TJX Beats and Raises Guidance - Analyst Blog

Discount retailer TJX Companies, Inc. (TJX) reported results for the third quarter of fiscal 2010. The company posted quarterly earnings of 81 cents per share, slightly above the Zacks Consensus Estimate of 79 cents and approximately 42% higher than the year-ago period.

Net sales in the quarter were 10% higher year-over-year at $5.2 billion. TJX reported a 7% increase in consolidated comparable store sales. The company’s Home Goods and A.J. Wirght divisions in the U.S. posted double-digit growth in comparable store sales during the quarter.

The company’s value proposition and discount deals on products drove customer traffic during the quarter. During the third quarter, TJX added 57 stores and increased its square footage by 5% from the comparable period of fiscal 2009.

Third quarter gross margin increased 180 basis points to 27.5%. The margin growth was primarily a result of strong merchandise margins. Pretax profit margin in the quarter grew 200 basis points year-over-year to 10.8%, driven by strong gross margins as well as expense leverage. The company’s cost reduction efforts along with strong comparable store sales dragged down SG&A expenses, as a percentage of sales, by 50 basis points.

The company raised its earnings guidance for fiscal year 2010. TJX now expects to post earnings of 65 - 71 cents per share for the fourth quarter and $2.55 - $2.61 per share for the full fiscal year 2010 (ending January). The company’s earnings forecast is based on expectations of comparable store sales growth of 5% to 7% in the fourth quarter and approximately 5% growth for the full year. The company had earlier provided earnings guidance of $2.46 - $2.54 per share for the fiscal year.

TJX repurchased 8.2 million shares for $304 million during the third quarter. Year-to-date, the company has spent $541 million repurchasing 16.1 million shares. TJX expects to buy back shares for a total of $625 million in fiscal 2010.
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