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Earnings Results: TJX’s stock pops after retailer tops profit estimates and raises full-year guidance

TJX Cos. stock rose 3.6% Wednesday, after the discount retailer and parent to T.J. Maxx, Marmaxx, HomeGoods and Marshalls stores posted better-than-expected fiscal first-quarter profit and raised its full-year guidance, offsetting a revenue miss.

“Our pretax profit margin and earnings per share both significantly exceeded our plan and our 3% comparable-store sales increase was at the high end of our plan,” Chief Executive Ernie Herrman said in a statement.

The company’s TJX, +1.80% pretax profit margin came to 10.3%, above the 7.5% posted a year ago. The improvement was mostly due to lower freight costs and the timing of certain expenses.

The company had net income of $891 million, or 76 cents a share, in the quarter to April 29, up from $587 million, or 49 cents a share, in the year-earlier period. Sales rose to $11.783 billion from $11.406 billion a year ago.

The FactSet consensus was for EPS of 72 cents and sales of $11.824 billion.

Same-store sales rose 3% to beat the 2.7% FactSet consensus.

Inventories stood at $6.4 billion at quarter-end, compared to $7.0 billion a year ago.

“As a reminder, total inventories in the first quarter of fiscal 2023 were elevated primarily due to a larger in-transit balance as a result of supply chain delays,” said the company.

It’s now expecting second-quarter same-store sales to grow 2% to 3%, while FactSet expects growth of 2.9%.

But it expects EPS of 72 cents to 75 cents, which is below the FactSet consensus of 80 cents, suggesting it’s seeing similar trends to rivals Home Depot Inc. HD, +2.83% and Target Corp. TGT, +2.76% as they grapple with an inflation-weary consumer that’s spending more on essentials and less on discretionary items.

Herman said the second quarter was off to a good start and that TJX was seeing “phenomenal off-price buying opportunities in the marketplace.”

On Tuesday, Home Depot, which is viewed as a proxy for the strength of the consumer, reported a softening of sales trends in the second quarter.

See also: Home Depot’s bad news might not just be bad news for Lowe’s

“In our view, we are going to [a] transitional period in the consumer economy,” said Chief Financial Officer Richard McPhail in a post-earnings conference call with analysts, according to an AlphaSense transcript.

And on Wednesday, Target also talked of weaker trends and said it expected second-quarter same-store sales to fall, while the FactSet consensus is for a small gain.

TJX is more upbeat for the full year fiscal 2024, guiding for same-store sales to grow 2% to 3% and for EPS to range from $3.49 to $3.58. The FactSet consensus is for same-store sales to grow 2.9% and for EPS of $3.53.

The company’s first-quarter earnings call kicks off at 11.00 a.m. Eastern.

CFRA analyst Zachary Warring reiterated his hold rating on the stock.

“We believe TJX will continue to execute in this environment and bolster its market share and balance sheet, but see little upside in shares due to valuation,” he wrote in a note.

The stock is up 1.7% in the year to date, while the S&P 500 SPX, +0.42% has gained 7%.

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