TJX's stock rises toward a record after earnings, as customers shopped more

By Tomi Kilgore

Same-store sales rose at T.J.Maxx, Marshalls and Home Goods due to an increase in transactions, but they missed expectations

This replaces an earlier item that incorrectly spelled the CEO's name, and to fix typos in some figures.

Shares of TJX Companies Inc. rallied into a record territory Wednesday after the discount apparel and home fashions retailer beat fiscal first-quarter profit expectations and raised its full-year outlook, as increased customer transactions led to sales gains at all of its store brands.

But while the parent of T.J.Maxx, Marshalls and HomeGoods store chains saw comparable-store sales rise from a year ago, the growth was less than expected, to snap a six-quarter streak of beats.

Still the fact that sales growth was a result of customers shopping more is a good sign, according to Chief Executive Ernie Herrman.

"We see this as an excellent indicator of the strength of our business," Herrman said, according to a FactSet transcript of the post-earnings call with analysts.

The stock (TJX) rallied 5.1% in midday trading, to surpass the current record close of $101.42 on March 28.

Net income for the quarter to May 4 rose to $1.07 billion, or 93 cents a share, from $891 million, or 76 cents a share, in the same period a year ago, to beat the FactSet consensus for earnings per share of 88 cents.

Net sales grew 5.9% to $12.48 billion to match expectations. Marmaxx, or the combination of Marshalls and T.J.Maxx, saw sales rise 5.2% to $7.75 billion and HomeGoods sales were up 5.7% to $2.08 billion.

TJX International sales jumped 8.8% to $1.54 billion and TJX Canada sales climbed 7.2% to $1.11 billion.

Meanwhile, comparable-store sales, or sales of stores open for two fiscal years, rose 3%, to miss the FactSet consensus of 3.7% growth.

"We saw comp sales growth at every division entirely driven by customer transactions, which underscores the strength of our value proposition," said Chief Executive Ernie Herrman.

Among TJX's store brands, HomeGoods same-store sales rose 4% but missed the FactSet consensus for a 6% rise, and Marmaxx same-store sales increased 2% to miss expectations of 3.8% growth. TJX Canada sales were up 4% to beat expectations of a 3.3% increase, while TJX International sales rose 2% to miss expectations of a 3% rise.

"The second quarter is off to a good start and we see numerous opportunities for our business for the balance of the year that we plan to pursue," said CEO Herrman.

That said, TJX said it expects second-quarter EPS of 88 cents to 90 cents, below the current FactSet consensus of 94 cents.

While the guidance was below Wall Street forecasts, Jefferies analyst Corey Tarlowe reiterated his buy rating on the stock, as he focused more on the commentary about the quarter being off to a good start.

"We believe guidance remains conservative, and continue to see a favorable buying environment for [TJX's stock]," Tarlowe wrote in a note to client.

For the full fiscal year, however, the company raised its EPS guidance range to $4.03 to $4.09 from $3.94 to $4.02.

The stock has gained 3.6% over the past three months, while the SPDR S&P Retail ETF XRT has tacked on 1.7% and the S&P 500 index has advanced 4.3%.

-Tomi Kilgore

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05-22-24 1350ET

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