The recession is funneling both customers and profits to The TJX Cos., which boosted its bottom line by 7.9 percent in the first quarter and is seeking to solidify its position in the off-price category.

This story first appeared in the May 20, 2009 issue of WWD. Subscribe Today.

Quarterly earnings for the Framingham, Mass.-based parent of TJ Maxx and Marshalls rose to $209.2 million, or 49 cents a diluted share, from $193.8 million, or 43 cents, and were in line with analyst estimates. Sales for the three months ended May 2 inched up 1.2 percent to $4.35 billion from $4.3 billion and grew 2 percent on a same-store basis.

Combined operating profits from TJ Maxx and Marshalls increased 18.7 percent to $330.7 million on a 4.9 percent rise in sales to $2.94 billion. Comparable-store sales at Marmaxx were up 1 percent in the quarter.

The more moderate A.J. Wright division posted operating earnings of $4.4 million, reversing year-ago losses of $885,000, as sales rose 16.3 percent, to $179.4 million, and same-store sales jumped 12 percent.

“Customer traffic increased significantly across virtually all of our divisions, as customers responded to our extreme values on ever-fresh assortments,” said Carol Meyrowitz, president and chief executive officer. “We are taking advantage of this environment to attract new customers, open new vendor doors and take advantage of real estate opportunities.”

For the second quarter, TJX expects earnings of 43 cents to 49 cents a share, compared with profits of 48 cents from continuing operations in the same quarter a year earlier.

Investors traded the stock up $1.09, or 3.9 percent, to $29.03.

“TJX is doing a good job of driving merchandise margin improvement through its focus on making purchases opportunistically and closer to need,” said Standard & Poor’s equity analyst Jason Asaeda, who upgraded the stock to “buy” from “hold.”

But Jefferies & Co. analyst Randal Konik kept his “hold” rating on the stock and said profit margin expansion could slow as more prudent inventory practices are utilized. He also said the company could be running out of places to cut costs.