TJX Looks at New All-Time High After Raising Outlook

Retail

Published: August 18, 2015 9:21 am

Last Updated: April 28, 2020 7:43 am

The TJX Companies Inc. (NYSE: TJX) reported second quarter 2016 results before markets opened Tuesday morning. The discount retailer reported diluted earnings per share (EPS) of $0.80 on revenues of $7.4 billion. In the same period a year ago, the company reported EPS of $0.75 on revenue of $6.92 billion. Second-quarter results compare to the Thomson Reuters consensus estimates for EPS of $0.76 and $7.25 billion in revenue.

Same-store sales for the second quarter rose 6%, on top of a 3% increase in the year-ago quarter. The company said that year-over-year currency exchange effects lowered net sales by 4% in the second quarter. European sales rose 5% on a same-store sales basis and Canadian sales rose 12%. In the U.S., the Marshalls/T.J. Maxx pair had a same-store sales rise of 4% and the HomeGoods stores posted a rise of 9%.

The outlook for the third quarter calls for EPS of $0.80 to $0.82, compared with $0.85 in the third quarter of fiscal 2015 and a consensus estimate of $0.89. The company raised its estimate for full-year 2015 EPS to $3.24 to $3.28. The current consensus estimate calls for full-year EPS of $3.30. For the full year TJX expects same-store sales to grow by 3% to 4%.

Quarterly EPS is expected to take a hit of 13% due to a combination of currency effects, the company’s wage initiative, new investment, and pension costs. The full-year estimate reflects the benefit from the strong second quarter and a higher same-store sales growth assumption for the second half of the year, largely offset by expected additional foreign currency headwinds and higher supply chain costs than originally planned.

Company CEO Carol Meyerowitz said:

It was great to see that comp sales were entirely driven by customer traffic – our fifth consecutive quarter of sequential traffic improvement – and that we had strong sales across all of our divisions. … We were also very pleased with our solid merchandise margins. We are proud of our strong comp sales, traffic increases and merchandise margins, all of which are core to a successful retail business. We enter the back half of the year in an excellent position to keep our momentum going and have many exciting initiatives planned.

Shares traded up about 4.4% in Tuesday’s pre-market at $74.75, well above the 52-week range of $56.49 to $71.84. Thomson Reuters had a consensus analyst price target of $75.24 before today’s results were announced.

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