TJX Q3 Profit Meets View, But Revenues Miss; Lowers 2015 Outlook

(RTTNews) - Off-price retailer TJX Companies, Inc. (TJX) on Tuesday reported a 4 percent decline in profit for the third quarter from last year, as higher sales and customer traffic were offset by an increase in expenses. In addition, the prior-year quarter's results included a tax benefit.

However, adjusted earnings per share for the latest quarter beat analysts' expectations, while revenues missed their estimates. Looking ahead, the company forecast earnings for the fourth quarter below Street estimates and also lowered its adjusted earnings outlook range for fiscal 2015.

Carol Meyrowitz, CEO of TJX Companies, said, "We are particularly pleased that customer traffic continued to gain momentum in the third quarter despite unusually warm weather, which we believe dampened sales throughout TJX Europe starting in September and hurt Marmaxx in October. Having said that, the fourth quarter is off to a very strong start."

The Framingham, Massachusetts-based company's net income for the third quarter was $594.96 million or $0.85 per share, down from $622.66 million or $0.86 per share in the prior-year quarter that included a tax benefit of $0.11 per share.

Excluding the tax benefit, adjusted earnings per share for the latest quarter were $0.85 compared to $0.75 per share in the year-ago period. On average, 27 analysts polled by Thomson Reuters expected the company to report earnings of $0.85 per share for the quarter. Analysts' estimates typically exclude special items.

Total net sales for the quarter increased 6 percent to $7.37 billion from $6.98 billion in the same quarter last year, but missed analysts' consensus revenue estimate of $7.44 billion.

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

Gross profit margin for the quarter edged up 0.1 percentage points from last year to 29.4 percent.

Within the company's U.S. segment, Marmaxx sales for the quarter rose 4 percent from the year-ago period to $4.67 billion, while sales of HomeGoods increased 15 percent to $851.05 million. Comparable store sales increased 1 percent at Marmaxx and rose 7 percent at HomeGoods.

In the International segment, sales in Canada edged up less than 1 to $791.73 million, while sales in Europe rose 8 percent to $1.05 billion. Comparable store sales increased 3 percent at TJX Canada and declined 1 percent at TJX Europe.

Looking ahead to the fourth quarter, TJX forecasts earnings per share in a range of $0.86 to $0.90, representing a 6 percent to 11 percent increase over $0.81 per share in the year-ago period.

The outlook now assumes negative impact from foreign currency exchange rates of $0.02 per share, compared to the prior assumption of foreign currency being neutral, as well as a negative impact of $0.02 per share on additional expenses and investments for the future.

However, TJX maintained its fourth-quarter outlook for estimated consolidated comparable store sales growth of 1 percent to 2 percent and merchandise margins to be higher.

Street expects the company to earn $0.94 per share for the quarter on revenues of $8.34 billion.

For fiscal 2015, TJX now forecasts reported earnings per share in a range of $3.07 to $3.11 per share. This guidance now assumes an expected negative impact from foreign currency exchange rates of $0.03 per share, compared to the prior assumption of a negative impact of $0.01 per share.

On an adjusted basis, excluding the second-quarter debt extinguishment charge of an estimated $0.02 per share, the company forecasts earnings of $3.09 to $3.13 per share.

Earlier, TJX forecast full-year reported earnings in a range of $3.08 to $3.16 per share and adjusted earnings of $3.10 to $3.18 per share.

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 $3.17 per share for the year on revenues of $29.18 billion.

TJX is currently trading at $60.10, down $1.44 or 2.34 percent on a volume of 653,933 shares.