TJX 2Q15 Earnings Call Notes

Comps up strongly, but margins impacted by higher wages, lower ticket and higher supply chain costs

“In the U.S., Marmaxx comps grew by strong 4% and it was terrific to see that this increase was entirely driven by customer traffic, while segment profit margin was down 40 basis points, margins were negatively impacted by our investments in our associates, as well as the lower average ticket and higher supply chain costs as we had anticipated. Importantly, we were very pleased with our increase in merchandise margins.”

We think we can grow to 5475 stores

“With over 3,450 stores today, we see the opportunity to grow to 5,475 stores long-term with just our existing chains in our existing countries and the Netherlands. This includes 1,500 additional stores in North America and another 500 plus stores in Europe. Last month, we were excited to announce our plan to enter our next continent, Australia which I will talk about in a moment.”

We are one of the few US retailers to have successfully expanded internationally

“Over the last 38 years, we have built a global off-price powerhouse that we are sure would take decades for others to replicate. We are one of the few major U.S. retailers to have expanded successfully internationally. We have developed a highly integrated organization and infrastructure to support our off-price model. ”

Do your homework before making an investment

“we go into countries and we build brands and we are constantly increasing our number of vendors in every single country. I think what we have learned prior to going into Germany is to really investigate country for a long period of time before we go in. So, you tread lightly, you are camping, you really understand the mix of the customer, and every single country is very, very different. So, you have to take a long time to study each country before you go in. So, we have lots of learnings. And now we have obviously expanded into many new countries a little bit quicker, but we did a lot of homework before.”

See opportunities for growth in Europe and filling in in the US

” we think Europe, especially, Dana given the other countries that we are going into as well as in the current – like in Germany we feel like there is more opportunity to do more stores over the next couple of years. So, we are pretty bullish there. We are filling domestically. We will continue to probably be about where we have been on the store count. And in terms of I think you also asked about size of box. We are not seeing any major change there. I think we take that location by location. So, we do adjust as we go into more stores, we do adjust based on the location the size of the box, but there is no current plan to really play with that in a major way”

Turnover a little better, partially because of wage but also probably because of a lot of other stuff

“We are seeing a slight positive in terms of turnover. I mean it’s early on and we will see what happens over time. But along with that is we just worked very, very hard on building our culture and being a company of choice. So it all comes together. We try to work very hard to train. As we have growth in the company there is lots of opportunities for people and we try to make it an exciting place to work. So I can’t tell you if our turnover is better because of that, because of wage, but I think it’s a combination of everything. We just strive to do a better job every year.”