TJX Companies increases full-year forecast and reports a 5.6% increase in sales for the previous quarter.

• Wall Street's expectations were exceeded by TJX Companies on both the top and bottom lines, as it also raised its full-year guidance.
• TJ Maxx, Marshall, and HomeGoods, the retailer behind these stores, have been capturing market share from competitors such as Target and Macy's, making them a popular destination for price-conscious consumers.
• The company has announced that it has acquired a stake in a Dubai-based discounter in order to further its growth plans.

On Wednesday, the company raised its full-year guidance after reporting another quarter of strong sales, but its outlook still fell short of Wall Street's expectations.

LSEG reports that the discounter behind Marshalls, HomeGoods and TJ Maxx now anticipates full-year earnings to be between $4.09 and $4.13, which is lower than the previously estimated $4.14.

In contrast to predictions of $1.10, TJX anticipates earnings per share for the current quarter to be between $1.06 and $1.08.

Despite retailers providing disappointing guidance, their shares have not been negatively affected, indicating that investors are prepared for uncertainties in the second half of the year, ahead of the U.S. presidential election and a potential rate cut from the Federal Reserve. TJX's shares rose about 4% in premarket trading.

Based on a survey of analysts by LSEG, how the discounter performed compared with Wall Street's expectations.

• Earnings per share: 96 cents vs.92 cents expected
• Revenue: $13.47 billion vs. $13.31 billion expected

The company's net income for the three-month period ending August 3 was $1.1 billion, or 96 cents per share, compared to $989 million, or 85 cents per share, in the previous year.

The revenue increased to $13.47 billion from $12.76 billion in the previous year.

In the fiscal year 2024, TJX experienced significant sales growth and provided optimistic guidance. However, investors are eager to evaluate the company's ability to maintain this momentum in the upcoming quarters.

The company has announced that it is taking a 35% ownership stake in the Dubai-based retailer Brands for Less for $360 million. The privately-held brand is the region's only major off-price player and operates more than 100 stores, primarily in the United Arab Emirates and Saudi Arabia, along with an e-commerce business.

"TJX aims to expand its global presence through the acquisition of an established off-price retailer with significant growth potential. The company's ownership in BFL is expected to be slightly accretive to earnings per share starting in Fiscal 2026."

TJX reported that consolidated comparable store sales increased by 4% in the quarter, which was entirely driven by an increase in customer transactions. This growth is ahead of the 2.8% uptick that analysts had predicted, according to StreetAccount.

TJX's Marmaxx division in the U.S., which includes TJ Maxx, Marshalls and Sierra stores, was the primary driver of growth during the quarter. Marmaxx comparable sales were up 5%, exceeding estimates of up 2.9%, according to StreetAccount. However, HomeGoods' comparable sales were up only 2%, falling short of the 3% that analysts had anticipated, as the overall home furnishings market remains sluggish.

In the current quarter, performance is "off to a strong start," said CEO Ernie Herrman.

"Our company has marked a milestone by opening our 5,000th store in the second quarter, and we are excited about our potential to capture additional market share and continue our global growth. We see excellent buying opportunities in the marketplace and are strongly positioned to ship fresh and compelling merchandise to our stores and online throughout the fall and holiday selling seasons."

TJX's stock has increased by approximately 21% year to date as of Tuesday's close. The shares reached a new high in May following the release of the company's strong quarterly earnings report.

Consumers who are price-sensitive and want new clothes have been flocking to the retailer, which has been capturing market share from competitors like and.

Herrman stated in May that the company's success can be attributed to its transformation into a more appealing shopping destination and its ability to attract younger Gen Z customers, who prioritize finding good, high-quality deals over shopping at luxury brands.

TJX's business model allows it to perform well in any economic climate. During good times, its target market, lower- to middle-income consumers, has additional disposable income to purchase discretionary items such as clothing, shoes, and home decor. In tough economic conditions, higher-income shoppers turn to TJX for discounts on branded clothing that they are accustomed to.

Despite the company's strong value offering, a potential decline in consumer spending, as predicted by some analysts, could still affect the company.