HomeGoods a standout in TJX's Q1
Casual Living Staff -- Casual Living, May 21, 2013
Framingham, Mass. - Working against the toughest comparisons is will face in the new fiscal year, TJX Companies generated a strong first quarter performance that was largely ignited by the home segment.
"I'll just say it: HomeGoods is on fire," said Carol Meyrowitz, ceo, during the off-price chain's earnings call this morning. "Their mix is spectacular. Even when the weather turned, HomeGoods was strong. We are absolutely thrilled with this business."
When asked if any specific home areas were especially strong, Meyrowitz said strength was across the board. "HomeGoods just has a fabulous mix, and we love the business."
To support the momentum, TJX Cos. has recently expanded branded-product penetration and increased its buying staff.
"We have people buying for us all over the world," she continued. "We do business with over 16,000 vendors and offices all over the world. I don't think our HomeGoods business is equivalent to anyone else's. Our sku count is enormous, our differentiation is great, it's a very special business and it is very exciting, and that is what's driving this business, driving the margins."
For the quarter ended May 4, HomeGoods posted a 15.7% sales hike to $690 million and a 7.0% comp increase on top of last year's 9.0% gain. Marmaxx, its sister business in the U.S., had a 6.35% sales increase to $4.136 billion. Comps ticked up 1.0% on top of last year's 8.0% increase.
TJX Canada reported a modest 0.8% sales increase to $645 million, but reported an modest comp decline - down 1.0% compared to last year's 6.0% comp increase.
Total company net income for the quarter grew 8.0% to $453 million, and diluted earnings per share jumped 13% to 62 cents.
TJX Cos.' net sales for the quarter increased 7% to $6.2 billion, while consolidated comparable store sales inched up 2% over last year's reported 8% increase.
"We are very pleased with our first quarter results, especially as they were achieved over the highest year-over-year comparisons for quarterly comp sales and EPS growth of this year," Meyrowitz noted.
Looking ahead, the company said in the second quarter it expects diluted earnings per share to be in the range of 61 to 63 cents, which would represent a 9% to 13% increase over last year's $.56 per share. TJX estimates consolidated comparable store sales growth of 2% to 3%.
For the fiscal year ending February 1, 2014, the company is narrowing its expected range for diluted earnings per share to $2.70 to $2.78 versus $2.55 in fiscal 2013.
Farther ahead in TJX Cos.' sights are loftier goals, Meyrowitz said. "Longer term, we remain very confident in our continued ability to grow sales and profitability as we are well on the road to being a $40 billion-plus company."
The company also thinks it can expand its store count eventually to 3,000 within its existing markets alone, likely more with new markets. These include more urban sectors, for which TJX Cos. is currently developing a new prototype.
With respect to HomeGoods' real estate future, its recent performance has encouraged the company to ante its future store-count opportunity to 825 units, up from the previously estimated 750 stores.
"There are about 100 markets where we operate TJ Maxx and Marshalls and no HomeGoods, for example," Meyrowitz said.