Yahoo Finance TJX Companies’ US Business: Did Sales Rise in Fiscal 1Q17?
Did TJX Companies’ Fiscal 1Q17 Earnings Beat Estimates?
Sales rise despite competition
TJX Companies (TJX) generated 9.3% sales growth in its US business in fiscal 1Q17, which ended on April 30, 2016. The strong growth in fiscal 1Q17 came despite growing competition in the off-price space. With more and more consumers looking for bargain deals, some department store players are looking for growth opportunities in the off-price space. In 2015, Macy’s (M) entered the off-price space through its Macy’s Backstage stores, and Kohl’s (KSS) opened its first Off/Aisle store. Further, Nordstrom (JWN) operates 200 off-price Rack stores, as of April 30. However, TJX Companies and Ross Stores (ROST) are established off-price retailers and have a competitive edge in terms of their extensive store networks and strong supplier relationships.
US business performance
TJX Companies’ US business comprises the Marmaxx and HomeGoods segments. The Marmaxx segment includes the T.J. Maxx and Marshalls stores. As of April 30, 2016, TJX Companies’ operates 1,163 T.J. Maxx stores, 1,010 Marshalls stores, 534 HomeGoods stores, and eight Sierra Trading Post stores. TJX Companies constitutes 0.7% of the iShares Russell Top 200 Growth ETF (IWY).
In fiscal 1Q17, the Marmaxx segment delivered sales growth of 8.2%. The segment’s same-store sales growth of 6% in fiscal 1Q17 was higher than the 3% same-store sales growth in fiscal 1Q16. This strong growth was driven by higher customer traffic and significant gains in units sold, but it was partially offset by a fall in average ticket. In the fiscal 1Q17 conference call, Scott Goldenberg, the company’s chief financial officer, stated that the decrease in average ticket in fiscal 1Q17 for the Marmaxx segment was less than what the company expected.
The Marmaxx segment’s profit increased by 8.7% in fiscal 1Q17, and the segment’s profit margin increased by ten basis points. The segment’s margin increased due to strong buying and occupancy leverage and increased merchandise margins.
The sales of HomeGoods stores increased by 14.8% in fiscal 1Q17, and same-store sales grew by 9%. The segment’s profit increased by 13.9% in fiscal 1Q17. However, the segment’s profit margin declined by ten basis points due to an adverse impact of wage increases.
Fiscal 2017 expectations
The company expects its Marmaxx segment to deliver same-store sales growth in the range of 2%–3% in fiscal 2017, which ends on January 28, 2017. The Marmaxx segment’s profit margin is expected to be in the range of 13.7%–13.9%.
The HomeGoods segment is expected to generate same-store sales growth in the range of 4%–5%, and the segment’s profit margin is anticipated to be in the range of 12.9%–13.1%.
We’ll discuss the performance of the company’s international business in the next part of this series.
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