TJ Maxx parent's earnings show discount clothes and home goods are still in high demand

By Tomi Kilgore

TJX chief executive says the current quarter is 'off to a strong start,' but sales growth and profit guidance come in below expectations

Shares of TJ Maxx's parent company fell Wednesday, as a "conservative" outlook overshadowed quarterly results that beat on all the key metrics.

TJ Maxx parent company TJX reported a triple beat with its fourth-quarter results on Wednesday, but shares of the off-price apparel and home-fashions retailer slipped as the outlook disappointed.

The results from TJX (TJX), which is also the parent of retail chains Marshalls and HomeGoods, topped Wall Street's expectations on all the major metrics, showing that people were still clamoring for discounted goods.

For the quarter to Jan. 31, comparable sales, or sales of stores open at least two years, rose 5% from a year ago, matching the growth seen in the previous quarter, while analysts were modeling for growth to slow to 3.7%, according to FactSet. Among TJX's store brands, sales at Marmaxx, which covers TJ Maxx and Marshalls, rose 5%, and HomeGoods sales were up 6%.

And net sales increased 8.5% to $17.74 billion, above the FactSet consensus of $17.36 billion, while adjusted earnings per share grew 16% to $1.43 to beat expectations of $1.39.

CEO Ernie Herrman touted the results as "excellent," with full-year net sales topping $60 billion for the first time, and said the first quarter "is off to a strong start." However, the company said it was planning for current-quarter comparable sales to rise 2% to 3% from a year ago, which is below the average analyst estimate compiled by FactSet for a 3.8% rise. And TJX projected first-quarter earnings per share to be 97 cents to 99 cents, or below the FactSet consensus of $1.02.

Full-year comparable sales are expected to increase 2% to 3%, below expectations of 3.6% growth.

The stock fell 1.2% on Wednesday. It had closed Tuesday just 0.4% below the Jan. 8 record close of $158.25.

As Jefferies analyst Corey Tarlowe put it, management's take on the first quarter and the full year was "conservative" given that it followed a strong beat in the fourth quarter, with all sales divisions beating expectations.

Separately, the company also boosted its share-repurchase program by $3 billion and plans to buy back $2.5 billion to $2.75 billion worth of stock during the current fiscal year. That would represent 1.4% to 1.6% of the company's market capitalization of $175.1 billion as of Tuesday's close.

The stock has rallied 28.5% over the past 12 months through Tuesday, while the State Street SPDR S&P Retail exchange-traded fund XRT has gained 15.2% and the S&P 500 SPX has advanced 15.7%.

-Tomi Kilgore

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02-25-26 1746ET