Target, TJX & Macy's Q2 earnings top all estimates

Retailers Target Corp. (TGT), TJX Cos. Inc. (TJX) and Macy's, Inc. (M) reported Wednesday profits for the second quarter that topped analysts' estimates. Quarterly revenues at Target and TJX also beat estimates, while it misses by a whisker at Macy's. The improved results at the retailers were driven by gross margin expansion.

Target and TJX raised its earnings guidance for the full year, while Macy's maintained its earnings outlook for the full year.

In Wednesday's trading session on the NYSE, Target shares are up 20.22 dollars or 14.12 percent to trade at 163.43 and TJX shares are also up 6.41 dollars or 5.64 percent to trade at 119.71, while Macy's shares are down 2.41 dollars or 13.59 percent to trade at 15.33.

Discount retailer Target reported that second-quarter net earnings soared to 1.19 billion or 2.57 dollars per share from 835 million or 1.80 dollars per share in the year-ago quarter.

On average, 27 analysts polled by Thomson Reuters expected the company to report earnings of 2.18 dollars per share for the quarter. Analysts' estimates typically exclude special items.

Total revenue for the quarter grew 2.7 percent to 25.45 billion from 24.77 billion dollars in the same quarter last year, reflecting total sales growth of 2.6 percent to 25.02 billion dollars and 10.8 percent increase in other revenue. Analysts expected revenues of 25.20 billion dollars for the quarter.

Total comparable sales increased 2.0 percent in the quarter, as comparable store sales increased 0.7 percent and comparable digital sales grew 8.7 percent.

Gross margin improved 190 basis points to 28.9 percent, reflecting the net impact of merchandising activities, including cost improvements.

"Importantly, our growth was driven entirely by traffic in stores and our digital channels, with double-digit growth in our same-day delivery services," said Brian Cornell, chair and CEO of Target

Looking ahead to the third quarter, the company expects earnings and adjusted earnings in a range of 2.10 to 2.40 dollars per share on comparable sales growth of 0 to 2 percent. The Street is looking for earnings of 2.24 dollars per share for the quarter.

For fiscal 2024, the company now projects earnings and adjusted earnings in a range 9.00 to 9.70 dollars per share on comparable sales growth of 0 to 2 percent. Analysts expect earnings of 9.28 dollars per share for the year.

Previously, the company expected earnings and adjusted earnings in a range of 8.60 to 9.60 dollars per share on comparable sales growth of 0 to 2 percent.

Meanwhile, off-price retailer TJX reported that net income for the second quarter grew to 1.10 million or 0.96 dollars per share from 989 million dollars or 0.85 per share in the prior-year quarter. Analysts expected earnings of 0.92 cents per share for the quarter.

Net sales for the quarter increased 6 percent to 13.47 billion from 12.76 billion dollars in the same quarter last year, and topped analysts' consensus revenue estimate of 13.31 billion dollars. Overall comp store sales increased 4 percent, driven by an increase in customer transactions.

Comp store sales at Marmaxx increased 5 percent, and Marmaxx sales also grew 7 percent to 8.45 billion dollars. Comp store sales at HomeGoods grew 2 percent and HomeGoods sales also increased 4 percent to 2.10 billion.

TJX Canada sales increased 2 percent to 1.24 billion dollars, while TJX International (Europe & Australia) sales improved 4 percent to 1.68 billion from last year.

Gross profit margin improved 20 basis points to 30.4 percent from last year.

Looking ahead to the third quarter, the company expects earnings in a range of 1.06 to 1.08 dollars per share on consolidated comparable store sales growth of 2 to 3 percent.

For fiscal 2025, the company now projects earnings in a range of 4.09 to 4.13 dollars per share on consolidated comparable store sales growth of about 3 percent.

Previously, the company expected earnings in the range of 4.03 to 4.09 dollars per share on consolidated comparable store sales growth of 2 to 3 percent.

On average, analysts polled by Thomson Reuters expect the company to report earnings of 1.10 dollars per share for the quarter and 4.14 per share for the year.

The Company also continues to expect to repurchase approximately 2.0 to 2.5 billion dollars of TJX stock during the fiscal year ending February 1, 2025.

Additionally, the company said it has signed a definitive agreement to make an investment of approximately 360 million dollars, subject to customary working capital adjustments, for a 35 percent ownership stake in Dubai-based privately-held off-price retailer Brands for Less (BFL). The transaction is expected to close later this fiscal year. The Company's ownership in BFL is expected to be slightly accretive to earnings per share beginning in Fiscal 2026.

Omni-channel fashion retailer Macy's reported a net income for the second quarter of 150 million dollars or 0.53 cents per share, compared to a net loss of 22 million dollars or 0.08 cents per share in the prior-year quarter.

Excluding items, adjusted net income for the quarter was 0.53 per share, compared to 0.26 per share in the year-ago quarter.

Net sales for the quarter declined 3.8 percent to 5.10 billion from 5.28 billion dollars in the same quarter last year.

On average, analysts polled by Thomson Reuters expected the company to report earnings of 0.30 cents per share on net sales of 5.12 billion dollars for the quarter. Analysts' estimates typically exclude special items.

Comparable sales were down 4.0 percent on an owned basis and down 3.3 percent on an owned-plus-licensed -plus-marketplace basis.

Macy's brand comparable sales were down 4.5 percent on an owned basis and down 3.6 percent, on an owned-plus-licensed-plus-marketplace basis.

Bloomingdale's brand comparable sales on an owned basis were down 1.1 percent and on an owned-plus-licensed-plus-marketplace basis were down 1.4 percent. Bluemercury brand comparable sales were up 2.0 percent on an owned basis.

Gross profit margin improved 240 basis points to 40.5 percent from last year.

Looking ahead to fiscal 2024, the company continues to project adjusted earnings in a range of 2.55 to 2.90 dollars per share, but now expects net sales between 22.1 billion and 22.4 billion dollars, down from the prior forecast between 22.3 billion and 22.9 billion dollars.

The Street is looking for earnings of 2.78 dollars per share on net sales of 22.84 billion dollars for the year.(DPA)