Holiday Home Sluggish at TJX Cos. Stores

Michele SanFilippo, November 29, 2004

Framingham, Mass. — For the first time in recent years, holiday-themed home goods are experiencing sluggish sales due to delayed consumer spending, noted TJX Companies President and CEO Edmond English in a recent third-quarter conference call.

“We are seeing a bit of a slowdown in the holiday-related goods, but it could be a little too early to call since buying seems to be happening later this year,” explained English, adding that holiday sales were weak thus far at HomeGoods, TJ Maxx and Marshalls.

“This is the first time we are seeing pure holiday motif in home as slow. It's a category that has been growing for us, so we've been chasing it for some time,” he added, noting that holiday apparel sales have been very strong.

English continued that consumer purchases have been taking HomeGoods into more furniture, rugs and soft home. “The home business is more of a sourcing game, but the average ticket is up a little bit, even if it is skewed by increasing sales of high-ticket items that have been doing well, mainly furniture, lamps, wall décor and rugs,” he described. But home has been a trailing category for TJX Companies with comps off by 6 percent.

Subtle merchandising changes will be made at HomeGoods in terms of products offered in the front and middle of stores, but overall English said the company likes the way the stores look, “The inventory is very fresh with a good mix of products.”

At discounter AJ Wright, where consumers were affected by economic conditions such as high gas prices and energy bills, the company had a very difficult back-to-school selling period, but retooled the mix and was able to bring sales back on track. “Ultimately we feel good about the trend of this business and expect to make money next year,” he said.

TJX Companies feels good about its open-to-buy as it gets ready to close out this year, according to English. Inventory levels are up 1 percent at The Marmaxx Group and 3 percent overall at the company. “We have great confidence in achieving our goals by the end of the year. In addition, our Web sites for TJ Maxx and HomeGoods are open and ready for business, which should help holiday shopping,” he added.

Net sales for the quarter were $3.8 billion, a 13 percent increase over last year with comp store sales increasing 4 percent over the prior year. Net income was $201 million and diluted earnings per share were 41 cents, a 14 percent increase over last year's results.

For the first nine months of fiscal 2005, net sales were $10.6 billion, up 15 percent over 2004 and year-to-date comp store sales increased 5 percent over last year. Net income was $487 million, and diluted earnings per share were 98 cents, up 21 percent over 2004.

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