More profitable TJX likes its chances in home
Furniture Today Staff -- Furniture Today, February 25, 2009
Framingham, Mass. -- After a fourth quarter that, while not great was better than most, off-price retailer TJX Companies sees 2009 as a year of opportunity -- and home will be one of the bright spots.
Total sales rose 6.6% at the Home Goods chain last year to $1.58 billion, but comps declined 3% and profit plunged 44.4% to $42.3 million. Still, the division has turned in a promising performance so far in February and TJX president and ceo Carol Meyrowitz told analysts today that she likes the outlook.
“I’m feeling very good about our home business going into this year,” she declared.
The division shifted its merchandising to improve the value equation, boosted its in-store marketing efforts and began rotating some departmental positions on the floor to convey freshness. Since the liquidation of Linens ’n Things last year, sales have increased substantially in markets where Home Goods competed against LNT, she said.
Anticipating further retail consolidation this year, Meyrowitz said, “Home Goods is going to be the place to shop, and I believe there are going to be fewer home stores out there.”
Annual sales in the core Marmaxx division rose 3.3% to $12.4 billion while profit was flat at $1.2 billion. This year, the division sees potential to buy some better brands than it had in the past, and also plans to buy and flow merchandise on a weekly basis.
The strategy is to create a destination for moderate and high-end brands at “low-end” prices, said Meyrowitz.
For the year ended Jan. 31, profit at TJX climbed 14% to $888.6 million, or $2.00 per share. Sales rose 4% to $19.0 billion, with comps up 1%.
Fourth quarter profit fell 16.6% to $251 million, or 58 cents per share. Results were hurt in part by currency exchanges, especially against the weak Canadian dollar. Sales were flat at $5.4 billion and comps slipped 2%.
Although the company did not provide full-year earnings guidance today, Meyrowitz said TJX is planning around an expectation of a low single-digit comp decrease. The retailer is working to cut $150 million in costs, including a reduced merchandise spend.
“In 2009, we’ll be defensive, cautious and flexible,” she said.
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