Pent-Up Treasure Hunters Return to TJX Stores
Masked bargain-hunters determined to score a deal on sheet sets or olive oil helped TJX Companies score a much-needed win during the second quarter.
The off-price retailer said sales revenue fell 31.8% for the second quarter ended Aug. 1 to $6.7 billion from $9.8 billion a year earlier thanks to pandemic-related store closures for about one-third of that time. Second-quarter losses at TJX tallied $214 million, down from earnings of $759 million a year earlier. The company's “open-only comp sales” — same-store sales adjusted to represent just those were open — also slipped 3% during the quarter.
But the off-price consumer is showing signs of returning to the retailer in droves. The company's HomeGoods banner achieved an impressive 20% increase during the quarter as shoppers flocked in looking to improve or redecorate their quarantine quarters.
“We saw especially strong sales at our HomeGoods and Homesense chains, as well as the home departments within our other chains, across geographies,” CEO Ernie Herrman said. “Specifically, HomeGoods delivered double-digit, open-only comp store sales increases each month of the quarter. As to the future, we are confident that when more customers are comfortable with in-store shopping, we will be in a great position to continue gaining market share as we have for many years. We have been a trusted, value leader for more than 40 years, and we see a long runway of successful growth ahead for TJX.”
Off-price has been a retail winner for years, but the pandemic has posed a new challenge to the business model. So far it seems as though the off-price customer, even during a pandemic, isn’t looking for a digital option (TJX has a small e-commerce operation); they want the in-person treasure hunt.
The company says it experienced very strong initial sales across all of its retail banners and countries upon reopening, some of which was due to pent-up consumer demand. Following the early wave of stronger than anticipated demand, the company’s traffic and sales moderated as it moved through the second quarter and into the third quarter. The company believes that this was due to a number of COVID-19-related factors, including the impact on consumer behavior and demand, and lighter inventories in its stores than it planned. The company has put strategies in place to mitigate some of these inventory delays.
More than 4,500 of the company’s worldwide stores, and each of its online shopping websites, are now reopened. The company ended the second quarter in a strong liquidity position with $6.6 billion of cash.
For the third quarter, the company is planning overall open-only comp store sales to decrease in the range of 10% to 20%. This is in-line with the sales trends it has seen since the middle of July and through August month-to-date. The company’s wide sales plan range reflects the uncertainty of the current environment and the difficulty in forecasting the impact of the global pandemic on consumer behavior, demand and traffic, in addition to the anticipated slower back-to-school selling season.
The TJX Companies Inc. operates 4,557 stores in nine countries, the United States, Canada, the United Kingdom, Ireland, Germany, Poland, Austria, the Netherlands, and Australia, and four e-commerce sites.