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Despite Sales Gains, TJX Profits Slide

Don Hogsett -- Home Textiles Today, February 28, 2005

Losing ground or losing money in five of its six operating units, despite steady sales growth, diversified retailer TJX Companies Inc. saw fourth quarter profits slide 25.9 percent, to $176.9 million from $238.7 million last year, an earnings shortfall of more than $61 million.

While earnings may have headed south, all the sales arrows were pointing up, and the retailer boosted sales in the closing quarter by 5.4 percent, to $4.3 billion from $4.1 billion, helped by a strong performance at two of its home fashions units, HomeGoods in the U.S. market and HomeSense in Canada. Sales might have climbed even higher, but this year's fourth quarter included one less week of sales than a year ago.

In a lift to the top line, the HomeGoods sales improved 9.9 percent, to $315.7 million from $287.3 million last year. And for all of last year, HomeGoods burst through the billion-dollar market, putting up $1 billion in sales, up 15.6 percent from $876.5 million. But for all the growth in sales, the business was a drag on profits, with earnings plunging by 60.1 percent, to $9.1 million from $22.8 million a year ago.

North of the border, the combination of Winners and HomeSense drove sales higher by 8.1 percent, to $371.9 million from $344.2 million. But profits were just as hard to come by in Canada as in the U.S., and earnings tumbled by 31.1 percent, to $27.9 million.

Sales were virtually flat at Marmaxx, the locomotive that pulls the rest of the train, edging up just 0.2 percent, to $3.0 billion. Marmaxx profits dropped off by 9.5 percent, to $281.5 million from $311.1 million.

The TJX Companies Inc.

Qtr. 1/29 (x000) 2004 2003 % change
Sales $4,329,109 $4,105,597 5.4
Oper. Income (EBIT) 289,946 387,825 -25.2
Net income 176,935 238,739 -25.9
Per share (diluted) 0.35 0.46 -23.9
Average gross margin 22.2% 24.3%
SG&A expenses 15.5% 14.8%
12 months
Sales 14,913,483 13,327,938 -11.9
Oper. Income (EBIT) 1,105,450 1,095,578 0.9
Net income 664,144 658,365 0.9
Per share (diluted) 1.30 1.25 4.0
Average gross margin 23.7% 24.4%
SG&A expenses 16.3% 16.2%


TJX Fourth Quarter Segment Results

Sales 2004 2003 % change
Marmaxx $2,954,203 $2,948,358 0.2
Winners and HomeSense 371,901 344,186 8.1
T.K. Maxx 429,942 361,717 18.9
HomeGoods 315,674 287,267 9.9
A.J. Wright 172,847 139,997 23.5
Bob's Stores 84,542 24,072 251.1
Oper. income 2004 2003 % change
Marmaxx 281,506 311,069 -9.5
Winners and HomeSense 27,926 40,519 -31.1
T.K. Maxx 35,893 32,452 10.6
HomeGoods 9,087 22,752 -60.1
A.J. Wright (1,405) 4,111
Bob's Stores (7,896) (4,970)


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