TJX Q4 Profit, Sales Up But Disappoints Analysts

TJX CompaniesFramingham, MA—Despite reporting another quarter of comparable store sales gains, TJX Companies today gave a fourth quarter profit and outlook that disappointed analysts.

For the quarter ended Feb 2, the operator of T.J. Maxx and Marshalls posted a net income increase of 21% to $605 million, or 82 cents a share, compared with a year-earlier profit of $475.3 million, or 62 cents. Excluding special items, earnings were 74 cents a share, below analysts’ average of 81 cents a share.

Total net sales increased 15% to $7.72 billion, just topping analysts’ consensus estimate of $7.67 billion by a hair.

“Customer traffic was up across all of our divisions as our off-price shopping experience continued to resonate with customers, even with the growth in online shopping in the retail industry,” said Carol Meyrowitz, chief executive.

Total comparable store sales increased 4% on top of the prior year’s 7% increase. At the company’s U.S. division Marmaxx (T.J. Maxx and Marshalls) sales rose to $4.98 billion from $4.40 billion, and sales at HomeGoods totaled $826 million, up from last year’s $674 million. Comparable store sales at Marmaxx were up 4%, and up 5% at HomeGoods.

Gross profit margin rose 1.4 percentage points to 28.6%, driven entirely by merchandise margin improvement as well as expense leverage on above-plan sales.

The company also revealed a plan to increase dividends and buy back shares.

Trying Out E-Commerce Later This Year

Its board of directors approved an increase in its quarterly dividend from 11.5 cents to 14.5 cents a share payable in June.

TJX also said that it plans to buy back $1.3 billion to $1.4 billion worth of shares during the fiscal year ending Feb. 1, 2014. There is currently $925 million left in the previous share buyback program, which will total up to $1.5 billion in total share buy backs.

Looking ahead to the first quarter, TJX forecasts earnings of 59 cents to 62 cents, just sky of analysts’ estimates of 63 cents. Comparable store sales are expected to be flat to up 2%.

For the full year ending February 2014, the company expects earnings in the range of $2.66 to $2.78 a share while analysts’ consensus calls for $2.84 a share. Comparable store sales are expected to grow 1% to 2% for the year.

“In 2013, we will continue our investments to support our growth, investing in infrastructure, store growth, and e-commerce,” Meyrowitz said on a conference call.

TJX expects to expand its off-price retail concepts abroad as well as domestically. In fact, the company expanded the number of stores it believes the market can support to 2,400 to 2,600 stores in its combined Marshalls and T.J. Maxx division, or 100 to 200 more than its previous estimate. There are 1,943 stores now. And the company believes it can expand its Canadian market, now at 324 stores, to about 430 doors.

Although the company’s websites currently don’t permit online shopping, the company plans to begin testing e-commerce toward the end of the year.

 

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