Investors had been optimistic heading into TJX Companies(NYSE:TJX) first-quarter earnings report this week. The leading off-price retailer of home goods and apparel had announced healthy sales growth in the prior quarter, after all, and management sounded an optimistic tone back in February that fiscal 2019 will bring new operating and financial records for the company.

TJX Companies modestly surpassed those expectations, as customer traffic held up well across its core brands of TJ Maxx, Marshall's, and Home Goods.

Let's take a look at how the headline numbers compared to the prior-year period:

 Metric

Q1 2018

Q1 2017

Change (YOY)

Revenue

$8.7 billion

$7.8 billion

12%

Net income

$716 million

$536 million

34%

Earnings per share

$1.13

$0.82

38%

Data source: TJX financial filings. YOY = year over year.

What happened with TJX Companies this quarter?

Sales growth continued its healthy pace from the holiday period and kept TJX Companies on track to expand revenue for the 23rd consecutive year in fiscal 2019. Profits held up well, too, as customers snapped up its heavily discounted merchandise.

Here are the key highlights of the quarter: 

  • Comparable-store sales rose in each of the company's four main retailing divisions, led by a 4% spike at the Marshalls and TJ Maxx stores. The 3% overall increase was powered by positive customer traffic in each of its segments.
  • Gross profit margin held steady at 29% of sales, which suggests the retailer didn't have to cut prices to keep inventory moving.
  • Operating margin ticked up to 11% of sales from 10.7% a year ago, leading to a 17% increase in adjusted earnings per share.
  • The retailer added 71 stores to its footprint, equating to a 5% boost in square footage.
  • TJX Companies sent $600 million to shareholders, split between $400 million in stock repurchase spending and $200 million in dividend payments.

What management had to say

"We are pleased with our first quarter results," CEO Ernie Herrman noted in a press release. "Both our consolidated comp store sales growth of 3% and earnings per share exceeded our expectations," Herrman explained.

Management highlighted TJX Companies' steadily growing shopper traffic as particularly good news. "We believe that the consistency of our customer traffic increases demonstrates the strength and resiliency of our business and our ability to succeed through many types of economic and retail environments," Herrman said.

Regarding its buyers' opportunities to continue securing high-quality merchandise at discount prices, the retailer saw reason for more optimism. "[TJX Companies] is in an excellent inventory position entering the second quarter and has plenty of liquidity to take advantage of the terrific opportunities it sees in the marketplace for quality, branded merchandise," the company said.

Looking forward

The strong start to the year convinced management to boost its earnings outlook slightly, up to an increase of between 5% and 6%. Executives left their sales growth forecast unchanged at between 1% and 2%, likely due to the fact that so much of the fiscal year is still to come.

Investors can expect those returns to be supplemented by significantly higher cash payments, which are being funded by healthy cash flow and beneficial changes to U.S. tax law. TJX Companies' dividend was recently lifted by 25% and management, consistent with its comments at the start of the year, still expects to roughly double share buyback spending to as much as $3 billion in fiscal 2019.

Demitrios Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool recommends The TJX Companies. The Motley Fool has a disclosure policy.