- TJX Companies said it anticipates a decline in same-store sales of up to 20% in the current third quarter, citing “the uncertainty of the current environment and the difficulty in forecasting the impact of the global pandemic.”
- Despite early success when it reopened temporarily shuttered stores, TJX has struggled to maintain momentum as coronavirus cases rise in certain parts of the country, making shoppers less inclined to participate in its treasure hunt shopping style.
- TJX has also been saddled with a significant surplus of inventory that has been difficult to offload, prompting periods of additional mark downs and slashing of prices earlier this summer.
- Same-store sales at the company’s TJ Maxx, Marshalls, and HomeGoods locations combined dropped by 3% in the second quarter.
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TJX Companies — parent company of TJ Maxx, HomeGoods, and Marshalls — warned investors on Wednesday of the challenges its brands will face in the latter half of 2020 thanks to the coronavirus pandemic.
The retailer said in a statement that it expects sales at opened stores to decrease between 10%-to-20% in the third quarter due to “the uncertainty of the current environment and the difficulty in forecasting the impact of the global pandemic.”
The company also cited an “anticipated slower” back-to-school season to play a role in declining year-over-year sales in the third quarter.
TJX reported an overall same-store sales decline of 3% in the second quarter, attributing the decline largely to temporary store closures early on in the pandemic. Overall company sales of $6.6 billion topped analyst estimates, in part because of early sales success once stores began reopening after stay-at-home mandates were lifted around the country.
“While hard to quantify, we believe some portion of this strength was pent-up consumer demand as average basket size was higher than usual – as more shoppers bought more items on average,” TJX CEO Ernie Herrman said on the earnings call with investors, regarding the early onslaught of shoppers when mandates were lifted.
While customers at first flocked back to off-price retailers like TJ Maxx and Marshalls, momentum has started to slip as coronavirus case rates creep up in parts of the country, making shoppers less inclined to participate in the stores’ treasure hunt model.
Coincidentally, the company has also been saddled with a significant surplus of inventory that has been difficult to offload, prompting periods of additional mark downs and slashing of prices earlier this summer.
“We took significantly more markdowns than we normally would at this time of year,” Herrman said during the call.
The recent woes of TJX mirror larger challenges impacting off-price retailers nationally, including companies like Stein Mart, which filed for bankruptcy earlier this month with plans to close nearly all of its stores. Unlike TJX, Stein Mart had been struggling significantly before the pandemic and the announcement of store closures ultimately served as the nail in the coffin for the chain.
Still, TJX reported some bright spots that may continue to provide much-needed reprieve in the coming months. This includes the success of HomeGoods in the quarter, which reported a 20% increase in year-over-year sales. The brand’s positive results follow a growing trend in consumer demand for home improvement goods and home decor products as customers remain stuck at home.
Ultimately, Hermann said that despite the anticipated decline in coming months, he believes physical retail will remain integral to TJX’s business.
“We believe the appeal of in-store shopping is not going away,” Hermann said. “Our customers have told us that our treasurehunt shopping experience is a feel good experience and way to have some ‘me time.”