TJX Boosts 2016 Outlook After Stylish Q1

(RTTNews) - Off-price retailer TJX Companies, Inc. (TJX) reported Tuesday a profit for the first quarter that grew four percent from last year, despite foreign currency headwinds, reflecting improved margins and revenue growth. Both earnings per share and quarterly net sales topped analysts' expectations.

The company also provided earnings guidance for the second quarter, below Street view, but raised earnings outlook for the full-year 2016, citing strong first-quarter results.

"We are extremely pleased with our continued momentum and first quarter performance. Our 5% consolidated comparable store sales growth and 8% increase in earnings per share were both well above our plan. Our outstanding values and exciting mix of apparel and home fashions continue to resonate with shoppers across all of our geographies," CEO Carol Meyrowitz said.

The Framingham, Massachusetts-based company reported net income of $474.60 million or $0.69 per share for the first quarter, higher than $454.32 million or $0.64 per share in the prior-year quarter.

On average, 26 analysts polled by Thomson Reuters expected the company to report earnings of $0.67 per share for the quarter. Analysts' estimates typically exclude one-time charges and gains.

The results for the latest quarter include a negative foreign currency exchange rates impact of $0.04 per share.

Total net sales for the quarter increased 6 percent to $6.87 billion from $6.49 billion in the same quarter last year, and topped twenty-six Wall Street analysts' consensus estimate of $6.80 billion by a whisker.

Consolidated comparable store sales increased 5 percent on a constant currency basis, compared to a 1 percent rise last year.

Within the company's U.S. segment, Marmaxx sales rose to $4.50 billion from $4.24 billion, and sales of HomeGoods totaled $880 million, up from last year's $757 million. Comparable store sales at Marmaxx were up 3 percent, and it rose 9 percent at HomeGoods, both on a constant currency basis.

In the International segment, sales at TJX Canada increased to $620 million from $608 million, while sales at TJX Europe totaled $870 million, lower than $891 million in the year-ago quarter. Meanwhile, comparable store sales at TJX Canada increased 11 percent and it grew 3 percent at TJX Europe, both on a constant currency basis.

"It was great to see that, similar to last quarter, comp sales were almost entirely driven by customer traffic and we had a significant increase in units sold. At the same time, we also saw a strong increase in our merchandise margins. We were very pleased that we achieved these strong results despite significant foreign currency headwinds and while simultaneously investing in our business to support our growth goals," Meyrowitz added.

Gross profit margin for the quarter expanded 40 basis points to 28.3 percent, reflecting strong merchandise margin improvement and, to a lesser extent, buying and occupancy leverage.

The company also announced a 20 percent increase in its regular quarterly dividend in late Match on its common stock to $0.21 per share, payable in June 4 to shareholders on record as of May 14, 2015.

"The second quarter is off to a very strong start and we are confident in our ability to achieve our plans for 2015. We remain convinced that we have the right strategy in place to achieve our long-term growth goals as TJX continues on the path to becoming a $40 billion-plus global, value retailer!," Meyrowitz stated.

Looking ahead to the second quarter, TJX expects earnings in a range of $0.72 to $0.74 per share, on projected consolidated comparable store sales growth of 2 to 3 percent. Analysts expect the company to report earnings of $0.78 per share for the quarter.

For fiscal 2016, the company now projects earnings in the range of $3.21 to $3.27 per share on consolidated comparable store sales growth of 2 to 3 percent, up from the prior guidance range of $3.17 to $3.25 per share on comparable store sales growth of 1 to 2 percent. Street is currently looking for full-year 2016 earnings of $3.30 per share.

The company also continues to expect to repurchase approximately $1.8 to $1.9 billion of TJX stock in fiscal 2016.

In Tuesday's regular trading session, TJX is currently trading at $69.34, up $2.08 or 3.09% on a volume of 0.95 million shares. In the past 52-week period, the stock has been trading in a broad range of $51.91 to $71.03.