Shoppers seem to be getting more downscale these days. Just look at the numbers reported by two retailers - The TJX Companies (TJX) and Saks (SKS). In the second quarter,TJX, the parent of discounters T.J. Maxx and Marshalls, reported a rise in both its sales and profits while Saks Fifth Avenue's parent was just the opposite - down in both sales and profits. Saks blamed its poor results on hard-up fashionistas who now prowl the racks at Marshalls instead, looking to pay $50 instead of the $300 they used to shell out to Saks for designer jeans.

At TJX, total same-store sales were $4.5 billion, up four percent over the same time last year; the combined Marshalls and T.J. Maxx sales were also up by four percent to $3.15 billion while comparable sales at the company's Homegoods chain of home furnishings were up nine percent to $413 million. Those numbers are good, even in comparison to the second quarter of 2008 when TJX had a three percent increase in sales.

The company also posted record net income of $262 million and earnings per share of 61 cents, 27 percent higher than net income the same time last year and one penny ahead of what analysts expected.

Looking ahead, TJX is forecasting that its sales will be up two percent to four percent in the next two quarters and two to three percent for the full year. The company expects earnings per share to hit $2.26 to $2.38 for the full year, compared with $2.08 last year.

On the opposite end of the spectrum, the high-end clothing retailer Saks also beat analysts' expectations, posting a loss of $54.5 million, or 39 cents per share on sales of $561.7 million. While that's better than the 52-cent loss analysts had expected, the company's poor results show that luxury retailing has not been as recession-resistant as some had expected.

CEO Stephen I. Sadove said Saks was able to control expenses and increase margins to deal with the economy. But same-store sales were down 15.5 percent and were weak across all categories and all regions.

Gross margins were 29.9 percent for the quarter, better than the 27 percent to 29 percent the company expected, but lower than 34.6 percent margins it had enjoyed during the same period last year. Management blamed the fall in margins on more markdowns overall and the move of the store's big annual clearance sale from the first quarter to the second.

Saks now projects comparable-store sales will drop to the mid-to high single digit percentages for the second half of the year and will be down in the low-double-digit percentages for the full year.

Clearly, the results for these two companies reflect the difficult economy and TJX and Marshalls in particular, has been exploiting the situation in its advertising by showing how other retailers' overstocking can turn into a "shopportunity" on its racks. And while the stock market may be recovering, it looks like affluent shoppers are cutting back and increasingly shopping at discounters.

Some retail analysts have theorized that it will be at least next year before consumers go back to their usual spending patterns. Keep in mind, that after the last serious recession in the early 1990's, it took a major technology boom to prime shoppers to spend freely again. The racks at Marshall's may be crowded for a few quarters to come.


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