The operator of stores such as Home Goods, Marshalls and TJ Maxx, TJX Cos, has joined the list of brick-and-mortar chains that are disappointing investors when it disclosed that the growth of sales was at its slowest pace since 2015. Outlook for the future was also disappointing and as a result shares in the company that is based in the state of Massachusetts, U.S. fell.
In the weeks leading to April 29, comparable sales grew by 1% compared to the expectations by analysts that there would be a 1.5% growth. Since 2015’s first quarter this was the weakest growth rate. A year ago in the same quarter comparable sales had grown by 7%.
TJX Cos’ net sales increased by 3% year-over-year to reach a figure of $7.8 billion and this was a little lower than what analysts had estimated. Profits also increased to $536.3 million compared to a figure of $508.3 million a year ago. On a per-share basis, the profits were 82 cents a share compared to 76 cents a share a year ago. Analysts had been expecting profits of 79 cents per share.
With regards to projections TJX Cos expects per-share earnings of between 81 cents and 83 cents in the present quarter. This is lower than projections from analysts who are expecting 92 cents per share. The earnings guidance is being impacted by the exchange rate as well as increases in wages. Full-year earnings are also expected to rise to between $3.82 and $3.89 per share beating the previous outlook which was between $3.80 and $3.89 per share.
The forecast was more evidence of the challenges that the retail sector is facing where even discounters are not being spared. This is because of the competition from online retailers who are increasingly luring more and more shoppers away from brick-and-mortar stores. According to Ernie Herman, the chief executive officer of TJX Cos, the disappointing results could also be partly attributed to bad weather.
Currently, TJX operates over 3,800 stores around the world and even as other retailers shut down stores the company is considering an expansion. Over the long run TJX wants to expand to over 5,600 store across the globe. This year it will open around 250 new locations and this includes introducing its HomeSense brand to the United States.
“In the current volatile retail environment when many other retailers are closing, we are in a great position to be opportunistic,” said Herrman.