By Anuja Bharat Mistry
(Reuters) -TJ Maxx parent TJX (NYSE:TJX) Cos posted better-than-expected first-quarter results and raised its annual profit forecast on easing costs and strong demand for its affordable products, sending its shares up 6% on Wednesday.
Lower prices compared to department stores and cooling inflation have allowed shoppers more room to shop outside just essentials, boosting demand across product categories for the off-price retailer.
This helped the company lift its annual earnings estimates to $4.03 to $4.09 per share from its prior forecast of $3.94 to $4.02.
"TJX in particular is benefiting as wealthy shoppers trade down to cheaper retailers, and customers across income levels look to score designer goods at an affordable price," said Rachel Wolff, senior analyst from eMarketer.
The company's decade-old daily "treasure hunt" strategy also helped draw in younger customers to stores, who like to post their finds on social media, Wolff added.
As per Placer.ai data, traffic at TJ Maxx and Marshalls in April was up 2.7% and 1.9%, respectively, while non-off-price retailers saw a 10.6% drop in the same period.
TJX reported a 6% rise in net sales to $12.48 billion for the first quarter ended May 4 from a year earlier, compared with LSEG estimates of $12.46 billion, and maintained its annual comparable sales forecast.
On an adjusted basis, its quarterly profit of 93 cents per share beat analysts' estimate of 87 cents per share, while lower freight costs and better inventory management strengthened its margins to 30%.
However, Target reported lower-than-expected earnings for the reported quarter on slowing non-essentials spending, and expects consumer caution to persist, sending its shares down about 8% on Wednesday.