TJX Q3 net sales up 5 percent, maintains FY16 outlook

The TJX Companies said that its net sales for the third quarter of fiscal 2016 increased 5 percent to 7.8 billion dollars and consolidated comparable store sales increased 5 percent over last year's 2 percent increase. Net income for the third quarter was 587 million dollars and diluted earnings per share were 0.86 dollar versus last year's 0.85 dollar.

For the first nine months of fiscal 2016, net sales were 22 billion dollars, a 6 percent increase over last year, and consolidated comparable store sales increased 5 percent. Net income was 1.6 billion dollars. Diluted earnings per share were 2.35 dollars, a 5 percent increase over the prior year's adjusted 2.23 dollars.

“I am extremely pleased with our third quarter performance as our momentum continued. Our 5 percent consolidated comparable store sales growth, over a 2 percent increase last year, continued our excellent trend from the first two quarters and significantly exceeded our plans. Our 0.86 dollar in earnings per share was also well above our expectations. To that end, we continue to balance growth with investments in our future to establish a strong foundation in the US and internationally. Further, we were happy to add Trade Secret, an Australian off-price retailer in October,” said Carol Meyrowitz, Chairman and Chief Executive Officer of The TJX Companies.

Impact of foreign currency fluctuation

The movement in foreign currency exchange rates had a three percentage point negative impact on consolidated net sales growth in the third quarter versus the prior year. The overall net impact of foreign currency exchange rates had a 0.04 dollar negative impact on third quarter earnings per share, compared with a 0.01 dollar positive impact last year.

For the first nine months, the movement in foreign currency exchange rates had a three percentage point negative impact on consolidated net sales growth. The overall net impact of foreign currency exchange rates had a 0.08 dollar negative impact on earnings per share, compared with a neutral impact last year.

For the third quarter, the company's consolidated pretax profit margin was 12.1 percent, a 0.9 percentage point decrease compared with the prior year. Gross profit margin was 29 percent, down 0.4 percentage points.

During the third quarter, the company increased its store count by a net of 133 stores to a total of 3,594 stores. The company increased square footage by 5 percent over the same period last year.

Fourth quarter and full year outlook

For the fourth quarter, the company expects diluted earnings per share to be in the range of 0.91 dollar to 0.93 dollar compared to0.93 dollar last year. This guidance reflects an assumption that the combination of foreign currency, transactional foreign exchange, the company's wage initiative, incremental investments to support growth, and pension costs would have a 9 percent negative impact on EPS growth. This guidance also reflects a negative impact to EPS from the acquisition of Trade Secret that was not contemplated in the company's prior guidance. This EPS outlook is based upon estimated consolidated comparable store sales growth of 2 percent to 3 percent.

For the fiscal year ending January 30, 2016, the company continues to expect diluted earnings per share to be in the range of 3.26 dollars to 3.28 dollars versus 3.15dollars in fiscal 2015. This guidance for EPS growth reflects a 9 percent negative impact from the same factors affecting estimated EPS growth in the fourth quarter. This guidance also now reflects a 0.02 dollar to 0.03 dollar negative impact to EPS from the acquisition of Trade Secret. This EPS outlook is now based upon a raised estimate of consolidated comparable store sales growth of 4 percent to 5 percent.