The TJX Companies continued to record strong sales uplift in the second quarter, but the pace has slowed down after a long run of accelerating growth.
Net sales for the quarter ended August 1 increased 5 per cent to $15.2 billion, compared to the 9.2 per cent growth in the first quarter. Consolidated comparable sales were up 4 per cent.
According to GlobalData MD Neil Saunders, the company continued to add sales at a solid clip, even off the back of a strong prior year. However, this quarter represents a marked deceleration, though not to the point of being a cause for alarm.
Saunders attributed this mainly to the uneven performance across the divisions. The problem came from Marmaxx (TJMaxx and Marshalls), whose comparable sales rose by a relatively meager 1 per cent.
“This is a material slowdown from the prior quarter and, more significantly, is well below the prevailing rate of apparel growth for the period,” he said.
According to the analyst, some of the benefits of tax refunds that boosted Q1 faded into Q2, while competition from players like Ross and Nordstrom Rack also intensified.
“It is also the case that across the apparel market there was more promotional and discounting activity, which likely diverted some spend away from off-price. This, in our view, impacts Marmaxx more than other off-price players as it’s somewhat more affluent consumers who shop around more at middle-market players, so they’re more exposed to these offers and deals,” he explained.
Other parts of the company continued to perform well. HomeGoods has become best-in-class at delivering newness and home inspiration, especially around seasonal occasions, Saunders said, adding that the business was able to drive regular footfall in a way that many other home players struggle to do.
The international segment also had a strong quarter, adding an important dimension to TJX’s future trajectory as it gives it a lot more headroom for growth, according to Saunders.
On the bottom line, net income soared 22 per cent to $1.5 billion, partly driven by a tariff refund.
For the full year, the company continues to expect consolidated comparable sales to be up 3-4 per cent.
