TJX Companies Q3 Profit Declines, But Results Beat View; Affirms 2016 Outlook

(RTTNews) - Off-price retailer TJX Companies, Inc. (TJX) on Tuesday reported a slight decline in profit for the third quarter from last year as higher sales and customer traffic were offset by the impact of foreign currency exchange rates and higher expenses. However, both revenue and earnings per share for the quarter beat analysts' expectations.

Looking ahead, the company forecast earnings for the fourth quarter below the Street estimates, but affirmed its outlook for fiscal 2016 earnings.

The Framingham, Massachusetts-based company's net income for the third quarter was $587.26 million, down from $594.96 million in the prior-year quarter. However, earnings per share increased to $0.86 from $0.85 last year on lower number of shares outstanding.

On average, 28 analysts polled by Thomson Reuters expected the company to report earnings of $0.85 per share for the latest quarter. Analysts' estimates typically exclude special items.

Net sales for the quarter increased 5 percent to $7.75 billion from $7.37 billion in the same quarter last year and beat analysts' consensus revenue estimate of $7.73 billion.

The company noted that the movement in foreign currency exchange rates had a three percentage point negative impact on consolidated net sales growth in the latest quarter.

Consolidated comparable store sales for the quarter rose 5 percent, compared to an increase of 2 percent in the same period last year.

Gross profit margin decreased 0.4 percentage points to 29.0 percent, primarily due to transactional foreign exchange at the company's international divisions and increased supply chain costs related to a substantial increase in units sold during the quarter. Merchandise margins remained strong.

Looking ahead to the fourth quarter, TJX Companies forecast earnings in a range of $0.91 to $0.93 per share, compared to $0.93 per share in the year-ago period. The earnings outlook is based upon estimated consolidated comparable store sales growth of 2 percent to 3 percent.

This guidance also reflects a negative impact to earnings per share from the acquisition of Trade Secret that was not contemplated in the Company's prior guidance.

Analysts expect the company to earn $0.98 per share for the quarter.

For fiscal 2016, TJX Companies affirmed its outlook for earnings in a range of $3.26 to $3.28 per share on a raised outlook for comparable store sales growth of 4 percent to 5 percent. The Street is currently looking for full-year earnings of $3.31 per share.