TJX Companies Q1 Profit Beats View, But Sales Miss; Q2 Outlook Disappoints

(RTTNews) - Off-price retailer TJX Companies, Inc. (TJX) on Tuesday reported a 5 percent increase in profit for the first quarter from last year, reflecting higher sales and customer traffic. Earnings per share for the quarter beat analysts' expectations, but revenues missed their estimates.

Looking ahead, the company forecast earnings for the second quarter also below the Street estimates and raised the low end of its earnings outlook range for fiscal 2018. Shares of the company are down almost 5 percent in pre-market activity.

The Framingham, Massachusetts-based company's first-quarter net income was $536.28 million or $0.82 per share, up from $508.35 million or $0.76 per share in the prior-year quarter.

On average, 27 analysts polled by Thomson Reuters expected the company to report earnings of $0.79 per share. Analysts' estimates typically exclude special items.

Net sales for the quarter increased 3 percent to $7.78 billion from $7.54 billion in the same quarter last year, but missed analysts' consensus revenue estimate of $7.88 billion.

Consolidated comparable store sales for the quarter rose 1 percent, compared to an increase of 7 percent in the same period last year. The increase was driven by strong customer traffic, despite unfavorable weather in parts of the U.S. and Canada compared to last year.

Gross profit margin for the quarter was 29.0 percent, up 0.2 percentage points versus the prior year. This was primarily due to gains related to the company's inventory hedges and a strong merchandise margin.

Looking ahead to the second quarter, TJX Companies forecast earnings in a range of $0.81 to $0.83 per share, compared to $0.84 per share in the year-ago period. The earnings outlook is based upon estimated consolidated comparable store sales growth of 1 percent to 2 percent. Analysts expect the company to earn $0.92 per share for the quarter.

For fiscal 2018, TJX Companies now forecasts earnings in a range of $3.82 to $3.89 per share, representing a 10 percent to 12 percent increase over the $3.46 in fiscal 2017. Excluding the benefit, the company projects adjusted earnings of $3.71 to $3.78 per share.

The full-year outlook is based upon estimated consolidated comparable store sales growth of 1 percent to 2 percent.

Earlier, the company forecast full-year earnings in a range of $3.80 to $3.89 per share and adjusted earnings of $3.69 to $3.78 per share.

The Street expects earnings of $3.91 per share for the year on revenues of $35.63 billion.

The company also continues to expect to repurchase about $1.3 billion to $1.8 billion of TJX stock during the fiscal year ending February 3, 2018.