TJX Enterprises Wall Street raised its full-year forecasts on Wednesday after posting another quarter of strong sales, but its outlook is still just below Wall Street expectations.
The discount chain behind Marshalls, HomeGoods and TJ Maxx now expects full-year earnings to come in between $4.09 and $4.13, compared with estimates of $4.14, according to LSEG.
For the current quarter, TJX expects earnings per share to be between $1.06 and $1.08, compared with estimates of $1.10.
So far this earnings season, retailers that missed estimates have not seen much of a negative impact on their stocks, suggesting investors are prepared for uncertainty in the second half of the year ahead of the U.S. presidential election and a possible rate cut by the Federal Reserve. TJX shares rose about 4% in premarket trading.
Here's how the discount company fared compared to what Wall Street expected, according to a survey of analysts by LSEG:
- Earnings per share: 96 cents compared to the expected 92 cents
- Revenue: $13.47 billion versus the expected $13.31 billion
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.
Throughout TJX’s fiscal year 2024, which ended in February, the company posted strong sales gains and solid guidance, but investors have been eager to see how it will beat those numbers in the coming quarters and whether it can continue to grow.
The company has seen overseas as a key avenue for growth, announcing on Wednesday that it was acquiring a 35% stake in Dubai-based retailer Brands for Less for $360 million. The private label is the region’s only major player in the off-price sector 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.
“In an effort to continue its global growth, TJX seeks that this transaction provides the Company with the opportunity to invest in an established, off-price retailer with significant growth potential,” TJX stated. “The Company's stake in BFL is expected to be slightly accretive to earnings per share beginning in fiscal 2026.”
For the quarter, consolidated comparable store sales rose 4% and were “fully driven by an increase in customer transactions,” indicating that more shoppers are coming to its stores, TJX said. That jump is larger than the 2.8% increase that analysts had expected, according to StreetAccount.
Growth was driven primarily 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 estimates for a 2.9% increase, according to StreetAccount. HomeGoods posted a 2% comparable sales increase, below the 3% that analysts had been expecting, according to StreetAccount, as the overall home furnishings market remains stagnant.
In the current quarter, performance is already “off to a good start,” said CEO Ernie Herrman.
“We see excellent buying opportunities in the marketplace and are well positioned to deliver fresh, appealing products to our stores and online during the fall and holiday selling seasons. We marked a milestone for our company in the second quarter by opening our 5,000th store.”He “We are excited about our potential to capture increased market share across all of our geographies and continue our global growth,” Herrman said.
As of Tuesday's close, TJX stock was up about 21% year-to-date. The stock hit a new high in May after the company reported strong quarterly earnings.
The retailer has been gaining market share from competitors such as Aim and Macy's and has become a haven for price-sensitive consumers who may want to watch their money but still want to buy new clothes.
In May, Herrman said the company is winning in part because it has “become a more attractive place to shop” and has managed to gain traction among younger Gen Z customers, who tend to be more concerned with getting good, high-quality deals than buying from high-end brands.
Some analysts say the nature of TJX's business model means it does well in any economic environment. In good times, its core low- and middle-income consumers have the extra cash to buy discretionary items like new clothes, shoes and home decor, and in good times, higher-income shoppers flock to its stores looking for deals on the brand-name clothing they're used to.
However, a sharp drop in consumer spending, which some analysts have warned could be coming, could hurt the company regardless of its value proposition.
