TJX shares fall on poor sales per­for­mance

The Globe and Mail (Atlantic Edition) - - OPINION - GAYATHREE GANESAN

TJX Cos. Inc. dis­ap­pointed Wall Street, post­ing its worst quar­terly same-store sales per­for­mance since 2009, as its fash­ion ap­parel failed to click with cus­tomers and fewer peo­ple bought win­ter clothes in an un­usu­ally hot fall sea­son.

Shares of the off-price re­tailer, which also is­sued a full-year profit fore­cast that was be­low es­ti­mates, were down 4.7 per cent at $67.38 (U.S.) in af­ter­noon trad­ing on Tues­day.

The news took in­vestors by sur­prise as the com­pany has been hold­ing up well in the face of a broader slow­down in busi­ness for bricks-and­mor­tar re­tail­ers such as Macy’s Inc. and Nord­strom Inc.

“It was ab­so­lutely a fash­ion miss. … This was, re­ally, on our own part a se­lec­tion is­sue and had noth­ing to do with avail­abil­ity out there,” chief ex­ec­u­tive Ernie Her­rman said, adding that a bulk of the fash­ion mis­steps would be fixed in the hol­i­day quar­ter.

The com­pany said same-store sales for the third quar­ter were flat de­spite higher traf­fic at its stores across di­vi­sions. An­a­lysts had ex­pected a 2.2per-cent rise in same-store sales, ac­cord­ing to Thom­son Reuters I/B/ E/S.

“In­vestor con­cerns have been height­ened on near-term wor­ries, in­clud­ing warmer weather, hur­ri­canes and peer liq­ui­da­tion sales,” RBC an­a­lyst Brian Tu­nick wrote in a note.

Com­pa­ra­ble-store sales in Mar­maxx, the com­pany’s big­gest and most prof­itable unit which in­cludes T.J. Maxx and Mar­shalls stores, fell 1 per cent, sur­pris­ing an­a­lysts who were ex­pect­ing a 1.4-per-cent rise.

The Fram­ing­ham, Mass.-based com­pany said it would hit the higher end of its fis­cal 2018 ad­justed profit fore­cast of $3.91 to $3.93 a share.

TJX said it ex­pects hol­i­day-quar­ter same-store sales growth of 1 per cent to 2 per cent. Over­all sales rose 6 per cent to $8.8-bil­lion in the third quar­ter, slightly be­low the $8.86-bil­lion av­er­age es­ti­mate. TJX (TJX) Close: $67.94 (U.S.), down $2.82

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