Dive Brief:
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TJX on Wednesday said its Q4 net sales rose 5% year over year to $14.5 billion. U.S. net sales rose 6% to $11.4 billion, with largest division Marmaxx up 8% and HomeGoods down 4%.
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U.S. store-only comps rose 4%, with Marmaxx (mainly T.J. Maxx and Marshalls stores) up 7% and HomeGoods down 7%, according to a company press release. Net income rose 10.4% to just over $1 billion.
- Margins missed in the quarter, with pretax profit margin up less than the company expected (rising 0.2 percentage point to 9.2%), merchandise margin down “slightly,” and gross profit margin down one percentage point to 26.1%.
Dive Insight:
Margins and profit at normally stalwart TJX were undermined by shrink — typically goods lost to theft, breakage or other reasons — which the company thought would improve year over year, but instead got worse. The company is also enduring an ongoing slide in home goods sales, which spiked during the height of the pandemic but have since tumbled.
For the full year, total sales rose 3% to nearly $50 billion and net income rose 6.5% to $3.5 billion, with U.S. store comps flat, per the release. In a statement, CEO Ernie Herrman said the new fiscal year “is off to a strong start,” and that TJX is on track to reach its pretax profit margin target of 10.6% by next year.
“During the year, our apparel businesses, including accessories, across the company were strong. Sales at our home businesses overall were softer as we saw extraordinary growth during the two prior years when consumers focused on purchases for their homes,” he said. “Longer term, I am confident that we are on track to becoming an increasingly profitable $60 billion-plus company.”
The off-pricer is increasingly important, not only to customers, but also to brands, and is likely to continue to take market share in the long term, according to a research note from BMO Capital Markets analysts led by Simeon Siegel. Shorter term, volatility in the market promises to expand an already strong merchandising opportunity for TJX, and year-over-year comparisons in the home category are set to ease, William Blair analysts led by Dylan Carden said in a Tuesday client note. Moreover, TJX’s banners remain attractive to consumers still encountering rising prices elsewhere, they said.
GlobalData Managing Director Neil Saunders called the retailer’s U.S. operation “the star of the show.”
“Our channel checks over the quarter found that both TJX and Marshalls had assortments that were fresh and interesting, with plenty of inspiration for shoppers,” he said in emailed comments. “Price points where also very sharp. This, in our view, underlines the strength TJX has in its buying and merchandising teams. It is also one of the reasons why both TJMaxx and Marshalls managed to perform so strongly, even in a market that was extremely crowded with competing discounts and offers.”
