For the quarter May 3, the off-price retail company reported net income of $454 million, or 64 cents, compared with a profit of $452.9 million, or 62 cents a year ago. That missed analysts average estimate for 67 cents.
Sales in Europe Climb
Net revenue increased 5% to $6.49 billion from $6.19 billion a year ago, missing analysts’ consensus for $6.6 billion in sales. Comparable store sales rose 1%.
Gross margin narrowed 0.5 percentage points to 27.9% primarily due to lower merchandise margins, compared to strong improvement last year and expense deleverage on the comparable store sales increase of 1%.
By division, Marmaxx reported a 2% sales increase to $4.24 billion while HomeGoods was up 10%. Comp store sales at Marmaxx remained unchanged.
In the International segment, sales in Canada declined 6% to $60 8.42 million, while sales in Europe rose 24% to $890.85 million. Comparable store sales declined 1% at TJX Canada, but rose 8% at TJX Europe on a constant currency basis.
Results were under the company’s own expectations due in part to negative currency exchange, said CEO Carol Meyrowitz said.
“While sales were not as strong as we would have liked, predominantly in our apparel business, I was very pleased that overall business trends improved as the quarter progressed,” Meyrowitz said. “Our inventories and expenses were well managed, which helped protect our margins.”
Looking ahead, TJX said its second quarter earnings should be in the range of 70 to 74 cents with comp store sales up 2% to 3%. Analysts’ consensus expects 74 cents a quarter.
For its full year TJX cut its forecast, a move that send its shares down in trading. TJX expects earnings of $3.05 to $3.17 a share, while analysts’ estimate expect $3.19.