TJX Companies Lifts Full-year Outlook As Q2 Results Beat View

(RTTNews) - Off-price retailer TJX Companies, Inc. (TJX) on Tuesday reported a 14 percent increase in profit for the second quarter from the prior year, reflecting higher revenues and improved merchandise margins. Both revenue and earnings per share beat analysts' expectations.

Looking ahead, the company provided earnings guidance for the third quarter mostly below Street view, but raised its outlook for fiscal 2014 earnings as well as comparable sales growth. The company's shares are gaining more than 4 percent in the regular trading session.

Framingham, Massachusetts-based TJX Companies' net income for the second quarter was $479.56 million or $0.66 per share, up from $421.09 million or $0.56 per share in the prior-year quarter. On average, twenty nine analysts polled by Thomson Reuters expected the company to report earnings of $0.63 per share for the quarter.

Net sales for the quarter grew 8 percent to $6.44 billion from $5.95 billion in the year-ago period and beat analysts' consensus of $6.37 billion.

Consolidated comparable store sales for the quarter rose 4 percent, compared to a 7 percent increase in the same period last year.

The company's gross profit margin expanded 0.7 percentage points to 28.8 percent, reflecting merchandise margin improvement as well as buying and occupancy expense leverage on the above-plan sales.

Within the company's U.S. segment, Marmaxx sales increased 8 percent from the year-ago period to $4.30 billion and sales of HomeGoods rose 15 percent to $690.12 million. Comparable store sales increased 4 percent at Marmaxx and 8 percent at HomeGoods.

In the International segment, sales in Canada rose 3 percent to $679.36 million and sales in Europe grew 9 percent to $777.59 million. Comparable store sales rose 2 percent at TJX Canada and grew 6 percent at TJX Europe, both on a constant currency basis.

Looking ahead to the third quarter, TJX forecasts earnings in a range of $0.69 to $0.72 per share, representing an increase of 11 percent to 16 percent over earnings of $0.62 per share in the year-ago period. The outlook is based on estimated consolidated comparable store sales growth of 2 percent to 3 percent.

Analysts expect the company to report earnings of $0.71 per share for the quarter.

Carol Meyrowitz, CEO of TJX Companies, said, "The third quarter is off to a solid start and we see many opportunities for the second half of the year and beyond. We are in an excellent inventory position, which gives us the flexibility to capitalize on the great brands and fashions available to us in the marketplace."

For fiscal 2014, TJX now projects earnings in a range of $2.74 to $2.80 per share, up from the prior range of $2.70 to $2.78 per share. The company reported adjusted earnings of $2.47 per share in the previous year. Wall Street is currently looking for full-year earnings of $2.82 per share.

TJX noted that the revised earnings guidance now includes an additional $0.01 per share negative impact from foreign currency exchange rates.

The company now projects full-year consolidated comparable store sales growth of 2 percent to 3 percent, up from the prior range of 1 percent to 2 percent.

TJX continues to expect to repurchase about $1.3 billion to $1.4 billion of the company's stock in fiscal 2014. However, the company may adjust the amount of this spending up or down depending on various factors.

In Tuesday's regular trading session, TJX is trading at $53.07, up $2.32 or 4.57 percent on a volume of 263,423 shares.