Same-Store Sales Kill Profits at TJX

Framingham, Mass. — Hampered by slowing same-store sales, weakness in most of its operating units, and a fistful of one-time charges that put downward pressure on earnings, third quarter profits at The TJX Companies fell 14.8 percent, to $171.2 million from $200.9 million last year.

Sales at the off-price retailer rose 5.9 percent, to $4 billion from $3.8 billion last year. But same-store were flat during the quarter.

The company recorded a per-share profit of 91 cents during the period, down from 95 cents during the same period a year ago. Profits would have been sharply higher, about $1.08 per share, but for a trio of one-time charges. Exit costs and operating losses in the e-commerce business pulled about 15 cents out of per-share profits. Recent hurricanes pulled another penny out of earnings; and an exit package for a former CEO cost the company another penny out of profits.

Ben Cammarata, chairman and acting CEO, said: “We were disappointed with our sales and earnings results in the third quarter, particularly with the performance of women's sportswear across all divisions. While business was hurt by unseasonably warm weather across much of the U.S., Canada and the U.K., we believe that there are areas of our off-price buying strategies in which better execution would benefit us.”

With same-store sales running flat, both margins and operating costs weakened from year-before levels. Average gross margin narrowed by a percentage point, to 24.2 percent from 25.2 percent, hurt by the one-time charges and the weak same-store sales. Even so, the company said, merchandise margins “were up slightly over last year.” Operating costs climbed six-tenths of a percentage point, to 17 percent of sales from 16.4 percent a year ago.