(Reuters) - TJX Cos Inc (TJX.N) attracted more bargain hunters in the first quarter, helping the off-price apparel retailer report same-store sales above Wall Street expectations and sending its shares to a record high on Tuesday.
The company’s focus on keeping prices low and making shopping more engaging has helped it draw more people to its T.J. Maxx and Marshalls stores, a stark contrast to many U.S. retailers that have been hit hard by consumers shopping online.
TJX does not advertise the brands it sells, but encourages shoppers to go on a “treasure hunt” through its aisles to find ever-changing deals on a wide array of products.
If lucky, a shopper can sometimes find a Versace coat at a T.J. Maxx at half the price offered by most other retailers.
“The treasure hunt nature continues to drive new interest, new people and more visits by current customers,” said Brian Yarbrough, an analyst at Edward Jones.
On the other hand, retailers including Macy’s, Kohl’s and Nordstrom are investing heavily in online shopping.
TJX’s products, prices and inventory management dispel the notion that it needs a bigger online presence, Yarbrough said.
“We are convinced that the ability to touch and feel the merchandise and the inspiration that our shopping experience elicits, leads to instant gratification — all important factors for shoppers,” Chief Executive Officer Ernie Herrman said on a conference call with analysts.
TJX reported a 3 percent rise in same-store sales in the first quarter ended May 5, compared with the 2.5 percent increase analysts had estimated, marking the seventh time in nine quarters the company has topped expectations.
Shares of the Framingham, Massachusetts-based retailer rose as much as 4.8 percent to an all-time high of $88.74 on Tuesday afternoon.
TJX warned that rising freight costs will likely lower its earnings later in the year. Still, the company slightly lifted its forecast for yearly adjusted earnings to $4.04 to $4.10 per share from $4.00 to $4.08.
TJX expects second-quarter net sales of about $9 billion. Analysts on average were expecting $8.89 billion, according to Thomson Reuters I/B/E/S.
Its first-quarter net income soared 33.6 percent year-over-year to $716.4 million, or $1.13 per share.
Net sales climbed 11.6 percent to $8.69 billion, topping expectations of $8.47 billion.
Reporting by Uday Sampath in Bengaluru; Editing by Maju Samuel and Sai Sachin Ravikumar