The TJX Companies, which runs TJ Maxx, Marshalls and Home Goods, among other retailers, on Tuesday reported that third quarter net sales rose 12% to $9.8 billion, as company comp sales rose 7% year over year, "driven by strong customer traffic at every division," according to a company press release.
By segment in the quarter, same-store sales were up across the board: at the company’s Marmaxx operations (T.J. Maxx, Marshalls and Sierra Trading Post) comps rose 9%, up from a 1% dip last year; at HomeGoods comps rose 7%, up from a 3% rise last year; and comps rose 5% in Canada and 3% in Europe and Australia.
Net income in the period soared to $762.3 million from $641.4 million last year, the company also said. Gross profit margin for the quarter declined by a 0.9 percentage point to 28.9%, thanks mostly to rising freight and supply chain costs, the company said. Total inventories as of November rose to $5.5 billion from $4.7 billion at the end of the third quarter last year.
Macy's launched its Backstage effort in recent years in order to partake of the popularity of off-price stores, and Nordstrom has expanded its decades-old Rack division for the same reason. But neither is seeing the results that TJX Cos. is.
And TJX has little to fear from them, in part because they cater to different customer bases, according to GlobalData Retail Managing Director Neil Saunders. Within the U.S., TJX is growing rapidly and "adding significant market share across both the home and apparel categories," he said in comments emailed to Retail Dive.
In general, the segment shows that consumers are still hot for deals even in a good economy. "Our data shows that the percentage of consumers saying they like to look for bargains to make their money go further has not fallen," he also said, adding that the company is responding to that with an adept supply chain.
"The constantly changing assortment of products, which includes many hidden gems, gives shoppers a reason to visit regularly," he said. "In an environment where core customers have more money to spend, this works particularly well and, as a result, both customer traffic and conversion have risen. This is particularly true at the lower end of the income spectrum, where we believe spending at TJX has risen strongly."
The company has wisely expanded its store footprint in all geographies and has room to grow, he also said. And its expansion of its home goods and furniture offering through its HomeGoods and HomeSense gives it an edge against some rivals in a segment seeing increased demand, according to Saunders.
TJX, like all retailers, is grappling with rising freight costs, and its bottom line in the quarter was also dinged by a $36 million pension charge. That makes its near-19% net income rise especially impressive, Saunders said. "The company has a good strategy, an excellent understanding of its customers, and a very strong proposition," he said. "Whatever happens to the economy, we believe TJX will continue to outperform the market."