TJX Cos. profits slip; HomeGoods stays strong

By Don Hogsett -- Home Textiles Today, 8/25/2003 12:00:00 AM

FRAMINGHAM, MA —

With cool, rainy weather putting a cap on sales, and with margins thinning out under markdown pressure, second-quarter profits at off-price retail group The TJX Companies slipped by 4.9 percent, to $123.3 million from $129.6 million last year.

Helped by continued rapid expansion, most notably among its smaller formats, and continued strength at its HomeGoods unit, sales climbed higher by 7.4 percent, to $3.0 billion from $2.8 billion. But with unseasonably wet weather acting as a damper, same-store sales were flat.

A source of strength for the company during the second quarter was its fledgling HomeGoods format, where profits more than tripled during the period, jumping up by 221.8 percent, to $6.1 million from $1.9 million a year ago. HomeGoods sales climbed by 23.1 percent, to $193.0 million from $156.8 million during the same period last year.

In the company's core Marmaxx business, sales improved by 4.3 percent, to $2.3 billion from $2.2 billion. But with margins under markdown pressure, profits were stunted, tumbling by 9.3 percent, to $191.8 million from $211.4 million.

Acting as a drag on the bottom line, average gross margin thinned substantially, by 120 basis points, or 1.2 percentage points, to 23.6 percent from 24.8 percent a year ago. Tripped up by narrowed margins, operating profits slipped by 3.9 percent, to $208.3 million from $216.8 million.

Looking ahead to the second half, Edmond English, president and ceo, said, "The Marmaxx business has significant opportunities in year-over -year comparisons. Our younger divisions are firing on all cylinders, taking an increasingly important role in our results. Our new stores across the board continue to outperform our goals, and we are on track to grow our store base by 10 percent this year."

The TJX Companies Inc.

Second quarter segment results