HomeGoods still looking good to TJX

By Staff -- Home Textiles Today, 5/14/2003 3:50:00 PM

Framingham, MA — HomeGoods continues to be a standout performer for TJX Cos. Driven by new store openings, total sales rose 17 percent, while segment profit increased 12 percent, Ted English, president and ceo said during the company's first quarter conference call yesterday. Comps for the division were a decidedly more sluggish -1 percent, he reported, reflecting the overall anemic retail environment.

Yet, the company remains bullish on the division and selling in general. English forecast same-store sales at HomeGoods will rise by 5 percent in May, 5 percent in June, 6 percent in July, for a second quarter comp-store increase of 5 percent. Home merchandise, reflected in HomeGoods, as well as in T.J. Maxx, Marshalls and other divisions, represents about 20 percent of TJX's total business, the company stated. Moreover, English stated that it turns "as fast or faster than apparel."

Companywide, TJX reported frist quarter earnings declined 23 percent, while sales were hurt by cold weather from a late winter, rising only 4.6 percent. The company recorded net income of $113.5 million, or $0.22 a share, a drop from $147.1 million, or $0.27 a share from the year-earlier period. Still, earnings fell in line with forecasts. TJX posted sales of $2.78 billion in the quarter, compared to $2.67 billion last year. Comps declined 2 percent.

Lower-than-expected sales combined with exceptional opportunistic buys resulted in ballooning inventories for the retailer, sending them up 16 percent for the quarter. However, English defended the position, stating that they were a necessary part of the company's business plan and had contributed to above-average margins. Moreover, it's enabled the merchant to work closer in-season than usual, he said. "Business has been tough out there, and vendors have released inventories earlier than they would have [typically]," English said.

He argued that while inventories were higher, total commitments were in-line and the company's open-to-buy was in "great shape."