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Flashy Headlines Mislead Investors in TJX

Headlines announcing a tripling of profits for the retailer did not take into account charges in the year-ago quarter.
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TJX (TJX) had a quarter that was something to be proud of, no doubt about that, but the business media is still obtuse and excitable enough to make too big a deal of it, misleading investors.

Case in point was this

Associated Press

headline about the operator of TJ Maxx and Marshalls stores: "

TJX's 2Q profits triple as shoppers seek bargains.


In case you missed it, the


even showcased the amazing feat again in the sub-headline: "TJX says 2Q profits triple; raises outlook as shoppers seek cheaper alternatives."

You got that? The discount retailer's profits tripled in this environment! That must have been some line of bargain-seekers, huh?

The thought of it alone almost made The Business Press Maven have to clip his wig to his head -- especially because TJX was the first major retailer to report. This must bode remarkably well, no? Forget tough economic times! Forget the stretched consumer! Let's break out the bubbly!

Then, of course, I read the article. And the devil, as always was in the details -- not the headline.

TJX's profit growth was nothing to sneeze at. But it was a triple in name only, and calling it that to attract readers to a flashy headline is the sort of stuff that causes investors to make bad decisions and gives the business media their bad name.

While there was reference to a charge in last year's second quarter in the lead, its magnitude was left to the imagination. It's not until more than halfway down that we get the fill-out. Boy was it a big charge -- factor in that and a little one in this year's quarter and guess what? TJX earned 47 cents this quarter, up from 38 cents last year.

That's a good quarter, though only a penny better than expected. And while in body it's a triple -- considering the one-time charges -- it sure wasn't a triple in spirit.


wasn't as bad as the


in the headline, but it was worse in the lead.

Here is it's headline, which only implied the good that had truly happened: "

TJX profit jumps, raises full-year forecast.


But the lead went off into triple-land as those absolutely insatiable bargain-hunting shoppers materialized again: "TJX Cos Inc said on Tuesday quarterly profit more than tripled as bargain-hunting shoppers sought deals on clothes and accessories at its off-price stores."

The article then speculates on why the stock went down and touches upon how the results were already priced into the stock -- understandable with a 1-cent beat but the definition of ridiculous if you are acting on the assumption that profits truly tripled. Trust The Business Press Maven on this: If a retailer's profits had tripled (sans charges) in this environment, the stock would not have gone down.

The Wall Street Journal

, God bless it in this case, got mention of the giant charge into both the headline and the lead, while not detracting from the fact that TJX still did well.

Here is its headline: "

TJX's Profit Surges on Year-Ago Charge: Discount Retailer Boosts Its Forecast Amid Solid Sales.


And its lead: "TJX Cos., which operates the T.J. Maxx and Marshalls stores, said its fiscal second-quarter profit more than tripled from a year earlier, when the discount fashion retailer digested a charge for a security breach."

Got that? Everything is front and center. We had a surge, but we had a big charge. And we still had solid results (though not out-of-this-world) and good comments about the future.

No need to confuse a solid single that you might even be able to stretch into a double with a standup triple.

At the time of publication, Fuchs had no positions in any of the stocks mentioned in this column.

Marek Fuchs was a stockbroker for Shearson Lehman Brothers and a money manager before becoming a journalist who wrote The New York Times' "County Lines" column for six years. He also did back-up beat coverage of The New York Knicks for the paper's Sports section for two seasons and covered other professional and collegiate sports. He has contributed frequently to many of the Times' other sections, including National, Metro, Escapes, Style, Real Estate, Arts & Leisure, Travel, Money & Business, Circuits and the Op-Ed Page. For his "Business Press Maven� column on how business and finance are covered by the media, Fuchs was named best business journalist critic in the nation by the Talking Biz website at The University of North Carolina School of Journalism and Mass Communication. Fuchs is a frequent speaker on the business media, in venues ranging from National Public Radio to the annual conference of the Society of American Business Editors and Writers. Fuchs appreciates your feedback;

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