TJX Reports Strong First Quarter Results; Raises Fiscal 2025 Guidance

By Brian Nelson, CFA

On May 22, TJX Companies (TJX) reported strong first quarter results and increased its outlook for fiscal 2025. Net sales for the quarter ended May 4, 2024, advanced ~6% from the same period a year ago thanks in part to consolidated same store sales that increased ~3% due to strength in customer transactions. Diluted earnings per share came in at $0.93 versus $0.76 in the same period of fiscal 2024. The off-price apparel and home fashions retailer continues to deliver for consumers and investors alike. We like the company.

Management spoke positively about the quarter and the current momentum it continues to experience:

I am very pleased with our first quarter performance. Overall comp store sales increased 3%, at the high-end of our plan, and both profitability and earnings per share were well above our expectations. Our teams across the Company executed on our initiatives and were laser-focused on delivering consumers exciting values on great brands and fashions and a treasure-hunt shopping experience, every day. We saw comp sales growth at every division entirely driven by customer transactions, which underscores the strength of our value proposition. This also gives us confidence in our ability to gain market share across all of our geographies. The second quarter is off to a good start and we see numerous opportunities for our business for the balance of the year that we plan to pursue. Longer term, we are excited about the potential we see to drive customer transactions and sales, capture additional market share, and increase the profitability of TJX.

TJX’s margins in the quarter held up well. Its pre-tax profit margin increased 0.8 percentage points from last year as the company benefited from “lower freight costs, a reserve release, and higher net interest income.” Its gross profit margin revealed a 1.1 percentage point increase, while SG&A as a percentage of sales nudged higher by just 0.2 percentage points, the increase attributable to higher store wage and payroll costs.

The company generated $318 million in free cash flow in the period and ended the quarter with a nice net cash position, though it does have sizable long-term operating lease liabilities. Total inventories were $6.2 billion at the end of the quarter, down from $6.4 billion at the end of the same quarter last year. TJX continues to be shareholder friendly, returning $886 million during the period in the form of share repurchases and dividends. 

Management continues to expect to repurchase anywhere between $2.0-$2.5 billion in shares during its fiscal year ending February 1, 2025. For the full year fiscal 2025, TJX continues to expect comparable store sales to increase 2%-3%, but it raised its outlook for pre-tax profit margin to the range of 11%-11.1% as well as its diluted earnings per share outlook to the range of $4.03-$4.09, up from its previous guidance range of $3.94-$4.02.

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