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TJX Companies' (TJX) Q1 Earnings to Benefit from Comps Growth

The TJX Companies, Inc.TJX is slated to release first-quarter fiscal 2019 on May 22. This off-price retailer has been witnessing year-over-year growth in the top and the bottom line for over a year now, buoyed by the company's robust efforts to attract traffic and drive sales. Let's see what's in store for the company's upcoming quarterly results.

Efforts to Drive Sales Bode Well

TJX Companies has been delivering positive comparable store sales (comps) for a while. Notably, during the fourth quarter of fiscal 2018, TJX Companies witnessed growth of 4% in comps. Notably, all major segments reported higher comps, courtesy of consumers' favorable response to the company's brands and impressive merchandise assortments at reasonable prices.

Further, management stated that it is optimistic about comps growth in fiscal 2019 as it continues to focus on implementing sales-driving efforts to attract traffic. Management hopes that stores will benefit from solid merchandise assortment and brands.

Buoyed by such factors, the company expects comps growth of 1-2% in fiscal 2019, which will positively impact first-quarter results. In fact, other off-price retailers, such as Ross Stores ROST and Big Lots BIG , have also been deriving strength from efficient merchandising policies.

Moreover, the company's sales-driving efforts are supported by an aggressive store opening strategy. TJX Companies opened around 258 stores during fiscal 2018. With almost 4070 stores across nine countries, the company plans to continue expanding its store base. It projects to open approximately 600 stores in the long term. Like TJX Companies, Burlington Stores BURL - a major discount-retailer - has also been undertaking store-expansion initiatives to bolster sales.

Additionally, with an increasing number of consumers opting for online shopping, TJX Companies has undertaken several initiatives to boost online sales and strengthen its e-commerce business. The company's strategic prices combined with effective offers, in-store return policies as well as marketing and advertising campaigns have bolstered online and store businesses considerably.

Considering such well-chalked strategies, the Zacks Consensus Estimate for first-quarter fiscal 2019 sales is pegged at $8,503 million, reflecting 9.2% growth from the year-ago quarter's reported figure. Further, analysts polled by Zacks expect sales across Homegoods, Marmaxx, TJX Canada and TJX Europe to advance 15%, 4.3%, 15.2% and 20.4% respectively, on a year-on-year basis for the first quarter.

Earnings Front for Q1 Looks Positive

Robust endeavors to drive sales combined with benefits from tax reforms led management to provide an upbeat earnings view for the first quarter. Adjusted earnings for the first quarter are projected in the range of 85-87 cents per share compared with 82 cents in the year-ago quarter.

Including benefits from tax reforms, earnings are expected in the range of $1.00-$1.02. Further, the Zacks Consensus Estimate for the impending quarter is currently pegged at $1.02, depicting a surge of approximately 24.4% from the prior-year quarter's reported figure.

To top it, our proven model shows that TJX Companies is likely to beat bottom-line estimates in the impending quarter. For this to happen, a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Well, TJX Companies' Zacks Rank #3 and Earnings ESP of +1.08% makes us reasonably confident of an earnings beat. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

However, persistent rise in wages has been weighing on TJX Companies' performance for a while. In fact, higher wages are expected to negatively impact fiscal 2019 earnings by approximately 2%, which raises concerns. Nevertheless, given the robust endeavors to boost top-line performance, TJX Companies is expected to adequately cover-up wage cost woes and maintain its momentum.

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Ross Stores, Inc. (ROST): Free Stock Analysis Report

Big Lots, Inc. (BIG): Free Stock Analysis Report

The TJX Companies, Inc. (TJX): Free Stock Analysis Report

Burlington Stores, Inc. (BURL): Free Stock Analysis Report

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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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