TJX Companies topped profit estimates in the third quarter, despite sales coming in lower than the same period last year.
The Framingham, Mass.-based off-price retailer reported a net profit of $1.062 billion in the third quarter of fiscal 2023, up from $1.023 billion the same time last year. Net sales for the third quarter of 2023, however, were $12.2 billion, a decrease of 3% from $12.5 billion versus the third quarter of 2022.
By division, net sales at Marmaxx, which includes the T.J. Maxx, Marshalls, and Sierra banners in the U.S., were up 3% in the quarter to $7.455 billion, driven mostly by apparel. This gain was offset by a 14% decline to $1.948 billion in the company’s HomeGoods division. These results brought total net sales for the U.S. down 1% to $9.403 billion in Q3.
As for the company’s international divisions, TJX Canada posted a 1% decline in net sales to $1.285 billion in the quarter, while TJX International – which includes Europe and Australia – saw a 16% decrease to $1.479 billion.
But this sales miss didn’t discourage the street. At the time of the closing bell, shares for TJX were up 5%.
On the company’s earnings call on Wednesday, president and CEO Ernie Herrman was confident that the retailer is well positioned for the holiday season. “The marketplace is absolutely loaded with quality branded merchandise across good, better and best brands,” he told investors. “Importantly, this has set us up very well to offer an excellent assortment of branded gifts this holiday season that we believe will excite and inspire our shoppers.”
Herrman also noted that the company is focusing even more this holiday season on fresh flowing branded goods that are gift-oriented coming in later than normal, which, he said, is going to “bode well” for Q4 sales, especially in the last week or two right before Christmas.
Moving to inventory, Herrman noted that the company’s balance sheet inventory was up 26% versus the third quarter last year. Total inventories at the end of Q3 were $8.3 billion, compared with $6.6 billion at the end of the third quarter of fiscal 2022. “This is higher than we expected due to early receipts of merchandise as the supply chain continued to improve,” the CEO said.
Looking ahead, TJX is now planning total sales for the full fiscal year in the range of $49.3 billion to $49.5 billion. The change versus its previous guidance is due to its forecast that unfavorable foreign exchange rates will negatively impact Q4 reported sales.
“While our business is not immune to macro factors, I am convinced that the flexibility of our off-price retail model and the depth of our expertise and experience, especially within our merchant organization, will remain an important advantage for us,” Herrman said.