Budget priced brands versus EDLP basics

It may be back to basics in Walmart’s apparel department, but shoppers still crave discounted brands and fashion as evidenced by continued strength at some familiar retailers.

TJX and Ross Stores both posted same-store sales increases of 7% during June, and both companies used the occasion of the better-than-expected results to elevate their profits forecasts. TJX said June sales increase 9% to $2.3 billion, while Ross said its June sales increased 12% to $886 million.

“We are very pleased our strong trends continued in June,” said TJX CEO Carol Meyrowitz. “Our 7% consolidated comparable store sales increase significantly exceeded our expectations and was achieved over 5% growth last year. It is great to see such consistent, strong performance across the company, with all of our businesses in the United States, Canada and Europe continuing to deliver excellent results.”

Customer traffic during the month increased substantially at every division which Meyrowitz said speaks to the tremendous appeal of the retailer’s values, brands and fashions.

Meanwhile, rival fashion discounter Ross Stores vice chairman and CEO Michael Balmuth said, “Our ongoing ability to deliver terrific name brand bargains to today’s value-focused shoppers drove broad-based merchandise and geographic sales gains during the month.”

Both companies raise their profits forecasts as a result of strong showing in June. TJX now expects its second quarter earnings per share to be in the range of 52 cents to 53 cents and full year earnings in the range of $2.31 to $2.39. Ross increased its second quarter earnings forecast to a range of 77 cents to 78 cents from its previous guidance of 72 cents to 75 cents, but did not comment on full year expectations.

Both companies appeal to a shoppers segment of price sensitive brand aspirants who fit with Walmart’s core shopper demographic. The TJX Companies operates 1,006 T.J. Maxx, 892 Marshalls and 393 HomeGoods stores in the United States. In addition, the company operates 220 Winners, 87 HomeSense and 12 Marshalls stores in Canada and 337 T.K. Maxx and 24 HomeSense stores in Europe.

Ross operates 1,051 stores in the United States.