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TJX Companies Q1 Profit Matches View, But Outlook Disappoints


Off-price retailer TJX Companies, Inc. (TJX) on Tuesday reported an 8 percent increase in profit for the first quarter, reflecting higher revenues and improved merchandise margins. Revenues beat analysts' expectations, while earnings per share matched their estimates.

Looking ahead, the company provided earnings guidance for the second quarter and raised the lower end of its fiscal 2014 earnings range, but both below Street view.

Framingham, Massachusetts-based TJX Companies' net income for the first quarter was $452.89 million or $0.62 per share, up from $419.20 million or $0.55 per share in the prior-year quarter. On average, 25 analysts polled by Thomson Reuters expected the company to report earnings of $0.62 per share for the quarter.

Total net sales for the quarter increased 7 percent to $6.19 billion from $5.80 billion in the year-ago period and beat analysts' consensus estimate of $6.16 billion.

Consolidated comparable store sales for the quarter rose 2 percent, compared to an 8 percent increase in the same period last year.

Carol Meyrowitz, CEO of TJX Companies, said, "We believe the flexibility of our business model allowed us to achieve this growth despite the unfavorable weather patterns across most of our regions for much of the quarter. Flowing the right merchandise at the right time continued to be key to strong merchandise margins."

Within the company's U.S. segment, Marmaxx sales increased 6 percent from the year-ago period to $4.14 billion and sales of HomeGoods rose 16 percent to $689.53 million. Comparable store sales increased 1 percent at Marmaxx and rose 7 percent at HomeGoods.

In the International segment, sales in Canada edged up 1 percent to $645.50 million and sales in Europe grew 7 percent to $718.83 million. However, comparable store sales declined 1 percent at TJX Canada and grew 4 percent at TJX Europe, both on a constant currency basis.

The company's gross profit margin expanded 0.2 percentage points to 28.4 percent, reflecting merchandise margin improvement.

Looking ahead to the second quarter, TJX forecasts earnings in a range of $0.61 to $0.63 per share, representing an increase of 9 percent to 13 percent over earnings of $0.56 per share in the year-ago period. The outlook is based on estimated consolidated comparable store sales growth of 2 percent to 3 percent. Analysts expect the company to report earnings of $0.64 per share for the quarter.

Meyrowitz said, "The second quarter is off to a strong start and we are in an excellent position to buy into the enormous opportunities for quality merchandise that we are seeing in the marketplace. Longer term, we remain very confident in our continued ability to grow sales and profitability as we are well on the road to being a $40 billion-plus company!"

For fiscal 2014, TJX now projects earnings in a range of $2.70 to $2.78 per share, compared to the prior range of $2.66 to $2.78 per share. The company reported adjusted earnings of $2.47 per share in the previous year. Wall Street is currently looking for full-year earnings of $2.82 per share.

The company affirmed its outlook for full-year consolidated comparable store sales growth of 1 to 2 percent.

TJX continues to expect to repurchase about $1.3 billion to $1.4 billion of the company's stock in fiscal 2014. However, the company may adjust the amount of this spending up or down depending on various factors.

In Tuesday's regular trading session, TJX is trading at $50.95, down $0.40 or 0.78 percent on a volume of 1.38 million shares.

by RTTNews Staff Writer

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