TJX 2Q14 Earnings Call Notes

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. Full transcripts can be found at Seeking Alpha

14% earnings growth on 3% comp sales growth

“Adjusted earnings per share increased 14% which was above our expectations and over an 18% increase last year. Consolidated comp store sales grew 3% at the high end of our plans and over 4% increase last year.”

Home Goods comps 5-8%

“HomeGoods delivered another outstanding quarter. Comps were up 5% over 8% growth last year and segment profit margin was up 40 basis points. We’re even more excited about HomeGoods’ excellent new store performance in its new markets as we believe this bodes well for the continued growth of this division. We are thrilled about our prospects for HomeGoods. To support its future growth, we are planning to open a new distribution center for HomeGoods in the back half of this year.”

Spending more money on television

“we are increasing our total marketing spend in TV impressions and our commercials will be on TV even more weeks than last year.”

Potential of 5150 stores

“With over 3,200 stores today, we see the potential to grow to 5,150 stores long term with our existing chains in our existing countries alone”

Taking a deliberate e-commerce approach

“Our next pillar is e-commerce expansion. While it’s still early, we are very pleased with our e-commerce businesses and see online as a growth vehicle to the future. Some investors have asked why we’re not moving faster online. To be clear, we are taking a deliberate approach to growing e-commerce to ensure that online growth is incremental to our successful brick-and-mortar business.”

We are a sourcing machine

“A major way we are leveraging our business globally is our sourcing universe. We see ourselves as a global sourcing machine. We have built a world-class buying organization over nearly four decades that is 900 people strong, and we plan to keep growing it. We source merchandise from a universe of more than 16,000 vendors in over 75 countries.”

Also very flexible

“Next, we are one of the most flexible retailers in the world. Our flexible store formats and nimbleness allow us to react to changing market trends and consumer’s taste. We serve an extremely wide demographic reach which we believe is one of the broadest in retail. We attract shoppers with extremely large range of household income”

Running lean inventories

“we are very clean in the stores. In fact, our inventory, well, it’s been lean off season and, given the second quarter with sales picking up, our clearance levels are very under control. No real liabilities there.”

Ya it’s promotional, but we stay flexible

“Michael, I think the environment, I would say, like in the second quarter it felt a little more promotional, I think, than last year. And I think the business environment is a little mixed out there, so we react. Our model fortunately is we’re buying so close and that we’re reacting to whatever the environment is.

Certainly, the market continues to have plentiful availability. And I guess, at the end of the day, that’s our biggest hedge against all of that situation. So we’re always watching the environment. It does seem like it could get that way. We’re about to enter a third quarter where I would guess that would be typical to last year, because it’s the beginning of the fall season. So tough to predict, tough to predict, but our model allows us to flex it quick and whatever happens there”

There’s no limit to the number of goods that we can take

“I can say it 100 times and I will say it again. We could be $40 billion, we could be $50 billion, and there is more goods than we could ever take. Every day, we’re having that conversation. The availability is vast and the quality of it is terrific, and we don’t see that changing in the back half at all.”

Difficult weather in Q1 created opportunities

“I think also when the weather was difficult in the first quarter, that created additional opportunities in the market. So, the good thing is our merchants up there kept their liquidity which is always – Carol was talking earlier about how difficult it is to hold back sometimes. There’s so much goods out there. But in Canada, we did do a good job. The team, I thought, did a great, great job of taking advantage of market opportunities going to the second quarter.’

There aren’t a lot of e-commerce businesses making money

” I don’t – there aren’t a lot of e-commerce businesses out there that are making a ton of money and I think we’re very happy with Sierra. We are learning. We do want to make money with our e-com business. But more importantly, I keep coming back to we want to balance, pushing the customer to brick-and-mortar and back. So we have a lot of plans. It’s early gains. It’s early now. I can say it a million times, it’s 1% – a little bit more than 1% but we feel very good about some of our stores going forward, and we’ll keep learning. But we’re going to do it carefully.”