TJX Sees Profit Rise, Plots Expansion

Associated Press/AP Online

BOSTON - TJX Cos. said Tuesday that its third-quarter profit rose 8 percent, and the off-price retailer slightly boosted its earnings forecast for the fourth quarter.

The company also outlined long-term plans to expand by nearly 1,000 stores, and TJX's shares rose nearly 4 percent.

The owner of more than 2,500 discount stores including T.J. Maxx and Marshalls said third-quarter apparel sales were hurt by unseasonably warm early fall weather, although sales have ramped up in recent weeks as seasonably cool weather has settled in.

TJX, which acquires some of its inventory from traditional retailers' overstock, said it's now able to buy a wealth of fresh fashions at advantageous prices leading into the holidays.

Its shares rose $1.10 to $30.42 Tuesday after rising as high as $31 earlier in the session.

Net income for the three-month period ending Oct. 27 increased to $249.5 million, or 54 cents per share, up from a profit of $230.6 million, or 48 cents per share, in the same quarter a year ago.

The latest quarter's performance fell just short of the consensus estimate of 55 cents a share by analysts surveyed by Thomson Financial. The estimates typically exclude one-time items.

Revenue at Framingham-based TJX rose 6 percent to $4.74 billion from $4.47 billion. Analysts had expected revenue of $4.79 billion in the latest quarter.

Sales at stores open at least a year rose 3 percent, with gains at small divisions of TJX offsetting a 1 percent decline at the division that includes Marshalls and T.J. Maxx.

"Unfortunately, the weather did not cooperate," Carol Meyrowitz, president and chief executive, told analysts on a conference call. "But our flexibility allowed us to take aggressive markdowns, maintain merchandise margins, and set us up for a strong fourth quarter."

She described "a market full of buying opportunities" after cool early fall weather and consumer worries about economic factors left department stores with a glut of clothing and coats - merchandise that's being sold at discounts to consumers, and to off-price chains like TJX.

TJX's higher fourth-quarter earnings expectations also are due to favorable currency exchange rates. TJX expects fourth-quarter earnings of 58 cents to 60 cents per share - in line with analysts' expectations for 59 cents per share, and up from TJX's prior guidance of 57 cents to 59 cents per share. TJX expects same-store sales growth of 4 percent for the fourth quarter.

TJX on Tuesday outlined a more aggressive expansion plan than it has previously offered. Meyrowitz said TJX believes market conditions will eventually support expanding the current total of more than 1,600 T.J. Maxx and Marshalls stores by 400.

TJX's 287 HomeGoods stores could grow by another 300 locations over time, with new stores larger than existing locations. TJX's HomeSense chain, with 71 stores in Canada, will expand to Great Britain next year, and in Germany, TJX foresees adding 250 T.K. Maxx stores.

"We are far from being a mature company," Meyrowitz, who gave no timeline for the moves, told analysts.

TJX recorded no charges against third-quarter earnings from a massive breach of customer credit card data. In the second quarter, TJX's profit was cut by more than a half from a $118 million breach charge, mostly to build up a reserve covering future expenses.

TJX said in March that at least 45.7 million cards were exposed to possible fraud, although recent court filings by banks suing TJX estimate the total at more than 100 million.

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