TJX Cos., which operates the T.J. Maxx and Marshalls stores, said Tuesday that its second quarter profits more than tripled from a year ago when the discount fashion retailer digested a charge for a widely publicized security breach.
The Framingham, Mass.-based company also raised its profit outlook as it attracts new shoppers looking for cheaper alternatives in a challenging economy.
President and Chief Executive Carol Meyrowitz told investors in a conference call that she’s confident TJX can retain its new customers even when the economy recovers and emphasized a goal to create a global brand with more than 4,300 stores, up from about 2,600 now.
“We see enormous growth potential in the future and have solid strategies in place to support our goals,” she said. As part of its expansion plans, TJX is testing a new store concept in Canada called StyleSense, which offers family footwear and accessories.
TJX said it earned $200.2 million, or 45 cents per share, for the three-month period ended July 26, up from $59 million, or 13 cents per share, in the year-ago period.
The recent quarter’s results include an after-tax charge of $10 million related to its money-losing Bob Stores division. The year-ago results included a charge of $118 million related to a major security breach involving thieves who hacked TJX’s computer system to capture card numbers, passwords and account information. The Justice Department announced last week that 11 people, including a U.S. Secret Service informant, have been charged in connection with the data breaches at TJX and eight other major retailers.
Excluding those charges, second-quarter adjusted diluted earnings per share came to 47 cents, up from the adjusted 38 cents per share for the prior year.
Revenues increased 7% to $4.6 billion from $4.3 billion.
Analysts polled by Thomson Reuters had expected earnings of 46 cents per share on revenues of $4.61 billion.
For the current quarter, TJX expects diluted earnings per share of 59 cents to 62 cents, up from 54 cents per share a year earlier. That’s based on estimated consolidated same-store sales growth of about 2 percent to 3 percent. Same-store sales, or sales at stores opened at least a year, are considered a key indicator of a retailer’s health. Analysts expected 62 cents.
For the current fiscal year, the retailer raised its earnings per share guidance to $2.26 to $2.31. The range is based on estimated consolidated same-store sales growth of about 3 percent for the full year. Analysts expected $2.28.
Meyrowitz, aiming to defuse any concern among investors about the availability of merchandise as department stores cut back on their inventory, told analysts that TJX has more than 500 buyers, buying in more than 60 countries and working with more than 10,000 vendors that’s “growing every day.” She noted that one of its divisions just started doing business with several hundred new suppliers in a period of three months.
“The impact of department stores tightening inventory levels gives us just as much opportunity,” she said. “It helps maintain a wider pricing gap between us and the department stores and can increase average ticket.”
Shares of TJX slipped more than 2%, or 83 cents, to close at $36.17.
