The TJX Companies (TJX) reported better-than-expected Q2 results and raised its FY24 outlook. The off-price apparel and home fashion retailer posted earnings of $0.96 per diluted share, up 13% year-over-year. This was above analysts’ expectations of $0.92 per share.
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In addition, the company reported net sales for the second quarter of $13.5 billion, an increase of 6% year-over-year, surpassing consensus estimates of $13.3 billion. TJX’s comparable sales increased by 4% in the second quarter, driven by higher customer transactions.
TJX CEO Highlights Growth Drivers
In light of the positive Q2 results, Ernie Herrman, CEO and President of The TJX Companies, expressed his satisfaction with the quarter’s performance. Herrman highlighted that overall sales growth was driven entirely by increased customer transactions across all divisions, with Marmaxx leading the way with a 5% increase in comparable sales. Marmaxx is the company’s chain of off-price retail stores in the U.S.
Moreover, the company’s management noted that TJX had a strong start to the third quarter, with excellent buying opportunities and plans to continue delivering fresh merchandise through the fall and holiday seasons. Additionally, the second quarter also marked the opening of TJX’s 5,000th store.
TJX Invests in Brands For Less
Shifting focus to its strategic investments, the company announced that it has invested around $360 million, pending customary working capital adjustments, for a 35% ownership stake in Brands for Less (BFL). BFL is a privately held company based in Dubai and is the region’s only major off-price retailer of branded apparel, toys, and home fashions. The transaction, which gives TJX a non-controlling minority interest in BFL, is expected to close later this year.
TJX’s Dividends and Stock Buybacks
Turning to shareholder returns, TJX returned $982 million to shareholders in the second quarter through dividends and buybacks. This included $559 million used to repurchase and retire 5.1 million shares of TJX stock, and $423 million paid out in dividends.
TJX Raises Q3 and FY25 Outlook
Looking ahead, TJX anticipates comparable store sales to rise by 2% to 3% in the third quarter, with diluted earnings projected between $1.06 and $1.08 per share, slightly below analysts’ expectations of $1.10 per share.
For FY25, the retailer forecasts a 3% increase in comparable store sales and now expects diluted earnings to fall between $4.09 and $4.13 per share, up from its previous guidance of $4.03 to $4.09 per share.
Furthermore, TJX expects to buy back stock worth $2 billion and $2.5 billion in FY25.
Is TJX a Good Stock to Buy?
Analysts remain bullish about TJX stock, with a Strong Buy consensus rating based on 17 Buys and two Holds. Over the past year, TJX has increased by more than 30%, and the average TJX price target of $116.25 implies a downside potential of 2.6% from current levels. These analyst ratings are likely to change following TJX’s results today.
