TJX ( TJX) saw first-quarter earnings tumble despite higher revenue, as profits fell at its T.J. Maxx and Marshalls units compared with a strong year-ago quarter.

In early afternoon trading, TJX shares were down 6 cents, or 0.3%, at $19.98. TJX shares dropped as much as 54 cents, or 2.7%, earlier in the day.

In its quarter ended April 26, TJX earned $113.5 million, or 22 cents a share. On a per-share basis, the company's earnings were down 18.5% from the year-ago quarter, when TJX earned $147.1 million, or 27 cents a share.

TJX's revenue increased 4.6% to $2.79 billion. On a same-store basis, which compares results at like outlets open more than one year, TJX's sales declined 2%.

The bottom-line results met Wall Street expectations, even if TJX's revenue didn't. Analysts had projected that the Framingham, Mass.-based company would earn 22 cents a share on $2.84 billion, according to Thomson First Call.

In the current quarter, TJX expects to earn between 25 cents and 28 cents a share, company officials said on a conference call. Wall Street had been projecting second-quarter earnings of 26 cents a share, according to Thomson First Call.

TJX's inventory grew dramatically in the first quarter, climbing $339.3 million from the end of fiscal 2003 to $1.9 billion. At the end of the quarter, inventory was up 24.6% over last year.

But on a conference call with analysts, company officials seemed unconcerned by the swelling of inventory. After two years of first quarter inventory declines, inventory levels are essentially back to where they were two years ago, officials said. Meanwhile, the company found some "great buys" that it brought into its warehouses sooner than normal, officials said.

"As we always do, we're keeping a vigilant eye on inventories," said company CEO Ted English, during the call. But he added, "Our goods are very current and represent great values for our customers."

The company plans for inventories to be up again at the end of the second quarter, officials said. But the increase in inventories won't affect TJX's ability to control markdowns on products, they said. The average store inventory was up less than the company's overall inventory increase, they said.

"We control that flow into our stores very aggressively," English said.

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