• Clint Engel

TJX' 3Q sales disappoint, cites hurricane disruption

FRAMINGHAM, Mass. — Hurricanes and unseasonably warm temperatures ate into TJX Cos. fiscal third quarter results as the off-price retailer posted a 6% sales increase but flat same-store sales.

Net sales for the period ended Oct. 28 increased to $8.76 billion from $8.29 billion for the same period a year ago. Net income grew 16.7% to $641.4 million from $549.8 million. On a per-share basis, net earnings jumped to $1 from 83 cents.

The retailer’s home furnishings-centric HomeGoods division was among the top same-store sales performers for the quarter, up 3% on top of a 6% comp gain a year ago. The TJX Canada division posted the greatest comp gain (up 4%) while Marmaxx — the combination of TJ Maxx and Marshalls stores — trailed all divisions with a 1% comp-store decline. The comp numbers exclude e-commerce sales and sales of Puerto Rico stores impacted by the hurricanes, but include the retailer's Florida and Texas stores.

“Certainly, the hurricanes had a negative impact during the quarter,” CEO and President Ernie Herrman said in the earning release, adding later that the storms affected both the top and bottom lines. “Our greatest concern is the well-being of our associates, their families, our customers and everyone affected by these natural disasters, and our hearts go out to the people who have been impacted."

Herrman said that warmer-than-usual U.S. temperatures also “dampened demand for apparel at our Marmaxx division” but added that sales trends improved as the weather turned more seasonable. He added that the Marmaxx results also were hurt by a "fashion miss" in more than one apparel category. Customer traffic or transactions, however, were strong at all major divisions, and merchandise margins increased, “which we believe speaks to the flexibility of our off-price business model,” he said.

During the quarter, TJX added a net 139 stores, to end the period with 4,052 stores. That growth included the opening of three of its new Homesense stores featuring a broader assortment of large-scale furniture. On a conference call with the investment community, Herrman said the company was "thrilled" with the openings, and while it's still very early, initial consumer response has been outstanding.

For the first nine months of the fiscal year, TJX sales increased 5% to $24.9 billion while same-store sales increased 1%. Net income rose 6.8% for $1.73 billion and was up 9.9% on a per-share basis to $2.67 from $2.43.

Herrman said the fourth quarter is off to a strong start, “and we see numerous opportunities for the holiday selling season across our retail banners.”

For the fourth quarter, TJX said it expects earnings per share to increase 21% to 23% or be in the range of $1.25 to $1.27, which includes an estimated 11-cents-per-share benefit from an extra week in the period. Earnings per share adjusted to exclude that benefit are expected in the $1.14 to $1.16 range, up 11% to 13% from a year ago.

For the full year, the retailer stuck with the high-end of its earnings guidance of $3.91 to $3.93 per share, up 13% to 14% and including the extra-week benefit. for the HomeGoods division, the company said it was looking for comp-sales growth of 4% on total sales of $5.1 billion.

Clint EngelClint Engel | Senior Retail Editor, Furniture Today
cengel@furnituretoday.com

Please feel free to email or call me with all of your retail news and tips, including expansion news, successful merchandising and marketing strategies and anything else you would like to see covered by Furniture/Today.  Contact me directly at cengel@furnituretoday.com or 336-605-1129.

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