Any doubts about whether shoppers would return to discount retail stores to rummage through racks in the hunt for bargains were crushed this week when TJX Companies and Ross Stores reported their first-quarter earnings.
Both companies’ sales surged past analyst estimates, as consumers started packing back into their stores to look for new outfits, shoes, luggage and home goods as pandemic-induced lockdowns eased.
TJX and Ross cited a pent-up demand from shoppers, many of whom have been armed with extra stimulus dollars in recent months, but also a desire among many people to still look for good deals. So-called treasure hunting in stores could be something that many consumers end up craving more than they did before the Covid health crisis.
“We believe the appeal of our entertaining, treasure-hunt shopping experience gives consumers a compelling reason to shop us,” TJX CEO Ernie Herrman said in an earnings conference call. “In-store shopping is not going away.”
“We see our stores as a desirable destination for consumers seeking some stress relief,” Herrman said, “and also a great place to shop when they are seeking inspiration and looking to discover new things, which is difficult to replicate online.”
“Our business model now resonates more than it even did pre-Covid,” he said.
One year earlier, TJX’s net sales were more than cut in half and it swung to a first-quarter net loss, as the pandemic forced the company to temporarily close more than 4,500 stores in the U.S. and abroad. It was a devastating blow to the company, which relies on in-store shopping. TJX has a shoppable online platform for some of its brands, including TJ Maxx, but not all of them.
Ross similarly swung to a loss in the year-ago period when all of its stores shut beginning March 20, 2020, through the end of the quarter.
But this week, TJX staged a first-quarter comeback when it reported net sales that rose nearly 130% to $10.09 billion from $4.41 billion a year earlier, topping Wall Street estimates for $8.62 billion, according to data from Refinitiv. TJX is the parent company of Marshalls and TJ Maxx.
Though its shares fell following its blowout quarterly report, that was largely due to the ongoing struggles the company faces outside of the United States. Due to Covid, TJX still has about 300 stores closed in Canada and Europe. And in the second quarter, TJX forecast its Canadian and European locations would remain shut for 17% and 7% of the period, respectively.
TJX shares are down about 1% year to date.
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