Earnings reports can be a tricky thing.
For example, shares of the TJX Cos. (T.J. Maxx, Marshalls and HomeGoods) fell 3.2% yesterday, despite news of positive second quarter sales and comps. Why? Because the discount retailer’s Q3 and fiscal 2017 estimates, while on an upward note, still fell short of analysts’ estimates.
Net sales for Q2 of fiscal 2017 increased 7% to $7.9 billion and consolidated comparable store sales increased 4% over last year’s 6% increase. Net income for the second quarter was $562 million and diluted earnings per share were 84 cents, a 5% increase over the prior year’s 80 cents.
For the third quarter of Fiscal 2017, the Company expects diluted earnings per share to be in the range of 83 cents to 85 cents compared to 86 cents last year. Analysts expected per-share profit of 90 cents, according to FactSet.
For fiscal 2017, TJX expects to earn $3.39 to $3.43 per share, an estimate that falls short of $3.49 estimated by analysts polled by S&P Global Capital Intelligence. Shares of TJX fell $2.64 in Tuesday morning trading to $80.13.
Ernie Herrman, Chief Executive Officer and President of The TJX Companies, Inc., stated, “It was terrific to see our strong customer traffic and comps continue in the second quarter. Our consolidated comparable store sales increase of 4%, over 6% growth last year, and our earnings per share increase of 5% both exceeded our expectations. Further, we are extremely pleased that our comp store sales growth was almost entirely driven by customer traffic.”
The retailer is raising our guidance for full year comp sales to increase 3% to 4% and earnings per share to be in the range of $3.39 to $3.43.
“The third quarter is off to a solid start, and we see plentiful opportunities for our business in the second half of the year and beyond. We remain laser focused on achieving our goals for 2016 and are passionate about surpassing them. We continue on the road to becoming a $40 billion-plus company!” says Herrman.
The retailer is also bucking another trend. While some retailers have been shuttering underperforming stores, TJX has been expanding its footprint. It added 14 new stores in the latest quarter to bring its total to 3,675.