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TJX posts adjusted EPS growth in Q1, lifts FY'19 guidance

TJX Cos. Inc. posted and increase in adjusted diluted EPS year over year to 96 cents and beat its own guidance, although the company missed analyst expectations for the fiscal first quarter.

The reported EPS of 96 cents, excluding a 17-cent benefit due to U.S. federal tax reform, compared to 82 cents in the year-prior quarter. The figure fell short of the normalized mean consensus estimate of $1.02, according to S&P Capital IQ.

TJX beat its own guidance, which it set at a range of 85 cents to 87 cents per share for the fiscal first quarter. The company attributed the gain to better-than-expected operating results of 5 cents, as well as incremental benefits "from mark-to-market gains on inventory hedges" of 2 cents and share-based compensation of 2 cents compared to the company's original plan.

In its outlook for fiscal 2019, TJX raised the high end of its full-year adjusted EPS guidance by 2 cents on "strong first quarter results." The company now expects adjusted diluted earnings per share to be in the range of $4.04 to $4.10, representing a 5% to 6% increase over the prior year's adjusted diluted EPS of $3.85.

The guidance excludes a 17-cent net benefit due to U.S. federal tax reform, a benefit of about 11 cents from an extra week on the company's fiscal 2018 calendar and a 10 cent impairment charge related to Sierra Trading Post. TJX said it recorded a $99.3 million impairment charge related to the Sierra Trading Post in its fiscal fourth quarter.

Net income for the fiscal first quarter reached $716.4 million, beating the $536.3 million in the same quarter last year. Net income beat the S&P Capital IQ mean consensus estimate for GAAP net income of $641.8 million.

Net sales also grew, hitting $8.69 billion from $7.78 billion in the prior-year quarter.

Consolidated comparable store sales increased 3% over the comparable period last year.

For the fiscal second quarter, TJX expects diluted earnings per share to be in the range of $1.02 to $1.04.

Adjusted diluted earnings per share for the fiscal second quarter is expected to be in the range of 87 cents to 89 cents, compared to 85 cents in the same quarter last year, a figure that excludes a benefit about 15 cents from U.S. federal tax reform. The guidance assumes that restructuring costs within TXJ's IT department will negatively affect EPS growth by 3% to 4%, that wage increases will negatively impact EPS growth by another 2% and that foreign currency will benefit EPS growth by about 4%. The EPS outlook is based on anticipated consolidated comparable store sales growth of 1% to 2%.