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TJX Invents New Comp Store Sales Metric, Warns of International Margin Pressure
Off-price retailer wants investors to judge it by new open-only comp store sales measure.
May 18, 2021
Like many of its retail peers, The TJX Companies (TJX), an off-price apparel and home goods retailer, is changing how it calculates comparable store sales. The mandatory lockdowns resulting from the global pandemic caused TJX to close its stores for 24% of 2020. In its latest 10-K, TJX disclosed it is temporarily reporting a new sales measure:

“Open-only comp store sales includes stores initially classified as comp stores at the beginning of fiscal 2021 that have had to temporarily close due to the COVID-19 pandemic. This measure reports the sales increase or decrease of these stores for the days the stores were open in the current period against sales for the same days in the prior year. Open-only comp sales of our foreign segments are calculated by translating the current year using the prior year’s exchange rates.”

Open-only comp store sales fell 4% in fiscal year 2021.

Historically, TJX has defined comparable store sales to be sales of stores that have been in operation for all or a portion of two consecutive fiscal years, or those that are starting their third fiscal year of operation. TJX has not historically counted ecommerce sales as part of comparable store sales either, and the latest annual report does not indicate a change in this policy.

Expect margin pressure in TJX’s European division even though the Brexit deal reached appears friendly to retailers on the surface. The new trade deal provides for zero customs duties and zero quotas on trade between the U.K. and the EU in goods that are produced in each of the U.K. and the EU.

But in TJX’s latest annual report, the company says most of the items it sells won’t qualify for a free pass:

“However, a proportion of the merchandise we source in the U.K. and the EU is produced somewhere else in the world, and therefore will be subject to additional customs duty costs under the new trade deal. These additional customs duties and the related operational costs are likely to impact the profitability of our European division, at least in the short term.”
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