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Same-Store Sales Kill Profits at TJX

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

Framingham, Mass. — Hampered by slowing same-store sales, weakness in most of its operating units, and a fistful of one-time charges that put downward pressure on earnings, third quarter profits at The TJX Companies fell 14.8 percent, to $171.2 million from $200.9 million last year.

Sales at the off-price retailer rose 5.9 percent, to $4 billion from $3.8 billion last year. But same-store were flat during the quarter.

The company recorded a per-share profit of 91 cents during the period, down from 95 cents during the same period a year ago. Profits would have been sharply higher, about $1.08 per share, but for a trio of one-time charges. Exit costs and operating losses in the e-commerce business pulled about 15 cents out of per-share profits. Recent hurricanes pulled another penny out of earnings; and an exit package for a former CEO cost the company another penny out of profits.

Ben Cammarata, chairman and acting CEO, said: “We were disappointed with our sales and earnings results in the third quarter, particularly with the performance of women's sportswear across all divisions. While business was hurt by unseasonably warm weather across much of the U.S., Canada and the U.K., we believe that there are areas of our off-price buying strategies in which better execution would benefit us.”

With same-store sales running flat, both margins and operating costs weakened from year-before levels. Average gross margin narrowed by a percentage point, to 24.2 percent from 25.2 percent, hurt by the one-time charges and the weak same-store sales. Even so, the company said, merchandise margins “were up slightly over last year.” Operating costs climbed six-tenths of a percentage point, to 17 percent of sales from 16.4 percent a year ago.

The TJX Companies, Inc.

Qtr. 10/29 (x000) 2005 2004 % change
Sales $4,041,912 $3,817,350 5.9
Oper. income (EBIT) 289,463 334,258 -13.4
Net income 171,163 200,855 -14.8
Per share (diluted) 0.36 0.40 -10.0
Average gross margin 24.2% 25.2% --
SG&A expenses 17.0% 16.4% --
Nine months
Sales 11,341,608 10,584,374 7.2
Oper. income (EBIT) 746,625 815,504 -8.4
Net income 443,648 487,209 -8.9
Per share (diluted) 0.91 0.95 -4.2
Average gross margin 23.8% 24.4% --
SG&A expenses 17.2% 16.7% --


3Q Segment Results

Sales 2005 2004 % change Same-store sales
(loss)
Marmaxx $2,727,759 $2,671,889 2.1 0%
Winners/HomeSense 398,081 351,347 13.3 4%
T.K. Maxx 385,069 335,828 14.7 -5%
HomeGoods 292,315 248,738 17.5 1%
A.J. Wright 158,582 128,688 23.2 2%
Bob's Stores 80,106 80,680 -0.9 NA
Operating Profit 2005 2004 % change
Marmaxx 251,104 284,329 -11.7 --
Winners/HomeSense 52,237 39,002 33.9 --
T.K. Maxx 22,679 29,828 -24.0 --
HomeGoods 8,053 11,753 -31.5 --
A.J. Wright (2,466) (5,773) -- --
Bob's Stores (6,736) (2,392) -- --


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