The off-price retailer, which operates T.J. Maxx, Marshalls, Marmaxx and HomeGoods, released quarterly earnings Wednesday before the bell, revealing more than $40 billion in annual sales and prompting the stock to jump 7.15 percent to $63.99 a share the same day.
“We are extremely pleased with our strong fourth-quarter results, as both sales and earnings per share significantly exceeded our expectations,” said Ernie Herrman, chief executive officer and president of the TJX Cos. “We saw strength across the company, with each major division delivering [comparable] sales growth of 4 percent or higher, allover strong increases last year and all primarily driven by customer traffic. Our exciting brands and gift-giving assortments at great values, supported by our marketing, attracted customers around the globe during the holiday season and beyond.
“We are also very proud to well surpass $40 billion in annual sales, a tremendous milestone for our company,” Herrman continued.
For the three-month period ended Feb. 1, net sales grew 10 percent to $12.2 billion, up from $11.1 billion the same time last year. Profits also increased to $984 million, up from $841 million during 2019’s fourth quarter. For the full 2020 fiscal year, net sales rose to $41.7 billion, up from $38.9 billion the year prior, as profits expanded to $3.2 billion, up from just over $3 billion.
Across all brands, comp sales increased, marking the company’s 24th consecutive quarter of comp growth. Executives on Wednesday morning’s conference call with analysts also pointed out that even the six fewer days between Thanksgiving and Christmas last year didn’t hinder the company’s growth.
“Looking ahead to 2020, the year is off to a solid start and our global organization remains focused on bringing great values to shoppers every day,” Herrman said. “We see plentiful opportunities for TJX in today’s retail landscape and are confident we will continue to capture market share. We look forward to many more successful years ahead and continued growth around the world.”
The off-price channel has certainly figured out a winning retail formula: in-store experiences that cannot be replicated online while offering name-brand products for a discounted price.
“We continue to believe these retailers are best positioned due to their locations [off-mall] and their consumer centric assortments,” said a research note from Jane Hali & Associates. “Sales have obviously shifted from department stores to off-price.”
Herrman said on the call that the apparel and home businesses were particularly strong during the most recent quarter.
Meanwhile, the coronavirus continues to run rampant, resulting in store closures around Asia and parts of Europe, causing some designers to cancel shows during Milan Fashion Week, sales to dip and the stock market to tumble. But the TJX Cos., which closed down 3.29 percent to $59.72 a share Tuesday, is up nearly 15 percent year-to-date.
The company does not operate stores in China or any of the other countries that have been impacted by the virus, but does have associated supply chain tie-ups, such as products that come from both vendors and retailers, as well as buyers who travel the world.
“We are monitoring the situation closely with the health and well-being of all our associates being our top priority,” Herrman said on the conference call. “At this time, we have not seen an impact to our business and it is too early to speculate about the future.”
In addition, some critics worry that the off-price channel’s lackluster online presence might be a problem in the future as e-commerce and social media continues to penetrate the retail sphere. Both T.J. Maxx and Marshalls have about a million followers on Instagram — a small amount in the world of fashion. (Gucci has nearly 40 million followers. Victoria’s Secret has 69 million followers. Nike has 102 million followers, and so on.)
Moreover, the brands primarily work with micro-influencers. T.J. Maxx launched a campaign with actor Zachary Levi during the most recent holiday season.
But the minimal social media presence might be exactly what’s keeping the brands afloat: Consumers need to pop into a store to see what new merchandise has arrived.
“Obviously, the consumer is migrating online; consumers want to shop through apps and just regular web site,” said Jay Sole, equity analyst at UBS. “Brands are trying to more directly speak to consumers and off-price doesn’t have a big e-commerce presence right now. So maybe in 10 years that’s an issue. But for the near-term, not an issue.”
Either way, the retail company’s winning streak doesn’t seem to be ending anytime soon.
“A large percentage of the population is looking for value,” said Ike Boruchow, retail analyst at Wells Fargo. “Those consumers want the most value that they can possibly get. So I don’t see any fundamental problems, or any fundamental wall that these guys should hit anytime soon.”