Thanks to healthy store traffic, TJX announced better than expected third quarter sales and earnings.
TJX, parent company of TJ Maxx, Marshalls, Home Goods and Sierra Trading Post, said Q3 revenue rose 6.9% to $8.29 billion, from $7.75 billion in the third quarter last year; analysts expected revenue of $8.22 billion.
Same-store sales for the period rose 5%, ahead of the off-price retailer's own guidance for an increase between 2% and 3% and Retail Metrics analysts’ consensus estimate for 2.9%.
TJX CEO Ernie Herrman noted the company’s third quarter was an indication of “strong momentum" in customer traffic. "We have numerous initiatives underway to drive customers to our stores this holiday selling season and keep them coming back," he said in a statement. "We are on our way to becoming a $40 billion-plus company.”
The positive Q3 report is another indication that the off-price retail concept (mastered by TJX and, arguably, Nordstrom Rack) is a profitable model that has even inspired department stores and other brands to boost their own off-price efforts. Macy’s just this week announced an expansion of its off-price Backstage unit, even as it’s closing a record number of full-line stores.
Two-thirds of U.S. consumers shop at these stores, and TJX in particular has received props for its “treasure hunt” atmosphere, which has high-end, name-brand goods mixed in with lesser known brands. That mix of finds and styles has consumers of all income brackets spending time at its stores.
"Off-price retailers are resonating with fashion and cost-conscious consumers alike, and are stealing department store business for good reason,” Marshal Cohen, NPD Group’s chief industry analyst, said earlier this year. “Off-price is second only to the online channel in terms of growth rate.”
Not everything was rosy this quarter; there are indications that the strong dollar is weakening TJX's overseas performance as well as its upcoming holiday expectations, according to Conlumino retail analyst Håkon Helgesen. Nevertheless, TJX’s off-price stance is secure, he noted.
“In our view, while growth may come down slightly, TJX will end this year on a winning note, and its business model remains relevant and robust,” Helgesen said in a note emailed to Retail Dive.