TJX Cos. brings sales up, but profit slips in 4Q

By Don Hogsett -- Home Textiles Today, 3/3/2003 12:00:00 AM

FRAMINGHAM, MA —

With costs climbing higher and margins thinning out, fourth-quarter profits at The TJX Companies slipped by 0.7 percent despite a solid 9.2 percent increase in sales and a deep cut in interest expense.

Profits came in at $154.3 million, down $1.0 million from $155.3 million last year. But earnings per share, grew by 3.6 percent, to $0.29 cents from $0.28 cents, with fewer shares trading after a major stock buyback by the retailer.

Driven by Christmas shopping, sales climbed by 9.2 percent, to $3.5 billion from $3.2 billion, driven by steady expansion. Same-store sales were flat, following a 6.0 percent increase the year before.

Putting a dent in profits, operating costs climbed higher by 50 basis points, to 15.1 percent of sales from 14.6 percent a year ago. At the same time margins contracted by 30 basis points, to 22.4 percent from 22.7 percent a year ago.

Interest expense was pared by 18.0 percent, to $5.9 million from $7.2 million, generating a cash savings of $1.3 million.

For all of last year, profits climbed by 15.6 percent, to $578.4 million from $500.4 million last year, when the company recorded a $40.0 million loss from discontinued operations. Excluding last year's loss, profits rose by 7.0 percent. Sales improved by 11.9 percent, to $12.0 billion from $10.7 billion, and same-store sales grew by 3.0 percent.

A notably bright spot in the retailer's operation last year was the new HomeGoods home fashions format, which grew its store count by 27 percent, said Edmond English, president and ceo. "Total sales reached $705 million, a 39 percent increase over last year, and comp-store sales increased 6 percent over an increase of 7 percent in the prior year. Segment profit increased nearly nine-fold to $32 million and profit margin grew substantially. For the fourth quarter, same-store sales increased 2 percent, against a very strong 11 percent increase last year. Segment profit for the quarter increased 139 percent."

The retailer added 30 new HomeGoods stores last year, with 37 planned for 2003.

The TJX Companies Inc.