TJX 1Q Profit Falls Amid Restructuring, Currency Costs
Framingham, MA—Although TJX Companies met analysts’ estimates for sales in its first quarter, the off-price retailer said today that its net income fell 20% as currency fluctuations and the costs of closing its A.J. Wright chain continued to cut its income.
For the quarter ended April 30, TJX, which operates TJ Maxx and Marshalls, reported net income of $266 million, or 67 cents a share compared with the $331.4 million or 80 cents a share in the same quarter 2010. Analysts’ average estimates expected 80 cents a share.
Net sales for the first quarter increased 4 to $5.2 billion. Same store sales rose 2%. Gross margin fell to 26.7% from 27.3%.
The company reported that its profit suffered from continuing costs associated with closing and consolidating the company’s A.J. Wright store and the impact of foreign currency exchange rates. Taking those factors into accounts, TJX said adjusted earnings would have been 78 cents a share. Gross margin fell to 26.7% from 27.3%.
Carol Meyrowitz, ceo, said she is “pleased” with TJX’ “strong sales results in the face of our most challenging year-over-year comparisons of any quarter this year.”
In February, TJX said trim down its international expansion plans since results have been suffering. The company now plans to open 27 stores in Europe this year, half of last year’s amount.
For the year, the company raised the low end of its per-share earnings forecast and now expects $3.81 to $3.93 from its February view of $3.78 to $3.93.
For the current quarter, TJX expects earnings of 81 cents to 86 cents. Analysts’ average estimate expects 85 cents.
Urban Outfitters Q1 Income Drops 27% Despite Sales Growth
Philadelphia–Urban Outfitters posted Monday a 27% cut in its first quarter profits, but voiced confidence in the company’s future after rises in direct-to-consumer and wholesale revenues.
For the quarter ended April 30, Urban Outfitters reported a profit of $38.6 million, or 23 cents a share, down from $53 million, or 31 cents a share, a year earlier.
Revenue increased 9.2% to $524 million but same-store sales decreased 5%. Including direct-to-consumer sales, such as online orders, comparable sales were down 1%.
Analysts’ average estimate had expected a profit of 24 cents a share on revenue of $521.7 million.
The company’s Free People division posted same store sales increase of 30% and its Urban Outfitters division was up 1%, but Anthropologie fell 6% on the quarter. Meanwhile, direct-to-consumer comps were up 15% and wholesale revenues increased 22%.
“I am confident that we are on the right course to bring our business back to its high standards,” said Glen Senk, Urban Outfitters ceo. “I am encouraged by the progress each of the brands have made and anticipate improvements to occur gradually during the balance of this fiscal year.”
Despite revenue growth, the company’s margins narrowed to 36.9% from 41.8%. The company blamed increased markdowns on slow-moving inventory, primarily women’s apparel at Anthropologie and Urban Outfitters. The margin was also hurt by a one-time loss from selling off wholesale inventories from the company’s Leifsdottir brand. Total inventories rose 19%.
Syms Q4 Net Loss Widens As Same Store Sales Remain Fla
Secaucus, NJ–Syms Corp. reported last week that its fourth-quarter net loss widened to $17.8 million or $1.23 per share, from $7.4 million or $0.51 per share in the year ago quarter.
Excluding these one-time items, the company’s adjusted net loss for the quarter would have been $12.1 million or $0.84 per share, compared to last year’s adjusted net loss of $7.3 million or $0.50 per share.
Net sales for the quarter ended Feb. 27 declined 13% to $100.9 million compared to $115.5 million for the same 2010. Comparable store sales were flat for the year and decreased 7% in its fourth quarter.
For its 2010 year, net sales increased by $67.8 million, or 18%, to $445.1 million, up from $377.3 million last year. The increase in sales was primarily the result of the acquisition of Filene’s Basement in June 2009. Comparable store sales were flat for the year.
In addition, the company announced that it closed on the sale-leaseback of its property located in Rockville, Maryland, and used a portion of the proceeds from the transaction to pay in full the balance of its short-term loan under a credit facility with Bank of America, N.A.
“The company sits on a mound of real estate, which is understated on the books,” says Jeffrey Moore, analyst at Seeking Alpha. “Even if the retail operations continue to stagnate, the company is worth more than it is trading at. Anything that happens to the positive on the retail side is icing on the cake.”