TJX Company raises Q3 and FY’14 forecast

REPORT_ The TJX Companies has raised its forecast for the

current fiscal 2014's third quarter and full year results. The company will focus on its increased long-term store growth potential and its key strengths that underscore its confidence in these estimates through an Investor Event today. The company has also confirmed its long-term EPS growth model.

The company now expects third quarter diluted earnings per share to be in the range of 0.84 dollars to 0.85 dollars, compared with last year's 0.62 dollars per share. This guidance now reflects an estimated 0.11 dollars tax benefit, due to reversals of state and foreign tax reserves and allowances that was not contemplated in the company’s previous guidance. Excluding the tax benefit, on an adjusted basis, this guidance would be 0.73 dollars to 0.74 dollars, an 18 percent to 19 percent increase over the prior year. The company now expects third quarter consolidated comparable store sales growth to be approximately 4 percent over last year's reported 7 percent increase.

For the fiscal year ending February 1, 2014, the Framingham, Mass-headquartered company now expects diluted earnings per share of 2.89 dollars to 2.93 dollars versus 2.55 dollars in Fiscal 2013. On an adjusted basis, this guidance would be 2.78 dollars to 2.82 dollars. This outlook continues to be based on estimated consolidated comparable store sales growth of 2 percent to 3 percent.

The company is maintaining its fourth quarter earnings per share guidance of 0.77 dollars to 0.80 dollars, compared to 0.82 dollars last year, which also included the approximately 0.08 dollars benefit from the extra week in fiscal 2013. The company will raise its estimates for long-term store growth potential on a consolidated basis with its current chains, in its current markets. The most significant factor in this increase is that TJX now believes that its Marmaxx division (T.J. Maxx and Marshalls) can grow to substantially more stores in the US than it had previously estimated. Marmaxx has seen successful growth in both major cities and rural areas over the last several years, which has given the Company the confidence to increase its growth estimates.

The company will discuss its view that it now sees TJX Europe (consisting of T.K. Maxx and HomeSense) as having the long-term potential to reach over 10 percent segment profit margin. Previously, the company had modeled its European division at a potential over 8 percent margin. TJX Europe has reported strong results for the past seven quarters, which has given the company confidence in this division's increased ability to lever its infrastructure as it pursues its expansion opportunities.

The company is also confirming its confidence in its ability to grow earnings per share annually by 10 percent-13 percent for each of the next three years. The company expects to grow its sales by 6 percent-7 percent, with approximately 2 percent growth coming from comparable store sales and 4 percent-5 percent from square footage growth. An additional 1 percent-2 percent is estimated to come from segment profit margin improvement and an additional 3 percent-4 percent is expected to come from the company's share repurchase program.