TJX posts rare same-store sales miss as competition stiffens
today Aug 21, 2019
TJX Cos Inc forecast third-quarter profit below expectations and reported quarterly same-store sales that missed estimates for the first time in more than a year, as the discount store operator faces intense competition from online and other retailers.
Shares of the company fell 4% to $49.41 in early trading.
With traditional retailers such as Macy’s Inc and Nordstrom Inc stepping into the territory of discount retailers, off-price stores like TJX and Burlington Stores are struggling to boost sales.
TJX, which sells coveted apparel and luxury brands such as Dolce & Gabbana and Calvin Klein at a discount of 20%-60%, has been opening new stores, while also trying to attract consumers with treasure hunts at its stores, encouraging shoppers to spot deals among rapidly changing assortments.
While the efforts helped the company report positive traffic, it posted its slowest same-store sales growth in six quarters, rising only 2% in the quarter ended August 3. Analysts on average had expected a increase of 2.95%, according to IBES data from Refinitiv.
Neil Saunders, the managing director of GlobalData Retail, noted that above average levels of discounting across many apparel retailers was a serious threat to TJX this quarter.
“This gave those shoppers looking for bargains more choice and more reason to shop around, something that had a tangible impact on both T.J. Maxx and Marshalls,” Saunders said.
Same-store sales at Marmaxx, the biggest company unit that houses T.J. Maxx and Marshalls stores, rose just 2%, while that at HomeGoods, its second biggest, was flat in the quarter, both segments missing analysts’ expectations.
TJX expects third-quarter profit in the range of 63 cents to 65 cents per share, below analysts’ expectation of 68 cents.
The result follows a weak quarterly report from retailers Macy’s and J.C. Penney Co Inc with Macy’s cutting its annual profit forecast and J.C. Penney reporting a slump in sales.
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