NEW YORK — Youthful exuberance came through for The TJX Cos. in the third quarter as its newer apparel operations and youth-oriented styles led the way to a double-digit increase in net income.
This story first appeared in the November 12, 2003 issue of WWD. Subscribe Today.
For the 13 weeks ended Oct. 25, the Framingham, Mass.-based off-price apparel and home fashions leader saw earnings leap 24.1 percent to $182.8 million, or 36 cents a diluted share, surpassing Wall Street’s consensus estimate by a penny. The increase was magnified by an aftertax charge of $10 million, or 2 cents a share, in last year’s quarter when the firm posted earnings of $147.4 million, or 28 cents.
Sales for the quarter increased 11.2 percent to $3.4 billion from $3.04 billion last year as comparable-store sales advanced 3 percent.
Double-digit sales growth in four of the company’s five business segments fueled earnings. Youth led the way, with the company’s most youth-inspired division, A.J. Wright Stores, experiencing a 55.5 percent jump in sales to $103.1 million from $66.3 million last year. Comparable-store sales were up 14 percent, driven primarily by strong performance in the urban, young men’s and juniors’ segments.
With only 95 stores currently in operation, the second fewest of all business segments, A.J. promises to be a visible driver of future earnings. “Long term, we believe the U.S. market can handle at least 1,000 stores,” said Edmond English, president and chief executive officer, during the company conference call.
Sales for the company’s core Marmaxx group, the combination of T.J. Maxx and Marshalls, were up 5.4 percent to $2.54 billion from $2.41 billion last year. While comps were flat, profits for the group rose 21.3 percent to $265 million. As of October, the company operated more than 1,400 T.J. Maxx and Marshalls stores. English believes the chain will ultimately reach 1,800 units.
Sales for Winners, the company’s 159-store Canadian operation, were spared the dip most retailers experienced as a result of unseasonably warm weather during October. Revenues increased 35.4 percent to $284.6 million. In Canadian currency, comps were up 6 percent.
T.K. Maxx, with 143 stores in operation in the U.K. and Ireland, saw earnings grow 31.1 percent to $243.3 million. Comps increased 8 percent in local currency.
All told, TJX opened 178 new stores across all divisions for the quarter.
The growth through acquisition strategy continued during the third quarter. As reported, in October, TJX agreed to acquire bankrupt Bob’s Stores for $100 million. During the company conference call, English said he believed the 36-unit chain could be expanded to 400 stores in the U.S. “Our plans with Bob’s are to really treat it like a start-up,” said English. The company expects the transaction to close by the end of the year.
For the 39 weeks to date, earnings slid 1.1 percent to $419.6 million, or 81 cents a diluted share, from $424.1 million, or 78 cents, last year.
Revenues increased 8.8 percent to $9.22 billion against $8.48 billion last year.
The company also upped earnings guidance for the fourth quarter, expecting EPS of 41 cents to 43 cents.
Shares traded down 34 cents, or 1.5 percent, to close at $22.94 in Tuesday trading on the New York Stock Exchange.