Post Earnings Coverage as The TJX Cos. Q3 Results Outperformed Estimates
Upcoming AWS Coverage on Dillard's, Inc. Post-Earnings Results
LONDON, UK / ACCESSWIRE / November 23, 2016 / Active Wall St. announces its post-earnings coverage on The TJX Companies, Inc. (NYSE: TJX). The company reported its financial results for the third quarter fiscal 2017 (Q3 FY17) on November 15, 2016. The Framingham, Massachusetts-based company reported a 7% y-o-y growth in its net sales, outperforming market consensus estimates. Register with us now for your free membership at:
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One of TJX Companies' competitors within the Department Stores space, Dillard's, Inc. (NYSE: DDS), reported on November 10, 2016, its third quarter results. AWS will be initiating a research report on Dillard's in the coming days.
Today, AWS is promoting its earnings coverage on TJX; touching on DDS. Get our free coverage by signing up to:
http://www.activewallst.com/registration-3/?symbol=TJX
http://www.activewallst.com/registration-3/?symbol=DDS
Earnings Reviewed
TJX reported net sales of $8.29 billion in Q3 FY17 which came in above the $7.75 billion recorded in Q3 FY16. Net sales numbers beat market forecasts of $8.27 billion. Consolidated comparable store sales improved 5% during the reported quarter, primarily driven by customer traffic.
The off-price apparel retailer's net income came in at $549.79 million, or $0.83 per diluted share, in Q3 FY17 compared to $587.26 million, or $0.86 per diluted share, in Q3 FY16. The company reported adjusted diluted earnings of $0.91 per diluted share in Q3 FY17 which was above the $0.86 per diluted share recorded in the prior year's quarter. Results also beat market expectations of $0.87 per diluted share.
During Q3 FY17, TJX increased its store count by 110 stores to a total of 3,785 stores. The company also increased square footage by 4% y-o-y.
Operating Metrics
In Q3 FY17, the company's gross margin improved to 29.5% of net sales, up 0.5% y-o-y, primarily due to a strong increase in merchandise margin and gains related to the inventory hedges. The company's selling, general, and administrative costs as a percent of sales for Q3 FY17 came in at 17.6%, up 0.9% from the prior year's ratio, primarily due to wage increases and investments to support growth. Additionally, the company reported consolidated pretax profit margin of 10.7% of net sales and adjusted pretax profit margin of 11.7% of net sales in Q3 FY17.
Segment Performance
During Q3 FY17, the company's Marmaxx (U.S.) segment sales grew to $5.25 billion from $4.93 billion in the previous year quarter. The division's comparable sales reported a 5% growth during the Q3 FY17 versus comparable sales growth of 3% in the year ago period.
TJX's HomeGoods (U.S.) segment contributed $1.08 billion to total sales in Q3 FY17 compared to $960 million in Q3 FY16. The segment's comparable sales growth was 6% above Q3 FY17 and Q3 FY16.
In the reported quarter, TJX Canada's net sales came in at $855 million with comparable store sales growth of 8%, versus net sales of $754 million and comparable store sales growth of 10% in the year ago period.
TJX International (Europe & Australia) net sales were down marginally to $1.11 billion in Q3 FY17. Furthermore, the divisions recorded comparable store sales growth of 5% in Q3 FY17.
Cash Flow and Balance Sheet
In the 39 weeks ended October 29, 2016, net cash provided by operating activities was $2.09 billion compared to $1.66 billion in the first three quarters of FY16. As on October 29, 2016, the company had $2.38 billion in cash and cash equivalents compared to a balance of $1.72 billion as on October 31, 2015. The company reported long-term debt of $2.23 billion in its books of accounts as on October 29, 2016, versus $1.61 billion as on October 31, 2015.
Total merchandise inventories as of October 29, 2016, stood at $4.38 billion compared to $4.44 billion at the end of the third quarter last year.
Dividends and Share Repurchases
On September 16, 2016, TJX's Board of Directors announced a quarterly dividend of $0.26 per share on its common stock. The dividend is payable on December 01, 2016, to shareholders of record at the close of business on November 10, 2016.
During Q3 FY17, the company returned $170 million to its shareholder in form of dividends and $400 million in form of share repurchases, buying back 5.2 million shares. In the first nine months of FY17, the company has paid dividend amounting to $482 million and has spent a total of $1.2 billion in repurchase of 15.4 million TJX's shares. Furthermore, the company intends to repurchase shares worth approximately $1.5 billion to $2.0 billion in FY17.
Earnings Outlook
In its guidance for Q4 FY17, TJX's expects diluted earnings to be in the range of $0.96 per share to $0.98 per share. For full-year FY17, the company anticipates GAAP diluted earnings to be in the range of $3.39 per share to $3.41 per share. Furthermore, the company raised its adjusted earnings guidance range to $3.46 per share to $3.48 per share from prior guidance of $3.39 per share to $3.43 per share.
Stock Performance
On Tuesday, the stock closed the trading session at $79.31, climbing 2.11% from its previous closing price of $77.67. A total volume of 5.49 million shares have exchanged hands, which was higher than the 3-month average volume of 3.32 million shares. TJX Cos' stock price advanced 7.30% in the last month, 6.01% in the past six months, and 13.84% in the previous twelve months. Furthermore, since the start of the year, shares of the company have gained 13.33%. The stock is trading at a PE ratio of 23.03 and has a dividend yield of 1.31%.
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