TJX Companies Inc.
) reported adjusted earnings of 55 cents per share in the first
quarter of 2013. Although earnings just slivered past the Zacks
Consensus Estimate of 54 cents, they shot up 41% from the year-ago
earnings of 39 cents.
Growth was fueled by higher comparable store sales for
consecutive months and consumer traffic on the back of fresh stocks
in the stores.
Foreign currency movement had a one percentage point negative
impact on consolidated net sales growth in the first quarter of
fiscal 2013 over the prior-year period.
Total net sales during the quarter grew 11.0% year over year to
$5.8 billion, which surpassed the Zacks Consensus Estimate of $5.7
TJX Companies' consolidated same-store sales increased 8.0% in
the quarter,driven by same-store sales growth at Marmaxx (+8.0%),
Home Goods (+9.0%), TJX Europe (+13.0%) and TJX Canada (+6%).
TJX's gross margin expanded 1.3 percentage points from the
prior-year quarter to 28.2%. The margin expansion was mostly
driven by buying and occupancy leverage and merchandise margin
Selling, general and administrative costs as a percent of sales
increased 0.9 percentage points from the prior year to 16.2% in the
Cash Flow, Balance Sheet
TJX exited the quarter with cash and cash equivalents of $1.6
billion, compared with$1.43 billion in the prior-year quarter.
Quarter-end long-term debt was flat sequentially at $774.5 million
with shareholders equity of $3.3 billion. The company generated
$704.6 million of cash from operations.
Share Repurchase and Dividend
During the reported quarter, the company repurchased 6.5 million
shares worth $250 million of its common stock. The company
increased its dividend by 21% in the first quarter.
Based on quarterly earnings, the company updated its outlook for
fiscal 2013 to a range of $2.27 to $2.37 per share, which
represents a 14% to 19% increase over the prior-year's adjusted
earnings per share from continuing operations of $1.93. As per the
Zacks Consensus estimate, the fiscal 2013 earnings are expected to
For the second quarter 2013, the company expects earnings per
share on a GAAP basis to be in the range of 47 to 50 cents, a 4% to
11% increase over 45 cents per share reported last year. As per the
Zacks Consensus Estimate, the fiscal 2013 earnings are expected to
be 51 cents.
We are encouraged by the company's flexible off-price business
model allowing it to react to market trends. TJX has a low-cost
structure compared to many other traditional retailers. It focuses
aggressively on expenses throughout its business.
However, the highly competitive nature of the business is a
matter of concern. Stiff competition from
) coupled with slow recovery of the U.S. economy are matters of
Currently TJX holds a Zacks #2 Rank, implying a short-term Buy
recommendation. On a long-term basis, we maintain a Neutral
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