archaean: TJX Reduces Full-Year Profit Forecast as Consumers Pull Back

Nov. 11 (Bloomberg) -- TJX Cos., the owner of the T.J. Maxx and Marshalls chains, said full-year profit would be lower than it projected as consumers facing a credit crunch buy less home decor and bedding.

The shares fell as much as much as 5.2 percent in New York trading after TJX said today that full-year adjusted earnings will be $2.11 to $2.15 a share, less than the $2.15 to $2.20 it forecast in October. The average analyst estimate is $2.19.

TJX's sales gains are outpacing those at Macy's Inc. and other department stores as bargain-hunting consumers seek name- brand clothing and shoes that cost as much as 60 percent less. Today's forecast suggests that even discount retailers may suffer as consumers facing the worst financial crisis since the Great Depression halt spending on non-necessities.

``The original thought was TJX would be more immune to a slowdown because consumers would trade down,'' said David Abella, a portfolio manager at Rochdale Investment Management in New York. ``The economic slowdown is steep, if it's hurting even TJX.'' The firm has $2 billion under management, including TJX shares.

Third-quarter net income decreased 5.5 percent to $235.8 million, or 54 cents a share, hurt by an $18 million loss from the sale of the Bob's Stores chain in August. Revenue for the three months that ended Oct. 25 rose 2.2 percent to $4.76 billion, less than the $4.88 billion 13 analysts surveyed by Bloomberg estimated.

TJX, based in Framingham, Massachusetts, dropped $1, or 4.2 percent, to $22.71 as of 11:52 a.m. in New York Stock Exchange composite trading. The shares fell 18 percent this year before today, compared with a 62 decline at Macy's, the second-largest U.S. department-store chain.

Same-Store Sales

Sales at stores open at least two years decreased 1 percent, hurt by the strengthening of the dollar against other currencies. Excluding the currency impact, same-store sales rose 1 percent as the number of customer visits increased at most divisions.

Comparable-store sales at T.J. Maxx and Marshalls stores, which together make up two-thirds of total revenue, were unchanged.

Fourth-quarter profit will be 68 cents to 72 cents a share, TJX said. Analysts surveyed by Bloomberg estimated 77 cents on average. The forecast assumes same-store sales may range from little changed to a 2 percent decline and excludes a 5 percent drop from currency effects.

Spending Declines

Spending declines accelerated in the first part of October after the Wall Street meltdown and increased job cuts led consumers to forgo most purchases. U.S. unemployment rose in October to 6.5 percent, the highest level since 1994, according to the Labor Department.

TJX earned $249.5 million, or 54 cents, in the year-earlier third quarter. The company spent $226 million to repurchase 7.2 million shares in this year's third quarter.

TJX buys excess inventories of clothing, shoes and home furnishings from manufacturers at below-wholesale prices. The company had 2,647 stores worldwide at the end of the third quarter, including HomeGoods and A.J. Wright in the U.S.; Winners, HomeSense and Stylesense in Canada; T.K. Maxx in the U.K., Germany and Ireland, and HomeSense in the U.K.

archaean

Tuesday, November 11, 2008

TJX Reduces Full-Year Profit Forecast as Consumers Pull Back

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