Dive Brief:
-
TJX Cos., parent company of TJ Maxx, Marshalls, HomeGoods, and Sierra Trading Post, reported second quarter net sales rose 7% to $7.9 billion and consolidated same-store sales rose 4%, compared to a 6% increase last year.
-
Despite beating analyst expectations for same-store sales increases, including a Retail Metrics forecast for 2.8%, the same-store sales slip sent shares down about 3% in early trading Tuesday.
-
Q2 net income was $562 million and net profit rose 2.3%. The company raised its full-year guidance to a same-store sales increase of between 3% and 4%.
Dive Insight:
Despite its reliance on brick-and-mortar and the current struggles facing department stores and apparel retailers, TJX, the largest off-price retailer in the U.S., continues to grow. Its second-quarter same-store sales rise was the 30th straight quarterly increase — an impressive feat for the company.
"TJX has only posted three negative quarterly comps in the last 15.5 years," Retail Metrics analyst Ken Perkins wrote in a note Tuesday. "And two of them occurred at the height of the Great Recession."
The off-price segment in general is doing well in a time of turbulence for many other retailers. Two-thirds of all shoppers spend at off-price retailers, according to a report from NPD Group’s data service Checkout Tracking, which measures consumer buying behavior. Off-price shopping grew 4% this year through April, compared to the same period last year. Off-price shoppers are responsible for 75% of apparel purchases across all channels, shopping at various off-price retailers and outlet stores, the study found.
Although malls and department stores continue to report weak foot traffic, TJX CEO/president Ernie Herrman said in a statement that the company's comparable store sales growth this quarter was almost entirely driven by customer traffic.
The company also saw a strong merchandise margin increase. Low prices keep TJX stores competitive with the likes of Amazon, which has forced many retailers to compete on price. The company’s treasure-hunt atmosphere, which many shoppers find enticing, helps keep people coming through the doors.
Investors weren’t entirely pleased by the results, however, and TJX does have a few trouble spots. In particular, the company’s same-store sales in Europe and Australia rose 2% compared to 5% last year, and its U.S. HomeGoods segment had a 5% same-store sales increase, compared to its 9% rise last year. The company's stock fell 3% in early trading this morning.
