While we are working diligently to improve our merchandise assortments which are out of balance in a number of areas in Ladies, plus strengthen our value proposition it can take some time to correct issues like this in the chain of our size. That said we do believe that the actions we are taking the lead to improved results as we move through the year.

As we entered the period total consolidated inventories were down 4% over the prior year. Average in-store inventories were up 1% as planned or packaway as a percentage of total inventories was 44% compared to 49% last year. As it has for some time now these discounts posted better-than-expected gains in both sales and operating profits for the quarter.

Turning to store growth, our 2019 expansion program is on schedule with the addition of 22 new Ross and 6 dd's DISCOUNTS locations in the first quarter. We remain on track to open a total of approximately 100 locations in 2019 comprised of 75 Ross and 25 dd's DISCOUNTS. As usual these numbers do not reflect their plans to close or relocate about 10 stores.

Now Michael Hartshorn will provide further color on our first quarter results and details on our second quarter guidance.

Michael J. Hartshorn -- Group Senior Vice President, Chief Financial Officer

Thank you, Barbara. Let's start with our first quarter results. Our 2% comparable store sales gain was primarily driven by an increase in the size of the average basket. While operating margin of 14.1% was down 95 basis points from last year, it was better-than-expected mainly due to above plan merchandise margin and favorable timing of expenses. Cost of goods sold rose by 85 basis points in the quarter, a 30 basis point improvement in merchandise margin was more than offset by a 60 basis point increase in distribution cost as we were up against last year's benefit from packaway-related expense. In addition freight costs grew by 35 basis points and occupancy and buying expenses increased by 10 basis points each.

Selling, general and administrative expenses for the period increased 10 basis points as higher wage-related costs were partially offset by favorable timing of expenses. During the first quarter, we repurchased 3.4 million shares of common stock for a total purchase price of $320 million. We remain on track to buyback a total of $1.275 billion in stock for the year.

Let's turn now to our second quarter guidance. For the 13 weeks ending August 3rd 2019, we are forecasting same-store sales to increase 1% to 2% on the top of a 5% gain last year. Earnings per share for the second quarter are projected to be in the range of $1.06 to $1.11, up from $1.04 in the prior year period. The operating statement assumptions for our second quarter guidance include the following. Total sales are projected to grow 5% to 6%. We expect to open 28 new stores during the period, including 22 Ross and 6 dd's DISCOUNTS locations. If same store sales are in line with our guidance then we project operating margin to be in the range of 13.2% to 13.4%. The forecasted decline from last year's 13.8% mainly reflects headwinds from higher wage and freight costs, partially offset by the anniversary of last year's negative impact from packaway timing.

In addition, we would expect some deleveraging on occupancy if comparable sales perform in line with our guidance. We expect net interest income of about $4 million. Our tax rate is expected to be approximately 24% to 25%. And weighted average diluted shares outstanding are projected to be about $363 million. Based on our first quarter results and second quarter guidance, we now project earnings per share for fiscal 2019 to be in the range of $4.38 to $4.52. This compares to EPS of $4.26 last year, which included a $0.07 per share benefit from the favorable resolution of a tax matter in the fourth quarter.

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

Barbara Rentler -- Chief Executive Officer

Thank you, Michael. To sum up, we delivered respectable results in the first quarter despite difficulties in our Ladies apparel business. As I said earlier we're working hard to improve our merchandise assortment and strengthen the values we offer in this important business. We do believe the steps we are taking in Ladies will lead to improve performance over time.

At this point, we'd like to open up the call and respond to any questions you might have.

Questions and Answers:

Operator

(Operator Instructions) Your first question comes from the line of Matt Boss from JP Morgan.

Matthew Boss -- JP Morgan -- Analyst

Thanks and congrats on a nice quarter. I guess on the top line can you speak to Ladies apparel performance maybe versus plan in the first quarter. And just how much do you attribute to company's specific execution versus relative category weakness as we've heard this trend from a number of retailers in the last couple of quarters?

Barbara Rentler -- Chief Executive Officer

Okay. Sure. Well, obviously I wouldn't talk versus plan. Well, I'll tell you that Ladies on the top line trail the chain. In terms of company execution versus relative performance in the outside world, you know, we really feel that our execution was below our standards. And obviously there are other outside factors there's weather and there was whatever but in terms of execution we felt that our assortments rather balance there are value offerings were not as compelling as they should have been and obviously you know the price value equation is critical and so we really feel like it's an execution issue and not necessarily based of other factors in the outside world.

Matthew Boss -- JP Morgan -- Analyst

Got it. And then maybe just a follow up on the margin front. On gross margins, what's your expectation for merchandise margin in the second quarter and then the balance of the year in the back half?

Michael J. Hartshorn -- Group Senior Vice President, Chief Financial Officer

Sure, Matt. We don't give specific guidance by quarter. I will tell you when we started the year, we planned merchandise margin relatively flat for the year. And at this point that's what -- what's embedded into our guidance for the remainder of the year.

Matthew Boss -- JP Morgan -- Analyst

Great. Best of luck.

Operator

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

Lorraine Hutchinson -- Bank of America -- Analyst

Thank you. You've had a couple of your senior leaders leave over the past few months. And I was just hoping you could talk about the bench under them, if you're planning external searches or how you're thinking about the leadership team going forward?

Barbara Rentler -- Chief Executive Officer

First, what I would say overall our ability to -- we have a very deep bench of talented and long tenured executives on the operational side and on the merchandising side. And so we have a strong succession plan in all of those worlds underneath. So we feel strongly that our bench at the senior level and the level below that is very solid. And as we know that certain executive where we knew that they were leaving we had transition plants put in place for them, so that we could have a smooth transition and not have disruption to the business.

Lorraine Hutchinson -- Bank of America -- Analyst

Thank you.

Operator

Your next question comes from Mark Altschwager from Baird.

Mark Altschwager -- Baird -- Analyst

Great. Good afternoon. Thanks for taking my question. With respect to the comp guidance of 1% to 2%, I think last quarter you guided 0% to 2% given some of the headwinds you identified in Women's apparel. So is the fact that you're returning to that 1% to 2% range even with a tougher Q2 comparison, a reflection that you think the Women's apparel issue is improving as you move forward or there are other categories that perhaps making up a difference and giving you some more broad-based confidence in the trajectory of the comp? Thanks.

Michael J. Hartshorn -- Group Senior Vice President, Chief Financial Officer

Yeah. I'd say on the guidance, I mean we did it too in the first quarter, so the 1% to 2% is kind of in line on how we usually guide the business and that's all I'd read into it and that's the way I think about it.

Operator

Your next question comes from Kimberly Greenberger from Morgan Stanley.

Kimberly Greenberger -- Morgan Stanley -- Analyst

Great. Thank you so much. I wanted to know if there's any color you can provide on just the monthly cadence in the first quarter and whether you saw the same sort of headwinds in February this year from delays in tax refunds that you had seen perhaps two years ago. And then secondarily, Barbara, I'm wondering if there's a good basic way to help us understand the out of balance in Women's (inaudible) many of us are finance people not merchants. So just maybe in simple terms how would you explain to a non merchant person what is the out of balance issue. And then is the lack of the value proposition you talked about or lack of compelling value is that a function of the availability of goods in the market, the price that those goods are available for or perhaps maybe just some mistakes in the buying process? Any insight would be really appreciated. Thank you so much.

Michael J. Hartshorn -- Group Senior Vice President, Chief Financial Officer

Kimberly on the trends during the quarter, sales strengthened as the quarter progressed and as frankly as weather improved and obviously also with the later Easter that was three weeks later last year like others the delay in tax refunds did have a short-term impact until they got caught up pretty quickly. I think overall the tax refunds were slightly down for the kind of tax filing year, but hard to understand if that's any impact to us for the entire quarter.

Barbara Rentler -- Chief Executive Officer

And then Kimberly in terms of add of balance I mean that -- some of the simplest examples would be I own not to end up short, too much denim, note could be out of balance by classification, it could be out of balance by price point. I mean those are the kinds of things I'm talking about out of balance to give you a couple of examples to put aside or around it. In terms of offering the compelling value it has nothing to do with availability of goods. There's a lot of merchandise in the market. There continue to be merchandise in the market. I would say that the overall merchandise offerings just weren't where they needed to be. And really it was execution issues that were really well below our standard.

Kimberly Greenberger -- Morgan Stanley -- Analyst

Thank you, Barbara.

Operator

Your next question comes from Michael Binetti from Credit Suisse.

Michael Binetti -- Credit Suisse -- Analyst

Hey, guys, thanks for taking our question. I wanted to -- maybe if I asked a similar question to what Matt asked before but when you think about how to isolate your comments to your business versus what's going on more broadly in the marketplace obviously there's quite a bit going on out there right now. But how much do you -- how do you assess your comment that Midwest was the strongest market relative to your own company's performance versus externals like the big bond on bankruptcy a year ago. Have you guys tried to measure how much that's helping add to the Midwest?

Michael J. Hartshorn -- Group Senior Vice President, Chief Financial Officer

Sure. On the Midwest -- Michael, on the Midwest, Midwest has been comping well for us for frankly since we entered the market in 2011 has been one of our strongest performing comp and continues to be a place that we're adding stores so it's a newer store base and have been continued to be successful there in gaining market share.

Barbara Rentler -- Chief Executive Officer

And then as far as the --

Michael J. Hartshorn -- Group Senior Vice President, Chief Financial Officer

(inaudible)

Barbara Rentler -- Chief Executive Officer

Okay. I'm sorry. There was an error there. In terms of our business (technical difficulty) to comments people have made on the outside. You know we look at a number of metrics Ladies to plan other apparel businesses to plan and keep classification turns. I mean there's a variety of metrics that we look at to make that assessment overall. I mean it isn't just one metric, it's a series of metrics.

Michael Binetti -- Credit Suisse -- Analyst

Got it. And then if I could follow up quickly. I think you said the merch margin was up 30 basis points in the quarter. But you think flat for the year. Michael is there a point on the horizon where we see a minus sign in front of that and if so any, any reason why that's a planning or just erring on the side of conservatism?

Michael J. Hartshorn -- Group Senior Vice President, Chief Financial Officer

Well, when we entered the quarter, we were actually able to take -- be able to remain very flexible and so merchants were able to take advantage of close up during the quarter which helped the margin. I would also say that we entered and exited the quarter with healthy inventory positions and therefore there wasn't markdown exposures.

Michael Binetti -- Credit Suisse -- Analyst

Okay. Thanks a lot, Michael.

Operator

Your next question comes from Paul Trussell from Deutsche Bank.

Krisztina Katai -- Deutsche Bank -- Analyst

Hi, good afternoon. This is actually Krisztina Katai on for Paul. I was just wondering, if you could just maybe talk a little bit more about the weakness that you continue to see in Ladies apparel. I know you've discussed it earlier, but just wondering what are some of the steps that you have taken to improve these results and maybe the timeline to remedy it. And then just if you could just discuss some of the categories what you saw there. I mean you call that Men's outperforming, but what about some of the other categories such as Home and Beauty, if you could just share anything there? Thank you.

Barbara Rentler -- Chief Executive Officer

Sure. As it pertains to Ladies issues as I said before we're working diligently to improve the assortments in this important area. But it's going to take time to complete -- address all the issues for chain of our size. That said we believe that we will see improved performance as we move through the year. In terms of other categories Home and Beauty, home was relatively in line with the chain and beauty outperformed the chain.

Krisztina Katai -- Deutsche Bank -- Analyst

Thank you very much.

Operator

Your next question comes from Simeon Siegel from Nomura Instinet.

Simeon Siegel -- Nomura Instinet -- Analyst

Thanks. Good afternoon. I just given your comments on the inventory and the supply in the market. Just any help on understanding what the inventory decline and guess specifically packaway would have thought you would have had a nice opportunity there, so just any thoughts on that. And then the comfort in the ability to comp with the down inventory? Thanks.

Michael J. Hartshorn -- Group Senior Vice President, Chief Financial Officer

So inventory was down just slightly at the end of the quarter, so we think we can continue to operate at that level of inventory and in turn faster. On packaway we were actually up against a very large number last year. Packaway tends to be between 40% and 49% of the total inventory and that can vary over time. But I think we're happy with the level and the content of our packaway inventory as we ended the quarter.

Barbara Rentler -- Chief Executive Officer

Right. And in terms of supply in the market there's an abundance of supply in the market just based of Q1 performance in -- just even in -- just traditional department store. So supply is not the issue buying it at the right price at the right time is really a merchant judgment call.

Simeon Siegel -- Nomura Instinet -- Analyst

Great. Thanks a lot. Best of luck for the year.

Operator

Your next question comes from John Morris from D.A. Davidson.

John Morris -- D.A. Davidson -- Analyst

Hi. Thanks. Congratulations on a good quarter. Very briefly I'm just curious why this shifting of the timing of the expense. Why that was particularly or generally happening occur in the current quarter. And then on the merch margin -- merch margin was up Women's, however, Women's underperformed. So was maybe if you can dive a little bit deeper to help us understand the differences there. Was it all men's or should we look at it from a different -- with a different filter in terms of why you were able to have that merch margin despite the Women's underperformance? Thanks.

Michael J. Hartshorn -- Group Senior Vice President, Chief Financial Officer

Sure. On the timing, it was really broken into two pieces. It's -- part of it's just the packaway timing that you know our initial -- and all these timing by the way is not versus last year versus our original guidance. So what you'll notice we did is we beat the first quarter by $0.04 and then up the full year by $0.02 on the top end of the range. So we're just trying to call that out. But part of it was packaway related and part of it was SG&A cost that we expected to happen in the first quarter that will happen later in the year. And then just kind of on the merchandise margins, the reason we didn't have we're able to operate with higher merch margin and what's very important when you have a business that underperforms is that you manage the inventory and with ladies and overall inventories we entered -- both entered and exited the quarter with healthy inventory positions. So I think that's an important part of the margin improvement.

John Morris -- D.A. Davidson -- Analyst

Okay, great. Thanks.

Operator

The next question comes from Ike Boruchow with Wells Fargo.

Lyon -- Wells Fargo -- Analyst

Good afternoon, everyone. This is Lyon (ph) on for Ike. I just want to ask about the margin dynamics in the quarter just around freight, since I know that it's been such an outsized drag on your costs. How are you thinking about that dynamic for the balance of the year and in Q2? Thank you.

Michael J. Hartshorn -- Group Senior Vice President, Chief Financial Officer

Sure. So maybe it's best to go through last year. Last year the freight costs escalated as we move through the year. So in our initial call this year we said that we thought freight would be a negative impact for the first half of the year and then as we round some of the increases we had in the last year's second half that the costs would abate. So that's our thoughts continue to be that the first half of the year we'll have freight pressure and then we'll have a lower cost versus last year in the back half.

Lyon -- Wells Fargo -- Analyst

Great. Thanks.

Operator

Your next question comes from the line of Paul Lejuez from Citigroup.

Tracy Kogan -- Citigroup -- Analyst

Thanks. It's Tracy, filling in for Paul. I just had a follow up question on packaway. I was wondering if you're seeing more availability in certain categories versus others and maybe perhaps in categories that are already being impacted by tariffs? Thanks.

Barbara Rentler -- Chief Executive Officer

The availability is pretty broad-based in terms of categories with the tariff is, as I'm sure you're probably reading first the lot of vendors brought merchandise into the country even starting a few months ago to get ahead of the 10% tariff even before the 25%. So I would say there in certain pockets of those classifications, there are vendors who own inventory and then there are some that really don't own excess inventory. So that's, that's kind of a mixed story based on classification. And then in terms of apparel availabilities broad-based.

Tracy Kogan -- Citigroup -- Analyst

Great. Thank you.

Operator

Your next question comes from the line of Marni Shapiro from Retail Tracker.

Marni Shapiro -- Retail Tracker -- Analyst

Hey, guys. Great job in a cold and very late Easter first quarter. I'm not going to ask about your Ladies apparel. I'm actually curious about your real estate. You were one of the few net openers of stores out there and in a space where there are a lot of people vacating. So if you could just talk to us a little bit about the tone of what you're seeing out there for your leases and are you able to go back to some of your existing leases and renegotiate or what percentage of your leases are coming up for renewal each year, if you could just put some color around that?

Michael J. Hartshorn -- Group Senior Vice President, Chief Financial Officer

So we have seen closures with other retailers and that's been going on for quite a while. We tend to look 2 years to 3 years out and feel pretty confident that we'll be able to achieve our store opening targets. Wouldn't really comment on the leases, but whenever there's closures it's generally means good news for everybody.

Operator

Your next question comes from the line of Jay Sole with UBS.

Jay Sole -- UBS -- Analyst

Great. Thank you. A couple of questions probably what tariff was mentioned. Could you just talk about how the company is planning to handle the situation if there are new tariffs applied to apparel and footwear. And can you talk about you know what percent of your merchandise is imported from China and if it stores directly? Thank you.

Michael J. Hartshorn -- Group Senior Vice President, Chief Financial Officer

Sure. So like everybody else we're closely monitoring the trade talks and tariffs. And at this point it's too early to say what the potential impact could be on the industry. Our focus is to maintain a pricing umbrella versus traditional retailers and offer the best values to the customers. At this point it's unclear how the industry would react with increases to apparel and shoes and -- but we certainly would not be the price increase leader in that regard. The silver lining is we have a flexible business model and can react to, to the price increases and disruptions like this have historically meant supply opportunities for off price. And then we wouldn't comment on the direct sourcing question what percentage is directly sourced in China.

Jay Sole -- UBS -- Analyst

Okay, thank you.

Operator

Your next question comes from the line of Laura Champine with Loop Capital.

Laura Champine -- Loop Capital -- Analyst

Good afternoon. Thanks for taking my question. It is on the underperformance in the Women's apparel. Are there any changes in staffing for senior merchants or any significant changes in your relationship with vendors or any quality issues coming up with vendors that were unanticipated. I'm just trying to diagnose better what's going on and how long it might take to fix?

Barbara Rentler -- Chief Executive Officer

Okay. Well, in terms of the team, no, there were no significant changes. We have a very large and talented merchant team, very tenured. And it's the same team that has delivered results for many years and being able to deliver value to the customer. In terms of relationships in the market, we have -- again we have a very -- a very large merchant team whether in Ladies or in the entire company. So out there -- we're constantly out there building relationships and trying to do more business. So I don't see any relationship shifts or quality issues. The issues are really they are internal. They are execution issues and we're working diligently as I said before to correct those issues. But because of our size, we believe we'll see improved performance as we move through the year. But the issues are not external. The issues are internal. It's our execution.

Laura Champine -- Loop Capital -- Analyst

Got it. Thank you.

Operator

Your next question comes from Alexandra Walvis with Goldman Sachs.

Alexandra Walvis -- Goldman Sachs -- Analyst

Hi, there. Thank you so much for taking the question. And I had a question on the home category you mentioned in response to a prior question that was tracking in line with the chain. I think that represents a little bit of a deceleration in that category from prior -- some of your peers and other retailers are called out some softness in the home category and some difficulties with the competitive environment. I was wondering if you could comment on your experience there? And how you're seeing demand and pricing and so forth? Thank you.

Barbara Rentler -- Chief Executive Officer

From the -- just from the general classification of home, I think, you know some of our businesses are better than... I'm sorry, go ahead.

Alexandra Walvis -- Goldman Sachs -- Analyst

Yeah.

Michael J. Hartshorn -- Group Senior Vice President, Chief Financial Officer

And I think...

Barbara Rentler -- Chief Executive Officer

Go ahead, continue. Why don't you continue with the question?

Alexandra Walvis -- Goldman Sachs -- Analyst

Yes. So I was just wondering, if you could comment a little bit more on your experience in the general home classification. Many of you have any comments beneath that level in terms of what's performing well. That's well and how buoyant the market is in that category that would -- that would also be really helpful?

Barbara Rentler -- Chief Executive Officer

Okay. Generally some businesses in home are better than others. I really wouldn't go into the specifics of that on the call. I think you know the home categories as a general statement for the market as you know that's where a lot of people have absorbed the increased costs. And so I think the market may be you know depending upon the classification of business event, the market may be a little bit more disrupted than others, some prices more than others, and therefore in some of the businesses there's more opportunity for us and some of the other businesses there's less opportunity. And so -- and then -- so the balance of it may be a little bit different than it's been probably for everyone in the last few months. Without getting into any more specifics on the call, I mean that's kind of the general gist of what's going on.

Alexandra Walvis -- Goldman Sachs -- Analyst

Thank you.

Operator

Your next question comes from the line of Jamie Merriman from Bernstein.

Jamie Merriman -- Bernstein -- Analyst

Thanks very much. I think in the prepared remarks you mentioned that the driver of the comp performance was the basket size increasing. But I'm just wondering, if you could speak to what you've seen in traffic over the last quarter? And then also maybe break that basket price down into price versus unit? Thanks.

Michael J. Hartshorn -- Group Senior Vice President, Chief Financial Officer

Sure. So as we mentioned in the remarks the 2% comp was driven by the increase in the basket. The basket was driven by higher units per transaction, AUR was down slightly and with traffic given the performance in Ladies apparel we think that had an impact on traffic for the quarter. And again the way we measure traffic is through a number of transactions we actually do not have traffic counts.

Jamie Merriman -- Bernstein -- Analyst

Got it. Okay. Thank you.

Operator

Your next question comes from the line of Dana Telsey from Telsey Advisory Group.

Dana Telsey -- Telsey Advisory Group -- Analyst

Hi, good afternoon, everyone. As you think about just the state of the consumer anything you're picking up that in this first quarter was different than in quarters past that would have made a difference in top line whether it is delayed tax refunds or obviously the comparisons. And did you see a difference in performance of dd's versus Ross? Thank you.

Michael J. Hartshorn -- Group Senior Vice President, Chief Financial Officer

With the consumer there's nothing I'd call out. With tax refunds, the refund cycle was completed in the quarter so perhaps there was timing differences within the quarter. But there's nothing really that I'd call out. I mean first quarter has been tough for us and other retailers versus the rest of the year for a number of years.

Dana Telsey -- Telsey Advisory Group -- Analyst

And then the...

Michael J. Hartshorn -- Group Senior Vice President, Chief Financial Officer

And online dd versus Ross -- yeah, dd's actually we were pleased with the performance and we're ahead of last year, so we're pleased. As we said in our commentary we're pleased with the results.

Dana Telsey -- Telsey Advisory Group -- Analyst

And on the real estate front what are you seeing in terms of the opportunity for relocation and as you're renewing existing leases. Is there opportunity for occupancy cost improvements?

Michael J. Hartshorn -- Group Senior Vice President, Chief Financial Officer

So we tend to relocate on average about 10 relocate and open about 10 stores on a year. And we're always looking to improve stores that are underperforming for various reasons. On the -- the second question was on opportunity to improve leases.

Dana Telsey -- Telsey Advisory Group -- Analyst

Yes.

Barbara Rentler -- Chief Executive Officer

Yeah, on occupancy overall and leases. I mean we've seen a pretty good market for the last number of years. And so I think it's remained pretty stable to that to what it's been like over the last several years.

Dana Telsey -- Telsey Advisory Group -- Analyst

Thank you.

Operator

Your next question comes from the line of Bob Drbul from Guggenheim Securities.

Bob Drbul -- Guggenheim Securities -- Analyst

Hi, good afternoon. I was just wondering if you could give us an update just in terms of what you're seeing on your labor costs and the outlook for the year. There's been any change from that perspective. And then second question is just around dd's versus Ross, can you give us an idea on sort of vendor overlap and sort of how that might be trending over the last few years? Thanks.

Michael J. Hartshorn -- Group Senior Vice President, Chief Financial Officer

On the wage front our most recent national increase the $11 we did in the second quarter last year. We believe it keeps us competitively position. That said, we always take a market-to-market approach in determining our wage rates and that will not change and in fact many of our markets are well above the $11. As we always have done we'll make the necessary adjustments to ensure we continue to attract and retain talented associates.

Barbara Rentler -- Chief Executive Officer

And as pertains to dd's versus Ross with vendor overlap, the dd's customer is a lower income customer. So there is some overlap with Ross, but not a large overlap with Ross.

Bob Drbul -- Guggenheim Securities -- Analyst

Got it. And dd's as you open up more stores are you able to open a lot in closer proximity to Ross Stores. Can you just give us an idea just in terms of like the trade areas or how you really see that developing as well?

Michael J. Hartshorn -- Group Senior Vice President, Chief Financial Officer

Yeah, I think we look at it market-by-market. There are some markets where Ross alone makes sense in other markets where the two of them really enhance having on close by. So we take a market-by-market approach and you'll find locations where we're next door to each other.

Bob Drbul -- Guggenheim Securities -- Analyst

Got it. Okay, thank you very much.

Operator

Your last question comes from the line of John Kernan from Cowen.

Krista Zuber -- Cowen -- Analyst

Good afternoon. This is Krista Zuber on for John. Thank you for taking our questions. I just wanted to follow up on two previous questions one on inventory and one on freight. Just in terms of where you're thinking your inventory positioning or levels will be at the end of the year. And then secondly on freight. You mentioned that sort of your guidance or your thinking was unchanged. Is that a reflection of the renegotiations you'd expect it to have this year for the rates? Thank you.

Michael J. Hartshorn -- Group Senior Vice President, Chief Financial Officer

Sure. On inventory at the end of the year that's a long way out. But the way we have planned is store positions to be relatively flat at this point on freight. We have pretty good visibility on our renegotiations with our freight again a recap last year the cost escalated as we moved through the year. And so in the front half we've continued to see wage pressure -- not wage pressure but freight pressure just based on rates and market inflationary costs in the freight industry. And then in the back half we're up against those larger increases. So our view point at this point is that they will now abade as we move through the year.

Krista Zuber -- Cowen -- Analyst

Thanks. I could just add one more follow up. Just kind of looking at your free cash flow generation. I think you stepped up the CapEx this year to about $600 million excuse me when you gave guidance at the end of the fourth quarter. I'm just curious is this how we should think about the run rate of CapEx as a percentage of sales going forward? Thank you.

Travis Marquette -- Group Senior Vice President, Deputy Chief Financial Officer

Yeah, this is Travis. Yeah, we're still planning CapEx at around $600 million for the year. And as you may recall that includes the initial investment in our next distribution center. In terms of spending going forward you know we wouldn't be too specific for the future, but suffice to say it takes a little while to build that distribution center, so we expect CapEx to be elevated for the next couple of years.

Krista Zuber -- Cowen -- Analyst

Terrific. Thank you so much.

Operator

I will now turn the call back over to Barbara Rentler for closing comments.

Barbara Rentler -- Chief Executive Officer

Thank you for joining us today and for your interest in Ross Stores. Have a great day.

Operator

This concludes today's conference call. You may now disconnect.

Duration: 39 minutes

Call participants:

Barbara Rentler -- Chief Executive Officer

Michael J. Hartshorn -- Group Senior Vice President, Chief Financial Officer

Travis Marquette -- Group Senior Vice President, Deputy Chief Financial Officer

Matthew Boss -- JP Morgan -- Analyst

Lorraine Hutchinson -- Bank of America -- Analyst

Mark Altschwager -- Baird -- Analyst

Kimberly Greenberger -- Morgan Stanley -- Analyst

Michael Binetti -- Credit Suisse -- Analyst

Krisztina Katai -- Deutsche Bank -- Analyst

Simeon Siegel -- Nomura Instinet -- Analyst

John Morris -- D.A. Davidson -- Analyst

Lyon -- Wells Fargo -- Analyst

Tracy Kogan -- Citigroup -- Analyst

Marni Shapiro -- Retail Tracker -- Analyst

Jay Sole -- UBS -- Analyst

Laura Champine -- Loop Capital -- Analyst

Alexandra Walvis -- Goldman Sachs -- Analyst

Jamie Merriman -- Bernstein -- Analyst

Dana Telsey -- Telsey Advisory Group -- Analyst

Bob Drbul -- Guggenheim Securities -- Analyst

Krista Zuber -- Cowen -- Analyst

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