TJX Companies see 4 percent dip
August 30, 2004-- Home Textiles Today,
Losing ground in the second quarter, hampered by thinning margins, rising costs and a loss at its fledgling HomeGoods operation, second quarter profits at The TJX Companies slipped 4.1 percent, to $118.2 million from $123.3 million last year.
Overall sales at the diversified off-price retailer rose 12.1 percent, to $3.4 billion from $3 billion during the same period a year ago, while same-store sales edged up 3 percent.
Putting modest pressure on the bottom line was a small $626,000 loss at the HomeGoods unit, as the business skidded from a year-before profit of $6.1 million. HomeGoods sales, driven by continued rapid expansion, increased 15.1 percent, to $222.1 million from $193 million last year. But same-store sales slipped 1 percent.
Weighing in on the HomeGoods business, Edmond English, president and CEO, said, "bottom-line results were below last year and our expectations. HomeGoods' second quarter results were impacted by lighter-than-optimal summer, seasonal inventories, which had been in high demand early in the season. That said, we continue to be bullish about this unique concept, which offers great values on a rapidly changing assortment of home fashions. At HomeGoods, we now expect to add 34 stores, which includes both the freestanding and superstore format and represents a 17 percent increase in selling square footage."
Adding extra pressure to the bottom line, average gross margin thinned 60 basis points, or six-tenths of a percentage point, to 23 percent from 23.6 percent a year ago. At the same time, operating costs rose slightly, 20 basis points, or two-tenths of a percentage point, to 17 percent of sales from 16.8 percent the preceding year.
Second quarter segment results
|Winners and HomeSense|
The TJX Companies
|Qtr. 7/31 (x000)||2004||2003||% chg|
|Oper. Income (EBIT)||200,329||208,308||-3.8|
|Per share (diluted)||0.24||0.24||—|
|Average gross margin||23.0%||23.6%||—|
|Six months||2004||2003||% chg|
|Oper. Income (EBIT)||481,246||400,492||20.2|
|Per share (DILUTED)||0.57||0.46||23.9|
|Average gross margin||23.9%||23.9%||—|
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