TJX Cos forecast current-quarter profit below Wall Street expectations on Wednesday, signalling that spiralling costs were weighing on the off-price retailer’s margins even as it saw steady demand from bargain-hungry customers.
The company’s shares, which are up about 16 percent this year, fell 4 percent in early trading.
The company, like several other US retailers, has been struggling with higher costs linked to supply chain and wages, even as it has seen freight-related expenses come down from its peak.
TJX’s downbeat forecast was in contrast to that of Target. The big-box retailer said on Wednesday that it was expecting fourth-quarter profit above analysts’ estimates, helped by easing supply-chain costs and a tighter control on inventory.
“(TJX’s) fourth-quarter guidance has been slightly conservative,” Jane Hali & Associates analyst Jessica Ramirez said, adding that this did not feed investors’ expectations as off-price retailers are typically seen as winners in a volatile macro environment.
TJX now expects fourth-quarter adjusted earnings per share of between 97 cents and $1, down from its previous forecast of between $1 and $1.03. Analysts estimate a profit of $1.13 per share, according to LSEG data.
For the third quarter, TJX saw selling, general and administrative expenses climb 18 percent.
However, the company raised its full-year sales and profit forecasts as it benefited from customers shifting to cheaper alternatives amid a higher cost-of-living crisis.
“Customer traffic was up across all divisions,” CEO Ernie Herrman said, adding that the fourth quarter was “off to a strong start.”
The company now expects fiscal 2024 comparable store sales of between 4 percent and 5 percent, up from its earlier forecast of between 3 percent and 4 percent.
It expects fiscal 2024 adjusted earnings of between $3.61 and $3.64 per share, up from its previous outlook of between $3.56 and $3.62 per share. Analysts expect a profit of $3.73 per share.
This article was written by Juby Babu and Granth Vanaik from Reuters and was legally licensed through the DiveMarketplace by Industry Dive. Please direct all licensing questions to legal@industrydive.com.
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