TJX Companies misses Q2 sales expectations; EPS in line with estimates

The TJX Companies Inc. (NYSE: TJX) missed sales estimates for the second quarter of 2020 while earnings matched expectations. The stock was down 3% in opening hours on Tuesday.

Net sales rose 5% year-over-year to $9.8 billion but fell short of forecasts of $9.9 billion. Consolidated comp sales increased 2%, driven mainly by customer traffic, compared to a 6% increase last year.   

Net income was $758 million, or $0.62 per share, compared to $739 million, or $0.58 per share, in the prior-year quarter. The consensus estimate was for EPS of $0.62.

During the quarter, TJX Companies posted net sales increases across all four of its divisions. Comp sales grew in the low to mid single-digit range across all segments, except HomeGoods US. Customer traffic increased in all four divisions.   

Gross profit margin was 28.2%, down 0.7% from last year, in line with the company’s guidance. The decline was mainly caused by a decrease in merchandise margin and higher supply chain costs.

Also see: TJX Companies Q1 2020 Earnings Report

Total inventories at quarter-end were $5.1 billion, compared with $4.5 billion in the same period last year. Consolidated inventories on a per-store basis, including the distribution centers, but excluding inventory in transit, the company’s e-commerce sites, and Sierra stores, increased 6% on a reported basis, and 7% on a constant currency basis. 

During the second quarter, TJX Companies increased its store count by 31 stores to a total of 4,412 stores. The company increased square footage by 4% to 118.4 million.

For the third quarter of 2020, TJX Companies expects EPS to be $0.63-0.65. Comparable store sales is estimated to grow 1-2% both on a consolidated basis and at Marmaxx.

For fiscal-year 2020, the company expects EPS of $2.56-2.61, reflecting a 5-7% increase over last year. Comparable store sales is projected to grow 2-3% on a consolidated basis and at Marmaxx.

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