TJX Q1 Profit Edges Up, But Results Miss View; Lowers Outlook Range

(RTTNews) - Off-price retailer TJX Companies, Inc. (TJX) on Tuesday reported a slight increase in profit for the first quarter from last year on higher sales. However, both quarterly sales and earnings per share missed analysts' expectations due to negative currency impacts and weaker-than-anticipated sales at the company's apparel business.

Looking ahead, the company forecast earnings for the second quarter mostly below Street estimates, and lowered the top end of its earnings outlook range for fiscal 2015.

Carol Meyrowitz, Chief Executive Officer of TJX Companies, said, "For the first quarter, our consolidated comparable store sales increased 1%, and our earnings per share of $.64 were slightly below our expectations with a negative impact from foreign currency exchange rates that was larger than our guidance assumed. While sales were not as strong as we would have liked, predominantly in our apparel business, I was very pleased that overall business trends improved as the quarter progressed."

The Framingham, Massachusetts-based company's net income for the first quarter was $454.32 million or $0.64 per share, up from $452.89 million or $0.62 per share in the prior-year quarter.

On average, 30 analysts polled by Thomson Reuters expected the company to report earnings of $0.67 per share for the quarter. Analysts' estimates typically exclude special items.

Total net sales for the quarter increased 5 percent to $6.49 billion from $6.19 billion in the same quarter last year, but missed analysts' consensus revenue estimate of $6.60 billion.

Consolidated comparable store sales rose 1 percent, compared to a 2 percent increase in the same period last year.

However, gross profit margin for the quarter declined 0.5 percentage points to 27.9 percent. The decline was primarily due to lower merchandise margins, compared to strong improvement last year and expense deleverage on the comparable store sales increase of 1 percent.

Within the company's U.S. segment, Marmaxx sales rose 2 percent from the year-ago period to $4.24 billion, while sales of HomeGoods increased 10 percent to $757.15 million. Comparable store sales were unchanged at Marmaxx, while it rose 3 percent at HomeGoods.

In the International segment, sales in Canada declined 6 percent to $608.42 million, while sales in Europe rose 24 percent to $890.85 million. Comparable store sales declined 1 percent at TJX Canada, but rose 8 percent at TJX Europe, both on a constant currency basis.

Looking ahead to the second quarter, TJX forecast earnings in a range of $0.70 to $0.74 per share, representing an increase of 6 percent to 12 percent over earnings of $0.66 per share in the prior-year period. This outlook is based upon estimated consolidated comparable store sales growth of 2 to 3 percent.

Street expects the company to earn $0.74 per share for the quarter.

For fiscal 2015, TJX now forecasts earnings per share of $3.05 to $3.17, compared to the prior range of $3.05 to $3.19, and versus $2.94 in fiscal 2014. Excluding an $0.11 tax benefit in fiscal 2014, this guidance would represent an 8 to 12 percent increase over the adjusted $2.83 in fiscal 2014.

However, the company affirmed its outlook for full-year consolidated comparable store sales growth of 1 percent to 2 percent.

Analysts expect the company to report earnings of $3.19 per share for the year.

TJX continues to expects to repurchase nearly $1.6 billion to $1.7 billion of its common stock in the fiscal year ending January 31, 2015.

TJX closed Monday's trading at $58.40. In Tuesday's pre-market, the stock is down $2.42 or 4.14 percent to $55.98.