TJX Boosts 2014 Outlook As Third Quarter Results Top Estimates

(RTTNews) - Off-price retailer TJX Companies, Inc. (TJX) reported Tuesday a profit for the third quarter that grew 35 percent from last year, reflecting improved margins, lower expenses and revenue growth. Both adjusted earnings per share and quarterly sales topped analysts' expectations. The company also maintained its earnings guidance for the fourth quarter, but raised earnings forecast for the full-year 2014, citing strong third quarter results.

"Our 21% increase in adjusted earnings per share and 5% consolidated comparable store sales growth were both well above our original plan and achieved over strong comparisons last year," CEO Carol Meyrowitz said.

The Framingham, Massachusetts-based company reported net income of $622.66 million or $0.86 per share for the third quarter, higher than $461.55 million or $0.62 per share in the prior-year quarter.

Excluding a tax benefit of $0.11 per share, adjusted net income for the latest quarter was $0.75 per share. On average, 29 analysts polled by Thomson Reuters expected the company to report earnings of $0.74 per share for the quarter. Analysts' estimates typically exclude special items.

Total net sales for the quarter increased 9 percent to $6.98 billion from $6.41 billion in the same quarter last year, and topped twenty-five Wall Street analysts' consensus estimate of $6.91 billion. Consolidated comparable store sales rose 5 percent compared to a 7 percent increase last year.

Within the company's U.S. segment, Marmaxx sales rose to $4.48 billion from $4.16 billion, and sales of HomeGoods totaled $740 million, up from last year's $638 million. Comparable store sales were up 4 percent at Marmaxx and 10 percent at HomeGoods.

In the International segment, sales in Canada increased to $786 million from $769 million, and sales in Europe totaled $972 million, higher than $843 million in the year-ago quarter. Comparable store sales also increased 2 percent at TJX Canada and 5 percent at TJX Europe, both on a constant currency basis.

Gross profit margin for the quarter expanded 50 basis points to 29.3 percent, reflecting merchandise margin improvement as well as buying and occupancy leverage on the above-plan sales.

Selling, general and administrative costs as a percent of sales also improved 40 basis points to 16.6 percent from last year.

Looking ahead to the fourth quarter, TJX continues to expect earnings in a range of $0.77 to $0.80 per share, on projected consolidated comparable store sales growth of 1 to 2 percent. Analysts expect the company to report earnings of $0.84 per share on quarterly sales of $7.91 billion.

For fiscal 2014, the company currently projects adjusted earnings in a range of $2.80 to $2.83 per share, up from the prior range of $2.78 to $2.82 per share, on anticipated consolidated comparable store sales growth of 3 percent. Street is currently looking for full-year 2014 earnings of $2.86 per share on annual sales of $27.45 billion.

"The fourth quarter is off to a good start and we see exciting opportunities for this holiday selling season: we have great initiatives planned and will be shipping fresh gift-giving selections to our stores throughout the holiday season; we expect our marketing campaigns will be seen by more people than ever before; and as always, we will be offering consumers extreme values on great fashions and brands!," Meyrowitz added.

In Tuesday's regular trading session, TJX is currently trading at $63.47, up $0.98 or 1.57% on a volume of 0.19 million shares. In the past 52-week period, the stock has been trading in a broad range of $40.98 to $63.78.