TJX rings up a winning quarter, raises guidance
August 12, 2008-- Home Textiles Today,
Framingham, Mass. – A down-market consumer shift helped TJX turn in a strong second quarter performance – with sales, margins and profits all getting a boost.
“In down economies we ten to catch a new customer,” president and ceo Carol Meyrowitz told analysts during this morning’s quarterly conference call. She added that when the economy improves, “history has shown they stay with us,” even as the company raises “the price umbrella” to keep pace with better times.
For the quarter ended July 26, TJX reported a profit of $200 million, or 45 cents per share, up 239% from $59 million, or 13 cents per share, in last year’s second quarter. Those results include an after-tax charge of $10 million related to Bob Stores in this year’s quarter and a charge of $118 million in last year’s quarter associated with the computer hackers who broker into the retailer’s system.
Total sales rose 7% to $4.6 billion, with consolidated comp sales up 4%.
Sales at the Marmaxx division (TJMaxx/Marshall’s) rose approximately 5% to $2.96 billion. Comps climbed 3% for the quarter. Meyrowitz said the company “is feeling better about” home in this segment and has begun to experience significantly higher inventory turns in the category. Home comps in Marmaxx were flat for the quarter.
HomeGoods posted a 7% sales increase to $350 million, although comps slid back 1%. Profit in the division fell below expectations as the company took “extremely aggressive” markdowns to clear out big-ticket merchandise during the quarter to off-set higher delivery costs on furniture, Meyrowitz said.
This fall, the company will test a larger, 37,000-sq.-ft. format for HomeGoods. The test store will open next month in Westport, Conn.
Sales at A.J. Wright climbed 7.4% to $160 million, with comps jumping 6%. Company execs like the progress the format is making, and Meyrowitz said A.J. Wright results are “getting closer to the level that would give us confidence to begin accelerating store openings.” She noted that a ramped up rollout is not likely anytime soon, but reiterated that in the long term the company sees the 132-unit format expanding to somewhere between 500 and 1,000 stores.
In Canada, the combined Winners and HomeSense sales experienced a 15% bounce to $538.7 million, with combined comps up smartly by 12% on a U.S. currency basis. Comps rose 6% in Canadian currency. HomeSense “continued to do terrifically well on both the top and bottom line,” said Meyrowitz.
The company’s first United Kingdom HomeSense store, which opened this past spring, is “off to a good start,” she added. TJX hopes to have six units operating by year-end.
In the wake of a strong second quarter performance, TJX Cos. today raised its earnings guidance for the third quarter and full year.
For the third year, TJX now projects earnings per share of 59 cents to 62 cents, versus previous guidance of 54 cents. For the fiscal year, the company expects earnings of $2.26 and $2.31 per share.
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