TJX Cos, the parent company of popular retailer TJ Maxx, foresees a dip in profits for the current quarter, signaling the impact of increased costs on the off-price retail giant’s margins. Despite maintaining a steady demand from budget-conscious consumers, the company grapples with mounting costs related to supply chain and wages, even with a reduction in freight-related expenses from their peak.
While TJX’s shares have seen a 16% gain this year, the recent announcement led to a 4% decline in early trading. This stands in contrast to Target’s optimistic forecast, as the big-box retailer expects fourth-quarter profits above analysts’ estimates, benefiting from alleviating supply chain costs and tighter inventory control.
Analyst Jessica Ramirez from Jane Hali & Associates noted TJX’s slightly conservative fourth-quarter guidance, suggesting a deviation from investors’ expectations. Off-price retailers are often perceived as winners in a volatile macro environment, adding to the intrigue.
Despite an 18% increase in selling, general, and administrative expenses in the third quarter, TJX raised its full-year sales and profit forecasts. The company leverages customer preference for affordable alternatives amidst a cost-of-living crisis.
TJX CEO Ernie Herrman expressed confidence in a strong start to the fourth quarter, citing increased customer traffic across all divisions. The company anticipates fiscal 2024 comparable store sales to range between 4% and 5%, up from the earlier forecast of 3% to 4%. The outlook for fiscal 2024 adjusted earnings has been raised to between $3.61 and $3.64 per share, compared to the previous range of $3.56 to $3.62 per share. Analysts, however, are expecting a profit of $3.73 per share.
