TJX Companies beat third-quarter profit estimates, despite lower sales than in the same period last year.
The Framingham, Mass.-based off-price retailer reported net income of $1.062 billion in the third quarter of fiscal 2023, compared with $1.023 billion in the same period last year. Net sales for the third quarter of 2023, however, were $12.2 billion, down 3% from $12.5 billion from the third quarter of 2022.
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By division, Marmaxx’s net sales, which include TJ Maxx, Marshalls and Sierra in the United States, rose 3% in the quarter to $7.455 billion, led by apparel. That gain was offset by a 14% drop to $1.948 billion in the company’s HomeGoods division. The results pushed total U.S. net sales down 1% to $9.403 billion in the third quarter.
As for the company’s international divisions, TJX Canada reported a 1% decline in net sales to $1.285 billion in the quarter, while TJX International – which includes Europe and Australia – saw fell 16% to $1.479 billion.
But this sales failure did not discourage the street. At the time of the closing bell, TJX shares were up 5%.
During the company’s earnings call on Wednesday, the President and CEO Ernie Herman was confident the retailer was well positioned for the holiday season. “The market is full of quality branded products from the good, the best and the top brands,” he told investors. “Most importantly, it has prepared us very well to deliver a great assortment of branded gifts this holiday season that we believe will excite and inspire our shoppers.”
Herrman also noted that the company is focusing even more on this holiday season on fresh, gift-oriented branded products arriving later than normal, which he said “bodes well” for fourth-quarter sales, especially in the past week or two just before Christmas.
Turning to inventory, Herrman noted that the company’s balance sheet inventory was up 26% from the third quarter of last year. Total inventory at the end of the third quarter was $8.3 billion, compared to $6.6 billion at the end of the third quarter of fiscal 2022. “This is higher than expected due early receipts of goods as the supply chain continued to improve,” the CEO said. said.
Looking ahead, TJX now forecasts total sales for the full fiscal year in the range of $49.3 billion to $49.5 billion. The change from its previous guidance is due to its expectation that unfavorable exchange rates will negatively impact reported fourth-quarter sales.
“While our business is not immune to macro factors, I am confident that the flexibility of our off-price retail model and the depth of our expertise and experience, particularly within our organization merchants, will continue to be an important advantage for us,” said Herrman. .