TJX's lean inventories to get leaner

Retail Editor 5, November 16, 2010

Framingham, Mass. - TJX Cos. attributed its strong profit performance to pared down inventories - which generated faster turns with better margins - and said it thinks it can go even leaner.
"As lean as we are, I still believe we have further opportunities to bring inventory down," president and ceo Carol Meyrowitz told analysts during today's third quarter conference call. "We entered the fourth quarter with even leaner inventories and more open-to-buy than last year."
TJX report net income up 14% -- on top of 40% growth in the year-ago quarter - to $372 million, or 92 cents per share. Although average ticket is still slightly down, sales rose 5% to $5.5 billion, with consolidated comps up 1%.
Meyrowitz also said TJX Cos. will pick up the pace next year on openings of Marmaxx nameplates and HomeGoods stores, both of which had good third quarters.
Marmaxx comps rose 1%, on top of a year-ago 9% increase, with $3.5 billion in total sales for the division. Home Goods comps were up 3% against a 13% increase last year with a sales volume of $480 million. Comps at A.J. Wright fell 2% with $198 million in sales, primarily the result of unseasonably warm weather, she said.
Asked about the impact of higher cotton prices, Meyorwitz said they are a good thing.
"Average ticket going up is certainly a benefit to our comp and our average ticket," she said.
Based on third quarter results, the company raised its guidance for the full year, projecting an jump in earnings per share of 17% to 19%.
The company did not raise its outlook on the fourth quarter, continuing to believe earnings will be flat to down 5%.
"The fourth quarter is up against extremely strong results from last year," noted Meyerwitz.

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