The TJX Companies, Inc. raised its outlook for third quarter and full year sales and earnings and provided updated information on its growth model for the next three fiscal years.
Fiscal 2010 Third Quarter and Full Year Outlook
With October sales trending significantly above the company’s expectations, TJX now expects comparable store sales to increase in October by 9% to 11% both on a consolidated basis and at The Marmaxx Group (the internal combination of T.J. Maxx and Marshalls).
For the third quarter of Fiscal 2010, the company now expects diluted earnings per share from continuing operations to be in the range of $.77 to $.79 compared with $.58 in the prior year. This range is based upon estimated comparable store sales growth for the third quarter of approximately 7% on a consolidated basis and 8% to 9% for The Marmaxx Group.
This range is also based upon an estimated pretax margin of 10.2% to 10.4% for TJX on a consolidated basis, and an estimated segment profit margin of 11.8% to 12.0% at The Marmaxx Group. It is important to note that comparisons of projected third quarter results to the prior year are impacted by a non-operating item last year and by foreign currency exchange rates.
The company has also raised its estimate for full year fiscal 2010 results, reflecting the expected stronger third quarter. For the full year fiscal 2010, TJX now expects diluted earnings per share from continuing operations in the range of $2.46 – $2.54, compared with $2.08 per share last year. This range is based upon estimated comparable store sales growth for the full year of 4% to 5% both on a consolidated basis and for The Marmaxx Group.
This range is also based upon an estimated pretax margin of 8.6% to 8.8% for TJX on a consolidated basis, and an estimated segment profit margin of 10.7% to 10.9% at The Marmaxx Group. The outlook for the fourth quarter remains unchanged from the most recent forecast provided by the Company, which estimates diluted earnings per share from continuing operations to be in the range of 60 cents – 66 cents. It is important to note that comparisons of projected full year results to the prior year are impacted by certain items and foreign currency exchange rates.
Updated Information in Long-Term Growth Plans
The company’s long-term earnings per share growth target for the three fiscal years ending fiscal 2013 remains 12%, which is unchanged from previous models. However, it is important to note that, as indicated above, the company expects to significantly exceed this rate of growth in the current fiscal year, and also expects to exceed this annual rate of growth for the five-year period from fiscal 2006 to fiscal 2010.
The company has updated several of the components of its long-term growth model with respect to this three-year period. In particular, the company has increased its expectations for square footage growth for this period to the 4% to 5% range, reflecting the strong financial performance across all businesses and updated projections for expansion in Europe.
Additionally, the company has updated its outlook for the short and long term segment profit margin of The Marmaxx Group, the company’s largest division, for this period. The updated full year fiscal 2010 outlook of 10.7% to 10.9% (see above) is greater than the company’s prior estimates of this division’s profit potential of 9% to 10%. The company believes that Marmaxx can sustain this new level of profitability, and now estimates The Marmaxx Group’s segment profit margin to ultimately fall in the 10.5% to 11.5% range for the three-year period.
