The TJX Companies Inc. (TJX) reported adjusted earnings of 78 cents per share for the first quarter ended April 30, 2011 missed the Zacks Consensus Estimate of 80 cents and declined 2.5% from the prior-year quarter.
Quarterly Details
Total net sales during the quarter grew 4.1% year-over-year to $5,220.3 million, which was above the Zacks Consensus Estimate of $5,180.0 million. TJX's consolidated same-store sales increased 2.0% in the quarter driven by same-store sales growth at Marmaxx (+4.0%) and Home Goods (+6.0%), partially offset by a decline of 5.0% in TJX Europe and a decline of 3.0% in TJX Canada.
On an adjusted basis, total net sales grew 3.9% to $5,211.0 million. TJX's adjusted gross profit rose 2.3% year-over-year to $1,400.0 million, while gross margin contracted by 40 basis points to 26.9%. Improved buying and occupancy cost leverage were more than offset by the impact of mark-to-market adjustments and lower merchandise margins.
Selling, general and administrative expenses (SG&A), as a percentage of sales increased 70 basis points from the prior-year period to 17.1%. Costs associated with deleverage of company's European business and timing of certain expense items drive SG&A expenses upward.
Accordingly, TJX's adjusted operating income (gross profit less SG&A) inched down of 7.1% from the prior-year quarter to $508.0 million. Operating margin during the reported quarter contracted 120 basis points from the prior-year period to 9.7%.
Cash Flow, Balance Sheet and Share Repurchase
TJX exited the quarter with cash and cash equivalents of $1,377.1 million, compared to $1,833.3 million in the year-ago period. Quarter-end long-term debt was $774.4 million with shareholders equity of $3,123.4 million. The company generated $143.1 million of cash from operations and deployed $226.1 million towards capital expenditure and $58.6 million towards dividend payments.
During the reported quarter, the company repurchased shares worth $361.0 million. For full year, the company intends to repurchase shares worth $1.2 billion.
Second-Quarter and Full Year Outlook
Moving forward, TJX expects second-quarter ended July 31, 2011 earnings per share in the range of 81 cents to 86 cents based on same-store sales growth of 1.0% to 3.0%.
Moreover, for the full year, management expects earnings in the range of $3.81 to $3.93 per share based on same-store sales growth of 1.0% to 2.0%.
TJX, which competes with Kohl's Corporation (KSS) and Macy's Inc. (M), currently, has a Zacks #2 Rank, implying a short-term Buy rating on the stock. Besides, the company retains a long-term Neutral recommendation.
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