Impressive sales growth
TJX Companies (TJX) delivered same-store sales growth of 4% in fiscal 2Q17, which ended on July 30, 2016. This marked the 30th consecutive quarter of a same-store sales increase. The same-store sales growth in 2Q17 was driven by higher store traffic.
TJX Companies’s sales grew by 7% in fiscal 2Q17. Rival Ross Stores (ROST) reported sales growth of 7.2% in 2Q16.[1. Fiscal 2Q16 ended on July 30, 2016] Department stores continued to underperform off-price retailers in the second quarter as consumers sought bargains in off-price stores. Macy’s (M), Nordstrom (JWN), and Kohl’s (KSS) experienced declines of 3.9%, 1.4%, and 2%, respectively, in their 2Q16 sales.
Sales growth drivers
TJX Companies has exceeded analysts’ sales expectations for seven consecutive quarters. The 7% growth in TJX Companies’s sales in fiscal 2Q17 was lower than the 9.9% growth in fiscal 1Q17, but they were higher than the 6.5% growth in fiscal 2Q16. The company experienced strong sales across its apparel areas, including accessories and home products.
The company benefited from an increase in the units sold in fiscal 2Q17. However, the average ticket decreased more than expected in the second quarter. The SPDR S&P Retail ETF (XRT) has 1.1% exposure to TJX Companies.
Optimistic about future
Following better-than-expected sales in 2Q17, TJX Companies (TJX) has raised its same-store sales guidance for fiscal 2017, which will end on January 28, 2017. TJX Companies now expects its same-store sales to increase by 3%–4% in fiscal 2017 compared to its previous guidance of a 2%–3% growth.
In the fiscal 2Q17 conference call, TJX Companies’s CEO and president, Ernie Hermann, stated that fiscal 3Q17 has started on a strong note. The company is optimistic that its growth initiatives for the second half of fiscal 2017 will facilitate higher traffic and sales. We’ll discuss the company’s initiatives in Part 8 of this series.
Next, let’s look at the performance of the company’s US business in fiscal 2Q17.