TJX Companies missed revenue estimates and its same-store sales grew at the slowest rate in two years, raising fears that the retail doldrums have spread to the off-price segment.
The parent of T.J. Maxx, Marshalls and HomeGoods said Tuesday that profit rose 8% to $536.3 million or 82 cents per share in the first quarter while revenue increased 3% to $7.78 billion. Analysts had forecast earnings of 79 cents a share on $7.88 billion in sales.
Same-store sales rose 1%, the weakest pace of growth since the first quarter of 2015.
Despite missing sales estimates, TJX Chief Executive Ernie Herrman praised the company’s store traffic trends and its business model.
“We achieved [our first-quarter] results despite the unfavorable weather in parts of the U.S. and Canada compared to last year,” he said in a news release. “With our disciplined inventory management, our merchandise margin was up, which speaks to the resiliency and flexibility of our off-price retail model.”
But on news of the earnings, and guidance that was below expectations, TJX shares fell more than 4% in trading Tuesday.
“Off-pricers like TJX and Ross enjoyed a reputation for being untouchable by Amazon, thanks to the in-store treasure-hunt nature of bargain-rack shopping,” Investor’s Business Daily said. “But Tuesday’s weak sales and guidance raised concerns that status may be under threat as the rest of retail suffers a face-melting sell-off.”
For the second quarter, TJX is projecting earnings of between 81 to 83 cents a share, missing Wall Street expectations for earnings of 92 cents.
“The second quarter is off to a solid start, and we have excellent liquidity in our inventories,” Herrman said. “This positions us extremely well to capitalize on the plentiful buying opportunities we see for exciting fashions and brands in the marketplace, and bring them to consumers at amazing values.”
But Footwear News said “[the first-quarter] report — which follows lackluster releases from JCPenney and Macy’s last week — coupled with a weaker-than-expected Q2 outlook, may signal that no part of retail is immune to the current challenges.”