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TJX Companies (TJX) Q1 Earnings, Sales Beat Estimates; FY 17 View Up

The TJX Companies, Inc. TJX reported earnings of 75 cents per share in the first quarter of fiscal 2017, surpassing the Zacks Consensus Estimate of 70 cents. Earnings grew 7.14% year over year, backed by higher consumer traffic and solid comparable-store sales growth.

Quarterly Details

Net sales increased 10% year over year to $7.5 billion, supported by higher comps. Revenues also beat the Zacks Consensus Estimate of $7.8 billion.

TJX Companies' consolidated comparable-store sales grew 7%, better than the 5% rise in the year-ago quarter. The improvement was supported by 6%, 9%, 14% and 4% year-over-year growth in same-store sales at Marmaxx, Home Goods, TJX Canada and TJX Europe, respectively.

TJX Companies' pre-tax profit margin shrank 0.2 percentage points (pp) year over year to 10.9% of sales. Gross margin increased 0.5 pp year over year to 28.8%. The gain primarily came on the back of strong buying and occupancy leverage.

Selling, general and administrative costs, as a percentage of sales, went up 0.7 pp to 17.7% due to increased wages and investments.

Share Repurchase

During the reported quarter, the leading off-price retailer spent $375 million to repurchase 5.0 million common shares.

The company increased its dividend by 24% in the first quarter, marking the 20th consecutive year of dividend increase by the company.

Guidance 

TJX Companies issued the fiscal second-quarter 2017 guidance. The company expects earnings in the range of 77 cents to 79 cents compared with 80 cents reported a year ago. Comparable-store sales are expected to grow 2–3%.

The company raised its full-year guidance to reflect its strong first quarter results. TJX Companies projects diluted earnings per share in the range of $3.35 to $3.42 compared with the previous estimate of $3.29 to $3.38. The company reported adjusted earnings of $3.33 last year. Comparable-store sales are expected to grow 2--3% compared with 1–2% projected earlier

Key Picks in the Sector

TJX Companies currently has a Zacks Rank #2 (Buy). Other stocks in the broader retail wholesale sector with the same Zacks Rank are Best Buy Inc. BBY, Chuy’s Holdings Inc. CHUY and The Kroger Company KR.  

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