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Off-Price Continues to Impress in Q3

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Burlington

It’s been less than seven months since Macy’s disclosed plans to get into the off-price game with Backstage and the retailer has already announced its intention to roll out 50 more over the next two years.

As sales at its full-price stores decline, while such established discounters as Burlington, T.J. Maxx, Marshalls and Ross continue to rack up revenue, it’s not surprising that the department store chain would try to snatch back market share—but that doesn’t mean the old guard is ready to give up.

Burlington Stores

Burlington on Tuesday reported that net sales increased 6.4 percent from $1.17 billion to $1.24 billion in the three months ended October 31. This rise included a 2.8 percent increase in same-store sales (compared to 5.2 percent in the same period a year ago) as well as a growth of $44.3 million from new and non-comparable stores.

Adjusted net income per share in the third quarter surpassed the company’s expectations, increasing nearly 60 percent to $19 million (or $0.25 per share) due to sales growth, a 10-basis point expansion in gross margin to 39.8 percent and share repurchase activity.

“We continue to have significant open to buy and believe we are well prepared to take full advantage of the abundance of merchandise available in the marketplace,” Tom Kingsbury, president and chief executive officer, said in a statement.

Burlington also announced that its board of directors had approved a $200 million share repurchase program, which Kingsbury said “reflects their confidence in our business and strategy, as well as our strong cash flow generation that enables us to invest in our growth, reduce debt and repurchase our common stock for the benefit of our shareholders.”

The new program is expected to commence over the next 24 months.

Ross Stores

Ross revealed better-than-expected results in the third quarter. The Dublin, California-based retailer—which operates Ross Dress for Less and DD’s Discounts stores—delivered a 15 percent increase in earnings per share (EPS) to $0.53 on net earnings that grew 12 percent to $216 million. Sales for the period rose 7 percent to $2.78 billion, while comparable store sales were up 3 percent on top of last year’s 4 percent gain.

“These results demonstrate that customers continue to respond positively to the wide assortments of fresh and exciting bargains we offer throughout our stores,” said Barbara Rentler, chief executive officer, but she warned of upcoming challenges in the fourth quarter, such as “ongoing uncertainty in the macro-economic environment, and a holiday season that will be highly promotional.”

The TJX Companies

Strong customer traffic drove a 5 percent increase in consolidated comparable store sales at TJX in the third quarter, while comps at Marmaxx (Marshalls and T.J. Maxx) increased 3 percent.

The Framingham, Massachusetts-based off-price operator also posted a 5 percent in net sales to $7.8 billion (Marmaxx made up $4.9 billion of that) versus last year’s $7.4 billion and net income for the three-month period was $587 million. Diluted EPS, meanwhile, was $0.86 compared to last year’s $0.85.

“Our excellent traffic gains and strong performance across our apparel, accessories and home categories demonstrate that our brands globally are offering the right values and merchandise mix,” said Carol Meyrowitz, chairman and CEO of TJX, noting that October’s acquisition of the Australian off-price retailer Trade Secret will help the company achieve its $40 billion-plus target.

She added, “Our goal is to keep serving consumers and growing our market share around the world. To that end, we continue to balance growth with investments in our future to establish a strong foundation in the U.S. and internationally.”

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