The TJX Companies, Inc. TJX reported fourth-quarter fiscal 2017 results, wherein its net sales, comparable store sales (comps) as well as earnings exceeded expectations.
In the reported quarter, earnings of $1.03 per share surpassed the Zacks Consensus Estimate of $1.00. Further, earnings exceeded management’s guidance of 96–98 cents per share. Currency affected earnings negatively by 4 cents.
TJX Companies, Inc. (The) Price, Consensus and EPS Surprise
TJX Companies, Inc. (The) Price, Consensus and EPS Surprise | TJX Companies, Inc. (The) Quote
The bottom line grew 4% year over year, driven by higher consumer traffic and solid comps growth. Shares gained in the 6.7% in the pre-market trading.
Net sales increased 6% year over year to $9.5 billion, supported by higher comps. Additionally, the figure marginally beat the Zacks Consensus Estimate of $9.47 billion.
Consolidated comps for the fourth quarter increased 3%, over last year’s 6% increase, backed by higher comps at Marmaxx, HomeGoods and TJX Canada. Comps also exceeded management’s guidance of 1–2% growth. However, comps were flat in the International segment.
While TJX Canada comps grew 4% in the reported quarter, HomeGoods, Marmaxx and International comps increased 5%, 3% and 2%, respectively.
TJX Companies' adjusted pre-tax profit margin contracted 0.3 percentage points (pp) year over year to 11.6% of sales. Gross margin contracted 0.4 pp year over year to 28.3%. The downside can primarily be attributed to the company’s inventory hedges as well as incremental supply chain costs.
Fiscal 2017 earnings of $3.53 per share surpassed the Zacks Consensus Estimate of $3.50 by 4.6%. The bottom line grew 6% year over year, backed by higher consumer traffic and solid comps growth.
Net sales increased 7% year over year to $33.2 billion, supported by higher comps. Further, the figure marginally beat the Zacks Consensus Estimate of $33.18 billion.
Other Financial Updates
Cash and cash equivalents were $2.92 billion as of Jan 28, 2017 compared to $2.38 billion as of Oct 29, 2016, while long-term debt was $2.22 billion at the end of the fourth quarter, almost on par with previous quarter.
Moreover, in the reported quarter, the leading off-price retailer paid $2.4 billion to shareholders in fiscal 2017 through share repurchases and dividends.
TJX Companies also issued guidance for first-quarter fiscal 2017. The company expects earnings in the range of 76–78 cents per share compared with 76 cents reported a year ago. Wage increases are anticipated to negatively impact earnings growth by 3%. Moreover, currency headwinds are likely to hurt earnings by 6%.
For the fourth quarter, the company expects comps growth of 0–1% over last year’s strong 7% increase.
Fiscal 2018 Guidance
For fiscal 2018, TJX Companies now projects adjusted earnings per share in the range of $3.80–$3.89, up 5–7% from fiscal 2017 results. Comps are also expected to grow 4%, which is on the higher end of the previous guidance of 1–2% growth.
TJX Companies carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the retail sector are Zumiez, Inc. ZUMZ, Dollar Tree Inc. DLTR and Genesco Inc. GCO. All these stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
While Zumiez has an expected long-term earnings growth of 15.0%, Genesco and Dollar Tree has an expected earnings growth of 9.5% and 16.7%, respectively, for the next three to five years.
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