Earnings of TJX Companies (TJX) in the second quarter of 2024

TJ Maxx store in Pasadena, California.

Mario Inzoni | Reuters

Cash-strapped consumers may hold back on discretionary purchases at Target, but they spend more on TJX’s off-price brands and home goods.

The discounter raised its full-year forecast on Wednesday after reporting an 8% year-over-year jump in sales and a 23% increase in profits. She cited high customer traffic and an unexpected assortment of premium merchandise it acquired from high-end retailers eager to offload their bloated inventories.

Here’s how TJX companies fared during the fiscal second quarter, compared to what Wall Street was expecting, based on a survey of analysts by Refinitiv:

  • Earnings per share: 85 cents vs. 77 cents expected
  • Revenue: $12.76 billion vs. $12.45 billion expected

The company’s reported net income for the three-month period ended July 29 was $989 million, or 85 cents per share, compared to $810 million, or 69 cents per share, a year ago.

Sales roles came to $12.76 billion, up about 8% from $11.84 billion a year earlier.

Shares of TJX Companies rose more than 3% on Wednesday.

TJX Companies, which operates TJ Maxx, Marshalls, HomeGoods, Sierra and Homesense in the US, raised its full-year outlook for comparable-store sales, pre-tax margin and earnings per share after a strong quarter.

The company now expects comparable-store sales to rise 3% to 4%. It expects a pre-tax profit margin in the range of 10.7% to 10.8%, and earnings per share between $3.66 and $3.72. Analysts had expected earnings of $3.59 per share, according to Refinitiv.

TJX’s quarter may have been stronger, but so are the numbers from a year earlier when sales fell 1.9% and comparable-store sales fell about 5%, GlobalData managing director and retail analyst Neil Saunders noted. However, the retailer is able to win market share.

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As inflation-exhausted, debt-burdened consumers pull back on expensive and discretionary items and use their precious dollars on services, they still seek bargains and splurge on accessories, apparel, and home goods at TJX’s many no-price stores. The retailer said traffic increased across all divisions of the company, which led to the strong quarter.

TJX Companies has been able to offer a wide variety of premium merchandise because many of their suppliers, who tend to be full-price premium retailers, handle bloated inventories and offload their inventory more than usual.

“The third quarter is off to a very strong start and we’re seeing massive off-price buying opportunities in the market,” TJX Companies CEO Ernie Hermann said in a press release. “Going forward, we continue to see excellent opportunities to increase sales and customer traffic, capture market share, and drive our company’s profitability.”

The home goods sector has come under pressure recently after consumers pushed to upgrade living spaces during the pandemic and then shifted their spending towards experiences and services. However, TJX’s HomeGoods reported a similar sales increase of 4% as consumers continue to search for home decor, pillows, and other furnishings.

Meanwhile, Target reported its fiscal second-quarter earnings on Wednesday and continues to see declines in spending on discretionary items like apparel and home decor. It cut its full-year forecast and said consumers were still facing pressure from rising inflation in food, beverages and household necessities.

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