TJX Raises Earnings, Store Count Estimates

TJX has raised its earnings estimates in preparation for its annual analyst meeting, where company president Ernie Herrman detailed how the company will continue to expand operations. Among the coming indicatives is the opening of a new HomeGoods distribution center next year, the company said in the actual presentation.

Herrman pointed out that the company could potentially open 825 Home Goods locations up from an original estimate of 450 as the company grows to 4,730 locations up from an earlier projection of 3,211.

Herrman said one key reason that TJX would be able to grow successfully has to do with its employees.

“We believe we have the best buying organization in retail,” he said, adding that the company’s effective support staff boosts buyer efforts.

He also said that improvements in distribution would help drive growth. The company’s resources have grown significantly, Herrman noted, as TJX has grown from 10,000 to 16,000 vendors over the past five to six years. Future gains will depend upon connections from those suppliers through to stores.

“An important building block supporting our future growth is our supply chain, where we continue to make improvement,” Herrman said. “We’ve attempted to make improvements here continuously over the last 36 years. It’s a become a goal of flowing merchandise to our stores in a more efficient way.”

With current business strong, TJX announced that it would raise its third quarter financial estimates. The retailer said it now expects third quarter diluted earnings per share to arrive in the range of 84 cents to 85 cents versus last year’s 62 cents per share. This guidance includes an estimated 11-cent tax benefit due to reversals of state and foreign tax reserves and allowances not incorporated into previous guidance, the company stated. The tax benefit excluded, on an adjusted basis, the guidance still would represent an 18% to 19% advance over last year’s per-share earnings. TJX also noted that it expects third quarter consolidated comparable store sales growth to be about 4%.

TJX also related that it expects to grow earnings per share annually by 10% to 13% for each of the next three years based on sales gains of 6% to 7%. The company believes sales growth would arise from 2% gains in comparable store sales and 4% to 5% expansion in square footage as well as a 1% to 2% segment profit margin improvement. TJX said earnings would get an additional boost of 3% to 4% from its share repurchase program.