TJX Companies Impresses Investors in 2Q16, Raises Outlook
Earnings in 2Q16
TJX Companies (TJX) delivered strong earnings in the second quarter of fiscal 2016 that ended on August 1, 2015. The company’s 2Q16 adjusted EPS (earnings per share) came in at $0.80. It was ahead of the consensus Wall Street analyst earnings estimate of $0.76 per share.
The company’s adjusted EPS, which excludes one-time items, increased by 6.7% in 2Q16 from the corresponding quarter of the previous year. Greater sales are the main reason for the increase.
Adjusted EPS in the second quarter of the previous fiscal year excluded the impact of a $16.8 million debt extinguishment charge. The company finished ahead of analyst expectations in 1Q16 also. The company’s adjusted EPS in the first half of fiscal 2016 increased by 7.2% to $1.49.
Earnings above management’s guidance
TJX Companies’ 2Q16 earnings came in ahead of the company’s own expectations. In May 2015, the company stated that it expected diluted EPS to be in the range of $0.72 to $0.74. This guidance included a 9% estimated reduction due to investments in associates, growth investments, and higher pension costs. In the end, however, the actual impact of these factors on 2Q16 earnings was only 5%, mainly due to lower-than-expected currency headwinds.
How was the quarter for TJX peers?
Off-price retailer Ross Stores (ROST) reported a 12.5% rise in its second-quarter adjusted EPS, driven by greater sales.
Nordstrom (JWN), which operates high-end full-line stores as well as Rack off-price stores, reported a 2.1% decline in its 2Q15 adjusted EPS. Meanwhile, the upscale department store managed to beat analysts’ earnings estimates.
Macy’s (M) reported a 20% decline in its second-quarter adjusted EPS due to fewer sales and more growth investments. Macy’s growth investments are directed toward its off-price business, expansion of the beauty business, and its omnichannel strategies.
TJX Companies, along with Ross Stores, Nordstrom, and Macy’s, account for 2.7% of the portfolio holdings of the iShares Global Consumer Discretionary ETF (RXI). These four companies also constitute about 4.4% of the SPDR S&P Retail ETF (XRT).
For a detailed business overview of TJX Companies, read TJX Companies: A Tour of the Retail Powerhouse.
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