Home Inflation Hits Comps but TJX Beats Street on Earnings
August 17, 2022
Inflation Hits Comps but TJX Beats Street on Earnings

By Mike Duff

Contributing Editor

TJX drove earnings in the second quarter despite declining comparable sales in its stores across the United States.

Net income was $809.3 million, and diluted earnings per share were 69 cents versus $785.7 million and diluted earnings per share of 64 cents, in the quarter a year past.

A MarketBeat-published analyst average estimate called for diluted earnings per share of 68 cents and revenue of 12.05 billion in the quarter.

Net sales were $11.84 billion, a decrease of 2% versus the year-before quarter. U.S. comparable sales decreased 5% after a 21% increase in U.S. open-only comps covering stores active the year earlier during a period of pandemic-related regulation. Comps at Marmaxx, including T.J. Maxx and Marshalls, slipped 2% after gaining 18% in the year-previous quarter, and comps at HomeGoods slid 13% after gaining 36% in the year-previous period, the company reported.

In a conference call, Ernie Herrman, TJX president and CEO, said the effect of inflation on shoppers had depressed comp sales, but the company benefited from disciplined expense management and better than expected merchandise margins as company buyers purchased “the right merchandise in the right categories.”

Scott Goldenberg, TJX CFO, noted that HomeGoods segment profit was hit by incremental freight costs and results for the division were affected by strong home-related pandemic-influence spending. Yet, while the comp declined in the quarter, the year-over-year average basket increased significantly even as traffic decreased.

In announcing the financial results, Herrman said, “I am very pleased that our second quarter pretax profit margin exceeded our plan and earnings per share were at the high end of our guidance. We believe our strong profitability speaks to the strength and flexibility of our off-price business model, sharp execution of our teams, and expense discipline. As to the top line, U.S. comp sales for the second quarter came in lighter than we expected as we believe historically high inflation impacted consumer discretionary spending. While we saw more softness in our home categories, we were very pleased that comp sales in our overall apparel business at Marmaxx were slightly positive every month of the quarter. In addition, it was good to see the improved profitability of our international divisions.

“Looking ahead, while we are not immune to macro factors, we are convinced that the flexibility of our off-price business model and the value proposition we offer to a wide range of consumers will continue to serve us well, as we have seen throughout our 46-year history,” Herrman continued. “We see a marketplace flush with off-price buying opportunities for branded, high-quality product. We are excited about our many initiatives to drive customer traffic and sales for the fall and holiday selling season and will be emphasizing our value leadership in our marketing. We remain focused on our long-term vision to become an increasingly profitable, $60-billion-plus revenue company.”

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