Dive Brief:

• TJX Cos. fourth-quarter sales rose 10% year over year to $12.2 billion, with comparable sales up 6% as well. Those spikes were on top of a 6% comp increase the year before and well above the retailer's own projections for Q4.
• The company's earnings also beat its guidance, with net income, at $984.8 million, up 17% year over year. TJX's sales, comps and earnings also handily beat the FactSet analyst consensus, according to MarketWatch.
• For the full fiscal year, TJX comps rose 4% and net sales rose 7% to $41.7 billion.

Dive Insight:

Another quarter, another tale of divergent paths for department stores and off-price retailers. Even some of the strongest department store players, including Kohl's and Macy's, posted sales declines. Macy's kicked off 2020 with plans to close 100 stores (over three years) and revamp its lethargic business — again. For the weaker players, like J.C. Penney, the holidays were even worse.

Meanwhile TJX just keeps bulldozing onward. CEO Ernie Herrman said the gains were broad-based across the company's business, with "each major division delivering comp sales growth of 4% or higher, all over strong increases last year and all primarily driven by customer traffic," he said in a press release announcing the results. 

By banner, Marmaxx (which includes T.J. Maxx and Marshalls stores) comps rose 6% in Q4, HomeGoods comps were up 5%, Canadian comps were up 4% and international comps were up 10%. 

Margins also rose during Q4, to 28.4%, a 0.6 percentage point increase from a year ago. Inventories were up 4% (excluding the Sierra banner) by February, positioning the company to "to continue shipping fresh, spring merchandise to its stores and take advantage of the fantastic buying opportunities it sees in the marketplace," TJX said. 

During the quarter, Herrman said, "Our exciting brands and gift-giving assortments at great values, supported by our marketing, attracted customers around the globe during the holiday season and beyond." 

And if the simple disparity in performances aren't enough to strike fear in the hearts of department store executives, Herrman signaled that 2020 is off to "a solid start" and his team expects to capture more market share during the year. 

MKM Partners Managing Director Roxanne Meyer said in an emailed client note that TJX's comparable sales increases are "fueled by product access and marketing efforts," as well as by traffic, which she believes is led by younger shoppers.

"We note significant comp upside vs. our model at every division," she said, adding that Marmaxx and TJX's international business "continue to benefit from disruptive events (tariffs and macro weakness across Europe), impactful marketing, and weaker performance at department stores, which we believe continues to fuel phenomenal access to goods."

On that latter note, she said her team believes "inventory access only gets better from here, which should support ongoing apparel growth and thus fuel upside potential."