Off-price retailer TJX Companies, Inc. (TJX) reported Tuesday a 58% year-over-year rise in profit for the first quarter, driven by higher comparable store sales as customers continued to seek out bargains.
Earnings per share for the quarter surged 63% and topped analysts' expectations by two cents, with revenues also beating consensus estimate.
TJX also provided earnings guidance for the second quarter, in line with view, and boosted its earnings forecast for the full-year 2011.
In a statement, president and chief executive officer, Carol Meyrowitz said, "I am very pleased with our first quarter results, which underscore our ability to deliver consistent profitable growth. Our 9% consolidated comparable store sales increase and 63% increase in earnings per share far exceeded our expectations for the quarter. The momentum in our business was driven by continued increases in customer traffic, reinforcing the appeal of our great values and indicating to us that consumers will remain focused on value in both weak and strong economic environments."
First-Quarter Results
The Framingham, Massachusetts-based company reported net income of $331.43 million or $0.80 per share for the first quarter, higher than $209.21 million or $0.49 per share in the prior-year quarter.
On average, 21 analysts polled by Thomson Reuters expected the company to earn $0.78 per share for the first quarter. Analysts' estimates typically exclude one-time charges and gains.
The results for the latest quarter include a positive foreign currency exchange rates impact of $0.01 per share, while the year-ago quarter included negative foreign currency exchange rates impact of $0.02 per share.
Total net sales for the quarter increased 15% to $5.02 billion from $4.35 billion in the same quarter last year, and topped fifteen Wall Street analysts' consensus estimate of $4.95 billion.
The company noted that foreign currency exchange rates had a favorable three percentage-point impact on consolidated net sales for the latest quarter. The company's consolidated comparable store sales increased 9%, compared to a rise of 2% last year.
Segmental Details
Within the company's U.S. segment, Marmaxx sales for the first quarter rose to $3.28 billion from $2.94 billion in the prior-year quarter, and sales of HomeGoods totaled $457.06 million, up from last year's $391.90 million. Meanwhile, A.J. Wright sales increased to $211.38 million from previous year's $179.39 million. Comparable store sales at Masmaxx were up 10%, at HomeGoods it rose 15%, and it was up 7% at A.J. Wright.
In the International segment, sales in Canada increased to $555.00 million from $424.09 million in the prior-year quarter, and sales in Europe totaled $515.24 million, higher than $420.53 million in the year-ago quarter. Comparable store sales at TJX Canada increased 6% and at TJX Europe it grew 1%, both on a constant currency basis.
The operator of such retail chains as T.J. Maxx, Marshalls, and HomeGoods said foreign currency had a favorable impact on the year-over-year growth in segment profit and segment profit margins at its TJX Europe and TJX Canada businesses.
Other Metrics
Total segment profit for the first quarter climbed to $579.06 million from $379.68 million in the same quarter last year.
Gross profit margin for the first quarter expanded 250 basis points to 27.3% from last year, primarily due to strong merchandise margins as well as buying and occupancy expense leverage.
Selling, general and administrative expenses increased to $821.28 million from $34.78 million in the prior-year quarter, and it expanded 50 basis points as a percentage of net sales. Provision for income taxes were $204.87 million, up from $130.01 million in the year-ago quarter.
The company ended the first quarter with cash and cash equivalents of $1.83 billion, compared to $1.01 billion at end of the prior-year quarter.
As at end of the first quarter, total inventories were decline to $2.6 billion from 2.8 million at the end of the year-ago quarter. Consolidated inventories on a per-store basis, including the warehouses, were down 12%, compared to being down 4% at the end of the first quarter last year.
During the first quarter, the company spent a total of $234 million in repurchases of TJX stock, retiring 5.5 million shares, and continues to expect to repurchase nearly $900 million to $1 billion of TJX stock in Fiscal 2011.
During the first quarter, TJX added a total of 23 stores. The company currently operates 896 T.J. Maxx, 817 Marshalls, 325 HomeGoods, and 152 A.J. Wright stores in the U.S. at the end of the first quarter. In Canada, the company operates 211 Winners, and 79 HomeSense stores, and in Europe, it operates 272 T.K. Maxx and 14 HomeSense stores.
Early last month, the TJX board declared a 25% higher regular quarterly dividend of $0.15 per share, payable on June 3, to shareholders of record on May 13, 2010, as the company continues to balance growth investments in its businesses with cash distributions to its shareholders through the dividend and share repurchase programs.
Looking Ahead...
"Going forward, with our wide demographic reach, we are reinvesting in our stores and heightening our marketing campaigns to attract and retain more new customers, and we are sourcing new, exciting product in the marketplace. As always, we will run our business conservatively, with lean inventories as well as a focus on cost reduction initiatives. We have confidence in TJX sustaining strong top- and bottom-line performance as we grow as a global off-price value retailer," Meyrowitz added.
For the second quarter of fiscal 2011, TJX expects earnings in a range of $0.67 to $0.72 per share, based on estimated consolidated comparable store sales growth of about 2% to 4% and with currency exchange rates remaining at current levels. Analysts expect the company to report earnings of $0.72 per share for the second quarter.
For fiscal 2011, the company currently projects earnings in a range of $3.21 to $3.32 per share, up from the prior forecast of earnings from continuing operations in the range of $3.17 to $3.31 per share. The company also anticipates consolidated comparable store sales growth of about 2% to 3%. The Street is currently looking for full-year 2011 earnings of $3.35 per share.
Stock Quote
In Tuesday's regular trading session, TJX is currently trading at $44.03, down $1.22 or 2.70% on a volume of 5.12 million shares. In the past 52-week period, the stock has been trading in a broad range of $27.08 to $48.50.
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