TJX Companies, parent of T.J. Maxx, Marshalls, and Home Goods, announced first quarter results Tuesday that are once again immune to the woes seen by many apparel retailers.
The company saw Q1 net sales rise 10% to $7.5 billion and consolidated same-store sales increase 7%, compared to 5% year over year—handily beating analyst expectations for 2% to 3% same-store sales growth. Marshalls and TJX same-store sales grew 6% and HomeGoods same-store sales grew 9%.
Revenue increased 9.9% to $7.54 billion in the quarter, beating analyst expectations of $7.29 billion as reported by the Wall Street Journal.
TJX raised its full-year per-share guidance to between $3.35 and $3.42 per share on same-store sales growth of 2% to 3%, improving its previous estimate of per-share profit of $3.29 to $3.38 per share on same-store sales growth of 1% to 2%. Shares rose 3.1% to $77.52 premarket on the news.
Just when lagging apparel sales are being blamed for recent dismal reports from several retailers, in comes TJX once again with a story of healthy traffic and sales.
While department stores and other retailers with an eye to TJX’s success have introduced or increased their own stables of off-price stores, TJX appears to stand alone in its ability to thrive whatever the weather—literally or figuratively. Indeed, T.J. Maxx aims to be in business regardless of the state of the economy (good or bad) or any one shopper’s bank account (fat or middling).
A few things have helped TJX avoid the recent earnings doldrums of other apparel retailers. Buyers at the company are highly specialized and know their stuff. High-end items are in the mix to add to the treasure-hunt allure, but all merchandise is geared to the middle-income bargain hunter. And there are no storewide sales because T.J. Maxx wants to protect its brand of good deals, all the time.
T.J. Maxx also has a unique real estate situation. Stores are found mainly at out-of-the way strip malls, untethered to traditional malls or downtown areas with expensive leases. Customers are willing to drive and park at the slightly more remote, less beautiful areas for the sake of their treasure hunt. And that’s somewhere many off-price outlets of major retailers can't go because operating at an overly downscale location could, like any sub-par merchandise or low-low prices, once again dent their flagship brand.
In any case, TJX CEO/president Ernie Herrman’s statement on the company’s Q1 report included his trademark exclamation points:
“It is great to start 2016 with such a strong quarter!” he said. “We are particularly pleased with our very strong customer traffic, which drove the comp increases at every division. This tells us that our strategies to bring consumers exciting values on an eclectic and ever-changing mix of the right fashions and brands, sourced from across the globe, are working. We are confident that we are growing our customer base and gaining market share. … We are extremely focused on achieving our goals for 2016 and motivated to surpass them. TJX has an exciting future ahead, and we have a strategic long-term vision to grow to be a $40 billion company and beyond!”