TJX Has Big Plans in Store

The off-price retailer plans to double its stable of stores this year.
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Off-price retailer

TJX Companies

(TJX) - Get Report

Wednesday beat fourth-quarter earnings expectations then raised the bar on itself by announcing an ambitious expansion program for 2004.

On a post-earnings conference call, the company detailed plans to almost double its existing store count and also open an e-commerce store in the third quarter.

TJX also hinted that it is open to acquiring more store chains, saying "If the right deal were to come our way, we certainly would

look at it. We have the ability, appetite and desire to look for other opportunities out there."

In the quarter ended Jan. 31, the company earned $238.7 million, or 47 cents a share, from $154.3 million, or 29 cents a share, a year ago. Analysts had been calling for a profit of 44 cents a share. Total sales were $4.1 billion, up from $3.5 billion in the year-earlier period, while same-store sales increased 3%.

"Merchandise is moving in and through our buildings at a very fast rate and we're very happy about that," the company said.

Profit at TJX's Marmaxx Group was $311 million, an increase of 50% from last year's $208 million. Total revenue rose to $2.9 billion, from $2.7 billion, while same-store sales were flat. The company said it plans to add 60 stores in 2004 and increase selling square footage by 5%.

The company's Canadian division Winners reported quarterly profit of $41 million, compared with $26.6 million last year, on total sales of $344.2 million. Same-store sales on a comparable week basis increased 25% in U.S. dollars and were up 5% on a local currency basis. In 2004, TJX said it will add eight Winners and 15 HomeSense stores and increase their combined selling square footage by 13%.

The company's T.K. Maxx segment in the U.K. and Ireland had $32 million in fourth-quarter income, from $28 million last year, on revenue of $361.7 million, from $247.3 million a year ago. Same-store sales increased 16% in U.S. dollars and were up 5% in local currency terms. TJX plans to open 25 T.K. Maxx stores in 2004 and increase the division's selling square footage by 26%.

"We will continue to expand our existing businesses and are very excited about the great growth potential of our younger businesses," the company said in a press release. It plans to have about 4,000 total stores "in the next few years," with 182 new stores in 2004 alone. The company currently has about 2000 stores.

TJX also said it plans to add 32 new A.J. Wright stores in 2004 and increase its selling square footage base by 31%. In addition, it anticipates adding 40 stores to its HomeGoods chain and will increase HomeGoods' selling square footage by 20% during the year. The company said it will open just two new Bob's stores, as the segment was just acquired in December 2003 and the company plans to test various stores sizes and layouts before growing it aggressively.

Also in fiscal 2005, the company said it plans to drive same-store sales growth by adding 282 larger jewelry sections at its Marmaxx Group and T.J. Maxx stores and 72 expanded footwear sections at Marshalls stores. Total capital expenditures will be $500 million in 2005, the company said.

Additionally, the company said: "After years of thorough research and evaluation, we are ready for an e-commerce Web site for T.J. Maxx and Homegoods," which is planned for the third quarter.

The company expects the site to drive traffic into its store locations as well. Merchandise will be offered at prices similar to those in stores. Currently, the company's Web sites do not allow visitors to purchase items.

In the current quarter, TJX sees earnings of 29 cents to 31 cents a share, compared with the prior year's 22 cents a share. Analysts' consensus is 26 cents a share. Total revenue is seen at $3.3 billion with consolidated same-store sales are forecast up 6% to 7%.

In the second quarter, the company sees earnings of 27 cents to 28 cents a share, while analysts' have forecast 28 cents a share. In the third quarter, TJX predicted EPS of 39 cents to 42 cents; analysts expect 41 cents.

And in the fourth quarter, the company sees a profit range of 40 cents to 43 cents a share, lower than the previous year's 47 cents a share and below the Wall Street consensus for 47 cents a share.

Looking to fiscal-year 2005 earnings, the company expects $1.35 to $1.45 a share, compared with Wall Street's consensus for $1.42 a share. Total revenue is seen at $15 billion.

Shares of the Framingham, Mass.-based company, were slightly lower in early afternoon trading, down 6 cents, or 0.3%, at $23.62, after hitting a new 52-week high on Tuesday of $24.69.