COVID-19 disrupted TJX’s fiscal 2021 first quarter operations, but while posting a deep loss, the company reported reopening its store and e-commerce businesses.
Net loss in the first quarter was $887.5 million, or 74 cents per diluted share, versus net income of $700.2 million, or 57 cents per diluted share, in the year-prior period.
TJX came in short of an analyst consensus estimate published by MarketBeat of a nine-cents per diluted share loss.
TJX posted net sales of $4.41 billion in the quarter versus $9.28 billion in the quarter a year before. In the extraordinary circumstances of the coronavirus outbreak, the company did not present a formal breakdown of comparable sales.
TJX pointed out that its first quarter results were hit by temporary store closures resulting from the COVID-19 pandemic, which affected about half of the period. The company also had an inventory write-down charge and continued to incur payroll expenses while stores were closed. The costs were largely offset by significant expense reductions that benefited the company later in the quarter, as well as government credits related to the pandemic.
Ernie Herrman, TJX president and CEO, said, “Throughout our 43-year history, we have navigated through many challenging economic and retail environments, and I am convinced that we will manage through this as well. While the pandemic has resulted in our making difficult decisions, TJX has always been and remains a fundamentally strong company. We have a senior management team with decades of TJX and off-price retail experience who are fully dedicated to managing through this crisis while ensuring the long-term stability and strength of TJX, and returning the company to its path of long-term, successful growth.”
Herrman said TJX had been experiencing comparable sales gains prior to the onset of coronavirus-related shopping restrictions. On May 2, the company started to reopen stores in select markets in the U.S. and other countries where it operates in accordance with local government guidelines. By May 21, the company had reopened more than 1,600 of its stores worldwide. Hermann said initial reaction had been positive, and the company maintained that sales overall were above last year’s figures across all states and countries for the over 1,100 stores that have been reopened for at least a week. The company also reopened the four e-commerce websites it operates in the U.S. and United Kingdom. TJX expects to continue reopening stores around the world in a phased manner as more states and countries restore retail. The company added that it believes stores could be mostly reopened by the end of June based on current government guidance.
“For the month of February, we delivered a 5% consolidated comp increase driven by customer traffic,” he said. “All four major divisions had a February comp increase of 5% or better. As various states and countries reopen for business, health and safety remain at the forefront of our decision making. We have been pleased to reopen as many stores as we have in May, as well as our e-commerce websites. Although it’s still early and the retail environment remains uncertain, we have been encouraged with the very strong sales we have seen with our initial reopenings. We believe this very strong start speaks to our compelling value proposition and the appeal of our treasure-hunt shopping experience, as well as pent-up demand. It has been great to see, especially for the teams working so hard on the reopening preparations and our associates welcoming back our customers. We are currently seeing plentiful off-price buying opportunities, which, as we look to the remainder of the year, gives us confidence in having excellent brands and quality merchandise available to us. With our flexible business model and ability to adapt quickly to changing market conditions and customer preferences, we will be pursuing these buying opportunities. Above all, we are convinced that our mission to deliver great value to consumers every day will continue to be our enduring retail formula today and in the future.”