TJX Companies raised its full-year forecast on Wednesday after reporting another quarter of strong sales, but the outlook still fell just short of Wall Street expectations.
According to LSEG, the discounter behind Marshalls, HomeGoods and TJ Maxx now expects full-year profit to be between $4.09 and $4.13, compared with estimates of $4.14.
For the current quarter, TJX expects earnings per share of $1.06 to $1.08, compared with estimates of $1.10.
So far this earnings season, retailers that have disappointed with their guidance haven’t seen much negative impact on their stocks, suggesting investors are bracing for uncertainty in the second half of the year ahead of the U.S. presidential election and a potential Federal Reserve rate cut. Shares of TJX rose about 4% in premarket trading.
Here's how the discounter performed compared to what Wall Street expected, based on a survey of analysts by LSEG:
- Earnings per share: 96 cent vs. 92 cents expected
- Gain: $13.47 billion vs. $13.31 billion expected
The company's reported net income for the three-month period ended Aug. 3 was $1.1 billion, or 96 cents per share, compared with $989 million, or 85 cents per share, a year earlier.
Sales rose to $13.47 billion from $12.76 billion a year earlier.
During TJX’s fiscal 2024 year, which ended in February, the company posted strong revenue growth and a good outlook. However, investors will be interested to see how the company will surpass those numbers in the coming quarters and whether it can continue to grow.
The company has looked overseas as a primary growth opportunity, announcing Wednesday that it was acquiring a 35% 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, primarily in the United Arab Emirates and Saudi Arabia, along with an e-commerce business, TJX said in a news release.
“As TJX seeks to continue its global growth, this transaction provides the company with the opportunity to invest in an established, off-price retailer with significant growth potential,” TJX said. “The company’s ownership of BFL is expected to be slightly accretive to earnings per share beginning in fiscal 2026.”
During the quarter, consolidated comparable store sales rose 4% and were “entirely driven by increased customer transactions,” indicating more shoppers are coming to stores, TJX said. That jump was larger than the 2.8% increase that analysts had expected, according to StreetAccount.
Growth was led by TJX’s Marmaxx division in the U.S., which includes TJ Maxx, Marshalls and Sierra stores. For the quarter, Marmaxx’s comparable sales rose 5%, compared with an estimate of 2.9%, according to StreetAccount. HomeGoods posted a 2% comparable sales increase — less than the 3% analysts had expected, according to StreetAccount — as the overall home furnishings market remains flat.
According to CEO Ernie Herrman, performance in the current quarter is already “off to a strong start.”
“We see excellent buying opportunities in the market and are strongly positioned to ship fresh and attractive merchandise to our stores and online during the fall and holiday selling seasons. We achieved a milestone for our business in the second quarter by selling our 5,000and store,” Herrman said. “Long term, we are excited about our potential to capture additional market share in all of our regions and continue our global growth.”
At Tuesday's close, TJX shares are up about 21% this year. Shares hit a new high in May after the company reported strong quarterly earnings.
The retailer has taken market share from competitors as Goal And Macy's and has become a haven for budget-conscious consumers who are watching their money but still want to buy new clothes.
In May, Herrman said the company is winning in part because it has become “a cooler place to shop” and has gained traction among younger Gen Z customers, who are typically more interested in scoring good, high-quality deals than shopping at expensive brands.
Some analysts say the nature of TJX's business model means it can do well in any economic environment. In good times, the core low- and middle-income consumer has the extra cash to buy discretionary items like new clothing, shoes and home furnishings, and in bad times, higher-income shoppers flock to the stores looking for deals on the brand-name clothing they've come to expect.
However, some analysts have warned of a sharp drop in consumer spending, which could impact the company regardless of the value it offers.
