The TJX Cos. Inc.’s fourth-quarter earnings expanded beyond Wall Street’s expectations.
The company also joined the ranks of retailers unilaterally raising the minimum wage paid to its U.S. store associates, moving to $9 an hour in June and to $10 an hour at some point in 2016 for those with at least six months of service. Gap Inc. took a similar step last year and Wal-Mart Stores Inc. revealed its plan to do the same last week.
In the three months ended Jan. 31, TJX recorded net income of $648.2 million, or 93 cents a diluted share, ahead of the 90 cents of EPS anticipated, on average, by analysts and 11.3 percent above the $582.3 million, or 81 cents, registered during the final quarter of 2013.
Revenues rose 6.3 percent to $8.3 billion from $7.81 billion, as comparable-store sales rose 4 percent, better than the 2013 quarter’s 3 percent increases or the full-year gain of 2 percent. The analysts’ consensus estimate was for revenues of $8.26 billion.
Carol Meyrowitz, chief executive officer, noted that the higher comps “were almost completely driven by customer traffic.”
In the quarter, revenues rose 5.4 percent to $5.29 billion at Marmaxx, incorporating TJ Maxx and Marshalls; 18.1 percent at HomeGoods to $1.03 billion; 2.7 percent at TJX Canada to $788 million, and 3.9 percent at TJX Europe to $1.2 billion.
Gross margins added 60 basis points to move to 28.2 percent of sales from 27.6 percent a year ago.
TJX said it expected first-quarter earnings of between 64 and 66 cents a diluted share, versus the consensus estimate of 72 cents. Comps are expected to grow between 2 and 3 percent. Guidance for the year of $3.17 to $3.25 a share was also below earlier analysts’ estimates of $3.50.
Paul Lejuez, analyst at Wells Fargo Securities, said that the annual guidance reflects anticipated negative impact from foreign exchange of 16 cents and from higher wages and other initiatives of 13 cents.
Meyrowitz said, “In 2015, we are taking a prudent approach to planning our earnings per share growth. We are continuing to plan comp sales increases conservatively while we simultaneously strive to surpass our goals. Further, we will continue to reinvest in our growth initiatves for today and the future, and we are making additional investments in our store associates to maintain our focus on offering our customers an excellent shopping experience.”
She added that, “like other major international retailers,” plans for the new year reflect currency headwinds.
TJX will enter its seventh country, Austria, this spring and also plans to launch stores in The Netherlands later in the year.
For the full year, earnings were up 3.6 percent to $2.22 billion, or $3.15 a diluted share, while revenues advanced 6 percent to $29.08 billion from $27.42 billion.
In morning trading on the New York Stock Exchange, shares of TJX were up 2.9 percent to $69.12.