TJX executives praise strong start to holiday season, but Q4 performance guidance falls short of expectations.

TJX Corporation (TJX.US) announced its financial performance for the third quarter. Q3 earnings per share were $1.14, compared to $1.03 in the same period last year, and analysts' expectations were $1.09. Total revenue increased by 6% year-on-year to $14.1 billion, exceeding analysts' expectations of $13.95 billion. Q3 same-store sales increased by 3%, surpassing market expectations and being at the higher end of the company's guidance, driven by growth in customer transactions. The executives describe the third quarter sales as strong and mention a strong start to the holiday season. Earlier this year, due to execution issues, TJX's European business faced challenges, but the segment reported strong performance in the third quarter, with same-store sales growth of 7% in TJX's international channels. Before the company reported its financial results, some analysts were concerned that TJX and other discount retailers like Ross Stores (ROST.US) might be disproportionately affected by the unusually warm weather in October. Bank of America Corp analysts wrote in a research report that discount retailers are often more susceptible to adverse weather patterns compared to traditional retailers because low-income consumers typically buy goods when needed rather than in advance. During the fall months, retailers like TJX relied on customers purchasing new coats and other gear in anticipation of colder weather. If lower-income consumers delayed buying due to the warmer weather, TJX's sales could be impacted. However, the warmer-than-expected weather did not seem to have a significant impact on TJX's sales, which grew by 3% in Q3, exceeding market expectations and being at the higher end of the company's guidance, driven by customer transaction growth. TJX CEO Ernie Herrman stated at a press conference, "The fourth quarter has started strong, and we are excited about the holiday sales season. In stores and online, we provide consumers with a constantly changing and inspiring shopping destination to buy gifts of outstanding value. We believe that everyone will find something they love when they shop our products." TJX is a well-known discount retailer known for offering a diverse range of products, including family clothing, home goods, jewelry, etc. The company operates well-known brands such as T.J. Maxx, Marshalls, and HomeGoods, which are major players in the discount retail industry. TJX sells branded clothing and other products at much lower prices than department stores, initially based on a strategy of purchasing excess inventory from manufacturers or other retailers. As cost-conscious American consumers flock to its discount stores to purchase clothing, shoes, and other products, the company's stock price has risen by 27% so far this year, outperforming the S&P 500 index, which has seen a cumulative increase of 24.05% during the same period. Slowing of same-store sales growth The first aspect is the number of stores, which typically determines how much revenue a retailer can generate. TJX had 5,057 stores in the most recent quarter. Over the past two years, it has rapidly opened new stores, with an average annual growth rate of 2.7%. This growth rate is faster than the overall consumer retail industry. When a retailer opens new stores, it usually means they are investing in growth because demand exceeds supply, especially in areas where consumers may not have had stores within a reasonable driving distance. The fundamental change in a company's store count is just one aspect of the story. Another is the performance of existing stores and e-commerce sales, with same-store sales being a key metric as it measures organic growth from a retailer's e-commerce platform and physical stores that have been around for at least a year. On average over the past two years, the company's same-store sales have grown at an amazing annual rate of 4.3%. This performance demonstrates that the launch of new stores is beneficial to shareholders. This means that TJX's revenue growth can come from new stores, e-commerce, as well as an increase in foot traffic at existing stores and an increase in sales per customer. However, in the most recent quarter, TJX's same-store sales growth increased by only 3% year-on-year, a slower rate compared to historical levels, indicating that while the business is still performing well, it has lost some momentum. Additionally, a forecast by the National Retail Federation (NRF) in October suggested that the growth rate of US holiday sales by 2024 is expected to be lower than last year. NRF estimates that sales in the industry in November and December will increase by 2.5% to 3.5% compared to the same period last year, which is lower than the growth rate of 5.3% last year. According to the organization, consumer spending is expected to reach up to $989 billion. NRF President and CEO Matt Shay expressed during a conference call with reporters, "We are seeing a more modest spending pattern among consumers." He added that overall spending remains strong, despite slowing down compared to the exceptionally high growth during the pandemic period. Shay pointed out that the calendar effect of fewer shopping days between Thanksgiving and Christmas is expected to have a negative impact on performance. Overall, according to industry forecasts, while retailers are expected to see year-on-year sales growth this quarter, their growth rate may be the slowest since 2018. This holiday season, consumers have even less time for spending, with five fewer shopping days between Thanksgiving and Christmas compared to 2023. Performance outlook falls below expectations After a year of rapid growth, this discount retailer's sales are still growing. It has gained favor among value-seeking consumers, who are shifting from higher-end department stores like Macy's, Inc.(M.US) and Kohl's (KSS.US) to more affordable discount retailers, and the company has gained market share among younger shoppers who do not see discounted shopping as a stigma. Although TJX Corporation boasts a "strong start to the holiday shopping season," the performance guidance it announced disappointed Wall Street. Looking ahead to the fourth quarter of the 2025 fiscal year, the company continues to expect same-store sales to grow by 2% to 3%, below market expectations. Currently, the pre-tax profit margin is expected to be at 10%.The company has raised its diluted earnings per share guidance to be between $1.12 and $1.14, an increase from 0.8% to 10.9%. For the full year of 2025, the company continues to forecast a 3% growth in same-store sales, lower than market expectations. The company has adjusted its pre-tax profit margin forecast to 11.3%, and its diluted earnings per share forecast to be between $4.15 and $4.17, lower than market expectations.Bonjour, comment a va ?