Investors were expecting good news from TJX Companies (TJX -2.49%) when the retailer announced its holiday season operating results. Trends looked strong heading into the peak selling period, even though peers such as Walmart and Target saw surprise slowdowns in the week leading up to Christmas.

The owner of the TJ Maxx and Marshalls off-price stores wasn't caught up in that slump and in fact reported a surprise acceleration in traffic trends. TJX Companies also had some good news for income investors as it hiked its dividend for the 24th consecutive year. 

Let's look at the results.

A couple shopping together in a mall

Image source: Getty Images.

Growth is up

Comparable-store sales, a core growth metric, landed at 6% to mark a big acceleration over last quarter's 4% uptick. That success allowed the off-price retailer to comfortably exceed its full year 2019 outlook, with comps rising 4% rather than the 3% executives had predicted back in November. The retailer's fourth-quarter result was about double management's pre-holiday target.

The sales boost was especially strong given that Walmart and Target each noted sluggish apparel spending in their stores in the weeks leading up to Christmas. TJX apparently avoided that slump, mainly thanks to its army of merchandise buyers.

"Our exciting brands and gift-giving assortments at great values," CEO Ernie Herrman said in a press release, "attracted customers around the globe during the holiday season and beyond." TJX Companies noted healthy shopper traffic as the main driver behind its market share gains.

Financial wins

Management said back in November that they liked their inventory position heading into the holidays, and that situation paid off for the business in Q4. Gross profit margin edged up to 28.4% of sales from 27.8% a year ago as increased selling prices more than offset higher expenses on things such as labor and transportation. As a result, pre-tax earnings rose to $1.33 billion from $1.18 billion.

Healthy cash flow trends gave TJX Companies plenty of flexibility to allocate resources toward growth initiatives while leaving room for direct shareholder returns. The retailer boosted marketing and spent more on its employees in 2019, but it also repurchased $1.5 billion of stock while paying out $1.1 billon in dividends.

Looking ahead

Herrman and his team expect to increase that stock buyback spending in 2020, up to between $1.75 billion and $2.25 billion. The company also raised its dividend by 13% to mark its 24th consecutive annual raise. One more increase will qualify TJX Companies as a Dividend Aristocrat.

As for the sales outlook, management said they see plenty of "fantastic buying opportunities" to procure quality name-brand merchandise at a discount. The demand picture is bright, too, with comps expected to rise again in 2020, by between 2% and 3%. Executives are predicting a slight profitability increase as well, along with the addition of over 200 stores to its base that now stands at 4,529 locations in the U.S., Canada, Europe, and Australia.