TJX Q1 Profit Up 8% on Comp Sales, Margins

TJX Cos.Framingham, MA—TJX Companies, one of the largest off-price retailers, said Tuesday that its fiscal first quarter profit rose 8% as its comparable store sales beat expectations.

For the quarter ended May 4, the parent of Marshalls, TJ Maxx and HomeGoods, posted a net profit of $452.9 million, or 62 cents a share, compared to $419.2 million, or 55 cents a share, a year earlier. That was in line with analysts’ average estimate for 62 cents a share.

Net sales increased 6.8% to $6.19 billion ahead of analysts’ consensus estimate of $6.16 billion. Comparable store sales beat consensus, too, rising 2% when 1.8% had been expected.

In the Marmaxx division (combined TJ Maxx and Marshalls), comp store sales were up 1% while HomeGoods posted 7% same-store sales growth. TJX Canada posted a 1% decline in comp sales while TJX Europe had a 4% increase in comp sales.

Headed Toward Being a $40 Billion Plus Company

“We believe the flexibility of our business model allowed us to achieve this growth despite the unfavorable weather patterns across most of our regions for much of the quarter,” said Carol Meyrowitz, chief executive. “Flowing the right merchandise at the right time continued to be key to strong merchandise margins.”

The company’s gross profit margin expanded 0.2 percentage points to 28.4%, reflecting merchandise margin improvement. Total inventories as of May 4 rose to $3.1 billion from $2.9 billion a year earlier.

Looking ahead to the second quarter, TJX forecast earnings in a range of 61 cents to 63 cents a share, representing an increase of 9% to 13% over earnings of 56 cents a share in the year-ago period. The outlook is based on estimated consolidated comparable store sales growth of 2% to 3%. Analysts expect the company to report earnings of 64 cents a share for the quarter.

Meyrowitz said, “The second quarter is off to a strong start and we are in an excellent position to buy into the enormous opportunities for quality merchandise that we are seeing in the marketplace. Longer term, we remain very confident in our continued ability to grow sales and profitability as we are well on the road to being a $40 billion-plus company!”

 

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Jeff Prine, Editor at Large, Accessories Magazine
Jeff returns as a regular contributor to Accessories magazine. Initially Jeff worked as senior editor at Accessories more than 20 years ago and his love of the industry has followed him until present. Since his tenure here, Jeff has continued to report jewelry, watch and other luxury goods trends as executive editor at Modern Jeweler magazine, fashion director at Lustre, and as contributor on products and trends for consumer and trade publications and websites. In addition to his editorial experience, Jeff also served as an adjunct instructor for accessories merchandising at Fashion Institute of Technology. jeffp@busjour.com