TJX Sees Double-Digit Sales & Profit Gains In Q1, Tops Street

The TJX Companies Inc. today served up another batch of evidence that the off-price channel is winning right now.

The owner and operator of discount apparel, footwear and fashion retailers Marshalls and T.J. Maxx posted Q1 earnings that significantly surpassed forecasts.

The company said its net income for the quarter, which ended April 30, rose 7 percent, to $508 million, or 76 cents per diluted share, compared with the year-ago period when net income was $475 million, or 69 cents per diluted share. Market watchers had predicted that the firm would post diluted earnings per share of 71 cents. (Diluted EPS rose 10 percent year over year.)

Sales advanced 10 percent to $7.5 billion from $6.9 billion in the year-ago period. It was a significant beat on analysts’ expectations for sales of $7.3 billion. Comps also climbed 7 percent in Q1, on top of the prior year’s gain of 5 percent.

TJX CEO Ernie Herrman was upbeat on the firm’s first quarter and was also bullish on its outlook for the remainder of the year, raising the company’s guidance.

We are particularly pleased with our very strong customer traffic, which drove the comp increases at every division. This tells us that our strategies to bring consumers exciting values on an eclectic and ever-changing mix of the right fashions and brands, sourced from across the globe, are working,” Herrman said in a release. “We are confident that we are growing our customer base and gaining market share. With our excellent first quarter results, we are raising our full-year EPS and comp sales guidance, and the second quarter is off to a solid start.”

Herrman added that he sees robust growth opportunities for the firm both domestically and internationally.

For the fiscal year ending Jan. 28, 2017,  TJX now expects diluted EPS to be in the range of $3.35 to $3.42, which would represent a 1 to 3 percent increase over $3.33 in FY16. The EPS outlook is now based on a raised estimate of consolidated comparable store sales growth of 2 to 3 percent.

In addition to modest stock gains in early market trading — likely offset by conservatively raised guidance — analysts have been praising the company in the hours since the earning release.

TJX Q1 blowout shows share gains for off-price are accelerating,” Cowen and Co. analyst Oliver Chen wrote this morning. “We are most encouraged by TJX’s EPS beat of 76 cents versus Street’s 71 cents, driven by a robust 7 percent comp (versus Street at 3 percent) on very strong customer traffic at each division.”

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