TJX Cos. reported a “strong start” to the holiday shopping season on Wednesday, but shares fell after the fast-growing retailer issued advice that appeared to undermine Wall Street.
TJX easily beat Wall Street expectations during its fiscal third quarter, but expects holiday quarter earnings per share to be between $1.12 and $1.14, behind expectations of $1.18, according to LSEG.
Here's how TJX performed compared to what Wall Street expected, based on a survey of analysts by LSEG:
- Earnings per share: $1.14 vs. $1.09 expected
- Gain: $14.06 billion versus $13.95 billion expected
The company's reported net income for the three-month period ended Nov. 2 was $1.30 billion, or $1.14 per share, compared to $1.19 billion, or $1.03 per share, a year earlier.
Revenue rose to $14.06 billion, up about 6% from $13.27 billion a year earlier.
“Across the company, customer transactions increased our revenue, which tells us that our values and our treasure hunting shopping experience are appealing to a broad range of customers,” CEO Ernie Herrman said in a press release.
“The fourth quarter is off to a strong start and we are excited about our opportunities for the holiday shopping season. In stores and online, we offer consumers an ever-changing and inspiring shopping destination for gifts at excellent prices, and we are confident there will be something for everyone which is what they want when they shop with us.”
For the holiday quarter, TJX expects comparable sales to grow between 2% and 3%, largely in line with the 3% increase that StreetAccount analysts had expected. In a press release, TJX said changes to pre-tax profit margin and earnings guidance for the holiday quarter are “due to the expected reversal of benefit in the third quarter due to the timing of certain expenses.”
TJX is sticking with its comparable sales forecast of 3% growth for the full year, just below the 3.2% growth that StreetAccount analysts had expected. It increased its pre-tax profit margin from 11.2% to 11.3%, which matched StreetAccount expectations, along with earnings per share expectations. The company now expects full-year earnings to come in between $4.15 and $4.17, compared to a previous range of $4.09 to $4.13. At the upside, guidance is in line with the $4.17 that LSEG expected.
After a year of enormous growth, the discounter behind Marshalls, HomeGoods and TJ Maxx is still increasing sales. It convinces value-seeking consumers who shop at department stores, for example Macy's And Kohl'sand making progress with younger shoppers who don't see off-price shopping as a stigma.
Still, growth is slowing and TJX is looking abroad to boost sales. During the quarter, comparable sales at the Marmaxx division, which includes TJ Maxx, Marshall's and Sierra stores, increased 2%, compared to 7% in the same period last year. Comparable sales at HomeGoods rose 3%, compared to 9% a year ago, while TJX Canada grew 2%, compared to 3% last year.
The only division to outperform last year's results was TJX International, which also includes Europe and Australia. Earlier this year, TJX's European operations struggled due to execution issues, but the division posted comparable sales growth of 7% during the quarter, up from 1% a year ago.
Last quarter, the company announced it would take a 35% ownership stake in Dubai-based retailer Brands for Less for $360 million. The privately held brand is the only major off-price player in the region and operates more than 100 stores and an e-commerce business, mainly in the United Arab Emirates and Saudi Arabia.
On Wednesday, TJX announced that it plans to enter Spain with its TK Maxx banner in early 2026.
Before the company reported, some analysts were concerned that TJX and other off-price retailers would like it Burlington Stores And Ross Stores could be disproportionately affected by the unusually warm weather in October. Out-of-price retailers are more likely to be affected by adverse weather patterns than traditional retailers because lower-income shoppers typically buy things when they need them — not in advance, Bank of America analysts wrote in a research note.
During the fall months, apparel-heavy retailers like TJX count on shoppers coming in to buy new coats and other gear for the cooler weather. If lower-income consumers had postponed these purchases because the weather was warm, it could have hurt TJX's sales.
However, the warmer-than-expected weather did not appear to have a major effect on TJX's revenue.