TJX Q2 Results Beat View, Lifts 2015 Adj. Earnings Outlook Range

(RTTNews) - Off-price retailer TJX Companies, Inc. (TJX) on Tuesday reported an 8 percent increase in profit for the second quarter from last year, reflecting higher sales and strong customer traffic. Both sales and adjusted earnings per share for the quarter beat analysts' expectations.

Looking ahead, the company forecast earnings for the third quarter mostly below Street estimates, but raised its adjusted earnings outlook range for fiscal 2015.

The Framingham, Massachusetts-based company's net income for the second quarter was $517.62 million or $0.73 per share, up from $479.56 million or $0.66 per share in the prior-year quarter.

Excluding a debt-extinguishment charge of $0.02 per share, adjusted earnings per share for the latest quarter were $0.75. On average, 30 analysts polled by Thomson Reuters expected the company to report earnings of $0.73 per share for the quarter. Analysts' estimates typically exclude special items.

Total net sales for the quarter increased 7 percent to $6.92 billion from $6.44 billion in the same quarter last year, and beat analysts' consensus revenue estimate of $6.88 billion.

Consolidated comparable store sales for the quarter rose 3 percent, compared to an increase of 4 percent in the same period last year.

However, gross profit margin for the quarter declined 0.2 percentage points from last year to 27.6 percent.

The decline was primarily due to the negative impact of mark-to-market adjustments on the company's hedging instruments as well as the impact of e-commerce on merchandise margins. Merchandise margins were flat for the second quarter.

Within the company's U.S. segment, Marmaxx sales for the quarter rose 5 percent from the year-ago period to $4.49 billion, while sales of HomeGoods increased 12 percent to $773.07 million. Comparable store sales increased 2 percent at Marmaxx and rose 5 percent at HomeGoods.

In the International segment, sales in Canada increased 3 percent to $695.92 million, while sales in Europe rose 23 percent to $954.34 million. Comparable store sales increased 3 percent at TJX Canada and rose 6 percent at TJX Europe.

Looking ahead to the third quarter, TJX forecast earnings in a range of $0.81 to $0.85 per share, compared to earnings of $0.86 per share in the same period last year.

Excluding a tax benefit of $0.11 per share in the year-ago period, the outlook would represent an increase of 8 to 13 percent over the year-ago period's adjusted earnings of $0.75 per share. This outlook is based upon estimated consolidated comparable store sales growth of 1 percent to 2 percent.

Street expects the company to earn $0.85 per share for the quarter on revenues of $7.43 billion.

For fiscal 2015, TJX now forecasts earnings in a range of $3.08 to $3.16 per share, compared to earnings of $2.94 per share in fiscal 2014.

Excluding the second-quarter debt-extinguishment charge of $0.02 per share, the company now forecasts full-year adjusted earnings of $3.10 to $3.18 per share, representing an increase of 10 to 12 percent over adjusted earnings of $2.83 per share in the prior year, which excludes a tax benefit of $0.11 per share.

TJX had earlier forecast fiscal 2015 earnings in a range of $3.05 to $3.17 per share. Excluding an $0.11 tax benefit in fiscal 2014, this guidance would have represented an 8 to 12 percent increase over adjusted earnings of $2.83 per share in fiscal 2014.

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

Analysts expect the company to report earnings of $3.14 per share for the year on revenues of $29.14 billion.

TJX is currently trading at $57.93, up $4.03 or 7.48 percent on a volume of 2.43 million shares.