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TJX CEO says fashion issues are in rearview mirror

TJX Cos. Inc. increased the sales guidance for its Marmaxx sector, which includes Marshalls and T.J. Maxx stores, as CEO and President Ernie Herrman said previous execution issues in the division are in the rearview mirror.

Marmaxx missed on its fashion mix last year, leading to lower sales as the company prepared for holiday shopping, Herrman said during a May 22 conference call with analysts following the release of fiscal first-quarter earnings. Those issues have eased, Herrman said, as the company raised its 2019 full fiscal-year sales guidance for the Marmaxx division to $22.9 billion from a previously given range of $22.6 billion to $22.7 billion. TJX reaffirmed its comparable store growth guidance of 1% to 2% and segment profit range of 13.2% to 13.3% for the sector.

"The Marmaxx issues were more fashion-oriented issues," he said on the call. "And when you have fashion-oriented issues, it's dealing with a bit of subjective taste and balance to the look of the goods that you're buying."

T.J. Maxx and Marshalls, with a focus on low-priced clothing that travels quickly in and out of stores, have the ability to recover quickly from fashion missteps, Herrman said.

"The good news is, in the model of our business, you can see and very quickly identify and fix, to really minimize the impact of any of those missed execution issues," he said.

Guidance for other TJX segments for fiscal 2019 remained largely the same. The company reaffirmed its HomeGoods outlook for comparable store growth of 2% to 3% and sales of $5.7 billion. The company lowered segment profit margin to a range of 11.6% to 11.8% from a previously given range of 12.0% to 12.2%.

For TJX Canada, the company continues to expect a comparable store sales increase of 2% to 3%. TJX capped its sales expectation for TJX Canada at $3.9 billion from a previously given range of $3.9 billion to $4.0 billion. The reduced total sales expectation is entirely due to currency exchange rates, the company said.

At TJX International, the company continues to expect comparable store sales growth of 1% to 2% on sales of $5.3 billion to $5.4 billion.

TJX lifted the high end of its adjusted EPS full fiscal-year guidance for the entire company by 2 cents to a range of $4.04 to $4.10 on strong fiscal first-quarter results.