Retail

Investors Cannot Make Up Their Minds About TJX Earnings

Chris Lange

Published: February 24, 2016 10:55 am

Last Updated: January 13, 2020 12:47 pm

TJX Companies Inc. (NYSE: TJX) reported its fiscal fourth-quarter financial results before the markets opened on Wednesday. The company said it had $0.99 in earnings per share (EPS) on $8.96 billion in revenue, which compares to consensus estimates of $0.94 in EPS on revenue of $8.73 billion. In the same period of last year, it posted EPS of $0.93 and $8.30 billion in revenue.

In the quarter, comparable store sales increased by 6%, compared to an increase of 4% in the same period from the previous year. At the same time, gross margin totaled 11.9%, a decrease of 0.5 percentage points year over year.

As for the outlook in the first quarter, EPS are expected to be in the range of $0.68 to 0.70. This reflects an assumption that the combination of foreign currency and transactional foreign exchange will have a 2% negative impact on EPS growth. TJX also expects its wage initiative will negatively impact EPS growth by 3%. This EPS outlook is based on estimated consolidated comparable store sales growth of 2% to 3%. Consensus estimates for the quarter call for $0.74 in EPS on $7.32 billion in revenue.

On the books, cash, equivalents and short-term investments totaled $2.45 billion, compared to $2.78 billion in the same period from last year.

Ernie Herrman, CEO and president of TJX, commented on earnings:

We are extremely pleased to end another strong year with terrific fourth quarter results! Our fourth quarter 6% comp growth and 6% increase in earnings per share significantly exceeded our expectations. Once again, customer traffic drove our entire consolidated comp increase. It was also the primary driver of our comp increases at every division in the fourth quarter and full year as we continued delivering consumers a differentiated offering at extreme value. We are convinced that we are gaining market share profitably around the world. We were particularly pleased that our overall merchandise margin was up in the fourth quarter while we continued to offer shoppers outstanding values. For the full year, we were thrilled to surpass $30 billion in sales, achieve consolidated comp sales growth of 5%, and deliver above-plan EPS growth. The year 2015 marks our 20th consecutive year of increases in comp sales and EPS! We have sustained profitable growth through many types of economic and retail climates and in different regions around the world, and we have great confidence in the future.

Shares of TJX were trading up fractionally at $73.14, though the stock has even been down as much as 1.6% since the earnings release. The stock has a consensus analyst price target of $82.00 and a 52-week trading range of $65.53 to $76.93.