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Can TJX Companies Deliver Strong Sales in Fiscal 3Q18?

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Sales versus analyst estimates

TJX Companies (TJX) has exceeded analysts’ sales expectations in nine of the past ten quarters. In fiscal 2Q18, which ended on July 29, 2017, the company generated sales of $8.4 billion, beating analysts’ sales estimate of $8.3 billion. The company’s fiscal 2Q18 sales grew 6% on a year-over-year basis. Analysts expect TJX Companies’ sales to rise 6.9% to $8.9 billion in fiscal 3Q18, which ended on October 28, 2017.

Analysts expect rival Ross Stores (ROST) to report a 5.7% rise in sales in fiscal 3Q17, which ended on October 28, 2017.

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Growth drivers in the previous quarter

In fiscal 2Q18, TJX Companies’ sales growth was driven by a 4% rise in new store sales and a 3% rise in same-store sales. However, currency headwinds had a 1% adverse impact on the company’s second-quarter sales growth.

Same-store sales growth in fiscal 2Q18 was driven by higher consumer traffic. In terms of merchandise categories, home fashions performed better than apparel categories.

Company guidance

Based on company guidance issued in August 2017, TJX expects sales of $8.8 billion–$8.9 billion in fiscal 3Q18. That sales guidance assumes a 1% favorable impact of currency fluctuations. The company expects same-store sales growth of 1%–2% in fiscal 3Q18.

For fiscal 2018, which ends on February 3, 2018, the company expects sales to grow 7%–8% to $35.6 billion–$35.8 billion. The guidance incorporates a 1.5% favorable impact due to the 53rd additional week in the current fiscal year. The company expects fiscal 2018 same-store sales growth of 1%–2%.

Next, let’s look at the company’s margins.

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