TJX Q1 Profit Beats Estimates; Target Stock Falls As Profitability Came In Well Below Expectations

The TJX Companies, Inc. (TJX) said its first-quarter pretax profit margin and earnings per share, each on an adjusted basis, exceeded its plans even though sales were slightly below planned range. Adjusted pretax margin was 9.4%, excluding a 1.9 percentage point charge related to a write-down of the minority investment in Familia. The company’s U.S. comparable store sales were flat, for the quarter. The largest division, Marmaxx, delivered a comp store sales increase of 3%, driven by an increase in customer traffic.

For the second quarter, TJX is planning U.S. comparable store sales to be down 1% to down 3%. Earnings per share is projected to be in the range of $0.65 to $0.69.

For fiscal 2023, TJX now expects U.S. comparable store sales to be up 1% to 2%. The company expects pretax margin in the range of 9.2% to 9.4% and increased its outlook for adjusted pretax margin to a range of 9.6% to 9.8%. The company expects earnings per share in the range of $2.94 to $3.01 and adjusted earnings per share in the range of $3.13 to $3.20. The company continues to expect to repurchase approximately $2.25 to $2.50 billion of TJX stock in fiscal 2023.

TJX noted that its fiscal 2023 outlook implies a 4% to 5% U.S. comparable store sales increase in the second half of fiscal 2023. The outlook also implies second half pretax margin in the double-digit range.

Net income for the first quarter was $587.5 million, and earnings per share were $0.49 compared to $533.9 million or $0.44 per share, prior year. Excluding a charge of $0.19 related to a write-down of the minority investment in Familia, adjusted earnings per share was $0.68, for the quarter. On average, 19 analysts polled by Thomson Reuters expected the company to report profit per share of $0.60, for the quarter. Analysts’ estimates typically exclude special items.

Net sales for the first quarter were $11.41 billion, an increase of 13% from a year ago. Analysts on average had estimated $11.59 billion in revenue.

Shares of TJX Companies were up 2% in pre-market trade on Wednesday.

Separately, Target Corp. (TGT) reported that its first quarter comparable sales grew 3.3 percent, reflecting comparable store sales growth of 3.4 percent and comparable digital sales growth of 3.2 percent. Operating margin rate was 5.3 percent, well below expectations.

Target Corp.’s first quarter adjusted EPS was $2.19, down 40.7 percent from $3.69, prior year. On average, 24 analysts polled by Thomson Reuters expected the company to report profit per share of $3.06, for the quarter. Analysts’ estimates typically exclude special items. Net earnings declined to $1.01 billion from $2.10 billion, previous year. Earnings per share was $2.16 compared to $4.17.

Target Corp.’s total revenue was $25.2 billion, up 4.0 percent from last year. Analysts on average had estimated $24.49 billion in revenue.

For second quarter, Target projects operating income margin rate will be in a wide range centered around first quarter’s operating margin rate of 5.3 percent. For full-year 2022, the company continues to anticipate low- to mid- single digit revenue growth. Target now expects its full-year operating income margin rate will be in a range centered around 6 percent.

Shares of Target Corp. were down 24% in pre-market trade on Wednesday.

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