TJX Q4 sales, earnings miss amid higher costs

The TJX Cos.’s fourth-quarter net sales rose 27%, led once again by a strong showing from its Home Goods banner.

The parent company of T.J.Maxx, Marshalls, Home Goods, Sierra, Homesense and other banners reported net income of $940.2 million, or $0.78 per share, in the quarter ended Jan. 29, up from $325.5 million, or $0.27  per share, in the year-ago period. Analysts had been expecting earnings per share of $0.91.

Net sales rose 27% to 13.854 billion from $10.943 billion, missing estimates of $14.218 billion.

Total open-only comparative sales grew 10%, with U.S. open-only comp sales up 13%. (Open-only comp sales measures stores that were also open on the same days in 2020.)

The company noted that its fourth-quarter incremental freight expense was higher than expected, driving down merchandise margins 2.8 percentage points, more than expected. Also, the combination of incremental investments to expand distribution capacity and wage increases reduced pretax profit margin by an additional 1.6 percentage points. Net COVID costs also negatively impacted pretax profit margin by 0.5 percentage points.

"Fourth quarter sales were trending higher before the surges in omicron," said CEO Ernie Herrman. “While freight and wage cost pressures remain elevated, we are pleased that our retail pricing strategy is working very well. This gives us confidence in improving our profitability when the macro environment normalizes.”

By division, fourth-quarter open-only comp sales in the U.S. rose 22% at Home Goods (and Home Sense.) and 10% at Marmaxx (includes T.J. Maxx and Marshalls). At the end of September, HomeGoods launched its first-ever e-commerce site. 

For the full year ended Jan. 29 (fiscal 2022 for TJX), net sales were $48.5 billion, an increase of 51% versus the prior year. The company increased its store count by 114 during fiscal 2022. It ended the year with $6.2 billion of cash.

TJX said its board has authorized a new $3 billion share repurchase program, which represents 4% of outstanding shares.

For the first quarter TJX is expecting earnings per share between $0.58 and $0.61. Analysts are looking for earnings per share of $0.59.

As of January 29, 2022, the retailer operated a total of 4,689 stores in nine countries, the United States, Canada, the United Kingdom, Ireland, Germany, Poland, Austria, the Netherlands and Australia, and five e-commerce sites. These include 1,284 T.J. Maxx, 1,148 Marshalls, 850 HomeGoods, 59 Sierra, and 39 Homesense stores in the United States; 293 Winners, 147 HomeSense, and 106 Marshalls stores in Canada; 618 T.K. Maxx and 77 Homesense stores, and 68 T.K. Maxx stores in Australia.