Lowe’s, Target, And TJX Q3 Profit Tops View; TJX Confident To Improve Profitability

Home improvement retailer Lowe’s Companies, Inc. (LOW) said, excluding charges in the prior-year period related to the extinguishment of debt, third quarter earnings per share increased 38% from a year ago. Comparable sales increased 2.2%. Comparable sales for the U.S. home improvement business were up 2.6% for the third quarter.

With sales momentum continuing into November, Lowe’s once again increased its outlook for the operating results of fiscal 2021. Given its better-than-expected performance, Lowe’s now plans to repurchase approximately $3 billion in shares in the fourth quarter, bringing the expected total share repurchases for the year to approximately $12 billion.

Lowe’s reported third quarter net earnings of $1.9 billion and earnings per share of $2.73 compared to $692 million and EPS of $0.91, last year. Third quarter EPS of $2.73 increased 38% from adjusted EPS of $1.98, prior year. On average, 27 analysts polled by Thomson Reuters expected the company to report profit per share of $2.36, for the quarter. Analysts’ estimates typically exclude special items. Lowe’s recorded total sales of $22.92 billion compared to $22.31 billion, last year. Analysts on average had estimated $22.06 billion in revenue.

For full year 2021, Lowe’s expects revenue of approximately $95 billion, and capital expenditures of up to $2 billion. Gross margin rate is expected to be up slightly, compared to prior year. Operating margin is estimated to be 12.4% for fiscal 2021.

Discount retailer Target Corp. (TGT) reported that its third quarter operating income margin rate reduced to 7.8 percent from 8.5 percent, a year ago. Gross margin rate declined to 28.0 percent from 30.6 percent, reflecting pressure from higher merchandise and freight costs, increased inventory shrink, and increased supply chain costs from increased compensation and headcount in the distribution centers. Comparable sales grew 12.7 percent, for the quarter.

Target Corp. said it continues to expect full-year operating income margin rate will be 8 percent or higher. For the fourth quarter, the company expects high-single digit to low-double digit growth in comparable sales, compared with the previous guidance for a high-single digit increase.

Target Corp. reported third quarter adjusted earnings per share of $3.03, up 8.7 percent from $2.79, a year ago. On average, 24 analysts polled by Thomson Reuters expected the company to report profit per share of $2.83, for the quarter. Analysts’ estimates typically exclude special items. Target Corp. recorded total revenue of $25.7 billion, up 13.3 percent from last year. Analysts on average had estimated $24.78 billion in revenue.

Off-price retailer TJX Companies Inc. (TJX) reported an increase in profit for the third quarter that also topped Wall Street estimates. Overall open-only comp store sales increased 14% over fiscal 2020.

Looking forward, TJX Companies now expects to repurchase approximately $1.75 billion to $2.0 billion of stock in fiscal 2022, an increase of $500 million from its prior plan. The company also expects to declare a $0.26 per share dividend in the fourth quarter.

“We are very confident in our ability to continue to gain market share, improve our profitability in the medium to long term, and reach our strategic vision of TJX becoming a $60 billion company,” Ernie Herrman, CEO, stated.

TJX Companies’ third quarter net income increased to $1.02 billion or $0.84 per share, from $866.66 million or $0.71 per share, a year ago. On average, 21 analysts polled by Thomson Reuters expected the company to report profit per share of $0.81, for the quarter. Analysts’ estimates typically exclude special items. Net sales were $12.53 billion, an increase of 24% from a year ago. Analysts on average had estimated $12.27 billion in revenue.

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