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Why Is TJX (TJX) Down 7.1% Since Last Earnings Report?
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It has been about a month since the last earnings report for TJX (TJX - Free Report) . Shares have lost about 7.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is TJX due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
The TJX Companies' Q4 Earnings Miss Estimates, Sales Up
The TJX Companies reported fourth-quarter fiscal 2022 numbers, with the top and the bottom line missing the Zacks Consensus Estimate. Nevertheless, earnings and sales increased year over year.
Q4 in Details
TJX Companies’ fourth-quarter earnings came in at 78 cents per share, up from 27 cents reported in the year-ago quarter. In fourth-quarter fiscal 2020, the company’s earnings came in at 81 cents per share. The Zacks Consensus Estimate for fourth-quarter fiscal 2022 earnings was pegged at 90 cents per share.
Net sales came in at $13,854 million, up 27% from $10,943 million reported in the year-ago quarter. Management highlighted that stores were shut for roughly 13% of the fourth quarter of fiscal 2021. Net sales in the quarter increased 14% from fourth-quarter fiscal 2020’s levels. The metric missed the Zacks Consensus Estimate of $14,368.3 million.
Management stated that due to temporary store closures amid the pandemic, the comp-store sales definition was not applicable in the quarter under review. To offer a performance indicator for the stores as they reopen, The TJX Companies came up with a temporary new sales measure — open-only comp-store sales. This includes stores that were initially classified as comp stores (in the beginning of fiscal 2021). This metric reports a rise or decline in sales of stores for the days they were operational in the fourth quarter of fiscal 2022 compared with the same days in fiscal 2020 before the pandemic. Management highlighted that it does not intend to report open-only comparable-store measures for fiscal 2023. The company wishes to report on the earlier historical definition of U.S. comparable store sales for fiscal 2023.
Open-only comp store sales for the company rallied 10% compared with fourth-quarter fiscal 2020 levels. The metric increased 10%, 22% and 1% for Marmaxx (the United States), HomeGoods (the United States) and TJX Canada, respectively. The same declined 2% for TJX International (Europe & Australia).
TJX Companies’ consolidated pretax profit margin came in at 9%, down 1.9 percentage point from the fourth quarter of fiscal 2020. Management highlighted that additional investments to expand distribution capacity as well as wage increases hurt the margin. In addition, net pandemic-induced expenses hurt the pretax margin by 0.5 percentage points. Merchandise margin in the quarter was hurt by rising freight expenses. Gross profit margin came in at 27.1%, down 1.3 percentage points from fourth-quarter fiscal 2020 levels. Selling, general and administrative (SG&A) costs, as a percentage of sales, was 18%, higher by 0.5 percentage points related to fiscal 2020’s level.
Other Financial Updates
TJX Companies’ ended the quarter with cash and cash equivalents of $6,226.8 million, long-term debt of $3,354.8 million and shareholders’ equity of $6,003 million. For 52 weeks ended Jan 29, 2022, the company’s net cash provided by operating activities stood at $3,057.5 million.
During the quarter under review, the company returned $1.4 billion to shareholders. Management repurchased and retired 15.2 million shares for $1.1 billion on a trade-date basis, while paying $310 million in shareholder dividends. In Feb 2022, management unveiled a new stock repurchase program, which authorizes the repurchase of up to an incremental $3 billion of the company’s stock. The company plans to repurchase $2.25-$2.50 billion of the company’s stock during fiscal 2023. Management announced its intentions of increasing quarterly dividend to 29.5 cents per share, reflecting a 13% rise from the current rate. The increased dividend is expected to be announced in March 2022 to be payable in June 2022.
Total inventories as of Jan 29, 2022, were $6 billion. Management is optimistic about its capabilities to provide fresh spring merchandise to its stores and online.
Store & More Updates
The company’s fiscal 2022 performance was affected by the pandemic-led temporary closure. Although TJX Companies’ stores in the U.S. remained operational throughout fiscal 2022, stores in Europe were shut for roughly 19% of fiscal 2022, stores in Canada were closed for nearly 12% of fiscal 2022. Also, stores across Australia were shut for approximately 19% of fiscal 2022. In total, it had stores closed for almost 4% of fiscal 2022 amid the pandemic. Management projects the closures to have caused $1.45-$1.61 billion in lost sales during fiscal 2022. The company anticipates quarterly earnings per share to have been negatively impacted by 27-32 cents, thanks to such store closures in fiscal 2022.
Outlook
For the first quarter of fiscal 2023, management expects U.S. comparable store sales to be up 1 compared with 17% U.S. open-only comp-store sales growth in the first quarter of fiscal 2022. For the first quarter of fiscal 2023, it anticipates earnings per share in the range of 58-61 cents compared with 44 cents reported in the year-ago quarter.
For fiscal 2023, management envisions U.S. comparable store sales to be up 3, compared with 17% U.S. open-only comp-store sales growth in fiscal 2022.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
The consensus estimate has shifted 9.49% due to these changes.
VGM Scores
At this time, TJX has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, TJX has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is TJX (TJX) Down 7.1% Since Last Earnings Report?
It has been about a month since the last earnings report for TJX (TJX - Free Report) . Shares have lost about 7.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is TJX due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
The TJX Companies' Q4 Earnings Miss Estimates, Sales Up
The TJX Companies reported fourth-quarter fiscal 2022 numbers, with the top and the bottom line missing the Zacks Consensus Estimate. Nevertheless, earnings and sales increased year over year.
Q4 in Details
TJX Companies’ fourth-quarter earnings came in at 78 cents per share, up from 27 cents reported in the year-ago quarter. In fourth-quarter fiscal 2020, the company’s earnings came in at 81 cents per share. The Zacks Consensus Estimate for fourth-quarter fiscal 2022 earnings was pegged at 90 cents per share.
Net sales came in at $13,854 million, up 27% from $10,943 million reported in the year-ago quarter. Management highlighted that stores were shut for roughly 13% of the fourth quarter of fiscal 2021. Net sales in the quarter increased 14% from fourth-quarter fiscal 2020’s levels. The metric missed the Zacks Consensus Estimate of $14,368.3 million.
Management stated that due to temporary store closures amid the pandemic, the comp-store sales definition was not applicable in the quarter under review. To offer a performance indicator for the stores as they reopen, The TJX Companies came up with a temporary new sales measure — open-only comp-store sales. This includes stores that were initially classified as comp stores (in the beginning of fiscal 2021). This metric reports a rise or decline in sales of stores for the days they were operational in the fourth quarter of fiscal 2022 compared with the same days in fiscal 2020 before the pandemic. Management highlighted that it does not intend to report open-only comparable-store measures for fiscal 2023. The company wishes to report on the earlier historical definition of U.S. comparable store sales for fiscal 2023.
Open-only comp store sales for the company rallied 10% compared with fourth-quarter fiscal 2020 levels. The metric increased 10%, 22% and 1% for Marmaxx (the United States), HomeGoods (the United States) and TJX Canada, respectively. The same declined 2% for TJX International (Europe & Australia).
TJX Companies’ consolidated pretax profit margin came in at 9%, down 1.9 percentage point from the fourth quarter of fiscal 2020. Management highlighted that additional investments to expand distribution capacity as well as wage increases hurt the margin. In addition, net pandemic-induced expenses hurt the pretax margin by 0.5 percentage points. Merchandise margin in the quarter was hurt by rising freight expenses. Gross profit margin came in at 27.1%, down 1.3 percentage points from fourth-quarter fiscal 2020 levels. Selling, general and administrative (SG&A) costs, as a percentage of sales, was 18%, higher by 0.5 percentage points related to fiscal 2020’s level.
Other Financial Updates
TJX Companies’ ended the quarter with cash and cash equivalents of $6,226.8 million, long-term debt of $3,354.8 million and shareholders’ equity of $6,003 million. For 52 weeks ended Jan 29, 2022, the company’s net cash provided by operating activities stood at $3,057.5 million.
During the quarter under review, the company returned $1.4 billion to shareholders. Management repurchased and retired 15.2 million shares for $1.1 billion on a trade-date basis, while paying $310 million in shareholder dividends. In Feb 2022, management unveiled a new stock repurchase program, which authorizes the repurchase of up to an incremental $3 billion of the company’s stock. The company plans to repurchase $2.25-$2.50 billion of the company’s stock during fiscal 2023. Management announced its intentions of increasing quarterly dividend to 29.5 cents per share, reflecting a 13% rise from the current rate. The increased dividend is expected to be announced in March 2022 to be payable in June 2022.
Total inventories as of Jan 29, 2022, were $6 billion. Management is optimistic about its capabilities to provide fresh spring merchandise to its stores and online.
Store & More Updates
The company’s fiscal 2022 performance was affected by the pandemic-led temporary closure. Although TJX Companies’ stores in the U.S. remained operational throughout fiscal 2022, stores in Europe were shut for roughly 19% of fiscal 2022, stores in Canada were closed for nearly 12% of fiscal 2022. Also, stores across Australia were shut for approximately 19% of fiscal 2022. In total, it had stores closed for almost 4% of fiscal 2022 amid the pandemic. Management projects the closures to have caused $1.45-$1.61 billion in lost sales during fiscal 2022. The company anticipates quarterly earnings per share to have been negatively impacted by 27-32 cents, thanks to such store closures in fiscal 2022.
Outlook
For the first quarter of fiscal 2023, management expects U.S. comparable store sales to be up 1 compared with 17% U.S. open-only comp-store sales growth in the first quarter of fiscal 2022. For the first quarter of fiscal 2023, it anticipates earnings per share in the range of 58-61 cents compared with 44 cents reported in the year-ago quarter.
For fiscal 2023, management envisions U.S. comparable store sales to be up 3, compared with 17% U.S. open-only comp-store sales growth in fiscal 2022.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
The consensus estimate has shifted 9.49% due to these changes.
VGM Scores
At this time, TJX has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, TJX has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.