THE TJX COS.
Cold weather, weak comps and higher costs drove down The TJX Companies Inc.’s first-quarter profits but earnings did meet the retailer’s forecast.
For the three months ended April 26, the Framingham, Mass.-based off-price chain said net income dropped 22.8 percent to $113.5 million, or 22 cents a diluted share. By comparison, last year the company posted earnings of $147.1 million, or 27 cents. Earnings per share were within the company’s plan and matched the Wall Street consensus estimate.
Net sales for the period rose 4.6 percent to $2.79 billion from $2.67 billion a year ago, but cold weather and unfavorably strong year-ago comparisons pushed comparable-store sales down 2 percent versus last year’s 7 percent same-store sales gain.
“We planned the first quarter conservatively against the very strong results of last year and earnings came in near the upper end of our range, while comp-store sales came in slightly below our expectations,” said chief executive officer Edmond English on a conference call with analysts. “The cold weather throughout the quarter was such an overriding issue that it is difficult to draw any other conclusion about the trend of our first-quarter performance. Unseasonable weather this season is never just about the current year. It’s about the year-over-year comparison, and last year the weather in the first quarter couldn’t have been more favorable.”
Consolidated costs — selling, general and administrative expenses plus cost of goods sold — also hurt the bottom line, expanding 220 basis points to 93.1 percent of net sales from 90.9 percent a year ago. TJX attributed the higher cost ratio to a conservative sales plan and increases in insurance and distribution expense.
At the Marmaxx segment, the firm’s combined entity of T.J. Maxx and Marshalls and its largest division by far, income plunged 22.5 percent to $193.9 million on a 1 percent sales decrease to $2.15 billion. Segment comps fell 5 percent during the quarter versus a year-ago 7 percent gain. TJX said the cool weather was responsible and that the segment failed to meet the firm’s plan.
In guidance, TJX said second-quarter earnings are anticipated at 25 to 28 cents a share, with full-year earnings of $1.20 to $1.32 a share. The Wall Street consensus estimates are currently 26 cents and $1.24, respectively.