TJX lowers its expectations for '08

TJX Cos., the owner of the T.J. Maxx and Marshalls chains, said full-year profit would be lower than it projected as consumers facing a credit crunch buy less home decor and bedding.

The retailer's shares fell after it also said third-quarter earnings dropped 5.5 percent.

TJX's sales gains are outpacing those at Macy's Inc. and other department stores as bargain-hunting consumers seek name-brand clothing and shoes that cost as much as 60 percent less. Yesterday's forecast suggests that even discount retailers may suffer as consumers facing the worst financial crisis since the Great Depression halt spending on nonnecessities.

"The original thought was TJX would be more immune to a slowdown because consumers would trade down," said David Abella, a portfolio manager at Rochdale Investment Management in New York. "The economic slowdown is steep, if it's hurting even TJX." The firm has $2 billion under management, including TJX shares.

Third-quarter net income decreased to $235.8 million, or 54 cents a share, hurt by an $18 million loss from the sale of the Bob's Stores chain in August. Revenue for the three months that ended Oct. 25 rose 2.2 percent to $4.76 billion, less than the $4.88 billion 13 analysts surveyed by Bloomberg estimated.

TJX said full-year adjusted earnings will be $2.11 to $2.15 a share, which includes a 9-cent benefit from an extra week in the sales calendar. In October, the company said it expected $2.26 to $2.31 on that basis.

TJX shares have fallen 18 percent this year, compared with a 64 percent decline at Macy's, the second-largest US department-store chain.

Sales at stores open at least two years decreased 1 percent, hurt by the strengthening of the dollar against other currencies. That's the first decrease since the first quarter of 2003, according to Michelle Clark, a Morgan Stanley analyst.

The company has been able to obtain better brands and is moving through inventory faster, chief executive Carol Meyrowitz said during a conference call with analysts and investors. TJX is cutting back discretionary spending and plans to keep repurchasing shares, chief financial officer Nirmal Tripathy said on the call.