The TJX Companies, Inc. sales for November were $1.6 billion, up 7% over the $1.5 billion achieved during the four-week period ended November 26, 2005. Consolidated comparable store sales for the four-week period ended November 25, 2006, increased 3% over last year.
For the 43 weeks ended November 25, 2006, sales reached $13.9 billion, a 9% increase over last year's $12.8 billion. For the 43-week period ended November 25, 2006, consolidated comparable store sales increased 4% over last year.
The Company also announced today the repositioning of its A.J. Wright division for future growth. As part of this repositioning, the Company will close 34 of its 162 A.J. Wright stores during January 2007, and will record a charge that will reduce net income by an estimated $37 million, or $.08 per share, in the fourth quarter and fiscal year ending January 27, 2007.
Ben Cammarata, Chairman and Acting Chief Executive Officer of The TJX Companies, Inc., stated, “Our November consolidated comparable store sales increase was in line with our expectations. The month got off to a strong start but, as it progressed, sales trends tapered somewhat as we experienced pockets of unseasonably mild weather. That said, sales for the Thanksgiving week met our expectations. Entering December, we continue to be well positioned as a shopping destination for gifts with great brands, fashion and values throughout the holiday season.”
As part of the repositioning of A.J. Wright, the Company today announced that it will close 34 of its 162 stores during January, 2007. These stores represent approximately 21% of A.J. Wright's store base, but only 16% of its year-to-date sales, and have profit contributions significantly below the balance of the chain. In connection with this action, the Company expects to incur an estimated pre-tax charge of $62 million, which will reduce net income by $37 million, or $.08 per share in the fourth quarter of the current fiscal year ending January 27, 2007. This charge represents costs the Company will incur related to asset impairment, remaining lease liability (net of expected subtenant income), and severance and other costs. While net income will be reduced by an estimated $37 million, the cash cost of these closings is estimated to be approximately $17 million. Additionally, the Company expects to generate an incremental $5 million of cash through working capital reductions related to these closings (primarily inventory reductions).
Cammarata stated, “In our ongoing pursuit to drive profitable sales, we have made a strategic decision that we believe makes A.J. Wright a stronger business and puts it in a substantially better position for future growth. By closing 34 of the 162 A.J. Wright stores, we eliminate marginally profitable stores and accomplish several important things: we substantially reduce the number of advertising markets in which we operate, enabling us to better lever marketing dollars and efforts; we gain efficiencies in store operations and logistics; and we have greater ability to focus management attention and resources on the bulk of A.J. Wright stores that are performing well, so that we can build upon that base and grow successfully. We believe that the success of the A.J. Wright stores opened this year points to our better understanding of the customer and the markets that A.J. Wright serves. In fiscal 2008, we expect to open 5 to 10 A.J. Wright stores. Beyond that, we continue to believe that A.J. Wright holds great promise as a growth vehicle for TJX, with its very sizable target demographic.”
Cammarata continued, “While we believe this decision is the right one for our business, we know this is a challenging time for the Associates who are affected by these store closings, and we are very appreciative of their hard work and dedication. We are committed to offering these Associates other opportunities within TJX, where appropriate, and to seeing that they are provided assistance during this transition.”
The Company expects that net income during the fourth quarter and fiscal year 2007 will be reduced by $37 million, or $.08 per share, due to the charge related to closing A.J. Wright stores. The Company expects to classify these 34 stores as a discontinued operation. Accordingly, the exit costs, along with any operating income or loss related to these stores, will be included in the Company's financial statements as discontinued operations and therefore will not impact results from continuing operations.
The Company's fourth quarter and full year outlook in fiscal 2007 for continuing operations remains unchanged. We continue to expect earnings per share from continuing operations in the range of $.48-$.50 for the fourth quarter and $1.59 – $1.61 for the year ended January 27, 2007. As a reminder, unlike many companies in the retail industry, TJX does not have a 53rd week in its fiscal 2007 year.
