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Why TJ Maxx & Marshalls Are Retail’s Bright Spot in a Tough Time

TJX Companies Inc. continues to serve up evidence that the off-price channel is retail’s shining star in an otherwise challenging environment.

The owner of discount retailers TJ Maxx and Marshalls said today that its Q4 profits advanced 2 percent year-over-year to $678 million, or $1.03 per diluted share, handily topping analysts’ forecasts for diluted earnings per share of 97 cents.

Net sales also climbed 6 percent year-over-year, to $9.5 billion, which also beat forecasts for sales of $9.4 billion. Comparable store sales were up 3 percent, stronger than Wall Street’s bets for a comp gain of 2.6 percent.

While many department stores are shuttering multiple doors — Macy’s and Sears are two examples — as they struggle with dimming store traffic, TJX president and CEO Ernie Herrman said the firm’s across-the-board fourth-quarter comp gains were driven by solid customer traffic at all of its major divisions.

[This] tells us that our eclectic merchandise mix and amazing values continue to resonate with consumers across our geographies,” Herrman said in a release. “It was also great to see a strong increase in our merchandise margin, over a very solid increase last year.”

Full-year net sales gained 7 percent to $33.2 billion, while net income remained flat at $2.3 billion. Earnings per share gained 4 percent, to $3.46, or $3.53 on an adjusted basis.

We see many opportunities to continue our successful growth and are pursuing many initiatives to keep driving shoppers to our stores,” Herrman said. “We are making strategic investments in our infrastructure, stores and new seeds to strengthen our leadership positions and allow us to capture additional market share in the U.S. and internationally.”

Looking ahead, the company expects diluted EPS to be in the range of $3.80 to $3.89, which represents a 10 to 12 percent increase over the prior year. Adjusted diluted EPS is predicted to be in the range of $3.69 to $3.78, a 5 to 7 percent increase over the prior year.

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