T.J. Maxx owner's profit forecast disappoints, shares marked down

By Subrat Patnaik

(Reuters) - TJX Cos Inc (TJX.N), operator of off-price retail chains T.J. Maxx and Marshalls, forecast a profit for full year that fell short of analyst estimates as costs rise due to higher wages and a strong dollar erodes revenue from outside the United States.

Shares of the company, which also owns HomeGoods stores, fell as much as 5.9 percent to $77.93 on Tuesday. TJX raised its profit forecast for the year ending January to $3.39-$3.43 per share, but this was less than the $3.48 analysts were expecting.

Edward Jones analyst Brian Yarbrough said TJX has always been "pretty conservative" with forecasts, however. "Under-promise and over-deliver, that's kind of been their motto."

TJX sells apparel and accessories, including brands such as Dolce & Gabbana and Versace, at prices ranging from 20 percent to 60 percent below those at other retailers.

The company, which has stores in Canada, the UK and Australia, got more than a fifth of its sales from stores outside the United States in the just-completed second quarter.

Sales in the UK were slightly lower than hoped, Chief Financial Officer Scott Goldenberg said on a conference call.

However, he said "trends leading up to the Brexit vote were very strong" and that "we believe we are gaining significant market share in this environment."

TJX had 39 stores in the UK at the end of January.

PROFIT AND REVENUE BEAT

TJX reported a bigger-than-expected increase in quarterly comparable sales as more bargain-hungry shoppers visited the group's stores. Sales at stores open at least a year rose for the 30th straight quarter.

Hakon Helgesen, an analyst at research firm Conlumino, said TJX carefully selected genuine bargains - in contrast to the "mish-mash of unpopular and unwanted apparel lines which constitute the tragic clearance sections of players like Macy's (M.N) and Sears (SHLD.O)."

Comparable-store sales rose 4 percent in the second quarter ended July 30, beating the average analyst estimate of 3.5 percent, according to a poll by research firm Consensus Metrix.

Off-price retailers and fast-fashion chains such as Zara and H&M (HMb.ST) are growing quickly as they draw shoppers from department stores and other mall-based chains.

They are also opening more stores, while department store chains such as Macy's Inc (M.N) are scaling back.

TJX opened a net 14 stores in the second quarter, giving it a total of 3,675 worldwide.

The Framingham, Massachusetts-based company's net income rose 2.3 percent to $562.2 million, or 84 cents per share. Net sales rose 7 percent to $7.88 billion.

Analysts on average had expected a profit of 81 cents per share and revenue of $7.85 billion, according to Thomson Reuters I/B/E/S.

Up to Monday's close, stock had risen nearly 17 percent this year.

(Reporting by Subrat Patnaik in Bengaluru; Editing by Martina D'Couto and Ted Kerr)