TK Maxx owner ups full-year guidance as Q1 margins rise

The TJX Companies, the company that owns TK Maxx, has raised its full-year guidance after its first quarter trading was better than expected. In the quarter ended 29 April 2023, sales rose by 3% to $11.8bn (£9.48bn), while net income was $891m (£716m) and diluted earnings per share were $.76 (61p), up 55% against $.49 (39p) the prior year. The company’s pre-tax profit margin was 10.3% for the period, “well above” its plan and above last year’s first quarter pre-tax profit margin of 7.5%. In addition, the quarter’s pre-tax profit margin was up 0.9% against last year’s first quarter adjusted pre-tax profit margin of 9.4%. According to the group, its above plan pre-tax profit margin was mainly driven by a larger than expected benefit from freight, as well as the timing of some expenses. Over the period, it also increased its store count by 30 stores to a total of 4,865 stores and increased square footage by 0.5% against the prior quarter. For its second quarter of trading, the group said it expects overall comparable store sales to be up by 2% to 3%, and expects pre-tax profit margin to be in the range of 9.3% to 9.5%, and diluted earnings per share to be in the range of $.72 to $.75 (58p to 60p) . For FY24, it said it continues to plan overall comparable store sales to be up by 2% to 3%, and is increasing its expectations for pre-tax profit margin to a range of 10.3% to 10.5%, and diluted earnings per share to be in the range of $3.49 to $3.58 (£2.80 to £2.88). CEO and president Ernie Herrman said: “I am very pleased with our first quarter performance. Our pre-tax profit margin and earnings per share both significantly exceeded our plan and our 3% comparable store sales increase was at the high end of our plan. Our comp sales growth was driven by an increase in overall customer traffic and a 5% comp sales increase at Marmaxx, our largest division. “The strength and flexibility of our off-price business model, depth of our organisation’s expertise, and our wide demographic reach all give me great confidence in our ability to continue to succeed in today’s retail environment. Every day, our global organisation is focused on bringing customers around the world excellent values on great fashions and great brands and an exciting, treasure-hunt shopping experience.” He added: “We are pleased that the second quarter is off to a good start and we are seeing phenomenal off-price buying opportunities in the marketplace. We are set up extremely well to continue shipping fresh and compelling merchandise to our stores and online throughout the spring and summer. “Going forward, I am confident that we have significant opportunities to grow sales, drive customer traffic, capture market share, and improve the profitability of our company.”