The TJX Companies, Inc. (TJX) reported earnings of 81 cents per share in the fourth quarter of fiscal 2014, missing the Zacks Consensus Estimate of 83 cents by 2.4% due to lower than expcted sales.
However, earnings were ahead of the year-ago earnings of 74 cents by 9% and management's guidance range of 77 cents to 80 cents. The year over year earnings upside was fueled by higher consumer traffic, improved margins and solid comparable-store sales growth for consecutive months.
Quarterly Details
Net sales of this leading off-price retailer inched up by 1.0% year over year to $7.8 billion in the reported quarter. Net sales marginally missed the Zacks Consensus Estimate of $7.9 billion due to unexpected bad weather conditions that negatively affected holiday shopping.
TJX Companies' consolidated comparable store sales increased 3.0% in the quarter compared to a 7% increase in the comparable year-ago quarter. The year-over-year increase was driven by same-store sales growth of 3% at Marmaxx, 2% at Home Goods, and 9% at TJX Europe. Comps however declined at TJX Canada stores by 2%.
We note that comps growth was lower than the prior year growth, due totough retail environment in form of reduced discretionary spending by consumers and unfavorable weather, which negatively impacted holiday sales.
TJX Companies' gross margin shrank 1.0 percentage points (pp) from the prior-year quarter to 27.6%. The margin was lowered due to decline in merchandise margins following aggressive pricing by TJX during the highly promotional holiday shopping environment.
Selling, general and administrative costs as a percentage of sales increased 0.4 pp year on year to 15.6% in the fourth quarter
Fiscal Results
For fiscal 2014, earnings of $2.83 per share missed the Zacks Consensus Estimate of $2.85 by 1.0%. Earnings were ahead of the year-ago earnings of 2.47 by 15% and were at the higher management's guidance range of $2.80-$2.83 backed by higher sales.
Net sales grew 6.0% year over year to $27.4 billion on the back of comparable store sales growth of 3%. Net sales marginally beat the Zacks Consensus Estimate of $27.5 billion.
Share Repurchase
During the fourth quarter of 2014, the company spent a total of $455 million to repurchase 7.3 million common shares.
TJX also announced its plan to repurchase approximately $1.6 to $1.7 billion of common stocks during fiscal 2015.
Outlook
The company issued first quarter and fiscal 2015 outlook. For fiscal 2015, the company expects earnings in the range of $3.05 – $3.19. Comparable store sales are expected to grow in the range of 1%-2%. The Zacks Consensus Estimate for fiscal 2015 is $3.25 per share, higher than the company's guidance range.
For the first quarter of fiscal 2015, the company expects comparable store sales growth of 1%-2%. It issued earnings per share outlook in the range of 65 cents to 66 cents. The Zacks Consensus Estimate for first quarter fiscal 2015 is 71 cents per share, higher than the company's guidance range.
TJX currently holds a Zacks Rank #3 (Hold). Some better ranked stocks in the consumer staples sector include Diamond FoodsInc (DMND) and Post HoldingsInc. (POST) and The Hain Celestial Group Inc. (HAIN). All of these stocks sport a Zacks Rank #2 (Buy).
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