TJX Companies posts rise in Q2 net sales and earnings

The TJX Companies net sales for the second quarter of fiscal 2018 increased 6 percent to 8.4 billion dollars and consolidated comparable store sales increased 3 percent over last year's 4 percent increase. Net income for the quarter was 553 million dollars and diluted earnings per share were 0.85 dollar, versus the prior year's 0.84 dollar.

Commenting on the company’s results, Ernie Herrman, CEO and President of The TJX Companies, Inc., stated in a press release, "I am very pleased with our strong second quarter results. Earnings per share were 0.85 dollar, also above our plan, and, it's important to note, included significant headwinds from foreign currency exchange rates. As always, we will strive to surpass our goals and we have great confidence in the continued, successful growth of TJX."

First half earnings up 4 percent

For the first half of fiscal 2018, net sales were 16.1 billion dollars, a 5 percent increase over last year. Consolidated comparable store sales for the period increased 2 percent. Net income was 1.1 billion dollars, while diluted earnings per share were 1.67 dollars, a 4 percent increase over the prior year's 1.60 dollars.

For the second quarter, the company's consolidated pretax profit margin was 10.7 percent, a 0.9 percentage point decrease compared with the prior year. Gross profit margin was 28.5 percent, down 0.9 percentage points versus the prior year.

Through its dividend program, under which the current dividend represents a 20 percent increase versus last year, the company said, it returned to shareholders 201 million dollars in the second quarter and 369 million dollars in the first half of the year.

Third quarter earnings expected to rise 18-20 percent

For the third quarter of fiscal 2018, the company expects diluted earnings per share to be in the range of 0.98 dollar to 1 dollar. This would represent an 18 percent to 20 percent increase over the prior year's EPS of 0.83 and an 8 percent to 10 percent increase over the prior year's adjusted 0.91 dollar, which excludes the combined 0.08 dollar impact of last year's debt extinguishment charge and pension settlement charge.

This guidance, the company said, reflects an assumption that wage increases will negatively impact EPS growth by 1 percent. The company also anticipates that the combination of foreign currency and transactional foreign exchange will positively impact EPS growth by 3 percent and that the change in accounting rules for share-based compensation will positively impact EPS growth by an additional 2 percent. This EPS outlook is based upon estimated consolidated comparable store sales growth of 1percent to 2percent.

For the 53-week fiscal year ending February 3, 2018, the company now expects diluted earnings per share in the range of 3.89 dollars to 3.93 dollars. This represents a 12 percent to 14 percent increase over the prior year's EPS of 3.46 dollars. The company's full-year guidance includes an expected benefit of approximately 0.11 dollar per share from the 53rd week in the company's fiscal 2018 calendar.

Excluding this benefit, the company expects adjusted diluted earnings per share to be in the range of 3.78 dollars to 3.82 dollars, a 7 percent to 8 percent increase over the prior year's adjusted 3.53 dollars, which excludes the combined 0.07 dollar impact of last year's debt extinguishment charge and pension settlement charge from GAAP EPS of 3.46 dollars. This guidance reflects an assumption that wage increases will negatively impact EPS growth by 2 percent. The company also anticipates that the change in accounting rules for share-based compensation will positively impact EPS growth by 2 percent. This EPS outlook is based upon estimated consolidated comparable store sales growth of 1 percent to 2 percent.

During the second quarter ended July 29, 2017, the company increased its store count by 51 stores to a total of 3,913 stores.

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