JS Earnings Call Notes TJX Companies

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TJ Maxx (TJX) CEO Carol Meyrowitz said they saw significant gain in customer traffic to their stores, potentially stealing market share from traditional department stores and malls 

“Our 5% consolidated comp store sales growth over 2% increase last year continued our strong trend from the first two quarters of the year and was also well above our expectations. The comp was entirely driven by customer traffic. This marks the fourth consecutive quarter and traffic was the primary driver of our comp sales growth.”
The company continues to expand internationally at a measured pace as they opened their first stores in the Netherlands
“Also during the quarter, we were delighted to open our first store in the Netherlands and add Trade Secret in Australia to our family of companies. I’m very happy to say that we now operate in nine countries on three continents. The addition of Australia clearly increases our already enormous global growth opportunities.”
TJ Maxx (TJX) CFO Scott Goldenberg reminded investors that the company continued its streak of sequential comp store sales growth 
“Our third quarter consolidated comparable store sales increased 5% continuing our strong trend this year and exceeding our plan. This quarter marks our 27thconsecutive quarter of consolidated comp store sales growth. We were very pleased that customer traffic was the primary driver of our comp increases at every division.”
But they did see a decrease in average customer purchase 
“As we anticipated, average ticket decreased which was essentially in line where we had planned it.”
TJ Maxx (TJX) CEO Carol Meyrowitz highlighted the adaptability and flexibility of the business model as a key competitive strength 
 
Importantly, for the fourth consecutive quarter we saw an increase in merchandize margin. We continued our strategy of adjusting our pricing and merchandize mix to offer shoppers amazing assortments and value. As we expected this resulted in a lower average ticket, our gains in traffic, units sold and merchandize margins tell us our strategies are clearly working and underscore the flexibility of our business model.  We believe our ability to adjust our values and mix to suite customers needs and preferences, differentiates us from many other major retailers.
They are still experimenting with their E-commerce initiatives and think the channel is another way to interact with their customer base 
 
“Now to e-commerce, since launching tjmaxx.com two years ago, we have added more than 3,000 brand in over 25 department. Our e-commerce sites in the U.S. and UK have sensational gift-giving initiatives planned for the holidays. Our aim is to be there for our consumers however and whenever they want to shop us. Our e-commerce site is our another avenue for us to attract more customers and new customers.”
TJ Maxx (TJX) CEO Carol Meyrowitz said they are finding a plethora of opportunities to buy attractive merchandise and apparel from manufacturers 
 
We see a marketplace loaded, I would say loaded with quality, brand and merchandise and we are in excellent inventory position to take advantage of this great opportunities. We feel great about our inventory liquidity and plan to be buying right up until Christmas.”
And she spoke about how a challenged retail environment benefits her company 
“I would like to take a moment, as some of you may be concerned about today’s retail environment. To talk why TJX is so different from other retailers and how we continuously drive over comp store increases in many kinds of economic and retail environment, whether it’s very promotional or less promotional. We have built one of the most flexible retail models in the world over many, many years. Our vendor Universe is more than 17,000 and growing and no one brand has ever a substantial portion of our merchandise mix.  With our global presence, we have the ability to buy all over the world and offer consumers an eclectic differentiated mix and unique selection. We have a balanced portfolio of businesses in the U.S. and internationally which allows us to leverage our key advantages and mitigate our risk as one part of the world maybe more volatile than another at given time.”
TJ Maxx (TJX) CEO Carol Meyrowitz said she is never satisfied with the previous years performance numbers, no matter how good they are
 
Every year we look and we say, what did we do wrong and what could we do better? We never look at it as let’s just repeat exactly what we did. We always try and improve and that’s the part of innovation, it’s part of learning, it’s part of our secret sauce, it’s part of our sourcing, so we strive to be better every year. That’s what keeps our comps going.”
Their E-commerce business is lower margin than their traditional brick and mortars business
“E-commerce doesn’t produce the kind of operating income that Marmaxx does it, you are look at 14% almost operating income, so what it does do is build traffic, it is bringing in new customers and it’s doing exactly what we wanted to do and it’s giving the convenience of shopping, which is why we are differentiating it. Number one, it’s not the same as that product in the store, because it’s enticing for people to continue shopping 24/7.  So the combination of bringing in new customers and seeing a lifetime value of a customer that shops online and in brick-and-mortar, is really what is driving for.”
 
TJ Maxx (TJX) CEO Carol Meyrowitz said they are seeing an influx of young customers which will benefit their customers for decades to come
 
We’re getting the younger customers. We absolutely are, even in our HomeGoods is even getting younger customer, and they’re targeting it, we want to get them young and we want to keep them.  We’ve such a wide demographic of all the customers and younger, but our newer customers are tending to be younger.”