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Will TJX Companies’ Q1 Earnings Beat Wall Street Forecasts?

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First-quarter earnings

TJX Companies’ (TJX) earnings beat analysts’ expectations in three out of four quarters of fiscal 2019 and were in line with estimates in the fourth quarter of fiscal 2019. TJX Companies’ EPS of $0.68 (including the benefit from lower taxes) in the fourth quarter of fiscal 2019 (which ended on February 2) were in line with analysts’ expectations.

TJX Companies is scheduled to announce its results for the first quarter of fiscal 2020 (which ended on May 4) on May 21. Based on the guidance issued in February, the company expects its fiscal 2020’s first-quarter EPS in the range of $0.53–$0.54, compared to $0.56 in the first quarter of fiscal 2019. TJX Companies expects higher freight costs, increased store wages, and foreign currency headwinds to hurt fiscal first-quarter EPS growth by 7%. Analysts expect TJX Companies’ first-quarter adjusted EPS to come in at $0.55. For full-year fiscal 2020, analysts expect TJX Companies adjusted EPS to grow to $2.61, compared to $2.43 in fiscal 2019.

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Margins might be under pressure

TJX Companies expects its gross margin in the range of 27.9%– 28.0% in the first quarter of fiscal 2020, down from 28.9% in the first quarter of fiscal 2019. TJX Companies’ operating margin in the first quarter is expected to be under pressure due to higher SG&A expenses. TJX Companies expects its SG&A expense rate in the range of 18.2%–18.3% in the first quarter of fiscal 2020, compared to 17.8% in the first quarter of fiscal 2019. Higher wages, increased freight costs, and growth investments are expected to on TJX’s margins in the first quarter.

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