(Reuters) -Off-price retailer TJX Cos raised annual profit forecast after quarterly results beat estimates on Wednesday, banking on gains from easing costs and strong demand for its affordable apparel and accessories.
Shares of the company were up about 5% in premarket trading.
Over the past six quarters, TJX has kept prices low to attract shoppers who are worried about spending in an inflationary environment.
With newer product assortments and well-maintained inventories, the company has been able to lure in customers looking for their back-to-school purchases.
According to the Commerce Department’s Census Bureau, U.S. retail sales rose more than expected in July as consumers kept spending by bargain hunting and trading down to affordable substitutes.
“The third quarter is off to a strong start,” CEO Ernie Herrman said, adding that the company sees strong buying opportunities in the marketplace and is positioned to ship fresh merchandise both to stores and online throughout the fall and holiday selling seasons.
Furthermore, benefits from easing freight costs helped the company strengthen its quarterly margins to 30.4%.
The company expects annual earnings per share of $4.09 to $4.13, above its prior forecast of $4.03 to $4.09.
TJX reported net sales of $13.47 billion in the quarter ended Aug. 3, compared with analysts’ average estimate of $13.31 billion, according to LSEG data.
It earned a quarterly profit of 96 cents per share, compared with analysts’ estimates of 92 cents apiece.
TJX also announced its agreement to invest about $360 million for a 35% stake in privately held Brands For Less. It also maintained the upper end of its annual comparable sales forecast of a 3% rise.
(Reporting by Anuja Bharat Mistry in Bengaluru; editing by Alan Barona)
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