Why Off-Price Retailer TJX Companies' Stock Is Sliding Today

TJX Companies Inc TJX reported third-quarter FY24 sales growth of 9% year-on-year to $13.3 billion, beating the analyst consensus estimate of $13.08 billion.

Overall comparable store sales increased 6% versus last year, with Marmaxx store sales rising 7% and HomeGoods climbing 9%.

Gross profit margin for the quarter expanded 200 basis points to 31.1%. The pretax margin for the quarter was 12% versus 11.2% last year.

Selling, general and administrative (SG&A) costs as a percent of sales were 19.4%, a 1.4 percentage point increase Y/Y primarily due to incremental store wage and payroll costs, higher incentive compensation accruals, and 0.3 percentage points of costs from closing HomeGoods' e-commerce business.

EPS of $1.03 beat the consensus estimate of $0.99.

The company held $4.3 billion in cash and equivalents as of October 28, 2023. The company generated $3.3 billion of operating cash flow in nine months.

Total inventories at the quarter end remained flat Y/Y at $8.3 billion.

During the nine months ended October 28, 2023, the company returned $2.8 billion to shareholders, repurchasing and retiring 20.4 million shares of its common stock at a cost of $1.7 billion.

Outlook: TJX now plans overall comparable store sales to be up 4%-5% (prior view up 3%-4%) for FY24.

The company raised FY24 adjusted EPS outlook to $3.61 - $3.64 (prior view $3.56 - $3.62) against the consensus of $3.73.

For Q4, TJX continues to expect comparable store sales to be up 3%- 4% while revising the adjusted EPS forecast to $0.97-$1.00 (prior view $1.00-$1.03) against the consensus of $1.13.

Price Action: TJX shares are trading lower by 2.96% at $89.76 on the last check Wednesday.