TJX Europe, the European parent company of off-price retailer TK Maxx, is planning to slow its European expansion to get the business “back on track” after posting a 20% drop in profits to $39m (£24.5m) for the third quarter to October 30.
The company blamed a “weaker than expected” performance in the UK and Ireland for the decline, which follows a 76% fall in profits over the first half of the year.
TJX Europe adjusted profits for the year to date are down by 35% to $55m (£34.5m) compared to $85m (£54.4m) for the first nine months of the previous year.
The group, which also includes homeware chain HomeSense, saw net sales rise 11% to $672m (£422.2m) over the quarter, compared to $603m (£379m) for the same period last year, while sales over the nine months are up by 12% to $1.7bn.
Like-for-like sales fell by 3% over the quarter, compared to a 1% increase in the same quarter last year, and are also down 2% for the year to date compared to a 4% rise in the first nine months of last year. The number of TX Maxx Europe stores, which also includes Germany and Poland, rose from 283 to 304 over the quarter.
Debra McConnell, vice president of global communications at American holding company TJX Companies, said the company “firmly” believes that the issues it faces in Europe will be remedied, and that it intends to grow at a slightly slower pace in Europe next year to help the business get back on track.
In its results for the second quarter, TJX Companies president and chief executive Carol Meyrowitz blamed buying issues in the UK for “growing pains” in the business. She later attributed it to a slow transition to warm weather products and bad execution of some categories.
McConnell added: “TK Maxx is a well-established, fundamentally strong business that has seen strong and profitable performance in the UK and Ireland over the last several years. We remain very confident in all of our European businesses and the opportunities that Europe presents for enormous growth for the future.”