TJX Companies Q3 Profit Beats, But Higher Wages To Hurt Q4 Results

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November 15, 2016 9:13am NYSE:TJX

Discount retailer TJX Companies Inc (NYSE:TJX) early Tuesday posted better-than-expected third quarter earnings results, but its fourth quarter outlook was hampered by expectations of higher wages and negative currency impacts.

The Framingham, MA-based company reported Q3 net income of $0.91 per share, which was $0.04 better than the Wall Street consensus of $0.87. Revenue jumped 6.9% from last year to $8.29 billion, also topping estimates for $8.23 billion.

Comparable store sales rose 5% in the latest period, which was much better than TJX’s 2% to 3% guidance. Those results include a 5% rise for TJ Maxx stores, and a 6% gain at HomeGoods stores.

Looking ahead, TJX forecast Q4 earnings to range from $0.96 to $0.98 per share, which would miss Wall Street’s $1.02 estimate. The company noted that the weaker forecast was due to expectations of wage increases, which will negatively impact EPS growth by 3%. Foreign currency exchange headwinds will also hurt EPS growth by 6%.

TJX forecast consolidated comparable store sales growth of 1% to 2% for Q4, which would be much lower than the 6% increase seen in the fourth quarter of 2015.

The company commented via press release:

“Again this quarter, our comp store sales growth was primarily driven by customer traffic. We are convinced that we are gaining consumer market share across all of our divisions! Further, our merchandise margin was up strongly. We have numerous initiatives underway to drive customers to our stores this holiday selling season and keep them coming back.”

TJX shares rose $0.53 (+0.71%) to $74.75 in premarket trading Tuesday. Prior to today’s report, TJX shares had gained 4.67% year-to-date, slightly trailing the S&P 500 index’s 6.24% rise during the same period.


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