TJX sees double-digit 4Q growth

By Don Hogsett -- Home Textiles Today, 3/4/2002 12:00:00 AM

FRAMINGHAM, MA — As consumers continue to hunt for bargains in a broad-based recession, off-price retailer The TJX Companies, parent of The Marmaxx Group, drove sales and earnings sharply higher at a double-digit pace during the all-important Christmas quarter.

In a persistently difficult environment for most American retailers, the off-price specialist outpointed most of its peers, driving sales up 16.6 percent, to $3.2 billion from $2.8 billion last year, adding almost half a billion to the top line. Same-store sales advanced a comfortable 6.0 percent. Driving the strong sales growth, the retailer opened 172 new stores over the past 12 months.

Fueled by the strong sales growth, earnings in the closing quarter moved up by 14.9 percent, to $155.3 million from $135.2 million a year ago.

Helping to drive the profits, in addition to the stronger sales, continued cost-cutting more than offset slightly narrowed margins. Costs were whittled down to 14.6 percent of sales from 15.1 percent. Maintaining its low-price position, average gross margin tightened to 22.7 percent from 22.8 percent a year ago. But kicked higher by the rising sales, gross margin dollars moved up by 15.9 percent, to $727.1 million from $627.3 million.

At the Marmaxx unit, the combination of T.J. Maxx and Marshalls, same-store sales grew by 6 percent, "which was above plan," said Edmond English, president and ceo. "Strong merchandise margins led to a 23 percent increase in fourth-quarter operating profits," he added. "The key driver of these results was our liquid inventory position, which led to strong merchandise margins."

HomeGoods had a notably strong quarter, said English, and "operating profits more than doubled and comparable-store sales increased 11 percent. For the year, comparable-store sales increased by an on-plan 7 percent. Operating profits in 2001 were $4 million, slightly below the previous year because of higher-than-expected markdown activity stemming from HomeGoods' over-inventory position early in the year. Our Superstores, which couple HomeGoods with T.J. Maxx or Marshalls, continued to perform extremely well in 2001."

English added, "We opened a total of 31 HomeGoods stores during the year, and we will proceed with the rollout of both the freestanding and superstore formats in 2002. We plan to increase our HomeGoods year-end store base of 112 by a net of 32 stores, a 29 percent increase."

TJX Companies Inc.