TJX Companies on Wednesday touted a “strong start” to the holiday shopping season, but its shares fell after the fast-growing retailer provided guidance that appeared to confuse Wall Street.
TJX handily beat Wall Street forecasts in its fiscal third quarter, but is expected to post holiday-quarter earnings in a range of $1.12 to $1.14 per share, below estimates of $1.18, according to LSEG.
Here’s how TJX performed compared to Wall Street expectations, according to a survey of analysts by LSEG:
- Earnings per share: $1.14 Estimated $1.09
- income: US$14.06 billion Expected to be $13.95 billion
The company reported net profit of $1.3 billion, or $1.14 a share, for the three months ended Nov. 2, compared with $1.19 billion, or $1.03 a share, a year earlier.
Sales increased to US$14.06 billion, an increase of approximately 6% from US$13.27 billion in the same period last year.
“Across the company, customer transactions drove our sales growth, which tells us that our values ​​and treasure hunt shopping experience are attracting a broad range of customers,” CEO Ernie Herrman said in a press release.
“We’re off to a strong start in the fourth quarter and we’re excited about our opportunities for the holiday sales season. In stores and online, we offer consumers an ever-changing and inspiring shopping destination to buy at great value Gifts and feel confident that there’s something for everyone when they shop with us.
TJX expects comparable sales to grow 2% to 3% in the holiday quarter, essentially in line with StreetAccount analysts’ forecast of 3% growth. TJX said in a news release that the changes to its pre-tax margin and holiday quarter profit guidance “are due to an expected reversal in the timing of certain charges on third-quarter earnings.”
TJX maintained its full-year comparable sales guidance of 3% growth, slightly below StreetAccount analysts’ forecast of 3.2% growth. It raised its pre-tax margin forecast to 11.3% from 11.2%, in line with StreetAccount’s forecast and earnings per share guidance. Full-year profit is now expected to be $4.15 to $4.17, up from the previous range of $4.09 to $4.13. At the high end, its guidance was in line with LSEG’s forecast of $4.17.
After a year of rapid growth, sales at the discount store behind Marshalls, HomeGoods and TJ Maxx are still growing. It is winning over value-seeking consumers who buy markdowns from department stores, e.g. macy’s department store and Kohl’sand making headway among younger shoppers who don’t see the stigma of low-price shopping.
Still, its growth is slowing, and TJX is looking to overseas markets to boost sales. Comparable sales at its Marmaxx segment, which includes TJ Maxx, Marshall’s and Sierra stores, rose 2% in the quarter, compared with a 7% increase in the same period last year. HomeGoods’ comparable sales increased 3%, compared with 9% in the same period last year; TJX Canada’s comparable sales increased 2%, compared with 3% in the same period last year.
The only division to perform better than last year’s results was TJX International, which includes Europe and Australia. TJX’s European operations struggled earlier this year due to execution issues, but the unit’s comparable sales rose 7% in the quarter, compared with 1% a year ago.
Last quarter, the company announced it would take 35% equity Acquired Dubai-based retailer Brands for Less for $360 million. The private label is the only major discount brand in the region and operates more than 100 stores and e-commerce operations primarily in the United Arab Emirates and Saudi Arabia.
On Wednesday, TJX announced plans to enter Spain in early 2026 with TK Maxx.
Ahead of the company’s report, some analysts were concerned about TJX and other discount retailers such as burlington store and Ross Store Unseasonably warm weather in October could have a disproportionate impact. Bank of America analysts wrote in a research note that off-price retailers tend to be more vulnerable to adverse weather patterns than traditional retailers because low-income shoppers typically buy items when they need them, rather than ahead of time.
In the fall, clothing-heavy retailers like TJX want shoppers to come in and stock up on new outerwear and other gear for cooler weather. If low-income consumers delay purchases because of warm weather, it could hurt TJX’s sales.
However, warmer-than-expected weather does not appear to have had a significant impact on TJX’s sales.
