NEW YORK--TJX Cos. Inc.'s earnings slumped 27.7 percent in the second quarter ended July 30, slammed by weak apparel performances at its three major divisions.
The off-pricer reported flat earnings at T.J. Maxx, an operating loss at Hit or Miss and sharply lower profits at Chadwick's of Boston.
Total earnings fell to $18.8 million, or 23 cents a share, slightly below Wall Street's mean estimate of 25 cents. Last year, TJX earned $26 million, or 33 cents.
Sales gained 3 percent to $866.7 million from $841.1 million.
Bernard Cammarata, president and chief executive officer, said in a statement that T.J. Maxx, which accounts for about 70 percent of overall sales, showed "flat" operating profits in the quarter due to weakness in apparel sales. "In keeping with industry trends, nonapparel categories performed quite strongly throughout the quarter, and apparel categories remained sluggish," Cammarata said.
He noted, however, that T.J. Maxx's merchandise margins improved and inventories are in "excellent shape."
Overall operating income at the off-price apparel group, which includes Canadian off-pricer Winners as well T.J. Maxx, inched up 3.2 percent to $46.9 million. Sales increased 6.2 percent to $689.8 million.
Winners had very strong operating income and a 10 percent same-store sales gain in the quarter, Cammarata said.
Hit or Miss, the women's off-price chain, posted an operating loss of $1.2 million as revenues fell 5.2 percent to $91.5 million. Last year it registered a profit of $3.6 million.
Cammarata said Hit or Miss was up against a strong 1993 quarter. He expects improvement in the second half when comparisons become easier.
At Chadwick's of Boston, the women's catalog, operating profits slumped 42.2 percent to $4.1 million, as sales fell 10.2 percent to $85.4 million. Cammarata said the unit was unable to fulfill demand that exceeded expectations.
The quarter included a charge of $3 million, or 4 cents a share, to cover start-up costs for T.K. Maxx, its United Kingdom off-price concept. TJX said these costs were slightly higher than expected.
In the half, overall profits dipped 17 percent to $38.2 million, or 47 cents, from $46 million, or 61 cents. Sales rose 5.6 percent to $1.72 billion from $1.63 billion.
First-half operating profits at T.J. Maxx and Winners combined increased 6.1 percent to $93.6 million, while sales gained 8.1 percent to $1.34 billion.
Hit or Miss had a loss of $928,000 in the half, and sales were off 2.1 percent, to $180.9 million. Profits at Chadwick's of Boston skidded 62.6 percent to $5.1 million, while sales inched up 2.3 percent.
Separately, TJX said it plans to repurchase up to $100 million of its stock, or about 6 to 7 percent of total shares outstanding.
--Fairchild News Service

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