TJX Companies’ (TJX) CEO Ernie Herrman on Q2 2017 Results

The marketplace is flush with goods

“the marketplace is so flushed with goods, we thought it was a good time to actually lean up our inventories a little bit more than we had been running. So that’s one reason you saw a little shift there where even a little bit more liquid than we were three months or six months ago.”

Macy’s store closings are an indication that there’s share to be taken

“Paul, good question, clearly, an indicator of the times that we’re in and the environment that’s out there, we don’t like to comment specifically on another retailer or what’s going on there. Under our big heading, you heard us talk about gaining market share numerous times throughout our call. That is still our focus. We believe any of the uneasiness that’s happening or any of the store closures not just Macy’s, anywhere across the board in this market. And there’s been a fair amount announced this year in FY 2017, let alone in FY 2016. And I think it’s what you’re getting at. We believe there’s market share – additional market share opportunities for us.”

If other retailers promote less it gives us a chance to widen the price gap

“So Michael, I mean, if we’ve seen some articles, lower levels of promotions, which fairly could to be tied to leaner inventories I think that’s what you’re getting at that’s what some of the articles that talk to. If the retailers in general promote less, there’s for us that widens the gap. So what’s interesting is as we look at that as still market share opportunity. And probably a little bit of margin opportunity and that there’s still availability out there.”

Plenty of goods around

“So Lindsay, also a good question. We really don’t like to comment on specific areas of where the availability is high or low, categories, et cetera. What I would tell you is it’s across all – most families of business and it is most price ranges. And it’s not really a – it’s not like [indiscernible] one area or another it seems to be fairly widespread. And then also, I’d like to keep in mind, there’s never not goods right, so when I say it’s up a level from where it’s been, it’s not that there weren’t goods before clearly because there’s always goods and that’s why we’re always holding the merchants back.”

Scott Goldenberg

4% comp growth

Thanks, Ernie, and good morning, everyone. As Ernie mentioned, our second quarter consolidated comparable store sales increased 4% over last year’s 6% growth, which was above our plan. I want to note that this reflects the comp growth in our brick-and-mortar stores and excludes our e-commerce businesses.

Did better than others in UK

” While sales in the UK were slightly lower than we planned, our trends leading up to the Brexit vote were very strong. In addition, we were pleased to perform much better than many major retailers in the UK as the Brexit vote weighed on consumers there. We believe we are gaining significant market share in this environment. This speaks to our resiliency and ability to drive sales even in challenging times.”

Other retailers closing good for our real estate prospects

“But I do think, as Ernie said, it does pertain well for us, not necessarily per se Macy’s, but the real estate environment as other retailers both – as Ernie indicated both in Europe and the U.S. too, feel confident in our store openings that we’ve talked about and hopefully even more in the future.”

Ernie L. Herrman – Chief Executive Officer, President & Director

New CEO

“For nine years as CEO and over a long tenure with the company, Carol has led TJX to great success with achievements too numerous to cover on this call. I am delighted that, in her new role as Executive Chairman, Carol and I will continue our 20-plus years of working together.””

Supply chain is competitive advantage

‘There is no off-the-shelf, off-price inventory management software to support a global business model like ours, which is why our proprietary IT systems are designed specifically to handle our off-price buying. Our distribution network can process buys as small as 100 units to over 1 million units from any one of our thousands of vendors in a timely and efficient manner and then allocate that merchandise to the right stores at the right time.”

Off price can continue to get bigger

“we would say off-price can continue to get bigger and bigger and bigger, and we are not as high on the full-price business for a reason. I think, in the environment that we’re in right now, by the way, I think the value of off-price business still plays better and some of the results that come out there, I think that will validate that.”

There’s still more merchandise out there than we can buy

“And we just never – sometimes there’s a concern, there’s going to be a lack of goods as we continue to growing out all these stores. It just, as you know – I think I said it like 20 minutes ago. We actually have to hold the merchants back still. There’s so much merchandise out there. We’ve never not had it be that way. It goes in waves, sometimes a little more than others. Yes, right now, it’s a little bit more of that mode, but even when it cuts back a little, there’s still more goods than we can take in. So, we’re just bullish on this model.”

It’s an environment with lots of available merchandise

“What we feel in general is an environment of, again, a lot of availability of merchandise. And so, we don’t know where that – some of it’s department stores, some of it’s specialty stores, some of it’s other types of stores. So, that’s really our only barometer. In terms of their promotional activity, again, not sure. We do see their ticket actually declining is our perception. We see – I would say not declining, but we see their ticket kind of staying into the zone than it’s been to last year”