Winners posts stellar results in Canada
Bargain shopping does not appear to be going out of style in Canada, if the continued strong performance is any indication from the operator of the Winners and HomeSense chains, which Tuesday posted stronger results in Canada than in the U.S., Europe and Australia.
TJX Cos. said sales at stores open for more than a year surged nine per cent in the second quarter at its 399 Canadian stores, and are up 12 per cent so far this year for the period ended July 30 as shoppers continue to reach for off-price apparel and home goods.
Canadian sales in the period ended July 30 were US$757 million compared with US$699 million in the same period a year ago.
“Obviously, the foreign exchange has kept some of the Canadians who would tend to shop across the border shopping (in Canada instead) … people staying, and not travelling as much,” Scott Goldenberg, chief financial officer at TJX, told a conference call with analysts on Tuesday.
“But it’s not the most significant (factor).”
Increased traffic from bargain-loving customers was the biggest growth driver across the company’s global store network in the second quarter, executives said, which marked the 30th consecutive quarter of same-store sales growth for the company.
In Canada, the company’s Winners, Marshalls and HomeSense stores have benefited to a degree from the closure of other retailers, executives said, but they are performing better overall because of the retailer’s decision to strengthen its Canadian merchandising and planning team three years ago, they said, and the efforts are now paying off.
In TJX’s U.S. locations, same-store sales in the second quarter rose four per cent at its apparel stores and five per cent at its home stores, respectively; in Europe and Australia, samestore sales rose two per cent.
The news comes as Hudson’s Bay Co. and Nordstrom are vying for a bigger piece of Canada’s thriving off-price retail segment.
Off-price retailers typically sell brand-name housewares and apparel at 20 to 60 per cent off of the original retail price.
HBC is opening nine of its Saks Off 5th off-price chain by the end of this year in Canada and up to 25 in this country by 2018. Luxury retailer Nordstrom has also jumped on the off-price trend with its Nordstrom Rack concept and has announced its first four Canadian locations will open in 2018 in Calgary, Edmonton, Toronto and Vaughan, Ont.
“In the era of online and digital, TJX is a retailer that makes bricks and mortar retail work,” due to an everchanging assortment that puts customers in a “treasure hunt” frame of mind, said Hakon Helgesen, an analyst at research firm Conlumino.
“It drives immediacy — if a customer sees something they like, they need to buy it there and then or run the risk of it not being there next time they visit.”
“Second, it increases average transaction value as customers often enter stores with a fairly open mind rather than a fixed list of things they need.”
That generates high levels of impulse purchasing “as shoppers find things they did not know necessarily they wanted.” A changing assortment also drives up the frequency of customer visits “simply to see what’s new rather than because they have a specific purchase in mind,” the analyst said.
Net profit at the Framingham, Mass., company rose 2.3 per cent to US$562 million, or US84 cents per share, from US$549 million (US80 cents). Net sales climbed seven per cent to US$7.88 billion.
That beat analyst estimates of US81 cents per share and revenue of US$7.85 billion, according to Thomson Reuters.