The Business of Fashion
Agenda-setting intelligence, analysis and advice for the global fashion community.
Agenda-setting intelligence, analysis and advice for the global fashion community.
FRAMINGHAM, United States — TJX Cos Inc. forecast third-quarter profit below expectations and reported quarterly same-store sales that missed estimates for the first time in more than a year, as the discount store operator faces intense competition from online and other retailers.
Shares of the company fell 4 percent to $49.41 in early trading.
With traditional retailers such as Macy's Inc and Nordstrom Inc stepping into the territory of discount retailers, off-price stores like TJX and Burlington Stores are struggling to boost sales.
TJX, which sells coveted apparel and luxury brands such as Dolce & Gabbana and Calvin Klein at a discount of 20-60 percent, has been opening new stores, while also trying to attract consumers with treasure hunts at its stores, encouraging shoppers to spot deals among rapidly changing assortments.
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While the efforts helped the company report positive traffic, it posted its slowest same-store sales growth in six quarters, rising only 2 percent in the quarter ended August 3. Analysts on average had expected a increase of 2.95 percent, according to IBES data from Refinitiv.
Neil Saunders, the managing director of GlobalData Retail, noted that above average levels of discounting across many apparel retailers was a serious threat to TJX this quarter.
"This gave those shoppers looking for bargains more choice and more reason to shop around, something that had a tangible impact on both T.J. Maxx and Marshalls," Saunders said.
Same-store sales at Marmaxx, the biggest company unit that houses T.J. Maxx and Marshalls stores, rose just 2 percent, while that at HomeGoods, its second biggest, was flat in the quarter, both segments missing analysts' expectations.
TJX expects third-quarter profit in the range of 63 cents to 65 cents per share, below analysts' expectation of 68 cents.
The result follows a weak quarterly report from retailers Macy's and J.C. Penney Co Inc with Macy's cutting its annual profit forecast and J.C. Penney reporting a slump in sales.
TXJ's net sales rose 4.8 percent to $9.78 billion in the second quarter.
Net income rose to $759 million, or 62 cents per share, from $739.6 million, or 58 cents per share, a year earlier.
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Analysts on average had expected a profit of 62 cents per share on sales of $9.90 billion.
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