TJX 4th-quarter profit rises as shoppers continue to buy its discounted products

TJX 4Q profit rises as shoppers seek discounts

CHICAGO — Discount retailer TJX Cos. Inc. unveiled ambitious plans to expand Wednesday, saying the company beloved by bargain hunters could ultimately double in size.

The announcement came after the owner of T.J. Maxx and Marshalls said its sales rose more than 10 percent as new shoppers flocked to stores. Combined with efforts to cut costs, the company’s profit rose by 58 percent.

“We believe there has been a paradigm shift among customers to value,” President and CEO Carol Meyrowitz told investors during a conference call. “We expect the economic recovery will be muted. And our history shows that after a recession, our new customers stick with us. Regardless of whether the economy is weak or strong, value isn’t going out of style.”

Known for selling designer brands at deep discounts, TJX has seen sales and profit climb in the weak economy — a stark contrast to many of its full-priced competitors, which have seen sales fall or stagnate.

That boost is driving the company’s expansion plans. It has about 2,700 stores now and hopes to increase that to 4,200, Meyrowitz said, though the company didn’t give a time frame.

Executives said it plans to announce a smaller concept store to open in spring of 2011, but offered few details Wednesday other than to say that it could grow to have 100 locations. Besides T.J. Maxx and Marshalls, TJX owns HomeGoods and A.J. Wright.

Last year, TJX opened 91 new stores, and plans to increase that figure to 130 this year. Most of those stores will bear the T.J. Maxx or Marshalls names or be part of the company’s European operations.

“TJX has plenty of room to grow,” she said. “As some of our customers go back to shopping at their favorite high-end department stores, it doesn’t mean they won’t stop shopping us.”

But at the same time, other retailers are also beefing up their off-price offerings. Among them: Macy’s Inc. is trying out a Bloomingdale’s outlet, while Saks Inc. is planning to expand its discount store division called Off 5th.

Meanwhile, the retailer, based in Framingham, Mass., said it would buyback an additional $1 billion stock buyback and said it plans to raise its dividend.

It experts are right, TJX’s strategy may work. Many retail analysts expect consumers’ thrifty habits to linger well past the end of the recession.

For the quarter, TJX posted earnings of $395 million, or 94 cents per share, while sales grew to $5.94 billion.

Wall Street analysts expected the company to earn 91 cents per share on revenue of $5.98 billion.

And a key sales figure climbed 12 percent. That figure measures sales in stores open at least a year and is considered important because it excludes the effects of expansion. Much of that increase came from a boost in the number of shoppers, because average amount of money spent by customers fell slightly.

Standard & Poor’s analyst Jason Asaeda boosted his rating on TJX to “Buy” from “Hold” Wednesday, after the results were released, saying the company’s profit and increased square footage will help future results.

TJX shares climbed $1.33, or 3.4 percent, to $40.51 Wednesday.

AP Retail Writer Michelle Chapman contributed to this report from New York.