Off-price giant TJX posted strong sales and earnings in the second quarter, but wasn’t aggressive enough for some as it upped its outlook for the year.
TJX’s net income rose 2.3 percent to $562.2 million, or 84 cents a diluted share, from $549.3 million, or 80 cents, a year earlier. Sales for the three months ended July 30 rose 7 percent to $7.88 billion from $7.36 billion as comparable-store sales rose 4 percent.
Both the bottom and top lines topped expectations, as Wall Street was looking for a slight decline in net profits, to $537.1 million, and a slower 6.5 percent gain in sales.
TJX — the leader in the growing off-price space — has grown into a giant in the fashion space, eclipsing Macy’s Inc. in terms of sales. In addition to buying inventory from other retailers, the company’s has become an important customer of wholesalers, who feed the mammoth retailer to keep their operations humming.
Ernie Herrman, chief executive officer and president, noted with particular pride that the comp gain was “almost entirely driven by customer traffic.”
“We are convinced that we are gaining consumer market share,” Herrman said. “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 percent to 4 percent and earnings per share to be in the range of $3.39 to $3.43.” The company had previously been looking for comp growth of 2 percent to 3 percent and EPS of $3.35 to $3.42.”
The revision upward was not enough for some, since analysts already had the company pegged for profits of $3.49 this year and TJX shares slipped 3 percent to $80.30 in early trading on Wall Street.
Herrman said, “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.” He also added that TJX was on its way to $40 billion, up from sales of $30.94 billion last year.