TJX Cos. says it is shuttering its A.J. Wright discount stores by mid-February, cutting 4,400 jobs and converting some stores to other brands such as T.J. Maxx.
Ninety-one stores will be converted into T.J. Maxx, Marshalls or HomeGoods stores, and 71 will close entirely, along with two distribution centers. About 3,400 staffers will remain employed at the converted stores.
TJX said the move allows the company, based in Framingham, Mass., to focus on its more profitable businesses. Most positions are part time.
"All associates will have the opportunity to be compensated through the holiday season, and about half of the positions will be retained through late January," CEO Carol Meyrowitz said.
All 162 A.J. Wright stores will close by mid-February. And 91 will reopen under a different name after eight weeks.
After the cuts TJX will have about 150,000 staffers. As of December, the company operated 924 T.J. Maxx stores, 832 Marshalls, and 36 HomeGoods in addition to the 162 A.J. Wright stores.
The company said it will cost $150 million to $170 million to close the stores and $12 million to $15 million for the store conversions.
TJX launched A.J. Wright in 1998 as a discount store brand similar to T.J. Maxx and Marshalls, selling clothing, home decor, shoes and other items, but it never performed quite as well as its sibling stores. T.J. Maxx and Marshalls have benefited as shoppers hunt for bargains due to high unemployment and the uncertain economy.
But A.J. Wright stores offered even lower-priced products than T.J. Maxx and Marshalls, and that turned out to be not as appealing to shoppers.
During the company's most recent quarter, revenue in stores open at least one year rose 1 percent at T.J. Maxx and Marshalls, rose 3 percent at HomeGoods and fell 2 percent at A.J. Wright stores.
The closing itself won't affect TJX's profitability much, RBC Capital Markets analyst Howard Tubin said in a note to investors. In 2009, A.J. Wright generated operating profit of $13 million, compared with almost $2 billion for the entire company.
He said while he doesn't know for sure the reason for the closing, choosing to concentrate on European business may have played a part.
"Europe, in total, for TJX is a larger and more profitable business with significant opportunity for growth," he said. "However, performance this year has been choppy and management is in the process of turning it around. We theorize that management may want to focus its energy on the core businesses and Europe and viewed A.J. Wright as a distraction."
As a result, the company will take a charge of 27 cents to 30 cents per share in the fourth quarter and 14 cents to 17 cents, in total, per share in the first quarter of its next year.
Therefore, the company expects net income of 62 cents to 64 cents per share in the fourth quarter and $3.08 to $3.10 per share for the year including the charge.
Excluding the costs, it expects fourth-quarter net income of 89 cents to 94 cents per share for the fourth quarter and $3.35 to $3.40 for the year.
Analysts expect net income of 93 cents for the quarter and $3.38 per share for the year. Analyst estimates typically exclude one-time items.
Shares fell 11 cents to $44.85 during midday trading.