TJX Companies (TJX) Up 43.2% in 1 Year: What's Driving it?
The TJX Companies, Inc.’s TJX performance has exhibited a decent run on the bourses in the past year. The company’s operational initiatives, solid store and e-commerce growth efforts, effective marketing initiatives and loyalty programs supported positive market sentiments for the company.
In the past year, this leading off-price retailer of apparel and home fashions in the U.S. and worldwide has outpaced the Zacks Retail-Discount Store industry. In the said period, shares of this Zacks Rank #3 (Hold) company have gained 43.2% compared with the industry’s growth of 3.6%. The company also outpaced the retail-wholesale sector’s rise of 8.5% and the S&P 500’s increase of 14.6% in the same timeframe.
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An uptrend in the Zacks Consensus Estimate reflects the same sentiment. The consensus estimate for fiscal 2024 and 2025 increased by 3.9% to $3.71 and 2.5% to $4.04, respectively, over the past 30 days. The Zacks Consensus Estimate for the current and next financial years’ earnings implies year-over-year increases of 19.3% and 8.2%, respectively.
The Zacks Consensus Estimate for fiscal 2024 and 2025 sales is pegged at $53.7 billion and $56.4 billion, respectively, indicating year-over-year increases of 8.2% and 5.1%, respectively.
Let’s Delve Deeper
TJX Companies has been benefiting from its solid store and e-commerce growth efforts. The company has undertaken several initiatives to boost online sales and strengthen its e-commerce business. In the second quarter of fiscal 2024, the company increased both its store count and square footage by 3% from the year-ago quarter’s figures.
With an increasing number of consumers resorting to online shopping, The TJX Companies has undertaken several initiatives to boost online sales and strengthen its e-commerce business.
The company remains committed to boosting growth through effective marketing initiatives and loyalty programs. Its aggressive marketing and advertising campaigns through multiple mediums have been adding growth.
The implementation of loyalty programs has fostered customer loyalty and encouraged repeat purchases. Moreover, the company’s treasure hunt shopping experience is gaining traction among shoppers, leading to increased footfall and sales.
TJX’s performance in the second quarter of fiscal 2024 surpassed the Zacks Consensus Estimate for the top and bottom lines, driven by an off-price business model, a strong brand portfolio and an extensive geographical presence. In the fiscal second quarter, the company experienced growth in comparable store sales due to improved customer traffic and the strength of Marmaxx, which is TJX Companies' largest division. At Marmaxx, fiscal second quarter comparable store sales rose 8%. Recovery in the HomeGoods division bodes well for TJX. In the fiscal second quarter, comparable store sales rose 4% in the HomeGoods category.
For fiscal 2024, management envisions comparable store sales growth of 3-4%. It expects adjusted earnings of $3.56-$3.62 per share, which suggests an increase from earnings of $3.11 per share reported in fiscal 2023.
Despite the positives, TJX has been dealing with the adverse impacts of the high cost of sales and operating expenses. In the second quarter of fiscal 2024, its cost of sales increased by 4% and selling, general and administrative expenses rose by 17.7%. In the fiscal first quarter, its cost of sales and selling, general and administrative expenses increased by 1.8% and 6.9%, respectively. The company expects high wage and supply-chain costs to remain hurdles in fiscal 2024.
Key Picks
Some top-ranked stocks from the same sector are Abercrombie & Fitch ANF, American Eagle Outfitters AEO and Boot Barn BOOT, each currently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Abercrombie & Fitch is a leading casual apparel retailer. The Zacks Consensus Estimate for Abercrombie & Fitch’s current financial-year sales and earnings per share (EPS) suggests growth of 10.4% and 1,644%, respectively, from the year-ago reported figures. ANF delivered an earnings surprise of 724.8% in the last reported quarter.
American Eagle Outfitters is a retailer of casual apparel, accessories and footwear. AEO delivered an earnings surprise of 43.2% in the last reported quarter. The Zacks Consensus Estimate for American Eagle Outfitters’ current financial-year sales and EPS suggests growth of 1.3% and 24.7%, respectively, from the year-ago reported figures.
Boot Barn is a fashion retailer of apparel and accessories. The company has a trailing four-quarter earnings surprise of 13.5%, on average. The Zacks Consensus Estimate for Boot Barn’s current financial-year sales suggests growth of 7.8% from the year-ago reported figure.
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