HomeGoods: ‘We’re still trying to figure out the home trend’

FRAMINGHAM, Mass. – TJX Cos. executives dove into what they see ahead for the home business – and what could change at  HomeGoods after the wave of competitor store closings – during this week’s fourth quarter call with analysts.

The company’s HomeGoods division, which includes U.S. Home Sense stores, comped down 11% in the recent fiscal year and 7% in the fourth quarter, in part due to store year-over-year comparisons. While customer traffic was down for the year, average basket increased.

Although HomeGood’s business is now stabilizing, the broader environment in home furnishings is being rocked by major store closings from competitors, a sales slowdown at online home pure-play retailers and financial pressure on consumers, executives said.

“We’re still trying to figure out the home trend nationally,” said Ernie Herrman, TJX Cos. CEO and president.

Over the next couple of quarters, both HomeGoods and the home business at TJMaxx and Marshalls could experience some sales weakness. “So, the bottom line is we’re being conservative in our plans but, I think, judicious given the environment.”

Herrman did not reference Bed Bath & Beyond and Tuesday Morning by name, but he said that store closures and related e-commerce declines are going to open opportunities for market share expansion, including into the fashion side of the home business.

[Note: Bed Bath & Beyond is shrinking from more than 950 stores a year ago to 360 units. Off-price home furnishings specialist Tuesday Morning is shuttering 265 stores as it reorganizes under Chapter 11 bankruptcy and will be left with 218 doors.]

“All we have to do is weather the storm and keep HomeGoods and our home business in Marmaxx going, and we think we come out on the other side (as) an even bigger player (in the) fashion home business than anybody thought we would be,” said Herrman.

In the meantime, he added, the company also needs to get through “this lull in the demand” for home merchandise.

HomeGoods surpassed 900 stores with the opening of more than 50 new units last year, and the company sees the potential to add more than 500 doors over time.

In the current fiscal year, TJX Cos. plans to open 50 net new HomeGoods units, including 18 Home Sense stores. It also expects to open 45 net new Marmaxx stores in the U.S.

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