18 November 2018

T.J. Maxx Owner Lifts Worker Pay

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The parent company of T.J. Maxx, Marshalls and HomeGoods unveiled plans on Wednesday to boost pay for its U.S. workers to $9 an hour by June, mirroring a move made last week by Wal-Mart Stores Inc. and signaling a possible turning point for what have been stubbornly stagnant wages since the recession. Shares of TJX Cos. gained 3.3% in midday trading, reversing an earlier decline as the company also gave a weak outlook for its newly-started fiscal year and current quarter.

In 2016, TJX said it plans to pay all hourly U.S. workers who have been employed for six months at least $10 per hour. As of last February, TJX had about 191,000 employees, many of whom work less than 40 hours a week, the company said in a regulatory filing.

Wal-Mart announced last week that it plans to boost pay for its U.S. employees to at least $10 an hour by next year, well above the minimum wage, signaling a tightening labor market and rising competition for lower-paid workers.

Economists have been waiting for years for wage growth to kick in, even as employers have added more jobs and the unemployment rate has fallen. If other companies follow in Wal-Mart and TJX’s footsteps, it could amplify gains for low-wage workers across the nation. The current federal minimum hourly wage is $7.25, a rate that hasn’t changed since 2009.

Signs of wage growth are emerging as companies are having to fight harder to attract and keep good employees. Starbucks Corp . raised its starting pay last month, and Aetna Inc . said it would begin paying its lowest-rung workers $16 an hour in April. Meanwhile, TJX also unveiled plans to boost its quarterly dividend by 20% and buy back up to $1.9 billion in stock in the year ending next January.

Still, TJX gave a disappointing outlook for its newly-started fiscal year, citing foreign exchange impacts that are weighing on much of corporate America.

For the full year, the company forecast per-share earnings of $3.17 to $3.25, well below the $3.50 a share analysts had recently expected, according to Thomson Reuters. The outlook includes a 5% negative impact from currency. For its current quarter, TJX projected per-share earnings of 64 cents to 66 cents, below the 72 cents analyst had expected. The forecast includes a 4% negative impact from currency.

Off-price retailers like TJX have done better than the overall retail industry lately amid stronger traffic as consumers remain cost-conscious. Last month, Macy’s Inc. said it was considering starting an off-price business for its namesake brand.

Click here to access the full article on The Wall Street Journal.

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