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May 17, 2011
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TJX profit slips on Wright closing, weak Europe

By
Reuters
Published
May 17, 2011

May 17 - Off-price retailer TJX Cos Inc reported lower-than-expected quarterly profit, hurt by the cost of closing its A.J. Wright chain and declining same-store sales in Europe

TJX Cos Ltd
American department store chain TJ Maxx (TJX Group)

TJX, whose shares fell 2.5 percent, also forecast profit in the current quarter mostly below Wall Street forecasts.

The company sells apparel and home design brands at lower prices by buying merchandise that department stores return to vendors. It was one of the big winners during the recession, and its strong same-store sales gains of a year ago are tough to match.

Still, sales at stores open at least a year rose 2 percent in the first quarter, ended April 30, despite weakness in Europe and Canada, which together account for nearly a quarter of TJX revenue.

The retailer said it expects overall same-store sales growth of 1 percent to 3 percent in the current quarter.

In Canada, where TJX operates the Winners chain, same-store sales fell 3 percent in the first quarter, partly because of bad weather. Same-store sales were down 5 percent at its European stores, which include T.K. Maxx.

By contrast, same-store sales rose 4 percent at its U.S.-based T.J. Maxx and Marshalls chains.

The company said its stores were drawing more shoppers, suggesting bargain-hunters have not gone into hiding.

"Customer traffic continues to be up over significant prior-year increases, which reinforces to us that value remains top-of-mind for consumers," said Chief Executive Carol Meyrowitz.

Sales in May are off to a strong start, she added.

TJX, based in Framingham, Massachusetts, on Tuesday reported net income of $266 million, or 67 cents per share, for the first quarter, down from $331.4 million, or 80 cents per share, a year earlier.

Excluding one-time items, it earned 78 cents per share, below the average Wall Street forecast of 80 cents, according to Thomson Reuters I/B/E/S.

TJX, which said in December it would close the A.J. Wright chain, took a charge of 8 cents per share for the closing in the first quarter.

Sales rose 4.1 percent to $5.22 billion.

For the current quarter, TJX said it expects earnings of 81 cents to 86 cents per share. Wall Street expects 85 cents.

TJX raised the lower end of its full-year forecast for earnings per share from continuing operations, excluding special items, by 3 cents. It now expects $3.81 to $3.93 per share. Most of that range is below the $3.90 forecast by analysts.

The company's shares, which hit a 52-week high of $54.93 on Friday, were down 2.5 percent at $52.95 in morning trading.

(Reporting by Phil Wahba, editing by Gerald E. McCormick, Lisa Von Ahn and John Wallace)

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