TJX touts momentum heading into 4Q

Home on fire across the board

Framingham, Mass. – Although TJX Companies historically does well during recessions, this is the first time the company is seeing business accelerate during a recession, its chief executive told analysts this morning.

“We are seizing the day,” said Carol Meyrowitz, president and ceo during TJX’s third quarter conference call.

The company is entering the fourth quarter with the wind at its back. Third quarter profit from continuing operations jumped 40%, with profit up 52% in the Marmaxx division, up by double-digits for the Home Goods chain and up 15% in Canada in the Winners/Home Sense division.

“Home Goods is having just a phenomenal year,” said cfo Jeff Naylor.

The 324-store home furnishings chain historically produces a pre-tax margin of 5.1%, which was knocked back to 2.7% last year, he said. This year’s pre-tax margin to on track to finish at 5.6% to 5.8%, he said. “The return on invested capital is now approaching the mid teens,” he added.

Meyrowitz declined to address categories of business individually, but did say she believes the home sector “will be particularly strong for us going forward.” In addition to the Home Goods division, home is also robust at Marmaxx, in Canada and in the United Kingdom, she said.

Consolidated profit from continuing operations for the quarter ended Oct. 31 rose 40% to $348 million, or 81 cents per share. Sales increased 10% to $5.2 billion, while overall comps climbed 7%.

By division, Home Goods was the big winner in the comp race, with same-store sales up 13%. Total sales rose 18% to $452 million.

A.J. Wright comps were up 11% , and Marmaxx comps were up 9%. Comps at TJX Canada increased 1.0%.

For the year-to-date period, TJX’s net income from continuing operations jumped 27% to $819 million, or $1.91 per share. Sales rose 5.0% to $14.3 billion, with consolidated comps up 5.0%.

Looking down the road, Meyrowitz said the company could grow to be a $30 billion to $40 billion business. The company generated $14.4 billion in sales in the last fiscal year. She also said the company could add another 1,500 stores using its existing formats in existing markets. “That’s before opening new countries or stand-alone formats,” she added.

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