TJX CompaniesTJX

TJX reported a strong quarter with revenue reaching about 15.2 billion dollars, slightly ahead of what analysts expected. The most important number was the 4 percent growth in comparable store sales, which tracks performance at locations open for at least a year. This suggests the company is still successfully taking market share from traditional department stores by offering brand-name goods at steep discounts.

Profitability also came in better than planned, with adjusted earnings of $1.22 per share beating the $1.19 estimate. Management raised its profit and earnings guidance for the full year, signaling confidence that its inventory of discounted clothing and home goods remains attractive to budget-conscious shoppers. While the stock fell about 1 percent today, the underlying business appears to be hitting its growth targets.

See the full quarter, and how our tracked metrics did

Source: 8-K filing

Key highlights

• Profit outlook raised: The company increased its full year profit outlook to a range of 12.3% to 12.4% of sales, which is higher than the 12.0% reported in the first quarter. This indicates management is confident that the business is becoming more efficient even as they navigate changing costs.
• International growth shines: While the main U.S. stores grew only 1%, the international division saw sales at established stores jump 7% this quarter. This diversification helped the company overall, as strength in Europe and Australia offset the slower growth in the core U.S. business.
• Store expansion accelerating: Management plans to speed up store openings to a 4% growth rate starting next year and raised its long term goal to 7,500 total stores. Reaching this new target would mean adding over 2,200 more locations to the current count of 5,285 stores.
• Margins getting a boost: Adjusted profit margins rose to 11.9% of sales, up from 11.4% a year ago, because the company made more money on the goods it sold. This improvement happened even after accounting for higher store wages and payroll costs, which added 0.2% to expenses.
• Heavy cash returns: The company sent $1.3 billion back to its owners this quarter through dividends and by buying back 5.1 million shares of its own stock. They still have $2.7 billion left in their current plan to buy back more shares, which helps increase the value for remaining stockholders.

Our take: This was a very reliable quarter that showed why a global footprint matters. While the main U.S. stores were sluggish, the explosive 7% growth in the international and HomeGoods segments carried the result. Raising the profit outlook and store targets suggests the business model still has plenty of room to run.