As bricks-and-mortar clothing retailers like Macy's Inc. (M - Get Report) and J.C. Penney Company, Inc. (JCP - Get Report) fight for their lives by contracting—shuttering locations and laying off employees—discounter TJX Companies, Inc. (TJX - Get Report) is living large.
This year, the owner of TJMaxx, Marshalls and HomeGoods will open 260 new stores. Among them will be its premier home decor line, HomeSense, CEO Ernie Herrman told analysts during an earnings call on Tuesday, Aug. 15, following the second-quarter earnings release.
"The customer is clearly telling us that brick-and-mortar retail continues to be an essential part of the shopping experience, certainly when it is executed right with the right values," Herrman said. "All of this gives us confidence in our long-term global store growth potential."
While the company was tight-lipped about how many of the company's brands will be represented in the expansion, CNBC reported in February that about 80 will be HomeGoods stores.
These new openings, according to Herrman, bring TJX closer to its long-term goal of having 5,600 outposts worldwide.
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The company posted higher-than-expected profit and sales in its earnings report Tuesday, with a 3% year-over-year comparable store sales increase in the second quarter of 2017, which ended July 29, and net sales of $8.4 billion—a 6% uptick—in the same period.
TJX outperformed analyst expectations, thanks largely to lowered selling, goods and administrative costs, according to the equity research firm Cowen in a Tuesday note. "TJX's +3c [more than 3 cents] beat versus our estimates was driven primarily by lower than expected SG&A [selling, general and administrative expenses]," wrote Cowen analyst Oliver Chen. "Management noted customer traffic was up and was the primary driver of comps at every division, while merchandise margins were also up."
Customer traffic, Herrman said, was the main driver of comp store sales increase. The largest demographic of new customers? Millennials, thanks to an emphasis on digital marketing.
"Our media spend on digital media formats is way up," Herrman said. "We're talking about it all the time. I would tell you our person who's in charge of marketing is always on that mission to reach out to the younger demos."
The first HomeSense, which differs from HomeGoods in that it will sell home furnishings, will open Thursday in Framingham, Mass.
—This piece was written by Cathaleen Chen.
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