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Robust Traffic Aids TJX Companies (TJX) Q2 Earnings, View Up
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The TJX Companies, Inc. (TJX - Free Report) raised its guidance for fiscal 2019, after posting solid results for the second quarter. During the quarter, both earnings and revenues improved year over year on the back of continued improvements in customer traffic.
We note this Zacks Rank #2 (Buy) stock has gained 34.2% in the past six months, while the industry rallied 17.6%.
Quarterly Details
The company’s earnings came in at $1.17 per share compared with 85 cents recorded in the year-ago period. Excluding a benefit from 2017 Tax Cuts and Jobs Act, earnings came in at 99 cents per share. The Zacks Consensus Estimate was pegged at $1.05.
The TJX Companies, Inc. Price, Consensus and EPS Surprise
Net sales advanced about 12% year over year to $9,331.1 million, which beat the Zacks Consensus Estimate of $9,030 million. Sales were backed by solid comparable store sales (comps), which continued to gain strength from solid customer traffic across all segments. Also, net sales growth included a 1% positive impact from favorable currency movements.
TJX Companies' consolidated comps grew 6% year over year, up from 3% growth recorded last year. Comps primarily benefited from increased customer traffic at all segments. Management remains particularly impressed with the performance of its largest division — Marmaxx. Notably, the second quarter marked the 16th straight period of higher customer traffic for both Marmaxx as well as the company as a whole.
Segment-wise, comps rose 3%, 6%, 4% and 7, respectively, in HomeGoods, TJX Canada, TJX International and Marmaxx segments.
Gross margin rose 0.4 percentage point (pp) to 28.9%. The upside was backed by favorable year-over-year comparison associated with TJX Companies’ inventory hedges.
Selling, general and administrative costs as a percentage of sales increased 0.4 pp to 18.2%, accountable to IT restructuring expenses and anticipated rise in wage costs.
Other Financial Updates
The company ended the quarter with cash and cash equivalents of $2,872.7 million, long-term debt of $2,232.1 million and total shareholders’ equity of $5,227.1 million. Cash flow from operations for the first half of fiscal 2019 was $1,560.7 million.
Consolidated inventories on a per-store basis (including distribution centers and excluding e-commerce and inventory in transit) increased 5% (up 6% on a constant currency basis) year over year. The company remains well placed to take advantage of solid opportunities in the market for branded merchandise, given its impressive inventory and liquidity position.
During the quarter, the company returned approximately $844 million to shareholders. As part of this, TJX Companies repurchased 6.4 million shares for $600 million and paid dividends worth $244 million. In first-half fiscal 2019, TJX Companies repurchased 11.3 million shares for $1.0 billion, while it paid dividends worth nearly $441 million.
For fiscal 2019, the company expects to repurchase shares worth approximately $2.5-$3.0 billion.
During the quarter, the company added 53 stores, taking its total store count to 4,194 stores as of Aug 4, 2018.
Fiscal 2019 Guidance
Management remains impressed with its solid earnings and comps performance, which continued to be driven by robust customer traffic and successful implementation of the company’s off-price fundamentals. Markedly, the company’s apparel business performed exceptionally well. Well, consumers’ favorable response to TJX Companies’ impressive brand portfolio and consistent rise in customer traffic keep management encouraged about witnessing continued market share gains.
The company further stated that it commenced the third quarter on a strong note, which along with a stellar second-quarter show led to raised comps and full-year earnings guidance.
Consolidated comps are now expected to grow 3-4% in fiscal 2019, up from 1-2% projected earlier. Management also expects Marmaxx to witness comps growth of 3-4%.
For fiscal 2019, TJX Companies now projects adjusted earnings per share in the range of $4.10-$4.14, representing 6-8% increase from the year-ago period. Earlier, management expected the bottom line to be in the range of $4.04-$4.10, representing 5-6% increase from the year-ago period.
Including benefits from tax-reforms, earnings are anticipated to grow 20-21% to $4.83-$4.88 per share. Prior to this, management anticipated earnings to rise 18-20% to $4.75-$4.83 per share.
However, wage increases are still expected to negatively impact earnings growth by 2%.
Q3 View
The company expects consolidated comps growth of 2-3% in the third quarter. Marmaxx division is expected to post comps growth of 3-4%.
For third-quarter fiscal 2019, the company expects adjusted earnings in the range of $1.00-$1.02 per share compared with $1.00 recorded in the year-ago period. Including benefits from tax reforms, earnings are expected to come in the range of $1.18-$1.20 per share. Currency movements are likely to hurt bottom-line growth by roughly 4%, while wage increases are expected to hurt the same by an additional 2%.
Dollar Tree (DLTR - Free Report) with a Zacks Rank #2 has a long-term earnings per share growth rate of 15%.
Target (TGT - Free Report) , also with a Zacks Rank #2, has long-term earnings per share growth rate of 5.3%.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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Robust Traffic Aids TJX Companies (TJX) Q2 Earnings, View Up
The TJX Companies, Inc. (TJX - Free Report) raised its guidance for fiscal 2019, after posting solid results for the second quarter. During the quarter, both earnings and revenues improved year over year on the back of continued improvements in customer traffic.
We note this Zacks Rank #2 (Buy) stock has gained 34.2% in the past six months, while the industry rallied 17.6%.
Quarterly Details
The company’s earnings came in at $1.17 per share compared with 85 cents recorded in the year-ago period. Excluding a benefit from 2017 Tax Cuts and Jobs Act, earnings came in at 99 cents per share. The Zacks Consensus Estimate was pegged at $1.05.
The TJX Companies, Inc. Price, Consensus and EPS Surprise
The TJX Companies, Inc. Price, Consensus and EPS Surprise | The TJX Companies, Inc. Quote
Net sales advanced about 12% year over year to $9,331.1 million, which beat the Zacks Consensus Estimate of $9,030 million. Sales were backed by solid comparable store sales (comps), which continued to gain strength from solid customer traffic across all segments. Also, net sales growth included a 1% positive impact from favorable currency movements.
TJX Companies' consolidated comps grew 6% year over year, up from 3% growth recorded last year. Comps primarily benefited from increased customer traffic at all segments. Management remains particularly impressed with the performance of its largest division — Marmaxx. Notably, the second quarter marked the 16th straight period of higher customer traffic for both Marmaxx as well as the company as a whole.
Segment-wise, comps rose 3%, 6%, 4% and 7, respectively, in HomeGoods, TJX Canada, TJX International and Marmaxx segments.
Gross margin rose 0.4 percentage point (pp) to 28.9%. The upside was backed by favorable year-over-year comparison associated with TJX Companies’ inventory hedges.
Selling, general and administrative costs as a percentage of sales increased 0.4 pp to 18.2%, accountable to IT restructuring expenses and anticipated rise in wage costs.
Other Financial Updates
The company ended the quarter with cash and cash equivalents of $2,872.7 million, long-term debt of $2,232.1 million and total shareholders’ equity of $5,227.1 million. Cash flow from operations for the first half of fiscal 2019 was $1,560.7 million.
Consolidated inventories on a per-store basis (including distribution centers and excluding e-commerce and inventory in transit) increased 5% (up 6% on a constant currency basis) year over year. The company remains well placed to take advantage of solid opportunities in the market for branded merchandise, given its impressive inventory and liquidity position.
During the quarter, the company returned approximately $844 million to shareholders. As part of this, TJX Companies repurchased 6.4 million shares for $600 million and paid dividends worth $244 million. In first-half fiscal 2019, TJX Companies repurchased 11.3 million shares for $1.0 billion, while it paid dividends worth nearly $441 million.
For fiscal 2019, the company expects to repurchase shares worth approximately $2.5-$3.0 billion.
During the quarter, the company added 53 stores, taking its total store count to 4,194 stores as of Aug 4, 2018.
Fiscal 2019 Guidance
Management remains impressed with its solid earnings and comps performance, which continued to be driven by robust customer traffic and successful implementation of the company’s off-price fundamentals. Markedly, the company’s apparel business performed exceptionally well. Well, consumers’ favorable response to TJX Companies’ impressive brand portfolio and consistent rise in customer traffic keep management encouraged about witnessing continued market share gains.
The company further stated that it commenced the third quarter on a strong note, which along with a stellar second-quarter show led to raised comps and full-year earnings guidance.
Consolidated comps are now expected to grow 3-4% in fiscal 2019, up from 1-2% projected earlier. Management also expects Marmaxx to witness comps growth of 3-4%.
For fiscal 2019, TJX Companies now projects adjusted earnings per share in the range of $4.10-$4.14, representing 6-8% increase from the year-ago period. Earlier, management expected the bottom line to be in the range of $4.04-$4.10, representing 5-6% increase from the year-ago period.
Including benefits from tax-reforms, earnings are anticipated to grow 20-21% to $4.83-$4.88 per share. Prior to this, management anticipated earnings to rise 18-20% to $4.75-$4.83 per share.
However, wage increases are still expected to negatively impact earnings growth by 2%.
Q3 View
The company expects consolidated comps growth of 2-3% in the third quarter. Marmaxx division is expected to post comps growth of 3-4%.
For third-quarter fiscal 2019, the company expects adjusted earnings in the range of $1.00-$1.02 per share compared with $1.00 recorded in the year-ago period. Including benefits from tax reforms, earnings are expected to come in the range of $1.18-$1.20 per share. Currency movements are likely to hurt bottom-line growth by roughly 4%, while wage increases are expected to hurt the same by an additional 2%.
Looking for More? Check These Solid Retail Bets
Big Lots (BIG - Free Report) has long-term earnings per share growth rate of 12%. The stock carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Dollar Tree (DLTR - Free Report) with a Zacks Rank #2 has a long-term earnings per share growth rate of 15%.
Target (TGT - Free Report) , also with a Zacks Rank #2, has long-term earnings per share growth rate of 5.3%.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>