Yahoo Finance TJX Companies Scores a Great Deal, Beating 1Q16 Earnings Estimates
TJX Companies Starts Fiscal 2016 with a Bang
TJX Companies ahead of Estimates
On May 19, leading off-price retailer TJX Companies (TJX) reported earnings for the first quarter of fiscal 2016, which ended May 2, 2015. The company’s adjusted earnings per share (or EPS) for 1Q16 increased by 7.8% to $0.69 from the comparable quarter of the prior year. TJX Companies’ share price increased by 2.9% to $69.19 on May 19, as the company’s adjusted EPS exceeded analysts’ estimate of $0.67.
Earnings driven by higher sales
The company’s net earnings in 1Q16 increased by 4.5% to $474.6 million from the comparable quarter of the prior year. TJX Companies’ 1Q16 earnings were driven by a 5.8% growth in net sales.
Segment profit for the company’s US segments, Marmaxx and HomeGoods, increased by 4.7% and 23.5%, respectively. Segment profit for TJX Canada increased by 2.6% to $45.2 million, as the segment’s strong sales managed to offset the impact of adverse currency fluctuations. However, segment profit for TJX Europe declined by 31.1% to $26.4 million due to currency headwinds and growth investments.
Headwinds in 1Q16
TJX Companies’ 1Q16 earnings growth was adversely impacted by ~9.0%, due to the combined effect of currency headwinds, incremental investments, and higher employee payroll and pension costs.
Competition’s performance
Off-price rival Ross Stores (ROST) reported a 19.1% rise in adjusted EPS (earnings per share) for the comparable first quarter, driven by higher sales and strong expense control. Macy’s (M) earnings in the first quarter declined by 6.7% to $0.56 due to lower sales and higher expenses. Earnings of upscale department store Nordstrom (JWN) declined by 8.3% to $0.66 due to expenses related to its Trunk Club acquisition and growth plans in Canada.
The SPDR S&P Retail ETF (XRT) invests ~5.9% of its portfolio holdings in department stores and 1.0% in TJX Companies. Results in the first quarter were a testament to the continued success of TJX Companies’ off-price model in the United States. Bargain deals on branded merchandise continue to attract US consumers.
The next part of this series discusses TJX Companies’ same-store sales growth in 1Q16.
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