The outbreak of the novel coronavirus compelled the renowned off-price retailer, The TJX Companies, Inc. TJX, to announce store closures across the United States, Canada, Europe, and Australia. The shutdown, which is scheduled to last for two weeks, will be effective from today. Earlier, TJX Companies had announced closures of stores in various regions including Germany, Poland, Austria, Ireland, Netherlands as well as various shops in the United States and Canada.
Moreover, management stated that the company’s online businesses via tjmaxx.com, marshalls.com and sierra.com are going to be non-operational due to the recent coronavirus outbreak. Also, TJX Companies’ distribution centers along with offices will be shut down temporarily. The company will continue to make payments to its store, distribution centers and office associates for the abovementioned period.
The company withdrew its recently-provided guidance for the first quarter and fiscal 2021 considering the current situation and its unpredictable impact on results. During fourth-quarter earnings call, management projected earnings per share (EPS) in the range of $2.77-$2.83 for fiscal 2021. The figure indicated growth of 4-6% from $2.67 per share reported in the year-ago quarter. Further, it had expected consolidated and Marmaxx comps growth in the range of 2-3% during the same time period.
For the first quarter, the company had anticipated earnings in the band of 59-60 cents per share. The projected figure suggested a rise from 57 cents reported in the year-ago quarter. TJX Companies had projected consolidated comps growth of 2-3% for the quarter. It had anticipated comps at Marmaxx to increase in the same range. However, the company has withdrawn these forecasts and refrained from providing any update on the same.
Also, retailers such as Kohl’s Corporation KSS, Abercrombie & Fitch ANF, Nordstrom JWN and American Eagle Outfitters withdrew their initial guidance and closed stores due to rising concerns related to the COVID-19 pandemic. Companies are bearing the brunt of supply-chain bottlenecks due to travel restrictions imposed to contain the spread of the deadly virus. The outbreak has caused people in most cities to stay indoors, which lowered store traffic.
Coming back to TJX Companies, in an attempt to strengthen its financial position amid the crisis, the company has undertaken a number of measures including drawing down $1 billion from its revolving credit facilities as well as terminating the share repurchase program. Moreover, management is evaluating its dividend and reassessing all operating expenses. Also, TJX Companies will reduce its capital expenses.
We note that shares of this Zacks Rank #3 (Neutral) company have lost 24.6% in the past six months compared with the industry’s decline of 12.3%. You can see the complete list of today’s Zacks #1 Rank stocks here.
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