This section and other parts of this Form 10-Q contain forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from the results discussed in the forward-looking statements. Factors that might cause such differences include, but are not limited to, those discussed in Part II, Item 1A (Risk Factors) below. The following discussion should be read in conjunction with the condensed consolidated financial statements and notes thereto included elsewhere in this Quarterly Report on Form 10-Q and the consolidated financial statements and notes thereto in our Annual Report on Form 10-K for 2007. All information is based on our fiscal calendar.

Overview

We are the second largest off-price apparel and home goods retailer in the United States. As of November 1, 2008, we operated 906 Ross Dress for Less ("Ross") stores in 27 states and Guam, and 57 dd's DISCOUNTS stores in four states. Ross offers first-quality, in-season, name-brand and designer apparel, accessories, footwear and home fashions at everyday savings of 20% to 60% off department and specialty store regular prices. dd's DISCOUNTS features a more moderately-priced assortment of first-quality, in-season, name-brand apparel, accessories, footwear and home fashions at everyday savings of 20% to 70% off moderate department and discount store regular prices.

Our primary objective is to pursue and refine our existing off-price strategies to drive gains in profitability and improved financial returns over the long term. In establishing appropriate growth targets for our business, we closely monitor market share trends for the off-price industry. Total aggregate sales for the five largest off-price retailers in the United States grew 6% during 2007 on top of an 8% increase in 2006. We believe this solid growth reflects the ongoing importance of value to consumers. Our strategies are designed to take advantage of the expanding market share of the off-price retail industry as well as continued customer demand for name-brand fashions for the family and home at compelling everyday discounts.

Results of Operations

The following table summarizes the financial results for the three and nine
month periods ended November 1, 2008 and November 3, 2007:

                                                       Three Months Ended                     Nine Months Ended
                                                 November 1,        November 3,        November 1,        November 3,
                                                        2008               2007               2008               2007
 Sales
     Sales (millions)                          $       1,555      $       1,468      $       4,752      $       4,324
     Sales growth                                        5.9 %              7.8 %              9.9 %              9.1 %
     Comparable store sales growth                         0 %                1 %                3 %                1 %

 Costs and expenses (as a percent of sales)
     Cost of goods sold                                 77.1 %             78.4 %             76.5 %             77.6 %
     Selling, general and administrative                16.9 %             16.3 %             16.4 %             16.1 %
     Interest income, net                              (0.0) %            (0.0) %            (0.1) %            (0.0) %

 Earnings before taxes                                   6.0 %              5.3 %              7.2 %              6.3 %

 Net earnings                                            3.7 %              3.3 %              4.4 %              3.9 %

                                                Three Months Ended                Nine Months Ended
                                           November 1,      November 3,      November 1,      November 3,
                                                  2008             2007             2008             2007
  Stores at the beginning of the period            943              862              890              797
  Stores opened in the period                       23               32               77               98
  Stores closed in the period                      (3)              (1)              (4)              (2)
  Stores at the end of the period                  963              893              963              893

Sales. Sales for the three months ended November 1, 2008 increased $87 million, or 5.9%, compared to the three months ended November 3, 2007 due to the addition of 70 net new stores opened between November 3, 2007 and November 1, 2008. Sales from "comparable" stores (defined as stores that have been open for more than 14 complete months) for the three months ended November 1, 2008 were unchanged from the three months ended November 3, 2007. Sales for the nine months ended November 1, 2008 increased $428.5 million or 9.9%, over the same period in the prior year, primarily due to the impact of the 70 net new stores opened between November 3, 2007 and November 1, 2008, and a 3% increase in sales from comparable stores.

Our sales mix for Ross is shown below for the three and nine month periods ended November 1, 2008 and November 3, 2007:

                                                            Three Months Ended             Nine Months Ended
                                                        November 1,    November 3,    November 1,    November 3,
                                                               2008           2007           2008           2007
  Ladies                                                        32%            33%            33%            34%
  Home accents and bed and bath                                 23%            22%            22%            22%
  Men's                                                         13%            14%            14%            14%
  Fine jewelry, accessories, lingerie and fragrances            12%            11%            11%            11%
  Shoes                                                         10%            10%            11%             9%
  Children's                                                    10%            10%             9%            10%
   Total                                                       100%           100%           100%           100%

We expect to address the competitive climate for off-price apparel and home goods by pursuing and refining our existing strategies and by continuing to strengthen our organization, to diversify our merchandise mix, and to more fully develop our organization and systems to improve regional and local merchandise offerings. Although our strategies and store expansion program contributed to sales gains for the three and nine month periods ended November 1, 2008, we cannot be sure that they will result in a continuation of sales growth or an increase in net earnings.

Cost of goods sold. Cost of goods sold for the three months ended November 1, 2008 increased $47.7 million compared to the same period in the prior year mainly due to increased sales from the opening of 70 net new stores between November 3, 2007 and November 1, 2008.

Cost of goods sold for the nine months ended November 1, 2008 increased $281.9 million compared to the same period in the prior year mainly due to increased sales from opening 70 net new stores between November 3, 2007 and November 1, 2008, and a 3% increase in sales from comparable stores.

Cost of goods sold as a percentage of sales for the nine months ended November 1, 2008 decreased approximately 105 basis points from the same period in the prior year. This improvement was the result of a 110 basis point increase in merchandise gross margin, which benefited from a 95 basis point increase in merchant margin and a 15 basis point decrease in shortage. In addition, distribution costs declined by about 40 basis points during the period. These favorable trends were partially offset by a 35 basis point increase in buying and incentive plan costs and a 10 basis point increase in freight costs.

We cannot be sure that the gross profit margins realized for the three and nine month periods ended November 1, 2008 will continue in the future.

Selling, general and administrative expenses. For the three months ended November 1, 2008, selling, general and administrative expenses increased $23.7 million compared to the same period in the prior year, mainly due to increased aggregate store operating costs reflecting the opening of 70 net new stores between November 3, 2007 and November 1, 2008.

Selling, general and administrative expenses as a percentage of sales for the three months ended November 1, 2008 grew by approximately 60 basis points over the same period in the prior year. This change was primarily driven by a 45 basis point increase in store operating expenses. In addition, the third quarter of 2007 benefited about 25 basis points from a construction-related settlement at one of our distribution facilities. These negative trends were partially offset by a 10 basis point improvement in general and administrative costs compared to the prior year.

For the nine months ended November 1, 2008, selling, general and administrative expenses increased $80.7 million compared to the same period in the prior year, mainly due to increased store operating costs reflecting the opening of 70 net new stores between November 3, 2007 and November 1, 2008.

Selling, general and administrative expenses as a percentage of sales for the nine months ended November 1, 2008 increased by approximately 25 basis points from the same period in the prior year driven mainly by store operating costs.

Taxes on earnings. Our effective tax rate for the three and nine month periods ended November 1, 2008 and November 3, 2007 was approximately 39% which represents the applicable combined federal and state statutory rates reduced by the federal benefit of state taxes deductible on federal returns. The effective rate is affected by changes in law, location of new stores, level of earnings and the result of tax audits. We anticipate that our effective tax rate for fiscal 2008 will be approximately 38% to 39%.

Financial Condition

Liquidity and Capital Resources

Our primary sources of funds are cash flows from operations and short-term trade
credit. Our primary ongoing cash requirements are for merchandise inventory
purchases, capital expenditures in connection with opening new stores, and
investments in distribution centers, information systems and infrastructure. We
also use cash to repurchase stock under our stock repurchase program and to pay
dividends.

                                                         Nine Months Ended
   ($000)                                           November 1,      November 3,
                                                           2008             2007
   Cash flows provided by operating activities      $   368,833      $   132,405

   Cash flows used in investing activities            (174,460)        (178,841)

   Cash flows used in financing activities            (220,712)        (169,404)

   Net decrease in cash and cash equivalents        $  (26,339)      $ (215,840)

Operating Activities

Net cash provided by operating activities was $368.8 million for the nine months ended November 1, 2008 compared to $132.4 million for the nine months ended November 3, 2007. The primary sources of cash from operations for the nine months ended November 1, 2008 and November 3, 2007 were net earnings plus non-cash depreciation and amortization charges, and stock-based compensation expense. The increase in cash flow from operating activities for the nine months ended November 1, 2008 primarily resulted from an increase in accounts payable leverage as a result of faster inventory turns. Accounts payable leverage (defined as accounts payable divided by merchandise inventory) was 62% as of February 2, 2008 and increased to 63% as of November 1, 2008.

Working capital (defined as current assets less current liabilities) was $357.9 million as of November 1, 2008, compared to $401.4 million as of November 3, 2007. Our primary source of liquidity is the sale of our merchandise inventory. We regularly review the age and condition of our merchandise and are able to maintain current merchandise inventory in our stores through replenishment processes and liquidation of slower-moving merchandise through clearance markdowns.

During the nine month periods ended November 1, 2008 and November 3, 2007, our capital expenditures were approximately $175.5 million and $176.8 million, respectively. Our capital expenditures included fixtures and leasehold improvements to open new stores, implement information technology systems, build distribution centers and install material handling equipment and related distribution center systems, and various other expenditures related to our stores, buying and corporate offices. We opened 77 and 98 new stores on a gross basis during the nine months ended November 1, 2008 and November 3, 2007, respectively.

In addition, for the nine months ended November 1, 2008 and November 3, 2007, we purchased investments of $32.9 million and $63.2 million, respectively, and sold investments of $33.8 million and $61.2 million, respectively.

In October 2008 we purchased 160 acres of land in South Carolina for $7.6 million.

We are forecasting approximately $225 million in capital requirements in fiscal year 2008 to fund expenditures for fixtures and leasehold improvements to open both new Ross and dd's DISCOUNTS stores, for the relocation, or upgrade of existing stores, for investments in store and merchandising systems, distribution center land, buildings, equipment and systems, and for various buying and corporate office expenditures. We expect to fund these expenditures with cash flows from operations and existing credit facilities. Our $600 million credit facility remains intact and available as of November 1, 2008 and expires in July 2011.

Financing Activities

During the nine month periods ended November 1, 2008 and November 3, 2007, our liquidity and capital requirements were provided by available cash and investment balances, cash flows from operations and trade credit. Our buying offices, our corporate headquarters, one entire distribution center, one trailer parking lot, portions of two other distribution centers, and all but two of our store locations are leased and, except for certain leasehold improvements and equipment, do not represent capital investments. We own three distribution centers which were located in Carlisle, Pennsylvania, Moreno Valley, California, and Fort Mill, South Carolina.

Under our $600.0 million two-year stock repurchase program announced in January 2008, we repurchased 7.0 million shares of common stock for an aggregate purchase price of approximately $231.4 million during the nine month period ended November 1, 2008. We repurchased 5.0 million shares of common stock for approximately $152.6 million during the nine month period ended November 3, 2007.

For the nine month periods ended November 1, 2008 and November 3, 2007, dividends paid were $37.2 million and $30.7 million, respectively.

Short-term trade credit represents a significant source of financing for merchandise inventory. Trade credit arises from customary payment terms and trade practices with our vendors. We regularly review the adequacy of credit available to us from all sources and expect to be able to maintain adequate trade, bank and other credit lines to meet our capital and liquidity requirements, including lease payment obligations in 2008.

We estimate that cash flows from operations, bank credit lines and trade credit are adequate to meet our operating cash needs, fund our planned capital investments, repurchase common stock and make quarterly dividend payments for at least the next twelve months.

Contractual Obligations

The table below presents our significant contractual obligations as of November
1, 2008:

 ($000)                                            Less
                                                 than 1           1- 3          3- 5        After 5
 Contractual Obligations                           Year          Years         Years          Years           Total1
 Senior notes                              $         --     $       --     $      --     $  150,000     $    150,000
 Interest payment obligations                     9,667         19,335        19,335         64,696          113,033
 Capital leases                                     386            387            --             --              773
 Operating leases:
   Rent obligations                             334,424        617,185       483,461        519,790        1,954,860
     Synthetic leases                             7,612          8,894         7,159             --           23,665
     Other synthetic lease obligations            4,036          1,492            --         56,000           61,528
 Purchase obligations                           832,195         11,758            --             --          843,953
 Total contractual obligations             $  1,188,320     $  659,051     $ 509,955     $  790,486     $  3,147,812

1 Pursuant to FIN 48, a $26.5 million reserve for unrecognized tax benefits is included in other long-term liabilities on our condensed consolidated balance sheet. These obligations are excluded from the schedule above as the timing of payments cannot be reasonably estimated.

Senior notes. We have a Note Purchase Agreement with various institutional investors for $150.0 million of unsecured, senior notes. The notes were issued in two series and funding occurred in December 2006. The Series A notes, issued for an aggregate of $85.0 million, are due in December 2018, and bear interest at a rate of 6.38%. The Series B notes, issued for an aggregate of $65.0 million, are due in December 2021, and bear interest at a rate of 6.53%. Interest on these notes is included in interest payment obligations in the table above.

Borrowings under these notes are subject to certain operating and financial covenants, including maintaining certain interest coverage and leverage ratios. As of November 1, 2008, we were in compliance with these covenants.

Capital leases. The obligations under capital leases relate to distribution center equipment and have a term of two years.

Off-Balance Sheet Arrangements

Operating leases. We lease buying offices, our corporate headquarters, one entire distribution center, one trailer parking lot, portions of two other distribution centers, and all but two of our store locations. Except for certain leasehold improvements and equipment, these leased premises do not represent long-term capital investments.

We lease approximately 181,000 square feet of office space for our corporate headquarters in Pleasanton, California, under several facility leases. The terms for these leases expire between 2010 and 2014 and contain renewal provisions.

We lease approximately 161,000 square feet for our New York buying office and approximately 15,000 square feet for our Los Angeles buying office. The lease terms for these facilities expire in 2015 and 2011, respectively. The lease term for the New York office contains a renewal provision.

We lease a 1.3 million square foot distribution center in Perris, California. The land and building for this distribution center are financed under a $70 million ten-year synthetic lease that expires in July 2013. Rent expense on this center is payable monthly at a fixed annual rate of 5.8% on the lease balance of $70 million. At the end of the lease term, we have the option to either refinance the $70 million synthetic lease facility, purchase the distribution center at the amount of the then-outstanding lease obligation, or arrange a sale of the distribution center to a third party. If the distribution center is sold to a third party for less than $70 million, we have agreed under a residual value guarantee to pay the lessor any shortfall amount up to $56 million. Our contractual obligation of $56 million is included in Other synthetic lease obligations in the above table.

In accordance with Financial Accounting Standards Board ("FASB") Interpretation ("FIN") No. 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others," we have recognized a liability and corresponding asset for the fair value of the residual value guarantee in the amount of $8.3 million for the Perris, California distribution center and $2.2 million for the POS leases. These residual value guarantees are being amortized on a straight-line basis over the original terms of the leases. The current portion of the related asset and liability is recorded in prepaid expenses and accrued expenses, respectively, and the long-term portion of the related assets and liabilities is recorded in other long-term assets and other long-term liabilities, respectively, in the accompanying Condensed Consolidated Balance Sheets.

In November 2001 we entered into a nine year lease for a 239,000 square foot warehouse and a ten-year lease for a 246,000 square foot warehouse in Carlisle, Pennsylvania. In June 2006, we entered into a two-year lease extension with one one-year option for a 253,000 square foot warehouse in Fort Mill, South Carolina, extending the term to February 2009. In March 2008, we amended the term of this lease to February 2010 and obtained three three-year renewal options. In August 2007, we entered into a five-year lease, with an option to purchase a 423,000 square foot warehouse also in Fort Mill, South Carolina. In March 2008, we exercised our option to purchase this warehouse for $18.8 million and in June 2008 we completed our purchase of this warehouse. All four of these properties are used to store our packaway inventory. We also lease a 10-acre parcel of land that has been developed for trailer parking adjacent to our Perris distribution center.

The synthetic lease facilities described above, as well as our revolving credit facility and senior notes, have covenant restrictions requiring us to maintain certain interest coverage and leverage ratios. In addition, the interest rates under these agreements may vary depending on actual interest coverage ratios achieved. As of November 1, 2008, we were in compliance with these covenants.

Purchase obligations. As of November 1, 2008 we had purchase obligations of $844.0 million. These purchase obligations primarily consist of merchandise inventory purchase orders, commitments related to store fixtures and supplies, and information technology service and maintenance contracts. Merchandise inventory purchase orders of $787.4 million represent purchase obligations of less than one year as of November 1, 2008.

Commercial Credit Facilities

The table below presents our significant available commercial credit facilities
at November 1, 2008:

  ($000)                                      Amount of Commitment Expiration Per Period                       Total
                                       Less than           1 - 3            3 - 5         After 5             amount
  Commercial Credit Commitments           1 year           years            years           years          committed
  Revolving credit facility              $    --         $    --       $  600,000       $      --       $    600,000
       Total commercial commitments      $    --         $    --       $  600,000       $      --       $    600,000

Revolving credit facility. We have available a $600.0 million revolving credit facility with our banks, which contains a $300.0 million sublimit for issuances of standby letters of credit, of which $239.6 million was available at November 1, 2008. This credit facility which expires in July 2011 has a LIBOR-based interest rate plus an applicable margin (currently 45 basis points) and is payable upon maturity but not less than quarterly. Our borrowing ability under this credit facility is subject to our maintaining certain interest coverage and leverage ratios. As of November 1, 2008 we had no borrowings outstanding under this facility and were in compliance with the covenants.

Standby letters of credit. We use standby letters of credit to collateralize certain obligations related to our self-insured workers' compensation and general liability claims. We had $60.4 million and $61.8 million in standby letters of credit outstanding at November 1, 2008 and November 3, 2007, respectively.

Trade letters of credit. We had $21.3 million and $23.3 million in trade letters of credit outstanding at November 1, 2008 and November 3, 2007, respectively.

Dividends. In November 2008, our Board of Directors declared a cash dividend of $.095 per common share, payable on January 2, 2009. Our Board of Directors declared quarterly cash dividends of $.095 per common share in January, May, and . . .