The TJX Companies, Inc. (TJX - Analyst Report) reported earnings of 85 cents per share in the third quarter of fiscal 2015, in line with the Zacks Consensus Estimate. Earnings were ahead of the year-ago results by 13% backed by higher consumer traffic, improved margins and solid comparable-store sales growth in the consecutive months.

The Tjx Companies Inc - Earnings Surprise | FindTheBest

Quarterly Details

Net sales of this leading off-price retailer increased 6% year over year to $7.36 billion backed by higher comps. Net sales narrowly missed the Zacks Consensus Estimate of $7.45 billion.

TJX Companies' consolidated comparable-store sales went up 2%, lower than the 5% increase in the year-ago quarter. Comps sales were ahead of management’s expectations and grew on the back of 1%, 7%, 6% and 2% year-over-year increase in same-store sales at Marmaxx, Home Goods and TJX Canada, respectively. However, unusually warm weather in Europe resulted in a 1% decline for TJX Europe.

Notably, comps growth was lower than the prior-year figure due to reduced discretionary spending and unfavorable foreign currency translation.

TJX Companies' pre-tax profit margin inflated 0.4 percentage points (pp) from the prior-year quarter to 13% of sales. Gross margin was up 0.1 pp year over year to 29.4% mainly due to the higher revenues.

Selling, general and administrative costs as a percentage of sales went down 0.4 pp to 16.2% due to favorable adjustments on insurance reserves.

Share Repurchase and Dividend

In the reported quarter, TJX Companies spent a total of $448 million to repurchase 7.5 million common shares.

The company also announced its plan to repurchase approximately $1.6 to $1.7 billion of common stocks during fiscal 2015.

Outlook

TJX Companies tightened the fiscal 2015 outlook following the third-quarter results. For fiscal 2015, the company expects earnings in the range of $3.09–$3.13 as against $3.08–$3.16 and up 9% to 11% from $2.94 reported in the previous year. The guidance reflects the impressive third-quarter results. Comparable-store sales are expected to grow in the range of 1–2%.

For the fourth quarter of fiscal 2015, the company expects comparable-store sales growth of 1–2%. The company issued earnings per share outlook in the range of 86 to 90 cents, up 6% to 11% from the year-ago results.

TJX Companies currently has a Zacks Rank #4 (Sell). Some better-ranked stocks in the consumer staples sector include Keurig Green Mountain Inc. (GMCR -Analyst Report), Dr. Pepper Snapple (DPS - Analyst Report) and Monster Beverages Inc. (MNST - Analyst Report). All these stocks sport a Zacks Rank #2 (Buy).

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