TJX Meet Expectations - Analyst Blog
15 11월 2011 - 9:16PM
Zacks
TJX Companies Inc. (TJX) reported adjusted
earnings of $1.06 per share for the third quarter ended October 29,
2011. Although earnings were in line with the Zacks Consensus
Estimate, they shot up 15% from the year-ago level. The growth was
partly offset by warm weather in most parts of Europe and America,
sudden lowering of Celsius in Europe during the end of the quarter
bucked up sales in the region.
Foreign currency movement contributed 1% to the earnings of the
third quarter. Overall net impact of foreign currency exchange
rates had a positive impact of 3 cents on third quarter earnings
per share compared with a neutral impact last year.
Based on the quarterly earnings, the company updated its outlook
for fiscal 2012 to a range of $3.93 to $3.97 per share, which
represents a 13% to 14% increase over the prior year’s adjusted
earnings per share from continuing operations of $3.49.
For the fourth quarter, the company expects diluted earnings per
share on a GAAP basis to be in the range of $1.19 to $1.23, a 13%
to 17% increase over $1.05 per share last year. The management is
optimistic about the company’s performance due to the upcoming
holiday season coupled with comfortable inventory position of the
company.
Quarterly Details
Total net sales during the quarter grew 5.0% year-over-year to
$5.79 billion, which was slightly below the Zacks Consensus
Estimate of $5.83 billion. Sales were expected to be stronger, as
the unfavorable weather in many U.S. and European regions affected
apparel sales.
TJX's consolidated same-store sales increased 3.0% in the quarter
driven by same-store sales growth at Marmaxx (+4.0%) and Home Goods
(+5.0%), partially offset by a decline of 2.0% in TJX Canada and
flat growth in TJX Europe. Sales in Canada and Europe were impacted
by unfavorable foreign currency exchange rates.
TJX's gross margin expanded 60 basis points from the prior year
quarter to 28.1%. The margin expansion was mostly due to improved
buying, occupancy cost leverage and 0.2% positive impact of
mark-to-market adjustments. However, this was partially offset by
flattish merchandise margins.
Selling, general and administrative expenses (SG&A), as a
percentage of sales, remained constant from the prior-year period
at 16.5%.
Cash Flow, Balance Sheet and Share Repurchase
TJX exited the quarter with cash and cash equivalents of $956.9
million, compared to $1,339.1 million in the year-ago period.
Quarter-end long-term debt was flat at $774.5 million with
shareholders equity of $3,183.3 million. The company generated
$505.1 million of cash from operations and deployed $222.2 million
towards capital expenditure and $71.9 million towards dividend
payments in the third quarter.
During the reported quarter, the company repurchased shares worth
$295.0 million. For the full year, the company intends to
repurchase shares worth $1.2 billion.
Our Take
We are encouraged by the company’s flexible off-price business
model is flexible, allowing it to react to market trends. TJX has a
low cost structure compared to many other traditional retailers. It
focuses aggressively on expenses throughout its business.
However, the highly competitive nature of the business is a matter
of concern. Stiff competition from Kohl’s
Corporation (KSS) and Target Corporation
(TGT) coupled with slow recovery of the U.S. economy are matters of
concern.
Currently TJX holds a Zacks #3 Rank, implying a short-term Hold
recommendation. On a long-term basis, we maintain a Neutral rating
on the stock with a short-term Buy rating.
KOHLS CORP (KSS): Free Stock Analysis Report
TARGET CORP (TGT): Free Stock Analysis Report
TJX COS INC NEW (TJX): Free Stock Analysis Report
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TJX Companies (NYSE:TJX)
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TJX Companies (NYSE:TJX)
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