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The TJX Companies, Inc. adjusted earnings of 82 cents per share in the fourth quarter of fiscal 2013 was ahead of the Zacks Consensus Estimate by a penny. However, the reported earnings increased 32% from the year-ago quarter.

The earnings upside was fueled by higher consumer traffic on the back of fresh stocks in the stores and solid comparable-store sales growth for consecutive months.

Quarterly Details

Total net sales of this leading off-price retailer grew 15.0% year over year to $7.7 billion in the reported quarter, driven by solid growth in consolidated comparable store sales. Net sales beat the Zacks Consensus Estimate of $7.6 billion.

TJX Companies' consolidated comparable store sales excluding the extra week in 2013 increased 4.0% in the quarter, driven by same-store sales growth of 4% at Marmaxx, 5% at Home Goods, 7% at TJX Europe and 3% at TJX Canada.

Comparable store sales growth exceeded management’s expectations on the back of strong performance in all the stores in the U.S., Canada and Europe. Further, well-chosen stocks at the stores improved customer traffic during the period.

TJX Companies’ gross margin expanded 1.4 percentage points from the prior-year quarter to 28.6%.  The margin expansion was mostly driven by increased merchandise sales margin.

Selling, general and administrative costs as a percentage of sales increased 0.2 percentage point year on year to 16.0% in the third quarter, driven by expense leverage.

Share Repurchase

During the fourth quarter, the company spent a total of $350 million to repurchase TJX stock, retiring 8.1 million shares.

Outlook

For the fiscal 2014, the company expects diluted EPS to be in the range of $2.66 to $2.78. The Zacks Consensus Estimate for fiscal 2014 is $2.81, higher than the company’s guidance range.

For the first quarter of 2014, the company expects diluted earnings per share to be in the range of 59 cents to 62 cents

Saks currently holds a Zacks Rank #2 (Buy). Other stocks in the retail and wholesale sector worth considering include New York & Company Inc. with a Zacks Rank #2 (Buy), Abercrombie & Fitch Company with a Zacks Rank #2 (Buy) and Gap Inc. also with a Zacks Rank #2 (Buy).

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