Shoppers are spending big at T.J. Maxx, HomeGoods as Target sales slide


Shoppers at a TJ Maxx store in New York.

Scott Mlyn | CNBC

Cash-strapped consumers may be pulling back on discretionary purchases at Target, but they’re spending big on name brands and home goods at off-price TJX Cos.

The discounter raised its full-year outlook on Wednesday after posting a 7.7% year-over-year sales jump and a 23% rise in profits. It cited high traffic from customers and an influx of premium merchandise it received from higher-end stores eager to get rid of their overstocked inventories.

Here’s how TJX Cos. did during its fiscal second quarter, compared with what Wall Street was anticipating, based on a survey of analysts by Refinitiv:

  • Earnings per share: 85 cents vs. 77 cents expected
  • Revenue: $12.76 billion vs. $12.45 billion billion expected

The company’s reported net income for the three-month period that ended July 29 was $989 million, or 85 cents per share, compared with $810 million, or 69 cents per share, a year earlier. Sales grew 7.7% to $12.76 Billion, from $11.84 Billion a year ago. TJX, which operates T.J. Maxx in the U.S. and Marshalls, HomeGoods and Sierra, has raised its outlook for the full year, including comparable store sales, profit margins before tax and earnings per share. The company expects a pretax profit margin between 10.7% and 10.8% and earnings per share of $3.66 to $3.72. According to Refinitiv, analysts had expected earnings per share to be $3.59. Neil Saunders is a managing director at GlobalData and a retail analyst. He noted that TJX had had a better quarter but also compared to the previous year, when sales were down 1.9%, and comparable store sales fell about 5%. The retailer still manages to gain market share. The retailer reported that traffic increased across all divisions of the company, which contributed to the quarter’s success. TJX Cos. was able to offer more premium merchandise due to the fact that many of its suppliers – who are usually high-end, full-price retailers – have had to deal with overstocked inventories. “The third quarter has started off very well and we’re seeing tremendous opportunities to buy at a discount in the market,” TJX Cos. Chief Executive Officer Ernie Herrman stated in a press release. We continue to see great opportunities for our company to increase sales, customer traffic, gain market share and improve profitability. The home goods industry has been under pressure after consumers spent money to upgrade their living spaces during the Covid Pandemic, and then switched spending towards experiences and services. Even so, TJX’s HomeGoods posted a 4% comparable sales increase as consumers still sought out home decor, throw pillows and other furnishings.

Meanwhile, Target reported fiscal second-quarter earnings on Wednesday and is continuing to see a pullback in spending on discretionary items like clothes and home decor. Target reported its fiscal second-quarter earnings on Wednesday and is continuing to see a pullback in spending on discretionary items like clothes and home decor.