TJX on Tuesday reported that first quarter net sales rose 7% to $9.3 billion from $8.7 billion in the year-ago quarter. Consolidated comparable store sales rose 5%, and net income for the quarter fell to $700 million from $716 million a year ago, according to a company press release. "Customer traffic was the primary driver of the consolidated comp sales increase and was up at all four major divisions," according to a company press release.
By brand in the quarter: The Marmaxx unit (its largest, which includes U.S. banners TJ Maxx and Marshall's) comps rose 6% as net sales rose to $5.8 billion from $5.4 billion a year ago; HomeGoods comps rose 1% as net sales rose to $1.4 billion from $1.3 billion a year ago. Comps in Canada were flat, as international comp sales, in Europe and Australia, rose 8%.
Gross profit margin contracted year over year by 0.4 of a percentage point to 28.5%, hurt by supply chain and freight cost increases. Selling, general and administrative costs as a percentage of sales expanded by 0.5 percentage point to 18.3%, mostly due to store wage increases, among other factors.
With comp increases across banners and geographies, TJX once again shrugged off many of the headwinds that have troubled other retailers, and the company is in a good position to continue to take market share, according to MKM Partners Managing Director Roxanne Meyer.
The overall comp rise "reflects strong traffic gains as well as strength in both apparel and home," she wrote in comments emailed to Retail Dive. "We continue to view TJX as one of the best longer-term growth stories in retail, and point to the consistency of broad-based traffic gains as underpinning TJX's strong fundamentals."
The company has expanded its home goods offer, and the sales boosts indicate good execution of that, she also said, noting that its solid traffic drives store comps and that it's "bucking industry trends" with strength in apparel.
The off-price retail company has thus far been removed from the massive store closures happening around it. Some 12,000 could shutter this year, according to both Coresight and UBS, and Ascena this week added to the trend with its announcement that all 650 Dressbarn locations will close. During its most recent quarter, TJX boosted its store count by 75 for a total of 4,381 globally, increasing square footage by 4% over the same period last year. Across all banners, 3,190 of those locations are in the U.S.
Yet the retail company is also poised to get a boost from its late entry into e-commerce by gaining a new channel for high-quality inventory, according to Meyer. Even the woes suffered by other apparel and homes goods retailers, including their latest worry, tariffs, could benefit TJX by providing yet more share — at least incremental gains — as some consolidate or otherwise retreat, Meyer said.
The quarter's performance led TJX to raise its guidance. While incremental freight costs and store wage increases will likely impact second quarter earnings growth by 2% to 3%, the company expects a stronger increase for the year. For that 52-week fiscal period, the company is raising its guidance for diluted earnings to range between $2.56 to $2.61 per share, a 5% to 7% year-over-year increase from $2.43 per share. That, too, reflects an assumption that "incremental freight costs and store wage increases will negatively impact EPS growth by 3% to 4%. This EPS outlook is based upon estimated comparable store sales growth of 2% to 3% on a consolidated basis and at Marmaxx," according to the release.