Home TJX Q1 Earnings Exceed Estimates but HomeGoods Comps Slip
May 19, 2022
TJX Q1 Earnings Exceed Estimates but HomeGoods Comps Slip
Posted In: Retail Articles

By Mike Duff

Contributing Editor

Sales and earnings at The TJX Corp. gained year over year but only earnings surpassed Wall Street estimates in the first quarter as HomeGoods comparable sales slipped based primarily, the company stated, on difficult comparisons.

Net income was $587.5 million, or 49 cents per diluted share, in the quarter versus $533.9 million, or 44 cents per diluted share, in the period a year prior, TJX reported.

Adjusted diluted earnings per share of 68 cents excluded a 19-cent charge related to a write-down of the TJX minority investment in Familia. In early March, the company pointed out, TJX committed to divesting its minority investment in Familia, which operates off-price stores in Russia.

TJX beat a Yahoo Finance-published analyst consensus estimate for adjusted diluted earnings per share of 60 cents even if the company came up a bit short of the $11.59 billion sales estimate.

Net sales were $11.41 billion, the company maintained, versus $10.09 billion in the year-earlier quarter.

In the United States, comparable sales were up 3% at Marmaxx, including T.J. Maxx and Marshalls, and down 7% at HomeGoods while the company reading was flat. Comps at stores open in the first quarter of 2022 were up 12% at Marmaxx, 40% at HomeGoods and 17% overall at the company versus stores open in the first quarter of 2020. 

Total sales in the U.S. were $8.91 billion versus $8.78 billion while those in Canada were $1.08 billion versus $766 million and those in TJX International were $1.42 billion versus $539 million in the quarter a year previous, the company indicated. 

In a first-quarter conference call, Scott Goldenberg, TJX CFO, said the comp sales decline in the U.S. home businesses was a result of the difficult year-over-year comparison and not driven by company pricing initiatives that raised tickets in some cases. In the quarter, HomeGoods’ average basket increased driven by a higher ticket but customer traffic decreased. He added that profit margin was hurt by almost 700 basis points of incremental freight costs. 

Goldenberg said that TJX sees HomeGoods as strongly positioned given the retail environment, and it will emphasize value-message marketing for the banner.

In the conference call, Ernie Herrman, TJX president and CEO, said, in addition to the discussion of HomeGoods and the similarity in sales trends for home products at Marmaxx, the company’s HomeSense business, despite having an assortment heavily slanted toward bigger ticket items, has been “super healthy.”

In announcing the financial results, Herrman said, “I am particularly pleased that our first-quarter pretax profit margin and earnings per share, each on an adjusted basis, exceeded our plans even though our sales were slightly below our planned range. This underscores the power of our flexible, off-price business model when we execute well. For the full year, we see opportunity to further improve our profitability. I also want to highlight that our largest division, Marmaxx, delivered a comp-store sales increase of 3% over 12% open-only comp growth last year, which was driven by an increase in customer traffic. We believe our value proposition is as appealing as ever for consumers in today’s retail environment, and we are excited about our initiatives to drive customer traffic and sales. We remain focused on our long-term vision to become an increasingly profitable, $60 billion-plus company.”

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