How TJX is avoiding the retail sales slump

TJX shows no signs of losing its popular appeal with shoppers as the company reported stronger than expected traffic and same-store sales in the third quarter.



For the third quarter ended Oct. 31, same store sales at TJX Companies rose 5.3%. The company said net income fell to $587.3 million, from $595 million a year earlier. On a per share basis, net income rose to 86 cents per share from 85 cents, as the company had fewer shares outstanding. Revenue rose to $7.75 billion from $7.37 billion.



“We are delighted that strong customer traffic drove our entire consolidated comp and was the primary driver of our comp increases at every division. Our excellent traffic gains and strong performance across our apparel, accessories and home categories, demonstrate that our brands globally are offering the right values and merchandise mix," said Carol Meyrowitz, chairman and CEO of the TJX Companies Inc. "I am particularly pleased with our ability to simultaneously deliver exceptional value to consumers while maintaining strong merchandise margins, which speaks to the flexibility of our off-price business model."



TJX has been avoiding the malaise spreading through much of the retail sector for several quarters. Its flexible business model allows the company to get whatever inventory consumers are interested in with very short notice and sell it for less than traditional retailers to shoppers who are increasingly cost conscious.



Meyrowitz added: "Our goal is to keep serving consumers and growing our market share around the world. To that end, we continue to balance growth with investments in our future to establish a strong foundation in the U.S. and internationally. Further, we were happy to add Trade Secret, an Australian off-price retailer, to our family of companies in October. With our clear vision for global growth, a differentiated apparel and home fashions business, and world-class organization, I am very confident we will grow TJX to a $40 billion-plus company!”



Total inventories at TJX as of Oct. 31 were $4.4 billion, compared with $4 billion at the end of the third quarter last year. The company says it is very comfortable with its inventory position, which it strategically increased ahead of the fourth quarter to provide more flexibility to flow fresh merchandise to its stores with greater precision throughout the holiday season.



For the fourth quarter, the company expects diluted earnings per share to be in the range of $.91 to $.93, compared to $.93 last year.



During the third quarter the company increased its store count by a net of 133 stores to a total of 3,594 stores. The company increased square footage by 5% over the same period last year.