The TJX Companies Inc.‘s (TJX) fiscal third-quarter earnings grew 13.6% to 92 cents a share from 81 cents in the year-ago period. The quarterly earnings were a penny above the Zacks Consensus Estimate of 91 cents. Profits were primarily driven by prudent inventory management and increased store traffic.
Buoyed by the quarterly results, TJX lifted its adjusted earnings guidance for fiscal 2011 to a range of $3.33 to $3.38 per share. Previous guidance was in the range of $3.27 to $3.37 per share. The revised guidance remains in line with the Zacks Consensus Estimate of $3.37 per share, which edged up a penny over the past week.
Quarterly Details
Net sales during the quarter grew 5.4% year-over-year to $5,525 million, which was below the Zacks Consensus Estimate of $5,536 million. TJX’s consolidated same-store sales increased 1% in the quarter driven by same-store sales growth at Marmaxx (+1%), Home Goods (+3%) and TJX Canada (+3%), partially offset by a decline of 2% in A.J. Wright and 3% decline in TJX Europe.
TJX’s gross profit rose 5.3% year-over-year to $1,519 million, while gross margin remained flat year-over-year at 27.5%. Merchandise margin improvement and buying and occupancy cost leverage were fully offset by the impact of mark-to-market adjustments related to inventory related hedges.
Selling, general and administrative expenses (SG&A), as a percentage of sales, were also flat year-over-year at 16.5%. However, higher sales somewhat offset the increase in SG&A. Accordingly, TJX’s adjusted operating income (gross profit less SG&A) recorded a growth of 5.5% year-over-year to $597.1 million, while operating margin was almost flat year-over-year increasing marginally by 2 basis points to 10.8%.
Cash Flow, Balance Sheet and Share Repurchase
TJX exited the quarter with cash and cash equivalents of $1,339 million, compared to $1,445 million in the year-ago period. Quarter-end long-term debt was $774 million, reflecting a capitalization ratio of 20.0%. Year to date, the company generated $1099 million of cash from operations and deployed $141.9 million towards share buybacks, $540.4 million towards capital expenditure and $170 million towards dividend payments.
During the reported quarter, the company repurchased shares worth $256 million. For full fiscal 2011, the company intends to repurchase shares worth $1.2 billion.
Moving forward, TJX expects fiscal 2011 fourth-quarter EPS of 89 cents to 94 cents based on same-store sales decline of 1% to 3%. The guidance is in line with the Zacks Consensus Estimate of 94 cents per share.
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