Off-pricer TJX cuts forecast, will trim HomeGoods   

-- Home Textiles Today, 11/11/2008 1:44:00 PM

Framingham, Mass. – Leading off-price retailer TJX Cos. offered a positive outlook in a marketplace strewn with distressed merchants and refused merchandise – but noted that its home departments are suffering.

“The macro-environment is definitely affecting our home business more than any other category,” said president and ceo Carol Meyrowitz during this morning’s third-quarter earnings call.

TJX reported a 1% comp-store gain (excluding a 2% negative impact from foreign exchange rates) overall in Q3 – but its 315-store HomeGoods division registered a 5% comp fall. Nirmal Tripathy, evp and cfo, projected “5% to 8% negative comps” full-year for HomeGoods.

While the company, which operates about 2,100 stores in the United States, plans for flat store counts in 2009, Meyrowitz said TJX will probably reduce the number of HomeGoods doors. She did not provide a target number.

At the same time, TJX is experimenting: Meyrowitz pointed to a new, larger HomeGoods prototype just opened in Westport, Conn., where “we can expand highly productive categories” and cut back on others, she said. The average size of HomeGoods is 27,000 square feet.

Consolidated company net income fell 5% to $235.8 million for the quarter ended Oct. 25, with earnings per share steady at 54 cents.

The company foresees full-year net income per share of $2.11 - $2.15, down from earlier forecasts but still besting last year’s $1.92.

Quarterly sales of $4.76 billion grew 2% over $4.66 billion in the year-ago period. Year-to-date, sales are up 5% to $13.6 billion.

Meyrowitz emphasized “flexibility” as a key TJX strength, calling it a core factor in the company’s performance in previous recessions, and asserting, “When the dust settles, we will have greater opportunities.”

Indeed, she pointed out: “We are seeing a lot of people canceling goods – and we will take advantage of it … by category and by region.” Meyrowitz added TJX is “seeing some very high-end goods at crazy prices.”

TJX operated “extremely lean on inventory” in the third quarter, she said, and “saw faster inventory turn than last year.” Consequently, she noted, “We have much more current open-to-buy than last year.”

The company said consumer traffic was up across most divisions. “We believe this indicates we are attracting new consumers … and gaining market share.”