TJX Corporation It raised its full-year guidance on Wednesday after reporting another quarter of strong sales, but its outlook remained slightly below Wall Street expectations.
The discount store behind Marshalls, HomeGoods and TJ Maxx now expects full-year earnings in a range of $4.09 to $4.13, compared with expectations of $4.14, according to LSEG.
TJX expects earnings per share for the quarter of $1.06 to $1.08, compared with expectations of $1.10.
Retailers disappointed with guidance have not seen much negative impact on their stock prices so far this earnings season, a sign that investors are bracing for uncertainty in the second half ahead of the U.S. presidential election and possible interest rate cuts from the Federal Reserve. TJX shares were up about 4% in premarket trading.
This is what discount stores do Compared with Wall Street expectations, according to a survey of analysts by London Stock Exchange Group (LSEG):
- Earnings per share: 96 cents Expected 92 cents
- income: US$13.47 billion, expected US$13.31 billion
The company reported net profit of $1.1 billion, or 96 cents a share, for the three months ended Aug. 3, compared with $989 million, or 85 cents a share, a year earlier.
Sales rose to $13.47 billion from $12.76 billion in the same period last year.
In TJX’s fiscal 2024, which ended in February, the company reported strong sales growth and solid guidance, but investors have been keen to see how the company will achieve those numbers in the coming quarters and whether it can continue to grow.
The company, which sees overseas as its main avenue for growth, announced on Wednesday it would acquire a 35% stake in Dubai-based retailer Brands for Less for $360 million. TJX said in a press release that the private label is the only major discount brand in the region and operates more than 100 stores, primarily in the United Arab Emirates and Saudi Arabia, as well as an e-commerce business.
“As TJX seeks to continue its global growth, this transaction provides the company with the opportunity to invest in an established discount retailer with significant growth potential,” TJX said. “The company’s ownership of BFL is expected to increase slightly beginning in fiscal 2026. Earnings per share.”
TJX said consolidated comparable store sales rose 4% in the quarter, “driven entirely by increased customer transactions,” a sign that more shoppers are coming to its stores. The gain beat analysts’ expectations of 2.8%, according to StreetAccount.
The growth was primarily driven by TJX’s Marmaxx division in the U.S., which includes TJ Maxx, Marshalls and Sierra stores. According to StreetAccount data, Marmaxx comparable sales increased 5% this quarter, compared with expectations for a 2.9% growth. Comparable sales at HomeGoods rose 2%, according to StreetAccount, less than the 3% analysts had been expecting as the overall home furnishings market remained stagnant.
Chief Executive Ernie Herrman said the current quarter’s results were “off to a good start.”
“We see excellent buying opportunities in the market and have the ability to deliver fresh and compelling merchandise to our stores and online throughout the fall and holiday selling seasons. In the second quarter, we opened 5,000 stores, marking A milestone for our companyth Herman said. “Long term, we are excited about the potential to capture additional market share in all regions and continue our global growth.”
As of Tuesday’s close, TJX shares were up about 21% year to date. Shares hit a new high in May after the company reported strong quarterly earnings.
The retailer has been taking market share from rivals such as Target and macy’s department store It has become a haven for price-conscious consumers who may be saving money but still want to buy new clothes.
In May, Herman said the company won in part because it “became a cooler place to shop” and made inroads with younger Gen Z consumers, who tend to be more concerned with access to Good, high quality deals instead of shopping at the high end.
Some analysts say the nature of TJX’s business model means it will perform well in any economic environment. In good times, its core of low- and middle-income consumers have extra cash to buy discretionary items like new clothes, shoes and home decor, while in bad times, higher-income shoppers come to its stores to find what they want. Discounts on the branded clothing you want.
However, some analysts warned that a sharp decline in consumer spending could affect the company regardless of its value.
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