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TJX Companies Beats on Q2 Earnings; Raises Fiscal EPS View - Analyst Blog

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The TJX Companies, Inc. ( TJX ) reported earnings of 75 cents per share in the second quarter of fiscal 2015, beating the Zacks Consensus Estimate of 73 cents by 2.7%. Earnings were also ahead of the year-ago results by 14% backed by higher consumer traffic, improved margins and solid comparable-store sales growth in consecutive months.

The Tjx Companies Inc - Earnings Surprise | FindTheBest

Quarterly Details

Net sales of this leading off-price retailer increased 7% year over year to $6.9 billion in the reported quarter backed by higher comps. Net sales were in line with the Zacks Consensus Estimate.

TJX Companies' consolidated comparable-store sales increased 3% in the quarter, better than the 4% increase in the year-ago quarter. Comps sales grew on the back of 5%, 6%, 3% and 2% year-over-year increase in same-store sales at Home Goods, TJX Europe, TJX Canada and Marmaxx, respectively.

Notably, comps growth was lower than the prior-year figure due to reduced discretionary spending by consumers and unfavorable foreign currency translation.

TJX Companies' pre-tax profit margin shrank 0.3 percentage points (pp) from the prior-year quarter to 12.3% of sales. Gross margin also shrank 0.2 pp year over year to 28.6% mainly due to the negative impact of mark-to-market adjustments on hedging instruments and e-Commerce on merchandise margins.

Selling, general and administrative costs as a percentage of sales went down 0.5 pp to 16.2% due to favorable adjustments on insurance reserves.

Share Repurchase and Dividend

During the second quarter of 2015, TJX Companies spent a total of $440 million to repurchase 8.0 million common shares.

The company also announced its plan to repurchase approximately $1.6 to $1.7 billion of common stocks during fiscal 2015.

Outlook

TJX Companies raised the lower end of its fiscal 2015 outlook following the second-quarter results. For fiscal 2015, the company expects earnings in the range of $3.08-$3.16 compared with previously announced range of $3.05-$3.17, up 5% to 8% from $2.94 reported in the previous year. The raised guidance reflects the impressive second-quarter results. Comparable-store sales are expected to grow in the range of 1-2%.

For the third quarter of fiscal 2015, the company expects comparable-store sales growth of 1-2%. The company issued earnings per share outlook in the range of 81 to 85 cents, up 8% to 13% from the year-ago results.

TJX Companies currently has a Zacks Rank #4 (Sell). Some better-ranked stocks in the retail sector include Burlington Stores Inc. ( BURL ), Citi Trends Inc. ( CTRN ) and Men's Wearhouse Inc. ( MW ). All these stocks sport a Zacks Rank #1 (Strong Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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