Sales climb, but profits slip in TJX 4Q
February 26, 2003-- Home Textiles Today,
Framingham, MA — With costs climbing higher and margins thinning out, fourth-quarter profits at The TJX Companies slipped by 0.7 percent despite a solid 9.2 percent increase in sales and a deep cut in interest expense.
Profits in the all-important holiday quarter came in at $154.3 million, down $1.0 million from $155.3 million last year. But earnings per share, the number Wall Street watches, grew by 3.6 percent, to 29 cents from 28 cents, with fewer shares trading after a major stock buyback by the retailer.
Driven by Christmas shopping, sales in the holiday quarter climbed by 9.2 percent, to $3.5 billion from $3.2 billion last year, driven by steady expansion. Same-store sales were flat, following a 6.0 percent increase the year before.
Putting a dent in profits, operating costs climbed higher by 50 basis points, to 15.1 percent of sales from 14.6 percent a year ago. At the same time margins contracted by 30 basis points, to 22.4 percent from 22.7 percent a year ago.
For all of last year, profits at the off-price retailer climbed by 15.6 percent, to $578.4 million from $500.4 million last year, when the company recorded a $40.0 million loss from discontinued operations. Excluding last year's loss, profits rose by 7.0 percent. Sales improved by 11.9 percent, to $12.0 billion from $10.7 billion, and same-store sales grew by 3.0 percent.
A notably bright spot in the retailer's operation last year was the new HomeGoods home fashions format, said Edmond English, president and ceo. "HomeGoods had an excellent year, far exceeding our sales and profit objectives, while at the same time growing its store count by 27 percent. Total sales reached $705 million, a 39 percent increase over last year, and comp-store sales increased 6 percent over an increase of 7 percent in the prior year. Segment profit increased nearly nine-fold to $32 million and profit margin grew substantially. For the fourth quarter, same-store sales increased 2 percent, against a very strong 11 percent increase last year. Segment profit for the quarter increased 139 percent."