TJX: Business is boffo
August 14, 2007-- Home Textiles Today,
Framingham, Mass. – Coming off its strongest second-quarter performance in its history, The TJX Companies Inc. laid out several of its “growth opportunities” going forward, in particular a heavier focus on its “no walls approach” to merchandising, larger store footprints and a deeper expansion in Europe into new markets and potentially new formats.
During the company’s second-quarter earnings call this morning, Carol Meyrowitz, president and ceo, described the “no walls approach” as “exceptional talent sharing new ideas and best practices. Having no walls in our stores has always benefited us by allowing us to be opportunistic and flexible.”
Divisional teams are visiting with other divisional teams, she continued. And already, Meyrowitz said, “I can see in tangible ways how the company is benefiting.”
Soft home, for one, already has benefited, she said.
“We have had companywide meetings on this,” she said. “Results have been exceptional, and we are seeing big lifts in soft home in most of our divisions.”
Larger store footprints offer another opportunity for company growth, Meyrowitz said. The HomeGoods division is currently testing its first 40,000-square-foot box. Also, the company has been “very aggressive” with relocations into larger footprints at its U.K.-based T.K. Maxx stores, “which have had great return on investment,” she said. “And we’re also looking to do this at Marmaxx.”
More on U.K.-based T.K. Maxx: TJX Companies is in line with its plan to make this nameplate a “European brand.” I t will begin with an expansion into Germany starting this fall with five new stores.
For the second quarter ended July 28, TJX reported sales from continuing operations rose 9% to $4.3 billion, with consolidated comps ahead 5%. The HomeGoods division reported a 5% comp increase and sales of $327 million, up 8.6%. The Marmaxx division reported a comp gain of 3%, with sales up 5.9% to $2.8 billion.
Potential liability from a computer break-in that exposed customer data took a bite out of earnings, with TJX taking an after-tax charge of $118 million. Income from continuing operations was $59 million, and diluted earnings per share were 13 cents. Excluding the after-tax charge, earnings per share from continuing operations were 38 cents, up 31% from last year’s second quarter EPS.
During the first six months of the year, TJX reported profit from continuing operations of $221 million and diluted EPS of 47 cents. Those results include after-tax charges of $130 million related to the computer incident. Excluding the charges, EPS was 74 cents, up 17%.
Consolidated sales during the first half rose 7% to $8.4 billion, with comps up 4%. Sales at HomeGoods rose 8.8% to $660.4 million, and the division doubled its profit to $19 million. Marmaxx sales rose 4.5% to $5.5 billion, with segment profit up 9.8% to $524.6 million.
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