Thriving TJX to Open Sierra Trading Post Store in Denver Next Week

“We are very enthusiastic about outdoor and the active categories, and we see great promise in offering consumers more options in this space with our off-price values,” said TJX CEO Carol Meyrowitz, who added that STP provides a great vehicle for reaching men, who shop in relatively low numbers at the company’s other stores.

TJX acquired STP as a way to jump start its e-commerce efforts, but Meyrowitz has since become enamored with the athletic and outdoor space. She said that STP was – and remains profitable – and that TJX plans to keep it that way by expanding it slowly.

“We love Sierra,” she said Tuesday in a conference call focused on the off-price retailer’s second quarter earnings report. “We're learning a lot; but we're going to do it slow, because we do want to make money.”

 

TJX reported net sales grew 4.6 percent to $4.49 billion at its Marmaxx division in the second quarter ended Aug. 2 compared with the year earlier quarter. The division includes T.J. Maxx, Marshalls and Sierra Trading Post, which are all used by athletic and outdoor apparel brands to liquidate surplus product. Comparable store sales grew 2 percent at the division during the quarter.

 

TJX, which also operates Homegoods stores and has significant operations in Canada and Europe, reported customer traffic gained momentum throughout the quarter, and was positive in July. Performance improved at its apparel businesses.
 

Still, consolidated gross margins dipped 20 basis points to 28.6 percent, partially due to lower merchandise margins at its e-commerce business, which consist large of TJMaxx.com and SierraTradingPost.com. TJX EVP and CFO Scott Goldenberg said the MarMaxx division would have posted higher merchandise margins if not for the expected negative impact of e-commerce operations, which represented just over 1 percent of TJX sales during the period.

 

 

Meyrowitz asserted that while she wants e-commerce to earn a profit, she is more excited about how it can drive traffic back into TJX’s bricks-and-mortar stores. While TJX has not yet measured returns, she estimated that a substantial majority of online returns are being made in person at the company’s stores.   

 

 

SG&A costs declined 50 basis points to 16.2 percent of net sales, resulting in net income of $517.6 million in net income, up 7.9 percent from the second quarter of 2013. On an adjusted basis, earnings per diluted share exceeded expectations, reaching 75 cents, up 14 percent on top of last year’s 18 percent increase.

 

 

The company ended the quarter with inventory valued at $3.39 billion and cash and cash equivalents of $2.18 billion, up 6.3 and 14.9 percent respectively.

 

 

TJX said the better than planned results caused it to raise its full year guidance for adjusted diluted earnings per share to $3.10 to $3.18.