Cos TJX. Holiday sales jumped 13% as bargain-hunting shoppers flocked to discount retailers, it said Wednesday.
Despite the strong quarter and fiscal year-end, the company issued guidance that was in light of Wall Street expectations as it prepares for a tougher comp next year and an uncertain growth path.
Here's how TJX fared in its fiscal fourth quarter compared to what Wall Street was expecting, based on a survey of analysts conducted by LSEG, formerly known as Refinitiv:
Earnings per share: $1.22 vs. $1.12 expected Revenue: $16.41 billion vs. $16.21 billion expected
In the quarter ended February 3, the company reported net income of $1.4 billion, or $1.22 per share, compared with $1.04 billion, or 89 cents per share, a year earlier. Excluding an extra week in the quarter, TJX reported earnings per share of $1.12.
Sales rose to $16.41 billion, up about 13% from $14.52 billion the previous year. Sales for the period from the previous year included a lower week.
For the current quarter, it expects earnings per share to range from 84 cents to 86 cents, given the high end of Wall Street's forecast of 82 cents to 93 cents, according to LSEG. For the full year, it expects earnings per share of $3.94 to $4.02, compared to estimates of $3.88 to $4.40.
TJX shares closed slightly higher. The company's stock has risen more than 7% year to date, as of Wednesday's close.
TJX, which operates TJ Maxx, Marshall's, Sierra and HomeGoods, has become the de facto leader in off-price products for its ability to offer a wide range of premium branded products and entice higher-income shoppers looking for cheaper options. In the face of persistent inflation.
Over the past year, it has increased its sales and earnings guidance several times. Ahead of the holiday season, the tone was positive as other retailers issued cautious or disappointing guidance amid sluggish demand and an uncertain economy.
During the holidays, consumers were laser-focused on finding the best deals and discounts, spending record amounts on Black Friday and Cyber Monday and pulling out when promotions weren't available. TJX was well positioned during this period because consumers were able to shop for a wide variety of gifts at prices that tended to be lower than competitors.
“We feel there's a lot of opportunity in retail,” TJX CEO Ernie Herman said Wednesday on the company's conference call. “From our sales momentum, customers are responding very well.”
During the quarter, comparable sales at Marmaxx, which includes TJ Maxx, Marshall's and Sierra stores, rose 5%, better than the 4.6% rise analysts expected, according to StreetAccount.
While comparable growth is a bit stagnant from the previous quarter, TJX's numbers are up against the previous year's challenging numbers, so its two-year growth rate has actually accelerated, retail analyst Neil Saunders, managing director at GlobalData, said in a note.
In the United States, sales at TJ Maxx and Marshalls rose 11.7% on top of a 7% increase the year before, Saunders noted.
“Most of this was driven by consumers who were either budgeting to spend less overall or wanted to get more for their money. Pleasingly, those who chose to shop at TJ Maxx and Marshalls didn't just focus on price, they also chose the chains for quality,” Saunders said. : “And choice.” “This flight to value, essentially acting as a recruiting sergeant, was very beneficial over the quarter which is traditionally expensive for most households.”
While other retailers report weak home furnishings sales amid rising interest rates and a sluggish housing market, TJX is bucking the trend with its HomeGoods logo. During the quarter, comparable sales rose 7%, compared to the 4.7% rise that analysts expected, according to StreetAccount.
The numbers are far from the easiest comparisons, as comparable sales at HomeGoods fell 7% in the same quarter last year. But the chain is tapping into consumers who may not be able to afford a new home due to high interest rates, but are keen to spruce up their existing spaces.
Saunders said HomeGoods could also benefit from the demise of Bed Bath & Beyond stores and attract customers who prefer to shop for home furnishings in a physical retail store rather than online, where the new Bed Bath now lives exclusively.
The company said it sees additional market share opportunity after Macy's recently announced it would close 150 stores.
“With the closure of Macy's, you have a lot of overlapping categories that align with the businesses we operate,” Herman said.
TJX's showing was better than usual because many of its suppliers had high inventories throughout 2022 and 2023 and relied on the off-price retailer to help eliminate that glut. Now that stocks across the industry have stabilized, Wall Street will be eager to see the state of TJX's offerings and whether it can maintain the growth and demand it has recorded over the past year.
TJX's guidance appears to reflect this concern. Next year, it will face tougher companies, making its growth path uncertain. Some analysts suspect the current financial year will see more subdued growth, as it looks to hold on to new customers it has acquired rather than continuing to bring in new shoppers.
In a research note from Jane Hali & Associates, checks of stores in New York, Florida, Texas and California showed “fewer notable brand names across affordable and contemporary luxury.” While inventory levels in the previous quarter were steady, some stores appeared to have too much inventory and “too much clearance,” the memo said.
The company said that as of the end of the quarter, total inventories were $6 billion, compared to $5.8 billion at the end of fiscal 2023. Consolidated inventories increased on a per-store basis, which includes distribution centers and excludes inventory in transit, TJX's e-commerce sites and Sierra stores , by 1%.
Read the full earnings release here.
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