Store Closures May Have Cost TJX Roughly $1 Billion Last Quarter

TJX Companies continue to feel the effects of the coronavirus pandemic. 

The off-price retailer, parent to the T.J. Maxx, Marshalls, Sierra, Homesense and HomeGoods brands, reported quarterly and full-year earnings Wednesday morning before the market opened, falling short on both top and bottom lines thanks to continued lockdowns and store closures around the globe. The stock fell more than 1 percent at the start of Wednesday’s trading session as a result. 

The company, a fan favorite among consumers for its treasure hunt-like in-store experience, estimated the store closures cost it between $950 million and $1.05 billion in lost revenues during the quarter.

Even so, Ernie Herrman, chief executive officer and president, is optimistic about the firm’s long-term potential. 

“I am very pleased that our fourth quarter open-only comps were down only 3 percent, exceeding our plans,” Herrman said in a statement. “Our brands, values and exciting fit assortments resonated with customers and we achieved these results despite numerous COVID-related headwinds. Overall open-only comp store sales improved each month of the quarter and were positive in January.

“Further, open-only comp store sales exceeded our plans across each of our divisions, including HomeGoods, which once again delivered a double-digit increase,” he continued. “We also saw continued strength in our home and beauty departments. As we start the new fiscal year, while uncertainty around COVID-19 remains, we feel very good about the strength of our business and our market share opportunities beyond the health crisis. We are convinced that our entertaining, treasure-hunt shopping experience, our differentiated, branded merchandise selections and value proposition will continue to resonate with consumers. We see many opportunities to leverage our flexible business model, gain more customers and continue driving successful growth of TJX for many years ahead.”

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Simeon Siegel, managing director and senior retail analyst at BMO Capital Markets, rated the stock “outperform” despite the company’s near-term expected results. 

“The reasons for owning TJX were never for 4Q and as stores do open, we continue to expect TJX to become increasingly important to both shoppers and vendors, driving meaningful long-term share opportunity,” Siegel wrote in a note. 

Total revenues for the three-month period ending Jan. 30 were $10.9 billion, down from $12.2 billion a year earlier. For the year, sales were more than $32 billion, compared with about $41.7 billion during the same period a year earlier.

The retailer logged profits of $325 million for the most recent quarter, compared with nearly $985 million during 2020’s fourth quarter as a result. For the year, profits were $90.5 million, down from more than $3.2 billion a year ago.

By brand, HomeGoods was the bright spot, with open-only comp store sales up 12 percent for the quarter and 13 percent for the year.

Still, store closures continue to be a major headwind in the era of social distancing. The company, which has 4,572 stores around the globe, estimated stores in Europe were closed more than 60 percent of the recent quarter, while stores in Canada were closed more than 30 percent. 

As of Wednesday, the company has about 690 stores temporarily closed in response to the pandemic, the majority of them in Europe. TJX anticipates its store fleet to be closed for about 11 percent of the current quarter.

The retailer ended the quarter with more than $5.3 billion in long-term debt and $10.4 billion in cash and cash equivalents. TJX is not providing forward-looking guidance, but expects total sales, pretax margins and earnings per share to be negatively impacted during the first quarter of fiscal year 2021.

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