TJX Takes Minority Stake in Brands for Less; Ups Full Year Guidance

Vicki M. Young

Wed, Aug 21, 2024, 12:10 PM 4 min read

TJX on Wednesday said BFL operates more than 100 stores, primarily in the United Arab Emirates and Saudi Arabia, as well as an e-commerce business. The American off-pricer said the transaction should close later this year and that ts BFL investment is expected to be slightly accretive to earnings per share beginning in Fiscal 2026. TJX said it will report its share of BFL’s financial results on a one quarter delay.

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“As we continue to pursue our global growth vision, we are excited for our plans to have a minority ownership position in a profitable off-price retailer based in Dubai,” president and CEO Ernie L. Herrman said Wednesday in a conference call to investors after posting second-quarter earnings results. “As with our planned joint venture in Mexico which we announced last quarter, this investment represents another opportunity for our company to expand our global reach with an established off-price retailer.”

TJX signed its joint venture agreement with Grupo Axo, S.A.P.I. de C.V., an operator of global brands in Mexico and South America that includes both full- and off-price retail formats, this past June. The Grupo Axo joint venture has TJX owning a 49 percent stake.

TJX also on Wednesday raised full-year guidance. For the quarter ended Aug. 3, net income rose 11.1 percent to $1.1 billion, or 96 cents a diluted share, from $989 million, or 85 cents, in the same year-ago quarter. Net sales rose 5.6 percent to $13.47 billion from $12.76 billion. For the six months, net income rose 15.4 percent to $2.17 billion, on a net sales increase of 5.7 percent to $25.95 billion.

Consolidated comparable-store sales were up 4 percent on top of the 6 percent gain a year ago. By division, Marmaxx, representing the TJX and Marshall’s businesses in the U.S., saw comps rise 5 percent, while its U.S. HomeGoods operations posted a 2 percent gain in comps. TJX Canada comps were up 2 percent, while TJX International for Europe and Australia, saw comps rise 1 percent.

Herrman said that comp sales increases across all divisions were “once again entirely driven by an increase in customer transactions.” He also pointed to the strengths of the retailer’s business due to merchandise mix, great brands and oustanding values, which “continue to resonate with consumers across our geographies.”

For Herrman, another highlight in the quarter was the opening of the company’s 5,000th store. “This is a terrific achievement for TJX. We see plenty of additional store growth opportunities for our current retail banners and our existing geographies over the long term,” the CEO said. He said TJX has the opportunity to grow to 6,300 stores with its current retail banners operating in just its existing geographies.

Herrman said the third quarter is off to a good start and that the company has numerous plans to drive traffic and sales.

“Availability of quality branded merchandise is excellent, and we are confident we will have an exciting assortment of fresh goods across all of our stores and online throughout the fall and holiday selling seasons,” he said.

Herrman noted that TJX consistently has access to more goods than it could ever buy, with some vendor relationships “getting even stronger” as they see the off-pricer as a way to grow their own businesses.

“This gives me great confidence that we can bring shoppers the right assortment at the right values throughout the remainder of the year and for many years to come,” he said.

Herrman also remains convinced that consumers will keep seeking value in the second half. And while there are initiatives planned for the fall and holiday selling seasons, he noted that the retailer is now a year-round shopping destination for gifts, making it more “top of mind” with shoppers. And helping it address consumer needs is the business model’s ability to flex and pivot to take advantage of market trends, the CEO noted.

For the third quarter, TJX guided consolidated comparable store sales to rise 2 to 3 percent, with diluted earnings per share (EPS) in the range of $1.06 to $1.08.

For the full year Fiscal 2025, it now expects consolidated comparable store sales to be up 3 percent, raised diluted EPS forecasts to the range of $4.09 to $4.13. Diluted EPS was initially projected to be between $4.03 and $4.09 when the company posted first quarter results in May.

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