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TJX Companies (TJX) Tops Q4 Earnings, Revenue Estimates

The TJX Companies, Inc.TJX reported fourth-quarter fiscal 2017 results, wherein its net sales, comparable store sales (comps) as well as earnings exceeded expectations.

In the reported quarter, earnings of $1.03 per share surpassed the Zacks Consensus Estimate of $1.00. Further, earnings exceeded management's guidance of 96-98 cents per share. Currency affected earnings negatively by 4 cents.

TJX Companies, Inc. (The) Price, Consensus and EPS Surprise

TJX Companies, Inc. (The) Price, Consensus and EPS Surprise | TJX Companies, Inc. (The) Quote

The bottom line grew 4% year over year, driven by higher consumer traffic and solid comps growth. Shares gained in the 6.7% in the pre-market trading .

Quarterly Details

Net sales increased 6% year over year to $9.5 billion, supported by higher comps. Additionally, the figure marginally beat the Zacks Consensus Estimate of $9.47 billion.

Consolidated comps for the fourth quarter increased 3%, over last year's 6% increase, backed by higher comps at Marmaxx, HomeGoods and TJX Canada. Comps also exceeded management's guidance of 1-2% growth. However, comps were flat in the International segment.

While TJX Canada comps grew 4% in the reported quarter, HomeGoods, Marmaxx and International comps increased 5%, 3% and 2%, respectively.

TJX Companies' adjusted pre-tax profit margin contracted 0.3 percentage points (pp) year over year to 11.6% of sales. Gross margin contracted 0.4 pp year over year to 28.3%. The downside can primarily be attributed to the company's inventory hedges as well as incremental supply chain costs.

Fiscal Results

Fiscal 2017 earnings of $3.53 per share surpassed the Zacks Consensus Estimate of $3.50 by 4.6%. The bottom line grew 6% year over year, backed by higher consumer traffic and solid comps growth.

Net sales increased 7% year over year to $33.2 billion, supported by higher comps. Further, the figure marginally beat the Zacks Consensus Estimate of $33.18 billion.

Other Financial Updates

Cash and cash equivalents were $2.92 billion as of Jan 28, 2017 compared to $2.38 billion as of Oct 29, 2016, while long-term debt was $2.22 billion at the end of the fourth quarter, almost on par with previous quarter.

Moreover, in the reported quarter, the leading off-price retailer paid $2.4 billion to shareholders in fiscal 2017 through share repurchases and dividends.

Q1 Guidance

TJX Companies also issued guidance for first-quarter fiscal 2017. The company expects earnings in the range of 76-78 cents per share compared with 76 cents reported a year ago. Wage increases are anticipated to negatively impact earnings growth by 3%. Moreover, currency headwinds are likely to hurt earnings by 6%.

For the fourth quarter, the company expects comps growth of 0-1% over last year's strong 7% increase.

Fiscal 2018 Guidance

For fiscal 2018, TJX Companies now projects adjusted earnings per share in the range of $3.80-$3.89, up 5-7% from fiscal 2017 results. Comps are also expected to grow 4%, which is on the higher end of the previous guidance of 1-2% growth.

Zacks Rank

TJX Companies carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the retail sector are Zumiez, Inc. ZUMZ , Dollar Tree Inc. DLTR and Genesco Inc. GCO . All these stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

While Zumiez has an expected long-term earnings growth of 15.0%, Genesco and Dollar Tree has an expected earnings growth of 9.5% and 16.7%, respectively, for the next three to five years.

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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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