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TJX firing on all cylinders

Cecile Corral, Staff Staff -- Home Textiles Today, May 19, 2009

Framingham, Mass. – Off-price multi-nameplate retailer TJX Companies Inc. reported first-quarter results today it described as “the strongest in our history.”

For the first quarter ended May 2, net sales increased 1% to $4.35 billion, and consolidated comparable-store sales increased 2% over last year.

Net income from continuing operations for the period was $209 million, and diluted earnings per share from continuing operations were 49 cents compared to 44 cents last year.

First-quarter results included a 2 cent benefit from tax adjustments. Excluding last year’s tax benefit, first quarter diluted earnings per share increased 17% over the adjusted 42 cents for the prior year.

During the company’s earnings call today, president and ceo Carol Meyrowitz reviewed each brand’s performance.

“Marmaxx had its most profitable quarter – not its most profitable first quarter – but its most profitable quarter in its history, with profits up 19%, driven by very strong merchandise margins and terrific expense control,” she said.

Home Goods’ profit jumped 75% to $15.57 million.

A.J. Wright posted a 12% comp increase and delivered $4 million in profit – “more than it had cumulatively made in its entire history,” she said.

Winners “significantly made its plan,” offsetting much of the negative currency impact on its merchandise margins and delivering “more expense savings than we expected,” she continued.

And T.J. Maxx generated “a strong” 6% comp overall.

Merchandise-wise, the company is actively changing its strategy to “shift our purchase dollars to the right categories and initiatives in order to drive sales,” Meyrowitz said. Those efforts include juniors, dresses, footwear and children’s, she said.

Shining a positive light on the home business was Home Goods, which Meyrowitz said “just delivered its strongest first quarter performance ever.” Improvements include better customer service-oriented initiatives at the store level, more focused marketing efforts, leaner inventories, better execution, and “tremendous” value.

“We believe that much of the consolidation at retail will happen in the home arena, and should provide Home Goods a stronger competitive position,” she said.

As TJX Companies looks ahead to the critical second half of the year, with an eye on holiday, Meyrowitz stressed that the company is positioned to procure a vast variety of products and inventory to meet its needs.

“I will say this as plainly as I can -- availability is never a concern for us. Even when the marketplace becomes more disciplined, there will always be more products available to us than we would want or could ever buy,” she said. “We began the first quarter with more inventory liquidity and greater open-to-buy than I can remember.”

To help analysts “understand the magnitude of what we’re talking about,” she said, the company during the first quarter opened more than 600 new vendor doors – “and that was just at Marmaxx and Home Goods alone,” she added.

TJX Companies works with more than 500 buyers worldwide, Meyrowitz continued, “who take a global, tactical approach to sourcing from well over 10,000 vendors in 60 countries. We are always moving, placing buyers in the most advantageous locations as the dynamics of the markets change.”

Once a vendor opens, she said, “it typically stays open over time until we establish a long-term, mutually beneficial relationship,” she said.

Growing the company beyond the United States remains a key strategy for TJX Companies, and one that is “unwavering,” Meyrowitz said.

“I truly believe that with the right strategies in place, we’ll come out of the recession with an even greater competitive edge,” she said. “We are taking advantage of opportunities that this environment presents and are continuing to plant seeds for the future.”

Real estate is also ramping up as new opportunities from retail consolidations present themselves, she said. The retailer now plans to open 80 to 85 stores this year, net of closing, representing 15 to 20 more than initially planned.

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