TJX Grabs Market Share From Struggling Retailers

By Suzanne Kapner and Tess Stynes

TJX Cos., the parent of T.J. Maxx and other off-price chains, posted 4% growth in sales at established stores as it grabbed market share from other retailers in the latest quarter.

The Framingham, Mass., company raised its annual profit target but issued a forecast for the current quarter that was below Wall Street's expectations. Shares, which hit an all-time high on Monday, fell 5.5% to $78.22 in Tuesday afternoon trading.

"We are convinced that we are attracting new customers, driving more frequent visits to our stores, and gaining market share," TJX Chief Executive Ernie Herrman told analysts.

TJX buys many of its goods through closeouts and sells them at discounted prices. This has helped the parent of T.J. Maxx, Marshalls and HomeGoods report mostly higher earnings and sales. In contrast, department stores have been reporting weaker profits and sales as shoppers turn to lower-price competitors and online operators such as Amazon.com Inc.

Unlike Macy's Inc. and other retailers that have been closing stores, TJX has been expanding its footprint, increasing its store count by 14 in the latest quarter to bring its total to 3,675. The company said Tuesday it planned to open hundreds of stores in coming years, including 1,400 in North America.

As department store sales have remained sluggish, TJX has snapped up excess goods at deep discounts. "We see a marketplace that is loaded with quality branded goods," Mr. Herrman said. "We are extremely pleased with the abundance of merchandise available to us for the fall and winter seasons."

For the quarter ended July 30, TJX reported a profit of $562.2 million, up from $549.3 million a year earlier. Revenue increased 7% to $7.88 billion. Sales at stores open at least a year rose 4%.

For its fiscal year ending in January, TJX raised its per-share earnings estimate to $3.39 to $3.43 from its previous estimate of $3.35 to $3.42. It expects sales at existing stores to rise 3% to 4%, up from a previous estimate of 2% to 3% growth.

But for the current quarter, the company forecast per-share earnings of 83 cents to 85 cents. Analysts expected per-share profit of 90 cents, according to FactSet. Executives pointed to pressure from wage increases as well as foreign exchange rates.

Write to Suzanne Kapner at Suzanne.Kapner@wsj.com and Tess Stynes at tess.stynes@wsj.com

(END) Dow Jones Newswires

August 16, 2016 14:36 ET (18:36 GMT)

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