TJX Companies’ Weak Guidance Sends its Shares Reeling

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August 16, 2016 10:17am NYSE:TJX

Image of clothes on a rackDiscount clothing and home goods retailer TJX Companies Inc (NYSE:TJX) posted better-than-expected Q2 results this morning, but its tepid forecast sent its shares lower in morning trading.

The Framingham, MA-based company reported Q2 EPS of $0.84, beating Wall Street’s view for $0.81. Revenue rose 7% from last year to $7.88 billion, also besting analyst estimates for $7.84 billion.

Looking ahead, TJX forecast Q3 earnings to range from $0.83 to $0.85 per share, which would miss Wall Street’s projection of $0.90 per share. For the full year, the company lifted its outlook for EPS of $3.39-3.43 from a prior range of $3.35-3.42. Analysts expect a still-higher $3.48 per share for the year.

Other noted from the report included:

  • Wage increases will negatively impact Q3 EPS growth by 3%.
  • Foreign currency and transactional foreign exchange will have an additional 3% negative impact on Q3 EPS growth.
  • In Q2, the company repurchased $400 million of TJX stock, retiring 5.2 million shares.

From the press release:

Ernie Herrman, Chief Executive Officer and President of The TJX Companies, Inc., stated, “It was terrific to see our strong customer traffic and comps continue in the second quarter. Our consolidated comparable store sales increase of 4%, over 6% growth last year, and our earnings per share increase of 5% both exceeded our expectations. Further, we are extremely pleased that our comp store sales growth was almost entirely driven by customer traffic. We are convinced that we are gaining consumer market share as our excellent values on a compelling selection of brands and fashions are drawing customers to our retail brands around the world. We also are very pleased that our apparel, including accessories, and home businesses both performed well. Further, we saw a strong merchandise margin increase. We believe our robust sales, customer traffic and merchandise margins all speak to the strength of our off-price retail model. With our above-plan second quarter results, we are raising our guidance for full year comp sales to increase 3% to 4% and earnings per share to be in the range of $3.39 to $3.43. The third quarter is off to a solid start, and we see plentiful opportunities for our business in the second half of the year and beyond. We remain laser focused on achieving our goals for 2016 and are passionate about surpassing them. We continue on the road to becoming a $40 billion-plus company!”

TJX Companies shares fell $2.11 (-2.55%) to $80.66 per share in Tuesday morning trading. TJX has now gained 13.85% since the start of 2016.


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