TJX Companies gains after holiday quarter comparable sales beat, buyback boost

TJX Companies (NYSE:TJX) edged higher in early trading on Wednesday after the retailer reported comparable sales of 5% in Q4 to beat the consensus expectation of +4.1%.

The Marmaxx business saw comparable sales increase 5% during the holiday quarter, while the HomeGoods business saw a 7% comparable sales jump during the period. Comparable sales rose 6% for TJX Canada and were 3% higher for TJX International (Europe and Australia).

During Q4, gross profit margin was 29.5% vs. 26.1% a year ago. The margin improvement was driven by a significant benefit from lower freight costs and lower inventory shrink expense, strong markon, and lower markdowns, partially offset by supply chain investments. Selling, general and administrative costs as a percent of sales were 18.9% vs. 17.0% a year ago.

TJX's (TJX) inventory position at the end of the quarter was $6.0B vs. $5.8B a year ago. Consolidated inventories on a per-store basis, including distribution centers, but excluding inventory in transit, the company's e-commerce sites, and Sierra stores, were up 1% on both a reported and constant currency basis.

CEO Ernie Herrman noted the retailer saw comparable sales growth at every division driven by customer transactions. "We had a very strong finish to 2023 and start the new year in a position of strength with the first quarter off to a good start," For the longer term, Herrman said TJX is excited about the potential it sees to strategically grow the business, capture additional market share, and increase profitability.

Q1 EPS guidance was set by TJX (TJX) at $0.84 to $0.86 vs. $0.86 consensus. Full-year EPS guidance was set at $3.94 to $4.02 vs. $4.12 consensus. TJX (TJX) expects to buy back $2.0B to $2.5B in stock during FY25 and boost its dividend payout rate by 13%.

On the capital allocation front, TJX Companies (TJX) boosted the quarterly dividend payout by 13% and disclosed a buyback allowance of $2B to $2.5B for FY24.

Shares of TJX rose 1.47% in premarket trading on Wednesday.