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The TJX Companies, Inc. Reports In-Line November 2006 Sales; Repositions A.J. Wright Division for Future Growth

Posted on: Thursday, 30 November 2006, 09:00 CST

The TJX Companies, Inc. (NYSE: TJX) today reported November 2006 sales results. The Company also announced today the repositioning of its A.J. Wright division for future growth. As part of this repositioning, the Company will close 34 of its 162 A.J. Wright stores during January 2007, and will record a charge that will reduce net income by an estimated $37 million, or $.08 per share, in the fourth quarter and fiscal year ending January 27, 2007 (see details below).

November 2006 Sales

Sales for the four-week period ended November 25, 2006, were $1.6 billion, up 7% over the $1.5 billion achieved during the four-week period ended November 26, 2005. For the 43 weeks ended November 25, 2006, sales reached $13.9 billion, a 9% increase over last year's $12.8 billion. Consolidated comparable store sales for the four-week period ended November 25, 2006, increased 3% over last year. For the 43-week period ended November 25, 2006, consolidated comparable store sales increased 4% over last year.

Ben Cammarata, Chairman and Acting Chief Executive Officer of The TJX Companies, Inc., stated, "Our November consolidated comparable store sales increase was in line with our expectations. The month got off to a strong start but, as it progressed, sales trends tapered somewhat as we experienced pockets of unseasonably mild weather. That said, sales for the Thanksgiving week met our expectations. Entering December, we continue to be well positioned as a shopping destination for gifts with great brands, fashion and values throughout the holiday season."

Repositioning A.J. Wright for Future Growth

As part of the repositioning of A.J. Wright, the Company today announced that it will close 34 of its 162 stores during January, 2007. These stores represent approximately 21% of A.J. Wright's store base, but only 16% of its year-to-date sales, and have profit contributions significantly below the balance of the chain. In connection with this action, the Company expects to incur an estimated pre-tax charge of $62 million, which will reduce net income by $37 million, or $.08 per share in the fourth quarter of the current fiscal year ending January 27, 2007. This charge represents costs the Company will incur related to asset impairment, remaining lease liability (net of expected subtenant income), and severance and other costs. While net income will be reduced by an estimated $37 million, the cash cost of these closings is estimated to be approximately $17 million. Additionally, the Company expects to generate an incremental $5 million of cash through working capital reductions related to these closings (primarily inventory reductions).

Cammarata stated, "In our ongoing pursuit to drive profitable sales, we have made a strategic decision that we believe makes A.J. Wright a stronger business and puts it in a substantially better position for future growth. By closing 34 of the 162 A.J. Wright stores, we eliminate marginally profitable stores and accomplish several important things: we substantially reduce the number of advertising markets in which we operate, enabling us to better lever marketing dollars and efforts; we gain efficiencies in store operations and logistics; and we have greater ability to focus management attention and resources on the bulk of A.J. Wright stores that are performing well, so that we can build upon that base and grow successfully. We believe that the success of the A.J. Wright stores opened this year points to our better understanding of the customer and the markets that A.J. Wright serves. In fiscal 2008, we expect to open 5 to 10 A.J. Wright stores. Beyond that, we continue to believe that A.J. Wright holds great promise as a growth vehicle for TJX, with its very sizable target demographic."

Cammarata continued, "While we believe this decision is the right one for our business, we know this is a challenging time for the Associates who are affected by these store closings, and we are very appreciative of their hard work and dedication. We are committed to offering these Associates other opportunities within TJX, where appropriate, and to seeing that they are provided assistance during this transition."

Fourth Quarter and Fiscal 2007 Outlook

The Company expects that net income during the fourth quarter and fiscal year 2007 will be reduced by $37 million, or $.08 per share, due to the charge related to closing A.J. Wright stores. The Company expects to classify these 34 stores as a discontinued operation. Accordingly, the exit costs, along with any operating income or loss related to these stores, will be included in the Company's financial statements as discontinued operations and therefore will not impact results from continuing operations.

The Company's fourth quarter and full year outlook in fiscal 2007 for continuing operations remains unchanged. We continue to expect earnings per share from continuing operations in the range of $.48-$.50 for the fourth quarter and $1.59 - $1.61 for the year ended January 27, 2007. As a reminder, unlike many companies in the retail industry, TJX does not have a 53rd week in its fiscal 2007 year.

About The TJX Companies, Inc.

The TJX Companies, Inc. is the leading off-price retailer of apparel and home fashions in the U.S. and worldwide. The Company operates 826 T.J. Maxx, 751 Marshalls, 271 HomeGoods, and 162 A.J. Wright stores, as well as 36 Bob's Stores, in the United States. In Canada, the Company operates 184 Winners and 68 HomeSense stores, and in Europe, 212 T.K. Maxx stores. TJX's press releases and financial information are also available on the Internet at www.tjx.com.

November and December Fiscal 2007 Recorded Calls

A recorded message with more detailed information on TJX's November 2006 sales results, operations and business trends, as well as today's announcement regarding the A.J. Wright division, is available via the Internet at www.tjx.com, or by calling (703) 736-7248 through Thursday, December 7, 2006. The Company expects to release its December 2006 sales results on Thursday, January 4, 2007, at approximately 8:15 a.m. ET. Concurrent with that press release, a recorded message with more detailed information regarding TJX's December sales results, operations and business trends will be available via the Internet at www.tjx.com, or by calling (703) 736-7248 through Thursday, January 11, 2007. Archived versions of the Company's recorded messages and conference calls are available at www.tjx.com after they are no longer available by telephone.

Forward-looking Statements

SAFE HARBOR STATEMENTS UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995: Various statements made in this release are forward-looking and involve a number of risks and uncertainties. All statements that address activities, events or developments that we intend, expect or believe may occur in the future, including projections of earnings per share and same store sales, are forward-looking statements. The following are some of the factors that could cause actual results to differ materially from the forward-looking statements: our ability to successfully expand our store base and increase same store sales including our ability to successfully grow A.J. Wright; risks of expansion and costs of contraction; our ability to successfully implement our opportunistic inventory strategies and to effectively manage our inventories; successful advertising and promotion; consumer confidence, demand, spending habits and buying preferences; effects of unseasonable weather; competitive factors; factors affecting availability of store and distribution center locations on suitable terms; factors affecting our recruitment and employment of associates; factors affecting expenses; success of our acquisition and divestiture activities; our ability to successfully implement technologies and systems and protect data; our ability to continue to generate adequate cash flows; availability and cost of financing; general economic conditions, including gasoline prices; potential disruptions due to wars, natural disasters and other events beyond our control; changes in currency and exchange rates; import risks; adverse outcomes for any significant litigation; changes in laws and regulations and accounting rules and principles; adequacy of reserves; closing adjustments; effectiveness of internal controls; and other factors that may be described in our filings with the Securities and Exchange Commission. We do not undertake to publicly update or revise our forward-looking statements even if experience or future changes make it clear that any projected results expressed or implied in such statements will not be realized.

Source: Business Wire

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