TJX Q3 Profit Rises, Tops View; Lifts Q4, FY10 Earnings Outlook - Update
(RTTNews) - Off-price retailer The TJX Companies, Inc. (TJX | Quote | Chart | News | PowerRating) on Tuesday reported a sharp rise in profit for the third quarter, driven by a significant increase in comparable store sales and accelerated customer traffic amid the challenging economic environment. Both earnings and revenues came in ahead of analysts' consensus estimate. TJX also lifted its fourth quarter and fiscal year 2010 earnings outlook, buoyed by strong business momentum and confidence into future trends. Meanwhile, shares of TJX dropped in morning trade on the New York Stock Exchange.
For the third quarter, the Framingham, Massachusetts-based company's net income rose to $347.80 million or $0.81 per share from $235.85 million or $0.54 per share in the year-ago quarter.
Income from continuing operations for the quarter increased to $347.80 million or $0.81 per share from $254.12 million or $0.58 per share in the same quarter last year.
Excluding one-time items, earnings per share for the quarter increased 42% to $0.81 from $0.57 last year. Additionally, the overall net impact of foreign currency translation increased third quarter earnings by $0.02 per share compared to a favorable $0.05 per share impact last year.
On average, 18 analysts polled by Thomson Reuters expected the company to earn $0.80 per share for the quarter. Analysts' estimates typically exclude one-time charges and gains.
In the sequentially preceding quarter, TJX Companies net income rose to $261.60 million or $0.61 per share from $200.22 million or $0.45 per share in the year-ago second quarter. Income from continuing operations for the second quarter increased to $261.60 million or $0.61 per share from $212.10 million or $0.48 per share in the same quarter last year.
Total sales for the recent third quarter increased 10% to $5.24 billion from $4.76 billion in the year-ago quarter. The company's consolidated comparable store sales increased 7%, compared to a rise of 1% last year. Street analysts expected revenues of $5.25 billion for the quarter.
Business segment wise, within the U.S., Marmaxx, generated net sales of $3.38 billion for the quarter, up from last year's $3.06 billion, while HomeGoods sales rose to $452 million from $383 million last year. A.J. Wright posted net sales of $198 million, up from previous year's $164 million.
Sales in Canada increased to $611 million from $577 million in the prior-year quarter, while sales in Europe climbed to $603 million from $580 million in the year-ago quarter.
The operator of such retail chains as T.J. Maxx, Marshalls, and HomeGoods said foreign currency had a significant adverse impact on the year-over-year growth in segment profit and segment profit margins at its TJX Europe and TJX Canada businesses.
For the preceding second quarter, net sales rose 4% to $5.00 billion from $4.55 billion in the same quarter last year, while consolidated comparable store sales increased 4% from last year.
Gross profit margin for the third quarter under review was 27.5%, up 1.8 percentage points from the prior year quarter, primarily due to strong merchandise margins. Selling, general and administrative costs as a percent of sales for the quarter were 16.5%, down 0.5 percentage points from last year.
As at October 31, 2009, total inventories were essentially flat at $3.3 billion with prior-year quarter. The company indicated spending a total of $304 million in repurchases of TJX stock in the quarter, retiring 8.2 million shares, and continues to expect to repurchase nearly $625 million of its stock in fiscal 2010.
During the third quarter, TJX added a total of 57 stores. The company currently operates 889 T.J. Maxx, 820 Marshalls, 324 HomeGoods, and 148 A.J. Wright stores in the United States. In Canada, the company operates 208 Winners, 79 HomeSense and 3 STYLESENSE stores, and in Europe, 262 T.K. Maxx and 14 HomeSense stores.
Carol Meyrowitz, President and Chief Executive Officer of the company, said, "We are pleased to see the strong momentum in our business continue despite the challenging economic environment. We achieved record third quarter results, driven by significant increases in comparable store sales and customer traffic that have continued to accelerate."
During an economic downturn, many cash-strapped consumers gravitate toward stores that are perceived as offering the best value. In this recession, TJX seems to be a beneficiary of this trend. Still, analysts caution that the outlook for the holiday season remains uncertain as consumer confidence has declined and the unemployment rate has edged up.
Looking forward to the fourth quarter, TJX now expects earnings from continuing operations in a range of $0.65 - $0.71 per share, higher than earlier issued forecast of $0.60 -$0.66 per share, based upon estimated consolidated comparable store sales growth of 5% to 7%. This compares to earnings of $0.58 per share from continuing operations reported in the fourth quarter last year.
The estimates reflect an expected benefit from foreign currency exchange rates of $0.02 per share, compared with a negative impact of $0.04 per share last year.
Analysts polled by Thomson Reuters currently expect the company to earn $0.71 per share for the fourth quarter.
For the fiscal year 2010, TJX now expects earnings from continuing operations in a range of $2.55 - $2.61 per share, compared to earlier issued forecast of $2.26 - $2.38 per share, based upon estimated consolidated comparable store sales growth of nearly 5% for the full year. This compares to earnings of $2.08 per share from continuing operations reported a year earlier.
The fiscal 2010 range above reflects an expected total negative impact of $0.02 per share from foreign currency exchange rates compared with a $0.01 per share benefit last year.
Nineteen analysts on consensus currently expect the company to earn $2.59 per share for the full year.
Amongst others in the sector, Cincinnati, Ohio-based department stores operator Macy's, Inc. (M | Quote | Chart | News | PowerRating), on November 11, reported a narrower loss for the third quarter, reflecting strong sales at Bloomingdale's and "outstanding growth" in its Internet businesses. In addition, the company hiked its full year outlook, but issued a much lower-than-expected earnings guidance for the fourth quarter.
New York-based Macy's third-quarter net loss narrowed to $35 million or $0.08 per share from a loss of $44 million or $0.10 per share last year, while excluding items, loss was $0.03 per share compared to a loss of $0.08 last year. Macy's quarterly net sales declined 3.9% to $5.28 billion from $5.49 billion a year earlier, with same-store sales decrease of 3.6%.
TJX is currently trading at $38.54, down $0.98 or 2.48%, on a volume of 1.34 million shares on the NYSE. In the past 52 weeks, the stock trended in a broad range of $17.80 - $40.64, with a three-month average volume of 4.80 million shares.
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Copyright(c) 2009 RTTNews.com, Inc. All Rights Reserved
For the third quarter, the Framingham, Massachusetts-based company's net income rose to $347.80 million or $0.81 per share from $235.85 million or $0.54 per share in the year-ago quarter.
Income from continuing operations for the quarter increased to $347.80 million or $0.81 per share from $254.12 million or $0.58 per share in the same quarter last year.
Excluding one-time items, earnings per share for the quarter increased 42% to $0.81 from $0.57 last year. Additionally, the overall net impact of foreign currency translation increased third quarter earnings by $0.02 per share compared to a favorable $0.05 per share impact last year.
On average, 18 analysts polled by Thomson Reuters expected the company to earn $0.80 per share for the quarter. Analysts' estimates typically exclude one-time charges and gains.
In the sequentially preceding quarter, TJX Companies net income rose to $261.60 million or $0.61 per share from $200.22 million or $0.45 per share in the year-ago second quarter. Income from continuing operations for the second quarter increased to $261.60 million or $0.61 per share from $212.10 million or $0.48 per share in the same quarter last year.
Total sales for the recent third quarter increased 10% to $5.24 billion from $4.76 billion in the year-ago quarter. The company's consolidated comparable store sales increased 7%, compared to a rise of 1% last year. Street analysts expected revenues of $5.25 billion for the quarter.
Business segment wise, within the U.S., Marmaxx, generated net sales of $3.38 billion for the quarter, up from last year's $3.06 billion, while HomeGoods sales rose to $452 million from $383 million last year. A.J. Wright posted net sales of $198 million, up from previous year's $164 million.
Sales in Canada increased to $611 million from $577 million in the prior-year quarter, while sales in Europe climbed to $603 million from $580 million in the year-ago quarter.
The operator of such retail chains as T.J. Maxx, Marshalls, and HomeGoods said foreign currency had a significant adverse impact on the year-over-year growth in segment profit and segment profit margins at its TJX Europe and TJX Canada businesses.
For the preceding second quarter, net sales rose 4% to $5.00 billion from $4.55 billion in the same quarter last year, while consolidated comparable store sales increased 4% from last year.
Gross profit margin for the third quarter under review was 27.5%, up 1.8 percentage points from the prior year quarter, primarily due to strong merchandise margins. Selling, general and administrative costs as a percent of sales for the quarter were 16.5%, down 0.5 percentage points from last year.
As at October 31, 2009, total inventories were essentially flat at $3.3 billion with prior-year quarter. The company indicated spending a total of $304 million in repurchases of TJX stock in the quarter, retiring 8.2 million shares, and continues to expect to repurchase nearly $625 million of its stock in fiscal 2010.
During the third quarter, TJX added a total of 57 stores. The company currently operates 889 T.J. Maxx, 820 Marshalls, 324 HomeGoods, and 148 A.J. Wright stores in the United States. In Canada, the company operates 208 Winners, 79 HomeSense and 3 STYLESENSE stores, and in Europe, 262 T.K. Maxx and 14 HomeSense stores.
Carol Meyrowitz, President and Chief Executive Officer of the company, said, "We are pleased to see the strong momentum in our business continue despite the challenging economic environment. We achieved record third quarter results, driven by significant increases in comparable store sales and customer traffic that have continued to accelerate."
During an economic downturn, many cash-strapped consumers gravitate toward stores that are perceived as offering the best value. In this recession, TJX seems to be a beneficiary of this trend. Still, analysts caution that the outlook for the holiday season remains uncertain as consumer confidence has declined and the unemployment rate has edged up.
Looking forward to the fourth quarter, TJX now expects earnings from continuing operations in a range of $0.65 - $0.71 per share, higher than earlier issued forecast of $0.60 -$0.66 per share, based upon estimated consolidated comparable store sales growth of 5% to 7%. This compares to earnings of $0.58 per share from continuing operations reported in the fourth quarter last year.
The estimates reflect an expected benefit from foreign currency exchange rates of $0.02 per share, compared with a negative impact of $0.04 per share last year.
Analysts polled by Thomson Reuters currently expect the company to earn $0.71 per share for the fourth quarter.
For the fiscal year 2010, TJX now expects earnings from continuing operations in a range of $2.55 - $2.61 per share, compared to earlier issued forecast of $2.26 - $2.38 per share, based upon estimated consolidated comparable store sales growth of nearly 5% for the full year. This compares to earnings of $2.08 per share from continuing operations reported a year earlier.
The fiscal 2010 range above reflects an expected total negative impact of $0.02 per share from foreign currency exchange rates compared with a $0.01 per share benefit last year.
Nineteen analysts on consensus currently expect the company to earn $2.59 per share for the full year.
Amongst others in the sector, Cincinnati, Ohio-based department stores operator Macy's, Inc. (M | Quote | Chart | News | PowerRating), on November 11, reported a narrower loss for the third quarter, reflecting strong sales at Bloomingdale's and "outstanding growth" in its Internet businesses. In addition, the company hiked its full year outlook, but issued a much lower-than-expected earnings guidance for the fourth quarter.
New York-based Macy's third-quarter net loss narrowed to $35 million or $0.08 per share from a loss of $44 million or $0.10 per share last year, while excluding items, loss was $0.03 per share compared to a loss of $0.08 last year. Macy's quarterly net sales declined 3.9% to $5.28 billion from $5.49 billion a year earlier, with same-store sales decrease of 3.6%.
TJX is currently trading at $38.54, down $0.98 or 2.48%, on a volume of 1.34 million shares on the NYSE. In the past 52 weeks, the stock trended in a broad range of $17.80 - $40.64, with a three-month average volume of 4.80 million shares.
For comments and feedback: contact editorial@rttnews.com
Copyright(c) 2009 RTTNews.com, Inc. All Rights Reserved
For full details on Macy's Inc (M) M. Macy's Inc (M) has Short Term PowerRatings at TradingMarkets. Details on Macy's Inc (M) Short Term PowerRatings is available at This Link.
For full details on Tjx Companies Inc (TJX) TJX. Tjx Companies Inc (TJX) has Short Term PowerRatings at TradingMarkets. Details on Tjx Companies Inc (TJX) Short Term PowerRatings is available at This Link.
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