Source: TJX

The TJX Companies (NYSE:TJX) reported earnings for the third quarter of fiscal 2015 on Tuesday. While earnings per share were in line with expectations, sales were marginally below forecasts, and the company cut its earnings per share guidance for the full year. Shares were down slightly as of 2:15 p.m. Let´s take a look at TJX's latest report and the main takeaways for investors.

The top line
Net sales during the quarter ended on Nov. 1 increased 6% to $7.36 billion on the back of a 2% increase in comparable-store sales. The number was a bit short of Wall Street analysts' expectations, in the area of $7.44 billion, according to data compiled by Thomson Reuters.

The company opened 106 net new stores during the quarter, ending the period with a total of 3,385 locations across its different concepts and geographies. (TJX includes T. J. Maxx, HomeGoods, and Marshalls stores.) This represents a 4% increase in square footage versus the same quarter in 2013.

Sales in the U.S. Marmaxx division, which represents nearly 63% of total revenues, increased 1% on a comparable-sales basis and 4% on a net sales basis. HomeGoods in the U.S. was particularly strong during the quarter, with a 7% increase in comparable-store sales and a 15% jump in total revenues.

Comparable-store sales in TJX Europe fell by 1%, but total sales did much better, with an 8% increase. TJX Canada delivered a 3% increase in comparable-store sales and a 1% increase in total revenues during the quarter.

Margins and earnings
Gross profit margin during the quarter came in at 29.4%, a small increase of 0.1% versus the same period last year. Selling, general, and administrative expenses as a percent of sales were 16.2%, a 0.4% improvement from the prior year.

Even if the increase in profit margins was not something to write home about, it's nice to see profitability moving in the right direction, since it shows that TJX is managing to deliver healthy sales growth in a very competitive environment without eroding profit margins via excessive price discounts.

TJX allocated more than $1.2 billion to share repurchases during the first nine months of fiscal 2015, and it expects to repurchase a total of between $1.6 billion and $1.7 billion during the full year. The average diluted share count declined 3% year over year.

Diluted earnings per share came in at $0.85, in line with Wall Street estimates. When adjusted for $0.11 per share in tax benefits last year, the number represents a 13% year-over-year increase.

Management comments and guidance
CEO Carol Meyrowitz sounded quite satisfied with TJX's performance during the quarter and its future prospects:

We are particularly pleased that customer traffic continued to gain momentum in the third quarter despite unusually warm weather, which we believe dampened sales throughout TJX Europe starting in September and hurt Marmaxx in October. Having said that, the fourth quarter is off to a very strong start. As we enter the holiday season, we believe our gift giving, marketing and values are the most exciting that we have offered our customers. We have many new in-store initiatives that we believe will both surprise and delight our customers. We remain very confident in the short- and long-term growth prospects for our business as we grow TJX to a $40 billion-plus company.

Management expects earnings for the fourth quarter of fiscal 2015 to be negatively affected by $0.02 per share due unfavorable currency fluctuations, in addition to an extra $0.02 per share in charges "due to a combination of additional expenses and investments for the future."

Earnings per share are expected to be in the range of $0.86 to $0.90, representing an annual increase of between 6% and 11%. Management expects comparable-store sales to increase 1% to 2% and merchandise margins to be up during the coming quarter.

Full-year guidance was updated to reflect third-quarter results and guidance for the fourth quarter. On an adjusted basis, earnings per share during fiscal 2015 are now expected to be between $3.09 and $3.13, down from previous guidance of $3.10 to $3.18. This new guidance would represent a 9% to 11% annual increase in earnings per share. The company forecasts comparable-store sales to increase between 1% and 2% during the year.

All in all, it was not a particularly impressive quarter for TJX, and reduced guidance for the coming quarter was probably the main weak spot in the report. However, the company is still delivering strong sales growth in combination with healthy profit margins. Considering how challenging the industry has been lately, the latest report from TJX is no reason to panic by any means.