TJX Cos forecast current-quarter profit below Wall Street expectations on Wednesday, signalling that spiralling costs were weighing on the off-price retailer’s margins even as it saw steady demand from bargain-hungry customers.

The company’s shares, which are up about 16 percent this year, fell 4 percent in early trading.

The company, like several other US retailers, has been struggling with higher costs linked to supply chain and wages, even as it has seen freight-related expenses come down from its peak.

TJX’s downbeat forecast was in contrast to that of Target. The big-box retailer said on Wednesday that it was expecting fourth-quarter profit above analysts’ estimates, helped by easing supply-chain costs and a tighter control on inventory.

“(TJX’s) fourth-quarter guidance has been slightly conservative,” Jane Hali & Associates analyst Jessica Ramirez said, adding that this did not feed investors’ expectations as off-price retailers are typically seen as winners in a volatile macro environment.

TJX now expects fourth-quarter adjusted earnings per share of between 97 cents and $1, down from its previous forecast of between $1 and $1.03. Analysts estimate a profit of $1.13 per share, according to LSEG data.

For the third quarter, TJX saw selling, general and administrative expenses climb 18 percent.

However, the company raised its full-year sales and profit forecasts as it benefited from customers shifting to cheaper alternatives amid a higher cost-of-living crisis.

“Customer traffic was up across all divisions,” CEO Ernie Herrman said, adding that the fourth quarter was “off to a strong start.”

The company now expects fiscal 2024 comparable store sales of between 4 percent and 5 percent, up from its earlier forecast of between 3 percent and 4 percent.

It expects fiscal 2024 adjusted earnings of between $3.61 and $3.64 per share, up from its previous outlook of between $3.56 and $3.62 per share. Analysts expect a profit of $3.73 per share.

By Juby Babu and Granth Vanaik

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