Fiscal 3Q16 sales ahead of estimates
Off-price retailer TJX Companies (TJX) reported its results for the third quarter of fiscal 2016 on November 17, 2015. The company reported sales of $7.8 billion in fiscal 3Q16 ended October 31, 2015, beating the consensus Wall Street analyst sales estimate of $7.7 billion.
Increased traffic drives sales
TJX Companies’ sales in fiscal 3Q16 increased by 5.3% from the comparable quarter of the previous year. The company’s chairman and chief executive officer, Carol Meyrowitz, attributed this increase to higher consumer traffic. The company’s consolidated inventories on a per-store basis, excluding in-transit and e-commerce inventories, increased by 6% in fiscal 3Q16 on a constant currency basis.
Scott Goldenberg, TJX Companies’ senior executive vice president and chief financial officer, stated in the fiscal 3Q16 conference call that the company is comfortable with its inventory position. This position was strategically increased ahead of fiscal 4Q16 to provide more flexibility to flow fresh merchandise to the stores. The fourth quarter overlaps with the crucial holiday season.
27th consecutive quarter of same-store sales growth
TJX Companies delivered same-store sales growth of 5% in 3Q16, marking the 27th consecutive quarter of same-store sales growth. Aside from same-store sales growth across all divisions, the company’s CFO also mentioned a strong increase in the units sold in the quarter. TJX Companies’ CFO added that as anticipated, the average ticket size declined in the quarter.
TJX Companies accounts for 1% of the portfolio holdings of the SPDR S&P Retail ETF (XRT).
TJX Companies versus department stores
TJX Companies’ same-store sales growth in fiscal 3Q16 reflected the strength of its off-price model as consumers continue to look for bargains. The company outperformed department stores Macy’s (M), Nordstrom (JWN), and Dillard’s (DDS) in the comparable third quarter.
The same-store sales of Macy’s declined by 3.9% and that of Dillard’s declined by 4% in 3Q15. Nordstrom reported a same-store sales growth of 0.9% in the comparable third quarter. Kohl’s (KSS) reported same-store sales growth of 1% in 3Q15.
However, JCPenney reported a higher same-store sales growth of 6.4% in the third quarter compared to TJX Companies, backed by its strong turnaround efforts.
In the next part of this series, we’ll discuss the company’s earnings in 3Q16.