T.J. Maxx parent sees weak annual profit pressured by rising costs

By Aatrayee Chatterjee and Ananya Mariam Rajesh

(Reuters) -TJX Cos Inc forecast annual profit below analysts' expectations on Wednesday, as the off-price retailer faces pressures from supply chain costs as well as stubbornly high inflation, which could likely dampen consumer spending.

With U.S. consumer prices, rental housing and food costs still climbing, retailers have become more cautious about an economic downturn in the second half of the year.

Walmart Inc on Tuesday forecast annual earnings below estimates and warned that tight consumer spending could pressure profit margins.

TJX has been battling higher freight and labor costs due to global supply chain disruptions, the Russia-Ukraine war and inflation that made the company selectively raise prices from fiscal 2022 on some products.

The company's outlook is a little weaker than expected and is in line with what other companies are saying due to macroeconomic conditions, CFRA Research Analyst Zachary Warring said.

Shares of the HomeGoods owner fell about 2% in early trading after the company also sees a weak first-quarter profit.

Still, the retailer expects full-year overall comparable store sales to be up 2% to 3%, as inflation pushes bargain-hungry but brand-conscious customers to off-price retailers.

TJX also posted better-than-expected fourth-quarter revenue after it continued to draw in shoppers during the all-important holiday season.

But Chief Executive Officer Ernie Herrman said home businesses overall were softer compared to the extraordinary growth seen during the prior two years when consumers purchased for their homes. The HomeGoods segment's U.S. comparable store sales declined 7% in the quarter.

TJX now expects fiscal 2024 adjusted profit per share between $3.29 and $3.41, compared with analysts' estimates of $3.57, according to IBES data from Refinitiv.

The company has historically been "an under-promiser and over-deliverer," BMO Capital Markets analyst Simeon Siegel said.

TJX's fourth-quarter net sales rose 5% to $14.52 billion, beating estimates of $14.07 billion, while profit per share came in line with expectations.

(Reporting by Aatrayee Chatterjee and Ananya Mariam Rajesh in Bengaluru; Editing by Maju Samuel)