Reflections of shoppers are seen in a window at a TJ Maxx store in Peoria, Illinois.
Daniel Acker | Bloomberg | Getty Images
Doubts about whether shoppers would return to discount retail stores to rummage the shelves for bargains were crushed this week when TJX and Ross Stores companies reported their first quarter results.
Sales from both companies exceeded analysts’ estimates as consumers began to return to their stores to search for new outfits, shoes, luggage and home items as lockdowns induced by the pandemic eased.
TJX and Ross cited pent-up demand from buyers, many of whom have been armed with additional stimulus dollars in recent months, but also the desire of many to always seek bargains. The call for the so-called store scavenger hunt could be something many consumers end up craving more than before the Covid health crisis.
âWe believe the allure of our fun shopping and scavenger hunt experience gives consumers a compelling reason to buy from us,â TJX CEO Ernie Herrman said on a earnings conference call. “In-store shopping is not going away.”
âWe see our stores as a desirable destination for consumers looking for a bit of stress relief,â Herrman said, âand also a great place to shop when they’re looking for inspiration and looking to discover new things. , which is difficult to replicate online. ”
âOur business model now resonates more than it even did before Covid,â he said.
A year earlier, TJX’s net sales were more than halved and hit a net loss in the first quarter as the pandemic forced the company to temporarily close more than 4,500 stores in the United States and abroad . It was a terrible blow to the business, which relies on in-store purchases. TJX has an online shopping platform for some of its brands, including TJ Maxx, but not all.
Ross also experienced a loss a year ago, when all of its stores closed from March 20, 2020 until the end of the quarter.
But this week, TJX made a comeback to the first quarter by reporting net sales that rose nearly 130% to $ 10.09 billion from $ 4.41 billion a year earlier, beating Wall Street estimates. to $ 8.62 billion, according to data from Refinitiv. TJX is the parent company of Marshalls and TJ Maxx.
Although its shares fell in the wake of its explosive quarterly report, that was in large part due to the continued struggles the company faces outside of the United States. Due to Covid, TJX still has around 300 stores closed in Canada and Europe. And in the second quarter, TJX forecast that its Canadian and European sites would remain closed for 17% and 7% of the period, respectively.
Shares of TJX are down around 1% year-to-date.
A pedestrian walks past a hiring sign at the Ross Dress For Less store on April 02, 2021 in San Rafael, California.
Justin Sullivan | Getty Images
Ross’s first-quarter sales more than doubled to $ 4.52 billion from $ 1.84 billion a year earlier, beating Wall Street estimates of $ 3.87 billion.
CEO Barbara Rentler noted that the company was particularly optimistic about its chance to gain market share thanks to the growing number of retail store closings and bankruptcies that have occurred in recent years. In addition to her Ross dress for less business, Ross also owns the DD cuts.
For its full fiscal year, which ends Jan. 29, 2022, Ross expects comparable sales to increase between 7% and 9% from 2019 levels.
Ross shares are down less than 1% year-to-date.
“We continue to expect [market] share, believing the off-price wins because they don’t have e-commerce, not despite this, âBMO Capital Markets analyst Simeon Siegel said.
It is true that these companies have had more difficulty than other retailers during the pandemic due to their lack of online presence. Non-price activity has traditionally focused on the store experience, not the internet. Ross does not have an e-commerce site. Burlington Stores got rid of its website in early 2020.
But now, as consumers regain the freedom and confidence to leave home and go shopping, that may not matter as much.
âThe bargain hunt and the bargain hunt came back with a bit of vengeance,â said Neil Saunders, Managing Director of GlobalData Retail, in an interview. “I think the value segment might actually end up with a really nice influx of customers.”
Bullish results from TJX and Ross have led Telsey Advisory Group to raise expectations ahead of the Burlington Stores earnings report, which is due on May 27.
For the first quarter of 2021, Telsey now expects discount chain Burlington to post earnings per share of $ 1, up from the earlier outlook of 62 cents. He sees net sales grow about 127% year over year, to $ 1.81.
Although it maintains an outperformance rating on Burlington stocks, the company raised its price target in a note to clients on Friday, to $ 370 from $ 320. Burlington stock closed Thursday at $ 321.44, up about 22% year-to-date.
Department store chain Nordstrom, which operates non-price chain Nordstrom Rack, is also expected to release quarterly financial results after Tuesday’s bell.
âCNBC Michael bloom contributed to this report.