Discount retailers benefit from recessionary shoppers

— -- Earnings this week from these stores show how the recessionary shopper's behavior is affecting bottom lines. And a new analysis of off-price retailers shows they're doing better as the economy worsens.

"Where it used to be a polite war, it's now a 21st-century bar fight, where everybody is competing with everyone else for the customers' money," says author Paco Underhill, who is also CEO of the retail research and consulting firm Envirosell.

• T.J. Maxx and Marshalls parent TJX said Wednesday that its fiscal fourth-quarter profit fell 17% partly because of the stronger dollar, but adjusted results still managed to top analysts' estimates. Excluding a reduction of the reserve related to a security breach, adjusted earnings from continuing operations were 55 cents a share, which was above the retailer's forecast for 50 cents to 51 cents a share.

A report out Tuesday by specialty retail analyst Brian Tunick of JPMorgan found the off-price sector up 27%, from $22 billion in 2003 to $29 billion last year, mostly because of store openings.

Stores such as T.J. Maxx are becoming outlets for clothing designers who are sometimes shut out at full-price retailers. That "plays up the consumer perception" that off-price stores are a place they can get high-quality merchandise, often at "30% to 40% below department store prices," Tunick says.

•Saks reported a loss for the fourth quarter as the luxury retailer was forced to slash prices to pull in affluent shoppers who have sharply pulled back on their spending in the recession. The company also issued a downbeat sales forecast. The retailer, which operates Saks Fifth Avenue, said it lost $98.75 million, or 72 cents a share in the quarter ended Jan. 31. That compares with a profit of $39.47 million, or 26 cents a share, a year ago.