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$TJX stated that its overall 3Q18 Marmaxx margins missed outlook due to the hurricane impact and the deleverage on the low comp at Marmaxx. The company expects 4Q18 overall gross profit margin to be in the range of 28.9-29% vs. 28.3% last year. The extra week in the quarter is expected to benefit the high end of gross profit margin by approx. 40BP.
For FY18, $TJX is maintaining the high end of its EPS guidance, expecting diluted earnings in the range of $3.91-3.93. This guidance includes an expected benefit of approx. $0.11 per share from the 53rd week in $TJX's FY18 calendar. Excluding this benefit, $TJX expects adjusted diluted EPS to be in the range of $3.80 to $3.82.
For 4Q18, $TJX expects diluted EPS in the range of $1.25-1.27, a 21-23% increase YoY. Excluding an approx. $0.11 benefit from the extra week in 4Q18, the company expects adjusted EPS to be in the range of $1.14-1.16, an YoY increase of 11-13%.
Off-price retailer $TJX, which has been aggressive in store opening and brand enhancing initiatives recently, posted a 16.6% spike in its 3Q18 profit, driven by higher store traffic and improved margins. Profit surged to $641.4MM or $1 per share from $549.7MM or $0.83 per share a year ago. Sales jumped 6% to $8.8Bil, while comp sales remained flat.
$TJX said 2Q18 was impacted by supply chain and wage pressures. The company had significantly more freight costs in the HomeGoods division during 2Q18, primarily due to some additional West Coast sourcing and product mix differences compared to 1Q18.
For FY18, $TJX expects Marmaxx comparable sales growth of 1-2% on sales of $22.3-22.4Bil. At HomeGoods, comps are expected to increase 3-4% on sales of $5.1Bil. TJX Canada comps are expected to increase 3-4% on sales of $3.5-3.6Bil. At TJX International, the company expects comp growth of 1-2% on sales of $4.8Bil.
During 2Q18, $TJX’s Marmaxx division comparable store sales were up 2% versus a 4% increase last year. HomeGoods delivered a 7% increase in comparable store sales over 5% in 2Q17. TJX Canada comps increased 7% over last year’s 9% increase. TJX International comp store sales grew 1% versus 2% last year.
For FY18, $TJX expects diluted EPS of $3.89-3.93. This represents a 12-14% increase over the prior year’s EPS of $3.46. Adjusted diluted EPS is expected to be $3.78-3.82. This EPS outlook is based upon estimated consolidated comparable store sales growth of 1-2%.
For 3Q18, $TJX expects diluted EPS to be $0.98-1.00. This would represent an 18-20% increase over the prior year’s EPS of $0.83. This guidance assumes that wage increases will negatively impact EPS growth by 1% and that FX will positively impact EPS growth by 3%. $TJX expects consolidated comparable store sales growth of 1-2%.