By Sanskriti Shekhar and Danielle Kaye
Aug 19 (Reuters) - TJX Companies on Wednesday reported a slowdown at its TJ Maxx and Marshalls discount apparel chains in the second quarter, overshadowing strong growth in its home goods business and fueling concerns about a pullback in U.S. consumer spending.
While the off-price retailer is still drawing in bargain-hunting shoppers, its core apparel-focused Marmaxx division is facing headwinds ahead of the crucial back-to-school and holiday seasons. Shares of the company
fell 1% in morning trading.
The weak U.S. apparel results clouded TJX's earnings beat. The Framingham, Massachusetts-based company also raised its annual profit forecast and maintained its comparable store sales target for growth between 3% and 4%.
TJX faces mounting competition from value retailers Ross Stores and Burlington Stores as consumers grow more selective with discretionary purchases amid economic uncertainty and a softer labor market.
Marmaxx, TJX's largest division, posted comparable sales growth of 1% in the second quarter, slowing from 6% in the previous quarter.
"Our fear is that it relates to lower ticket (less purchases per shopping trip) given wider signs of consumer weakness and price increases over the last year and a half," said William Blair analyst Dylan Carden.
TJX, which offers merchandise priced from under $10 to designer goods costing several thousands of dollars, has boosted marketing efforts such as new launches and celebrity-led campaigns.
The company expects tariff refunds to lower merchandise costs in the third quarter, although partly offset by higher incentive compensation and bonus expenses.
Excluding an expected net benefit of six cents from tariff refunds, TJX sees third-quarter adjusted earnings per share of $1.30 to $1.32, compared with analyst expectations of $1.35, according to LSEG data.
It expects earnings per share for fiscal 2027 between $5.31 and $5.36, compared with $5.08 to $5.15 forecast earlier.
Quarterly net sales rose 5.4% to $15.18 billion, narrowly beating estimates of $15.16 billion. Adjusted earnings per share rose 11% to $1.22, above expectations of $1.19.
(Reporting by Sanskriti Shekhar in Bengaluru and Danielle Kaye in New York; Editing by Devika Syamnath)
