T.J. Maxx parent raises profit view as cost pressures ease
Reuters
TJX Cos Inc lifted its annual profit forecast on Wednesday, banking on easing cost pressures to cushion a pullback in consumer spending on discretionary items.
The T.J. Maxx parent also missed first-quarter revenue estimates and joined bigger retailer Target
Consumers aren’t necessarily buying home products right now, unless it’s essential for everyday use, said Jane Hali and Associates analyst Jessica Ramirez
TJX’s HomeGoods brand saw U.S. comparable-store sales drop 7% in the first quarter. The company had warned in February that the business would slow down for two more quarters.
Still, TJX’s gross margin increased by 1 percentage point to 28.9% as it started to see expenses ease after months of grappling with sky-high costs related to raw materials, labor and freight.
Shares were up about 3% in morning trade as the company also beat expectations for first-quarter profit and maintained its annual sales forecast.
“Investors place more importance on sales than margins, so the sales miss will likely keep the stock from moving much higher,” said UBS
Net sales rose 3.3% to $11.78 billion in the quarter ended April 29, missing estimates of $11.82 billion.
TJX now expects 2024 adjusted profit per share between $3.39 and $3.48, compared with its previous range of $3.29 to $3.41, missing estimates of $3.55, according to Refinitiv IBES.
Its current-quarter forecast for diluted earnings per share of between 72 and 75 cents also came in below estimates of 79 cents. Overall comparable store sales was expected to increase 2% to 3%, compared with expectations of 3.07%.
