TJX Companies stock declines on weak Q3 results, guidance

TJX Companies (TJX) reported a 19% jump in earnings for the third quarter as a sharp growth in customer traffic lifted comparable store sales. The top line exceeded analysts’ expectations while the bottom line missed consensus estimates. The off-price apparel retailer guided earnings below consensus view for the fourth quarter and full-year 2019.

Net income climbed 19% to $762.3 million and earnings jumped 22% to $0.61 per share. Excluding a $0.09 benefit due to items related to the 2017 Tax Cuts and Jobs Act, and a $0.02 negative impact from a pension settlement charge, adjusted earnings for the third quarter were $0.54 per share.

Net sales grew 12% year-over-year to $9.8 billion. Comparable store sales increased 7% as customer traffic was the primary driver of the comp sales increases at every division.

Changes in foreign currency exchange rates affect the translation of sales and earnings of the company’s international businesses into U.S. dollars for financial reporting purposes. The movement in foreign currency exchange rates had a one percentage point negative impact on sales growth and a $0.01 negative impact on the earnings per share for the third quarter of fiscal 2019.

Gross margin fell 0.9 percentage point to 28.9% due to higher freight costs, supply chain expenses, and an unfavorable year-over-year comparison related to its inventory hedges.

During the third quarter, the company lifted its store count by 102 stores to a total of 4,296 stores. The company increased square footage by 4% over the same period last year. During the third quarter, TJX Companies returned about $841 million to shareholders. The company now expects to repurchase about $2.5 billion of TJX stock in fiscal 2019.

TJX Companies Q2 sales beat estimates; stock gains on strong guidance

Looking ahead into the fourth quarter, the company expects earnings in the range of $0.66 to $0.67 per share and adjusted earnings in the range of $0.56 to $0.57 per share. This forecast is based upon estimated consolidated comparable store sales growth of 2% to 3%.

For the full year 2019, TJX Companies now predicts earnings in the range of $2.41 to $2.43 per share and adjusted earnings in the range of $2.08 to $2.09 per share. This is now based upon estimated comparable store sales growth of 5% on a consolidated basis and 6% at Marmaxx.

Shares of TJX Companies opened lower on Tuesday and is trading in the red territory. The stock has risen over 26% in the year so far and over 36% in the past year.

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