The TJX Companies Inc. is counting on store reopenings to revive its sales after posting disappointing first-quarter financial results.
The TJ Maxx and Marshalls parent posted a first-quarter loss of $887 million, or 74 cents per share — 59 cents worse than Wall Street’s bets of a 15-cents per share loss. Revenues for the three months ended May 2 also missed analysts’ expectations, coming in at $4.4 billion versus estimates of $5.17 billion.
In mid-March, when the coronavirus pandemic swept the United States, the Framingham, Mass.-based retailer temporarily closed all of its stores, distribution centers and offices, as well as both its U.S. and United Kingdom e-commerce sites.
Since May 2, it has begun opening back up its doors in states and localities where stay-at-home orders have been either lifted or relaxed. To date, it has reopened more than 1,600 outposts around the world, and in the U.S., it has fully or partially reopened in 25 states. (Its online platforms are also operational.)
According to the company, preliminary sales have been above last year’s numbers across all states and countries for the more than 1,100 stores that have been reopened for at least one week. However, it cautioned, “it is still early in the quarter and sales could fluctuate.”
Like many retailers, TJX is taking a phased approach to its reopening plan. It expects that it could be “mostly reopened” by the end of June based on current government guidance.
“Although it’s still early and the retail environment remains uncertain, we have been encouraged with the very strong sales we have seen with our initial reopenings,” said president and CEO Ernie Herrman. “We believe this very strong start speaks to our compelling value proposition and the appeal of our treasure-hunt shopping experience as well as pent-up demand.”
To maintain financial flexibility, the company has suspended share buybacks and dividends, as well as drawn down the full $1 billion from its revolving credit line. It also reduced its capital expenditures from $1.4 billion to between $400 million and $600 million, as it lowered the number of store openings for the fiscal year and paused the majority of its planned remodels.
At the end of the quarter, TJX had $4.3 billion in cash at hand. It withdrew its full-year outlook due to uncertainties surrounding the COVID-19 health crisis’ impact on the economy, consumers and its business.
“While the pandemic has resulted in our making difficult decisions, TJX has always been and remains a fundamentally strong company,” Herrman added. “We have a senior management team with decades of TJX and off-price retail experience, who are fully dedicated to managing through this crisis while ensuring the long-term stability and strength of TJX and returning the company to its path of long-term, successful growth.”