The company updated its guidance because it is holding an Investor Event on Tuesday.
Company Raises View of Third Quarter and Full Year Fiscal 2014
With strong sales and profit margins quarter-to-date, the Company is raising its third quarter Fiscal 2014 earnings per share and comparable store sales guidance. The Company now expects third quarter diluted earnings per share to be in the range of $.84 to $.85, compared with last year's $.62 per share. This guidance now reflects an estimated $.11 tax benefit, due to reversals of state and foreign tax reserves and allowances, that was not contemplated in the Company's previous guidance. Excluding the tax benefit, on an adjusted basis, this guidance would be $.73 to $.74, an 18 percent to 19 percent increase over the prior year. The Company now expects third quarter consolidated comparable store sales growth to be approximately 4 percent over last year's reported 7 percent increase.
The Company is also raising its full year earnings per share outlook to reflect its increased third quarter guidance. For the fiscal year ending February 1, 2014, the Company now expects diluted earnings per share of $2.89 to $2.93 versus $2.55 in Fiscal 2013. On an adjusted basis, excluding the $.11 tax benefit discussed above, this guidance would be $2.78 to $2.82. Excluding the approximately $.08 benefit from the 53rd week in the Company's Fiscal 2013 calendar, this adjusted EPS guidance would represent a 13 percent to 14 percent increase over the prior year's adjusted EPS of $2.47. This outlook continues to be based on estimated consolidated comparable store sales growth of 2 percent to 3 percent.
The Company is maintaining its fourth quarter earnings per share guidance of $.77 to $.80, compared to $.82 last year, which also included the approximately $.08 benefit from the extra week in Fiscal 2013.
Investor Event Focus
Company to Raise Long-Term Store Growth Potential in Current Markets
The Company will raise its estimates for long-term store growth potential on a consolidated basis with its current chains, in its current markets. The most significant factor in this increase is that TJX now believes that its Marmaxx division (T.J. Maxx and Marshalls) can grow to substantially more stores in the U.S. than it had previously estimated. Marmaxx has seen successful growth in both major cities and rural areas over the last several years, which has given the Company the confidence to increase its growth estimates.
Company Sees Greater Margin Potential for European Division
The Company will discuss its view that it now sees TJX Europe (consisting of T.K. Maxx and HomeSense) as having the long-term potential to reach a 10 percent-plus segment profit margin. Previously, the Company had modeled its European division at a potential 8 percent-plus margin. TJX Europe has reported strong results for the past seven quarters, which has given the Company confidence in this division's increased ability to lever its infrastructure as it pursues its expansion opportunities.
Continued Confidence in Long-Term Annual EPS Growth Model of 10 percent-13 percent
The Company is also confirming its confidence in its ability to grow earnings per share annually by 10 percent-13 percent for each of the next three years. The underlying components of this plan remain as follows: The Company expects to grow its sales by 6 percent-7 percent, with approximately 2 percent growth coming from comparable store sales and 4 percent-5 percent from square footage growth. An additional 1 percent-2 percent is estimated to come from segment profit margin improvement and an additional 3 percent-4 percent is expected to come from the Company's share repurchase program.
