TK Maxx owner suffers £161m Q2 loss
TJX Companies, the owner of fashion retailer TK Maxx, has reported a net loss of $214m (£161m) for the second quarter of the year, despite better than expected sales.
It reported net sales for the three month period ending 1 August 2020 for $6.7bn (£5bn) down from $9.7bn (£7.3bn). Overall it said open-only comp store sales were down 3% versus last year.
In its European business, including its UK TK Maxx stores, open only sales were down 1% with net sales down from $1.2bn (£908m) to $880m (£666m).
The company said it experienced “very strong’ initial sales across all of its retail banners and countries upon reopening, some of which it attributed to “pent-up consumer demand”. Following the early wave of stronger than anticipated demand, the company’s traffic and sales moderated as it moved through the second quarter and into the third quarter.
During the quarter it generated $3.4bn (£2.5bn) of operating cash flow and paid off the $1bn (£757m) it drew down from its revolving credit facilities in March 2020.
At the beginning of the third quarter, TJX also increased its borrowing capacity under revolving credit facilities with a new $500m (£378m) facility, making a total of $1.5bn (£1.1bn) available.
Looking ahead, it said it is planning overall open-only comp store sales to decrease in the range of 10% to 20% – in-line with the sales trends it has seen since the middle of July and through August month-to-date.
However it added it does not believe it is currently able to provide “meaningful further guidance” and is not providing a financial outlook for Fiscal 2021 at this time.
Ernie Herrman, CEO and president, said: “Across our organisation, our associates worked tirelessly to help us operate safely in the current environment and bring our customers the excellent values we are known for. When we reopened, customer response to our values was beyond what we could have imagined.
“For the quarter, we were very pleased that both our top and bottom lines well exceeded our internal plans, despite our stores only being open for a little more than two thirds of the second quarter, and that our merchandise margin was excellent.”
He added: “Further, we saw especially strong sales at our HomeGoods and Homesense chains, as well as the home departments within our other chains, across geographies. Specifically, HomeGoods delivered double-digit, open-only comp store sales increases each month of the quarter.
“As to the future, we are confident that when more customers are comfortable with in-store shopping, we will be in a great position to continue gaining market share as we have for many years.”
