For the three months ended August 2, net income rose 7.9% to $517.9 million, or 73 cents a share, up from $479.6 million, or 66 cents a share, a year earlier. Excluding special items, earnings were 75 cents a share. The company had expected per-share earnings of 70 cents to 74 cents.
Excluding a debt-extinguishment charge of 2 cents a share, adjusted earnings per share were 75 cents. That was ahead of analysts’ average estimate for 73 cents a share.
Net sales increased 7.4% to $6.92 billion, slightly above analysts’ forecast for $6.88 billion. Comparable store sales rose 3%, in line with the company’s expectations for 2% to 3% growth.
‘Flexible Business Model’
By division, Marmaxx sales rose 5% to $4.49 billion, while sales of HomeGoods increased 12% to $773.07 million. Comparable store sales increased 2% at Marmaxx and rose 5% at HomeGoods.
In the International segment, sales in Canada increased 3% to $695.92 million, while sales in Europe rose 23% to $954.34 million. Comparable store sales increased 3% at TJX Canada and rose 6% at TJX Europe.
Gross profit margin declined to 28.6% from 28.8%, because of mark-to-market adjustments on hedging instruments and the impact of e-commerce on merchandise margins.
CEO Carol Meyrowitz said the third quarter is off to “a solid start.”
“We entered the third quarter in an excellent inventory position and see plentiful opportunities for great brands in the marketplace. We are very confident in our ability to deliver another strong year, on top of many, as we continue on the path to being a $40 billion-plus company.”
Stifel analyst Richard Jaffe said he remains “favorable” regarding TJX’s long-term outlook and ability to grow its business internationally.
“This is based on the company’s flexible business model which allows TJX to flow the right merchandise in the right categories at the right time, driving strong sales and merchandise margins. We believe this highlights the ongoing resilience and competitive strength of the off-price business model and the strength of TJX as the largest and dominant player in the off-price market.”
As a result of Tuesday’s earnings report, TJX raised its outlook for the full year. The off-pricer now expects per-share earnings between $3.10 and $3.18, up from its prior forecast of $3.05 to $3.17.
For the current quarter, the company forecast earnings between 81 cents and 85 cents, compared with analysts’ forecast for per-share earnings of 85 cents.