July Sales Up for TJX - Analyst Blog - Kohl's (NYSE:KSS), Macy's (NYSE:M)

The TJX Companies Inc. (TJX) reported same store sales of 2% for the four week period ended July 31, 2010. This affirms the company’s positive comparable store sales growth momentum so far. Sales in the same period upped 6% to $1.5 billion from $1.4 billion in the four-week period ended August 1, 2009 driven by increase in store traffic.

TJX’s consolidated comparable store sales increased 6% for the 26-week period ended July 31, 2010. For the period, TJX recorded sales of $10.1 billion, an 11% increase over the $9.1 billion in the comparable period last year.

July is a clearance month, as it marks the transition from summer to back-to-school. With prudent inventory management in July, TJX is set to enter the second half of 2010 with a leaner inventory. This might have affected its top line but the company affirmed that its margins and earnings will remain unaffected. The company can thus opt for other brands and improve its offerings.

Further, TJX has kept aside a lion’s share of its marketing budget for the second half of the year, which will enable the company to increase its market penetration and help drive customer traffic.

TJX’s July same store sales were in line with Target Corp. (TGT) July same store sales of 2%. However, TJX’s performance could not match same store sales increases of 4.1% at Kohl's Corp. (KSS) and 7.3% at Macy's Inc. (M).

For the second quarter of fiscal 2011, TJX now expects earnings per share to be at or slightly above the high end of its previous range of 70 cents to 73 cents. The range represents a 15% to 20% increase over the previous year. This range includes an estimated 1 cent to 2 cents per share benefit from a reduction in the reserve related to computer intrusions, reflecting insurance recoveries as well as other adjustments, which had not been considered in the prior guidance. The Zacks Consensus Estimate of 72 cents remains in line with the company’s second-quarter guidance.

TJX’s fiscal 2011 EPS guidance remains in the range of $3.24 to $3.33, which translates into an annualized growth of 14% to 17%. The Zacks Consensus estimate for fiscal 2011 is pegged at $3.35, above the company’s guidance, indicating that analysts expect the company to outperform its guidance.

With a wide geographical coverage, transformation of stores, product enhancement and increased awareness programs, TJX continues to attract new and retain more customers, thereby improving customer traffic. Moreover, with leaner inventories and cost-reduction initiatives, the company will out perform the broader market.

Framingham, Massachusetts-based TJX is a leading off-price retailer of apparel and home fashions in the U.S. and worldwide. The company aims to deliver a rapidly changing assortment of quality, branded merchandise at prices that are 20–60% less than department and specialty store regular prices. The company operates 903 T.J. Maxx, 820 Marshalls, 328 HomeGoods, and 154 A.J. Wright stores in the United States. The company operates 208 Winners, 79 HomeSense and 3 STYLESENSE stores in Canada, and 283 T.K. Maxx and 21 HomeSense stores in Europe.

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