Dive Brief:

• TJX Companies on Wednesday reported fourth quarter net sales rose 2% year over year to $11.1 billion, as consolidated comparable store sales rose 6%, on top of a 4% increase in that metric in the year-ago quarter. Net income fell to $841.5 million from $877.3 million a year ago, according to a company press release. 

• Customer traffic was the "primary driver" of comp sales increases across segments. The company's Marmaxx unit, which includes off-price retailers Marshalls and T.J. Maxx, stoked store comps 7% as net sales rose to $6.9 billion from $6.7 billion a year ago. The company's HomeGoods unit also saw comps rise, up 5%, as net sales rose to $1.7 billion from $1.6 billion a year ago.

• For the full year, TJX net sales rose 9% to $39 billion, as consolidated comparable store sales rose 6%, on top of the previous year's 2% increase. Net income for the year reached $3.1 billion, up from $2.6 billion the previous year.

Dive Insight:

Profits took a hit over the holidays, but TJX's off-price position drew in plenty of shoppers at a time of disappointment for many retailers.

The quarter also delivered "tremendous amounts of cash," CEO Ernie Herrman said in a statement, in which he also said that the company is all-in when it comes to brick-and-mortar.

"In 2019, we plan to continue investing to support our growth while distributing cash to our shareholders," he said. "Our capital spending plans include investing in new stores, store remodels, and our supply chain and infrastructure. Simultaneously, we're planning a strong increase to our regular quarterly dividend and to continue our significant buyback program. These actions underscore our confidence in our ability to continue delivering strong, profitable sales and cash flow that enables us to both fund our continued growth and return value to our shareholders."

That expansion will help TJX grow sales, according to GlobalData Retail Managing Director Neil Saunders. "Although it is a sizable retailer, especially in the US, we still see scope for further store openings — especially the HomeGoods and HomeSense format," he said in comments emailed to Retail Dive. "Outside of the US, expansion in Europe and other geographies still has a very long way to run before it starts getting near saturation. This should provide a nice upside to TJX's overall numbers for many years to come."

Off-price retailers in general are defying current notions of retail imperatives, as they continue to pull off strong sales and traffic in stores, despite letting their e-commerce languish. Among the many players, which include department store offshoots like Nordstrom Rack and Saks Off 5th, as well as independent retailers like Ross, TJX is especially consistent in its ability to create a treasure hunt atmosphere that brings in shoppers of all incomes in weak or favorable economic times. Thanks to its ability to deliver value and convenience, the segment is set to continue to outperform the wider market, according to Moody's Investors Service Vice President-Senior Credit Officer Christina Boni. 

And TJX will continue to dominate, even amid signs of flagging consumer confidence, Saunders said, who credits the retail company's ability to market a steadily replenished inventory of appealing merchandise. "[T]he slightly tighter economy should drive more shoppers into TJX over the course of this year," he said. "Our data already show an increase in the number of consumers looking to save money by shopping around for bargains — this type of sentiment plays directly into the hands of the off-price players. In our view, the economy is now in a sweet-spot for TJX: strong enough to stimulate spending, but not so strong as to push people into trading up and buying at full-price."

The retailer will have to contend with more competition, however, he warned. "Other off-price concepts, including those from department stores, are growing," he said. "And more retailers will resort to price cutting and discounting as the economy tightens. That said, we maintain our view that TJX's leadership in off-price, which includes its extremely successful buying model, will ensure it holds its own over the course of the new fiscal year."