TJX Earnings Beats Expectations Despite Store Closures; Shares Fall

TJX Companies, Inc. (TJX) reported outstanding Q1 FY22 results despite temporary store closures for part of the quarter. TJX is a leading off-price retailer of apparel and home fashions in the United States and internationally.

Net sales for the quarter were up 129% at $10.09 billion and surpassed the Street’s estimates of $8.38 billion.

Earnings stood at $0.44 per share compared to a loss of $0.74 per share in the prior-year quarter. The company’s reported earnings beat the Street’s estimates of $0.28 per share. However, shares of the company fell 5.2% to close at $67.38 on May 19.

The company’s overall open-only comp sales increased 16% year-over-year. Open-only comp sales is a measure of increase/decrease in sales for a comparable number of days the stores remain open in the same quarters for both Fiscal 2022 and 2021.

The company ended the quarter with 4,639 stores (including temporarily closed stores) and a square footage increase of 1% compared to the prior quarter. (See TJX Companies stock analysis on TipRanks)

Commenting on the results, Ernie Herrman, CEO and President of TJX said, “As we start the second quarter, overall open-only comp store sales trends remain similar to the first quarter. While the environment remains uncertain, particularly internationally, we are convinced we are strongly positioned as we emerge from this health crisis. Looking ahead, we see numerous opportunities to capture additional market share around the world and are excited about the runway for growth we see for TJX.”

Owing to the uncertainty surrounding the COVID-19 pandemic, the company is not giving any guidance. The company forecasts its stores to be closed for around 3% of the upcoming quarter.

In April, the company reduced its debt by $750 million and expects further debt reduction of $2 billion during the year.

Following the Q1 FY22 results, Guggenheim analyst Robert Drbul maintained a Buy rating on the stock and lifted the price target to $80, which implies 18.7% upside potential to current levels.

“We are raising our estimates to reflect the upside in 1Q and our favorable outlook for TJX and off-price… For off-price overall, we see several favorable secular tailwinds over the long-term, as well as near-term benefits from store reopening’s and a favorable outlook for apparel spend in particular in coming months as consumers to look to refresh their wardrobes post COVID,” Drbul said.

Consensus among analysts is a Strong Buy based on 11 Buys and 3 Holds. The average analyst price target stands at $78.71 and implies upside potential of 17.1% to current levels. Shares have gained 32.5% over the past year.

TJX scores a 9 out of 10 from TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations.

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