TJX profit climbs nearly 20 pct, but shares dip

But its shares fell almost 4 percent in midday trading as lower investment income and costs from European expansion left TJX's profit margin slightly below the company's expectations.

Framingham, Mass.-based TJX said its net income in the three months ended April 26 rose to $193.8 million, or 43 cents per share, compared with a profit of $162.1 million, or 34 cents per share, in last year's first quarter.

While TJX's result a year ago was hurt by a $12 million charge from a massive data breach, this year's first-quarter profit was boosted $12 million from a tax benefit.

Not counting that benefit, TJX's profit in the latest period was 41 cents per share, matching the consensus estimate of analysts surveyed by Thomson Financial.

TJX's revenue rose 6 percent in the latest period to $4.36 billion, just shy of analysts' forecast of $4.39 billion. Sales at stores open at least a year rose 3 percent.

TJX, operator of 2,595 stores, said its quarterly profit margin before taxes declined to 6.6 percent, below the 6.9 percent figure a year ago excluding one-time items, and slightly below the firm's expectations.

Chief Financial Officer Trip Tripathy told analysts on a conference call that the margin dipped in part because of reduced interest gains on investments after the company spent $225 million to repurchase stock during the quarter.

Costs to add stores in Europe also hurt the profit margin.

Those factors were partly offset by an improved profit margin on merchandise, despite rising fuel costs that have prompted TJX to seek ways to cut the cost of delivering merchandise to its stores.

Despite the lower overall profit margin, Tripathy said TJX was "very pleased with these results."

Its shares fell $1.24, or 3.9 percent, to $30.90 in midday trading Tuesday.

TJX reiterated its expectations for a second-quarter profit of 40 cents to 42 cents per share, and full-year earnings of $2.20 to $2.25. Analysts expect a second-quarter profit of 43 cents per share, and $2.22 for the year.

TJX said its merchandise inventory was down 3 percent at the quarter's end from a year ago, excluding the effects of new stores the company has added recently.

Chief Executive and President Carol Meyrowitz said TJX is "very open to buy, very liquid, and truly taking advantage out there" in deals to snap up other retailers' overstock and sell it at discounts.

While the economic downturn has hurt consumer spending, TJX and other discount chains have generally fared better than mall-based retailers and specialty stores as shoppers increasingly seek bargain prices.

TJX operates T.J. Maxx, Marshalls, HomeGoods, A.J. Wright and Bob's Stores in the United States, Winners and HomeSense stores in Canada, and T.K. Maxx stores in Europe.