Home Chains Outperform at TJX

Fourth-Quarter Profits Slumped by 28%

By Don Hogsett -- Home Textiles Today, 2/26/2007 12:00:00 AM

FRAMINGHAM, MASS. —

Fourth quarter profits at The TJX Companies Inc. slumped by 28.8%, to $205.5 million from $288.7 million last year as the big off-pricer picked up a $38.1 million after-tax tab to shut down 34 money-losing A.J. Wright stores, and paid another $5.0 million to investigate a breach of its computer systems and customer records and to upgrade computer security.

Putting even more pressure on the bottom line, the retailer's tax provision during the all-important Christmas quarter more than doubled, jumping up by 117.8%, to $136.7 million from $62.8 million during the same period a year ago.

Sales at the diversified retail conglomerate improved by 8.9%, to $5.1 billion from $4.7 billion last year. Same-store sales improved a solid 4.0%, helped by big 11.0% jump in its Winners/HomeSense division and a 13.0% spike in T.K. Maxx units. Comps in the core Marmaxx operation rose a more modest 2.0%.

In terms of sales and profit growth, the core, apparel-driven Marmaxx franchise — comprising the T.J. Maxx and Marshalls chains — was substantially outperformed by most of the company's smaller divisions. Marmaxx sales rose by 4.8%, to $3.3 billion, but its operating profit edged up just 1.6%, to $287.7 million. T.K. Maxx (the U.K. operation), on the other hand, boosted sales by 29.1%, to $628.6 million, while profits shot up by 31.8%. Winners and HomeSense (the Canadian chains) drove sales up by 15.0%, to $494.1 million, and profits up by 23.4%, to $51.6 million.

At the home furnishings category killer HomeGoods, sales rose 12.0%, to $422.0 million, and profits climbed even faster, advancing by 13.8%, to $30.6 million.

Acting as a drag, though, were two money losing operations. The very-low-price chain A.J. Wright, with 34 stores shuttered, recorded a loss of $1.2 million, reversing a year-before profit of $6.1 million. A.J. Wright sales increased by 6.9%, to $182.6 million. Casual-oriented Bob's Stores posted a $5.9 million loss, worsening from a $4.6 million loss a year ago. Bob's sales were virtually flat, up 1.0%, to $90.0 million.

The TJX Companies Inc.

TJX Fourth-Quarter Segment Results