TJX 4Q Earnings Disappoint; Shares Drop


The TJX Companies 4Q earnings were disappointing as the off-price retailer reported diluted earnings per share (EPS) of $0.27, which fell short of analysts’ estimates of $0.62. The company posted revenues of $10.9 billion, reflecting a decline of 3% year-on-year versus consensus estimates of $11.47 billion.

Shares of TJX (TJX) were down by 1.5% in morning trading on Feb. 24.

TJX’s President and CEO Ernie Herrman said, “I am very pleased that our fourth quarter open-only comp store sales were down only 3%, exceeding our plans. Our brands, values, and exciting gift assortments resonated with customers, and we achieved these results despite numerous COVID-related headwinds. Overall open-only comp store sales improved each month of the quarter and were positive in January.”

“Further, open-only comp store sales exceeded our plans across each of our divisions, including at HomeGoods which once again delivered a double-digit increase. We also saw continued strength in our home and beauty departments,” Herrman added.

TJX also incurred an early debt extinguishment charge of $312 million in 4Q as the company terminated some of its debt prematurely.

On top of this, the company stated that the temporary store closures in Europe and Canada due to the COVID-19 pandemic resulted in 4Q sales taking a $950 million to $1.05 billion hit and EPS being impacted by $0.18 to $0.21. Temporary store closures due to the pandemic for around 13% of the fourth quarter resulted in the fall in revenues.

TJX declared a quarterly dividend of $0.26 per share, up by 13% year-on-year. The company did not provide financial guidance due to the uncertainty as a result of the COVID-19 pandemic. (See TJX Companies stock analysis on TipRanks)

Around a month ago, Deutsche Bank analyst Paul Trussell raised the price target from $70 to $73 and reiterated a Buy rating on the stock. Trussell said in a research note, “COVID has been a meaningful positive catalyst for margin trajectory as it forced retailers to make decisions about organizational structure, real estate, and pace of digital investments while also experiencing reduced competition and an opportunity to reset promotional activity and inventory level.”

The rest of the Street is bullish on the stock with a Strong Buy consensus rating. That’s based on 7 Buys and 1 Hold. The average analyst price target of $75.75 implies a 9.2% upside potential to current levels.

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