargo.
Ike Berusha
Ike Berusha from Wells Fargo. Hey, guys. Just a quick one for Travis. Just on the freight headwind you gave us for Q1, just curious, should we assume that that should be run-rated through the rest of the year, or should that cost headwind you have potentially moderate based on the contracts you guys have? Thanks.
Charles
Hi, Kyle. It's Michael. I'll take that. First, even the contracted rates were significantly higher than 2019 levels. In addition, like other retailers, we're incurring a higher cost to move freight. Really, both internationally and domestically, we have higher cost to land freight when expected. So given the robust overall economic rebound, as I said earlier in the call, we expect freight cost to escalate for the remainder of the year, and that's included in our guidance.
Operator
Your next question comes from Michael Benetti from Credit Suisse.
Michael Benetti
Hey, guys. Thanks for taking our questions here. I guess two quick ones. We see the sales guidance. I appreciate the conservatism. I think it's been the right move through the year here and with the visibility where it is. But if sales trends do remain strong, as strong as they were in 1Q relative to what you thought, a pretty significant upside sales scenario, can you tell us how to think about sales flow through in the model relative to the framework you've told us about in the past. And then, Barb, just a comment you made earlier. Why not extend the relative value back up to the normal rate relative to the department stores? Why hold it lower if they're moving higher, just so we can think alongside you on that?
Barbara Lentner
Sure. Listen, department stores didn't promote as much for the first time in a very long time. And so I think we'd have to see what that, you know, what that looks like because, you know, they're promotional kids. They've promoted for years and years and years. So we've had one quarter under their belt where the AUR is probably higher and they haven't promoted. I think we have to see what happens in the future. And also I think it's important while we can get great values to the customer, you know, price value is absolutely critical to our customer. And so... we're going to value the goods the way we think the customer expects them, where the customer expects them to be. And so, you know, raising the AUR and changing your value equation is a very delicate thing. And so I think having one quarter underneath our belt with lots of money, stimulus, and lots of things going on in there, driving sales, you know, I think it's very, very much a remains to be seen And it is very important and off-price and critical in our business model to offer that price value. The customer is very savvy, you know, and shopping all the time. So, again, not sustained yet in department stores. Don't know how that's really going to land. And then with all the money and the stimulus out there, don't know how to take that as a go-forward strategy to read at this moment in time.
Michael Hartron
And this is Travis. In terms of the operating margin flow-through on above sales, above plan, We continue to expect COMP outperformance to drive increased operating margin flow-through compared to the guidance that we provided, but I don't think we would necessarily expect it to be quite as strong as we saw in Q1, but we do expect operating margin improvements as COMP exceeds our plan.
Charles
And then the flow-through on this guidance would look like it has historically.
Michael Benetti
Thank you.
Operator
Your next question comes from Martin Shapiro from Retail Tracker.
Martin Shapiro
Hey guys, congrats. And Barbara at the department stores. We all know where they're going. They're going right back to promotions. If you could give me a little bit of guidance around your traffic during the quarter and what you're seeing around things like as schools reopened the Easter holiday, did you see a pop around when the stimulus checks pop came into hand or around Mother's Day? Just trying to get a feeling about the cadence of the traffic, if it's an everyday or is she also being sparked to come into the store by events?
Michael Hartron
Yeah, this is Travis. I can talk a bit about trends. Generally, we don't provide sort of detailed traffic trends by month, but given the timing of tax refunds and stimulus payments, you can imagine that sales were stronger later in the quarter than at the beginning. In terms of traffic trends, again, you know, traffic for us is transactions, it mirrors pretty closely our sales trends.
Martin Shapiro
Fantastic. Best of luck this summer, guys.
Operator
Your next question comes from Laura Shanty from Loop Capital.
Laura Shanty
Hi, thanks for taking my question. To that previous point, Travis, when you guys set the guidance for Q2 sales, did you just take the trend before the stimulus and extrapolate that there? What was the basis of that Q2 sales guide?
Michael Hartron
The comp sales guide? No, again, I think, Michael, we've talked about it. There are a number of factors that drove the Q1 performance, be it stimulus, pent-up demand, vaccine rollouts, et cetera. And it's difficult to precisely predict how long some of those will last. And so... We took that into account and projected forward what we think is our current plan and best guess for Q2, and we certainly hope to do better.
Laura Shanty
Got it. In the back half related to that, is there anything in your expectations for the benefit from the enhanced child tax credit? Historically, when this sort of stimulus has come through, do you see it in your numbers?
Charles
Laura, I would say it's hard to say at this point. We've not seen this type of stimulus even in the first quarter in a very long time. As Travis said, we set a baseline, and we clearly hope we can do better than the guidance that we put out.
Laura Shanty
Understood. Thank you.
Operator
Our next question comes from Jason from UBS.
Jason
Great. Thanks so much. You know, my question is about the full year guidance, specifically about the fourth quarter. When we get to the fourth quarter and get to January, it'll be lapping the stimulus that happened in January. How are you thinking about what impact that might have on the business in the fourth quarter? And how might fourth quarter sales and gross margin compare to what we saw, you know, this past year?
Charles
Yeah, I think we'll provide guidance as we move through the year. Right now, we typically provide guidance quarter by quarter, so we'll have more to say as we move through the year on the fourth quarter.
Jason
Would you think that the January sales would be down year over year? We wouldn't comment at this point. Got it. Okay. Well, then maybe if I can ask one more, are you still seeing right now the impacts of stimulus? Is there any way to measure whether whatever you're seeing in May is sort of still a tailwind from the stimulus that was distributed in March and April, or is now some other factor become a bigger driver here in May?
Charles
Yeah, we wouldn't, as Barbara said at the beginning, we don't comment on, it's our practice not to comment on intra-quarter trends. I can tell you, you know, certainly in the first quarter, we think stimulus had a had a significant impact among other factors that we called out earlier.
Operator
Got it. Okay. Thank you so much. Our next question comes from Paul Kressel from Deutsche Bank.
Paul Kressel
Hi. Good afternoon. This is Christina Katai on for Paul. I just wanted to add my congrats on a great quarter. I wanted to circle back to merchandise margin and the strength that has been there for the last three quarters. How do you see the current environment evolving from just a buying perspective? And can you just speak to the sustainability of these trends to potentially drive pre-COVID gross profit margins if you essentially maintain these strong sales trends?
Michael Hartron
Yeah, in terms of the merchandise margin, again, the buying environment remains very dynamic. You know, margins will vary significantly based on our overall sales performance. We've talked over the last several quarters that the buying environment has been quite strong, and we've benefited from that. Obviously, in the first quarter, we also benefited from significant above-plan sales, which drove faster turns and fewer markdowns. So those were all positives. You know, in terms of how long that sustains, you know, we'll see. I mean, we have our best guess built into the guidance, and And we obviously hope to do better. And to the extent we do, we'd expect to see some further benefit.
Paul Kressel
Got it. That's helpful. And I was wondering if you could talk a little bit about more, you know, what you're seeing as it relates to just general consumer willingness to return to your stores. And do you have any data on this? You know, what portion of your pre-pandemic shoppers have returned to shop with you regularly? And are you seeing any demographic changes perhaps older consumers are returning to your stores as vaccines are being rolled out here relatively quickly?
Charles
On the consumer, what we are seeing is the consumer, we've seen our consumer shop less, but they are buying more during their shopping trips. The demographics of our customer base did skew younger during the peak of the pandemic, given older customers' hesitancy to shop in brick and mortar stores. We believe customers of all ages are returning to stores with the increased vaccination rates, and that's especially true with older customers where the vaccination rates are much higher. Overall, we know that she continues to prioritize value and convenience when deciding where to shop. And with the large number of retail closures, she obviously has fewer places to shop now.
Paul Kressel
Great. Best of luck.
Operator
Your next question comes from Paul Leshway from Citi.
Paul Leshway
Hey, thanks. It's Tracy Cogan filling in for Paul. I had two questions. I was hoping first you could talk about the marketing spend in the quarter and whether you leveraged that spend and what your expectations are for the year. And then secondly, can you talk about the rent deals that you saw, I guess, for the deals you signed last year for the opening this year? And and how that's trended as you're signing new deals right now. Thanks.
Charles
Sure. On the leases, you know, the real estate market is good, you know, both from a supply standpoint and what we're seeing in leases. I wouldn't say specifically on a call like this, but, you know, the significant of the rent – favorability, given the number of leases across the whole chain, would not be significant on overall leverage, for instance, on sales. On marketing, for us, marketing continues to be a good reminder to our customers. Overall, our strategic investment here it has been to move to more digital. I wouldn't provide more specifics on, on, on marketing on this call.
Paul Leshway
Just, just going back to the real estate, any changes from what you were seeing last year versus this year in terms of favorability? Is it getting better?
Charles
I'd say, I'd say the story is still developing Tracy. So, you know, we'll see how it develops over the, over the next couple of years. Obviously the, availability is good, and we hope to take advantage of that given all the store closures.
Paul Leshway
Thanks very much, guys.
Operator
Your next question comes from Dana Telsey from Telsey Advisory Group.
Dana Telsey
Good afternoon, everyone, and nice to see the progress. It was mentioned about DDs in the release, and I think a little bit at the beginning. What are you seeing in DDs? It sounds like it took an upturn for the better, both in terms of sales and operating profits. And anything to note there on store openings of Deedee's versus Ross and what you're seeing either in terms of favorability of leases and also productivity this year to LLY? Thank you.
Charles
Dana, I would say that the story is very similar for Deedee's. We did see strong gains in sales previously. and operating profits for the period versus our expectations. I would also say that DDs has the similar wage, freight, and COVID cost expense pressures that we're seeing in Ross, and I would say we feel really good about the DDs performance.
Michael Hartron
In terms of new store productivity, we don't break out DDs specifically, but overall, new store productivity continues to be in the 60% to 65% range that we've talked about historically.
Charles
On the real estate rollout, we would expect to, beyond this year, grow DDs at 20 to 25 stores per year.
Dana Telsey
Thank you.
Operator
Your next question comes from from Barclays.
spk00
Great. Thank you so much for taking the question. I'm just hoping you could update us on your thoughts as to potentially continuing to bring down your debt balance given where the cash balance currently stands and any further thoughts on improving the balance sheet? Thank you.
Charles
Sure. Our expectation is that we're going to pay down our existing debt, so we're not going to refinance it. The timing, if it's economically advantageous to pay off early, we would consider it. But if If not, we would expect to pay off our existing debt at maturity.
spk00
Thank you so much.
Operator
That was our last question. I will turn the call over to Barbara Rentner for closing comments.
Barbara Lentner
Thank you for joining us today and for your interest in Ross Storrs. Have a good day.
Operator
This concludes today's conference call. Thank you for participating. You may now
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