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TK Maxx profits rocket in first quarter

The European division of TJX Companies, which operates UK discount chain TK Maxx, saw comparable sales rise 6% in the 13 weeks to May 2 and profits jump 42% to $15.5 million (£10m).

However net sales at TJX Europe, which included sales from 238 TK Maxx stores and eight Homesense stores in the UK, dropped 15% to $421m (£272m) for the first quarter.

“We are taking advantage of this environment to attract new customers, open new vendor doors, and take advantage of real estate opportunities.”

TJX Companies president and chief executive Carol Meyrowitz

Parent company TJX Companies, which also owns US chains Marmaxx, HomeGoods, AJ Wright and Bob’s Stores chains, saw net sales (on a constant currency basis) rise 1% to $4.35 billion (£2.81bn) - the strongest set of first quarter sales in the company’s history. Currency fluctuations had a six percentage point negative impact on consolidated sales across the group.

Consolidated comparable store sales increased 2%.

Net income from continuing operations for the first quarter at TJX Companies rose 5% to $209m (£135m)

The US discount giant said it was forecasting for comparable store sales growth of approximately flat to -2% in the second quarter, which reflected the company’s expectations that the economic and retail environments will continue to be challenging.

TJX Companies president and chief executive Carol Meyrowitz said: “We are pleased with our first quarter results, which were the strongest in our history and achieved despite the economic downturn. Our strategies of planning comparable store sales conservatively, running our business with lean inventories, and aggressively managing expenses drove strong bottom-line results.”

Meyrowitz added: “We are taking advantage of this environment to attract new customers, open new vendor doors, and take advantage of real estate opportunities. Additionally, we are encouraged by the strong performance of our younger and newer concepts. AJ Wright in the US, TK Maxx in Germany, and HomeSense in the UK continue to outperform our expectations despite widespread consumer weakness.”

TK Maxx launched a transactional website in the UK this month, initially selling handbags. The site will be the first ecommerce site for TJX Companies.

TK Maxx is also looking to expand across Europe, following the success of its launch in Germany. It plans to open stores in new markets, such as Poland, later this year.

TK Maxx Picadilly store update

Criterion Capital, which owns the lease on a store in London’s Picaddilly Circus and which agreed to let the site to TK Maxx, is to sue site landlord the Crown Estate this September, over its decision not to allow the discount retailer to trade from the store because of its market positioning.

The trial will begin on September 1, ahead of expectations.

 

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