The TJX Companies, Inc. (NYSE:TJX)
July 2008 Sales Call
July 10, 2008 8:15 am ET
Sherry Lang – Senior Vice President, Investor and Public Relations
This is Sherry Lang, Senior Vice President of Investor and Public Relations for the TJX Companies. Today is July 10, 2008, and I would like to welcome you to our investor call to discuss our June 2008 sales.
Before I begin, please note that the forward-looking statements I make today about the company’s results and plans are subject to risks and uncertainties that could cause these results and plans to vary materially. These risks are discussed in the company’s SEC filings including, without limitation, the Form 10-K filed on March 26, 2008.
Further, these comments are copy righted by the TJX Companies. Any recording, rebroadcast, reproduction, or other use of these comments for profit or otherwise without prior consent of TJX is prohibited and a violation of United States copyright laws.
Now to recap the numbers, sales for 5-week period ended July 15, 2008, were $1.8 billion, and up 9% over the $1.7 billion dollars achieved during the comparable 5-week period ended July 7, 2007. For the 22 weeks ended July 5, 2008, sales reached $7.7 billion, a 7% increase over last year’s $7.2 billion.
Consolidated comparable store sales for June 2008 increased 5% over a 5% increase last year. Foreign currency exchange rates benefitted comp store sales by about half a percentage point which was about what we had expected. For the 22-week year-to-date period, consolidated comparable store sales increased 4% over last year.
Our consolidated comp sales increase of 5% in June came in well above our expectations. We drove these strong results despite the challenges of the promotional competitive environment and on top of two years of exceptionally strong comparisons in June. It is interesting to note that in reviewing our comments about June sales last year, we were talking at that time about achieving above-plan results despite the consumer pressures of gas prices and the housing market.
We believe this speaks of the resiliency of our off-price model through executing wealth and offering great brands and value to our customers. We have performed well over the years through many cycles of weak consumer or promotional retail environments.
I should also note that the macro factor that historically has impacted us is the weather as we have a buy now, wear now customer. We believe the favorable weather in most US regions in June helped to boost traffic and demand for our selections of great summer apparel at excellent values. It is also worth noting that our strong sales were not achieved at the expense of margins. Further, in addition to traffic being up, our average basket was up, with sales and merchandize margins ahead of plan for May and June combined. We are raising second quarter guidance to a range $0.44 to $0.45 in earnings per share from continuing operations.
Now, divisional comp store sales for June were as follows. At the Marmaxx Group, we are particularly pleased with our comp store sales increase of 5% in June over a 3% increase last year, which was well above our plan. I will go into more detail on Marmaxx in a moment. At Winners and HomeSense in Canada, comp store sales in US dollars increased 11% in June. In local currency, which we believe more closely reflects our operating performance, comp stores sales in Canada increased by a strong 6% in June over a strong 9% increase last year and well above our plan.
Home Goods reported a comp store sales decrease of 3% in June versus a 4% increase last year. We believe that as we have seen in many other periods, the strong demand for apparel may have weakened demand for home products slightly. More importantly, however, we had some regional execution issues and also allowed too large a percentage of high-ticket items into our mix.
At TK Maxx, comp store sales in US dollars increased 4% in June. In local currency, which again we believe more closely reflects our operating performance, comp store sales increased by an above-plan 5% over a 6% increase last year. We were very pleased with the performance of our TK Maxx stores in Germany in June and with the initial response to our HomeSense stores in the UK.
At AJ Wright, comp store sales increased by a very strong 11% in June over a 4% increase last year. We continue to be pleased to see that many of the improvements we have made at AJ Wright are beginning to take hold. Comp store sales at Bob’s stores increased by 3% in June over a strong 10% increase last year.
To give some further color to June’s results at the Marmaxx Group: Geographically we saw broad-based strength across the country. The Northeast and Midwest were strong standouts. The West Coast, while positive, trailed the chain, and Florida was the only negative comp region. As to merchandize categories at Marmaxx, apparel comps were up 7%. Home fashions were down 2% which was in line with our expectations as we continue to see fast returns on reduced inventories.
Mrs. Sportswear comp’d up in the mid single digits, and dresses continued to be positive over high double-digit compares. Footwear, jewelry, and accessories were also very strong on top of challenging comparisons. Men’s and children’s also performed extremely well. As to inventories at the Marmaxx Group, our total inventory commitment including the warehouses, stores, and merchandize on order was down versus last year on a per store basis as of the end of June. We are very well positioned to continue buying into current trends.
Summing up, for July, we continue to look for a 3% increase in comparable store sales on a consolidated basis and a 2% to 3% increase at Marmaxx. For the second quarter, we now expect diluted earnings per share from continuing operations to be in the range of $0.44 to $0.45 which is above our previously anticipated range.
This compares to $0.13 in diluted earnings per share in the prior year, which includes the $0.25 per share intrusion charge. Excluding this charge, our guidance represents a 16% to 18% increase over the adjusted $0.38 diluted earnings per share in the prior year.
We will be reporting July sales on August 7, 2008, and second quarter results on Tuesday, August 12, 2008. Thank you and have a good day!
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