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TJX's 1Q14 Earnings Meet Estimates

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The TJX Companies, Inc. ’s (TJX - Free Report) adjusted earnings of 62 cents per share in the first quarter of fiscal 2014 were ahead of the year ago quarter by 13%. Earnings were in line with the higher end of management’s guidance range of 60 cents to 62 cents and with the Zacks Consensus Estimate.

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 7.0% year over year to $6.2 billion in the reported quarter. Net sales were roughly in line with the Zacks Consensus Estimate.

TJX Companies' consolidated comparable store sales increased 2.0% in the quarter compared to an 8% increase in the comparable year ago quarter. The same store sales growth were driven by same-store sales growth of 1% at Marmaxx, 7% at Home Goods, 4% at TJX Europe. The growth however, was partly offset by a 1% decline at TJX Canada.

Comparable-store sales grew on the back of strong customer traffic driven by well-chosen stocks at the stores.

TJX Companies’ gross margin expanded 0.2 percentage points (pp) from the prior-year quarter to 28.4%. The margin expansion was mostly driven by increased merchandise sales margin.

Selling, general and administrative costs as a percentage of sales increased 0.3 pp year on year to 16.5% in the first quarter, driven by increased marketing spending and the impact of the company’s e-commerce businesses.

Share Repurchase

During the first quarter 2013, the company spent a total of $300 million to repurchase 6.5 million common shares.


For the fiscal 2014, the company narrowed its outlook and now expects EPS in the range of $2.70 to $2.78 compared to a range of $2.66 to $2.78 announced previously. The Zacks Consensus Estimate for fiscal 2014 is $2.82, higher than the company’s guidance range.

For the second quarter of 2014, the company expects earnings per share in the range of 61 cents to 63 cents. The Zacks Consensus Estimate for second quarter is pegged at 64 cents.

TJX currently holds a Zacks Rank #2 (Buy). Other stocks in the retail and wholesale sector worth considering include Stein Mart Inc. with a Zacks Rank #1 (Strong Buy), The Gap Inc. (GPS - Free Report) with a Zacks Rank #2 (Buy) and The Buckle Inc. (BKE - Free Report) also with a Zacks Rank #2 (Buy).

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