TJX posts Q2 loss; sales fall amid store closures, inventory challenges
TJX Cos. swung to a second-quarter loss as its store fleet remained dark for nearly a third of the period due to the pandemic. But it ended the quarter with $6.6 billion cash on hand.
Looking ahead, the off-price giant forecast that same-store sales at reopened stores will fall 10%-20% in the third quarter. It noted that traffic and demand have moderated after an initial surge that followed the reopening of its 4,500 stores worldwide.
“Following the early wave of stronger than anticipated demand, the company’s traffic and sales moderated as it moved through the second quarter and into the third quarter,” the retailer stated. “The company believes that this was due to a number of COVID-19-related factors, including the impact on consumer behavior and demand, and lighter inventories in its stores than it planned.”
[Further Reading: Store closures hit TJX hard with big Q1 loss; defers Q2 rent to 2022]
TJX said it was unable to optimize the inventory flow back to its stores, particularly in Canada, due to supply chain and logistics challenges at both the company and at some of its third-party affiliates as businesses ramped back up. The retailer added it has put strategies in place to mitigate some of the inventory delays.
TJX’s net losses totaled $214.2 million, or $0.18 cents per share, for the quarter ended Aug. 1, compared to net income of $759.0 million, or $0.62 cent per share, in the year-ago period. Analysts had expected a loss of $0.10 a share.
Sales fell 31.8% to $6.67 billion, from $9.78 billion last year. Analysts had expected sales of $6.55 billion. “Open-only” comp-store sales, which the company defines as "the sales increase or decrease of these stores for the days the stores were open in the current period against sales for the same days in the prior year," were down 3%.
By division, the company’s HomeGoods chain performed the best, with a 20% increase in open-only comp sales at U.S. stores. Sales were down 6% at the Marmax division, which include Marshalls and T.J. Maxx, and 18% at TJX Canada.
“For the quarter, we were very pleased that both our top and bottom lines well exceeded our internal plans, despite our stores only being open for a little more than two-thirds of the second quarter, and that our merchandise margin was excellent,” said Ernie Herrman, CEO and president. “Further, we saw especially strong sales at our HomeGoods and Homesense chains, as well as the home departments within our other chains, across geographies. As to the future, we are confident that when more customers are comfortable with in-store shopping, we will be in a great position to continue gaining market share as we have for many years.”
TJX paid off the $1 billion it drew down from its revolving credit facilities in March. It ended the second quarter with $6.6 billion in cash.