The TJX Companies, Inc.
) reported earnings of 66 cents per share in the second quarter
of fiscal 2014, beating the Zacks Consensus Estimate of 63 cents
by 4.8%. Earnings were ahead of the year ago earnings of 56 cents
by 18% and management's guidance range of 61 cents to 63
The earnings upside was fueled by higher consumer traffic,
improved margins and solid comparable-store sales growth for
consecutive months. Currency fluctuations had no impact on
earnings in the quarter.
Net sales of this leading off-price retailer grew 8.0% year
over year to $6.442 billion in the reported quarter on the back
of comparable store sales growth. However, foreign currency
exchange had a negative impact of one percentage point on sales.
Net sales marginally beat the Zacks Consensus Estimate of $6.385
TJX Companies' consolidated comparable store sales increased
4.0% in the quarter compared to a 7% increase in the comparable
year-ago quarter. The year-over-year increase was driven by
same-store sales growth of 4% at Marmaxx, 8% at Home Goods, 6% at
TJX Europe and 2% at TJX Canada. Comparable-store sales increased
on the back of strong customer traffic, driven by well-chosen
stocks at the stores.
TJX Companies' gross margin expanded 0.7 percentage points
(pp) from the prior-year quarter to 28.8%. The margin expansion
was mostly driven by increased merchandise sales margin and
buying and occupancy expense leverage on sales.
Selling, general and administrative costs as a percentage of
sales increased 0.2 pp year on year to 16.7% in the second
quarter, driven by increased marketing spending and the impact of
the company's e-commerce businesses.
During the second quarter of 2013, the company spent a total
of $325 million to repurchase 6.4 million common shares.
Following the impressive second quarter results, the company
raised the lower end of its earnings outlook for fiscal 2014. The
company now expects earnings in the range of $2.74 - $2.78,
compared with the previous expectation of $2.70 - $2.78. The
Zacks Consensus Estimate for fiscal 2014 is $2.82 per share,
higher than the company's guidance range.
The company also expects to repurchase approximately $1.3
billion to $1.4 billion of shares in fiscal 2014.
For the third quarter of fiscal 2014, the company expects
comparable store sales growth of 2%-3%. It also expects earnings
per share in the range of 69 cents to 72 cents. The Zacks
Consensus Estimate for the third quarter is pegged at 72
TJX currently holds a Zacks Rank #3 (Hold). Other stocks in
the retail and wholesale sector worth considering include
Green Mountain Coffee Roasters Inc
Haverty Furniture Cos. Inc.
Fortune Brands Home & Security
), all of them holding a Zacks Rank #1.
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