TJX Cos. on Tuesday joined Target, Kohl’s and Best Buy in issuing holiday guidance that disappointed analysts amid strong third quarter sales.
The off-price giant reported that net income for the quarter ended Nov. 3 climbed 19% to $762 million, and diluted earnings per share of 61 cents. Excluding a nine cents benefit due to items related to the 2017 Tax Cuts and Jobs Act and a $.02 negative impact from a pension settlement charge adjusted diluted earnings per share for the third quarter were 54 cents. Analysts had expected earnings per share of 61 cents.
Net sales increased 12% to a better-than-expected $9.8 billion. Consolidated same-store sales rose 7%, easily topping analysts’ estimates, driven by strong customer traffic at every division. By brand, same-store sales rose 9% at Marmaxx, 7% at HomeGoods, 5% at TJX Canada and 3% at TJX International.
Analyst Neil Saunders, managing director of GLobalData Retail, described TJX’s third quarter results as stellar, with “excellent gains on both the top and bottom lines.”
“Within the US, the company continues to grow at a rapid clip and is adding significant market share across both the home and apparel categories,” he said. “On the bottom line, net income is up by almost 19% which is a good outcome considering the company was hit with a $36 million pension charge this quarter.” For more analysis, click here.
TJX posted gross margin of 28.9%, which missed analysts’ estimates of 29.2%, amid higher freight costs and supply chain expenses. The retailer expects margins to continue to be an issue in the next quarter.
For the fourth quarter, TJX expects earnings per share in the range of 66 cents to 67 cents, and adjusted earnings per share in the range of 56 cents to 57 cents. Analysts were expecting earnings per share of 71 cents.
As of November 3, 2018, the company operated a total of 4,296 stores in nine countries, the United States, Canada, the United Kingdom, Ireland, Germany, Poland, Austria, the Netherlands, and Australia, and three e-commerce sites. These include 1,247 T.J. Maxx, 1,091 Marshalls, 745 HomeGoods, 35 Sierra Trading Post, and 16 Homesense stores in the United States; 271 Winners, 125 HomeSense, and 88 Marshalls stores in Canada; 566 T.K. Maxx and 68 Homesense stores; 44 T.K. Maxx stores in Australia and a number of e-commerce websites.