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TJX Reports Strong Comps in June

Zacks Equity Research

Consolidated same-store sales at The TJX Companies Inc. (TJX), an off-price retailer of apparel and home fashions in the U.S. and worldwide, climbed 7.0% year over year in the five-week period ended June 30, 2012. This rate of increase was higher than the year-ago period’s growth of 5%. As for total sales, it climbed 9.0% in June 2012 to $2.3 billion from $2.1 billion in the year-ago period.

Comparable sales for the year-to-date period climbed 8% from the year-ago period. Total sales for the same period went up 10.0% year over year to $10.0 billion.

Sales exceeded management’s expectations on the back of strong performance of all the stores in the U.S., Canada and Europe. Further, well-chosen stocks at the stores consistently improved customer traffic during the period.

Store Update

As of June 30, 2012, The TJX Companies operated 1,006 T.J. Maxx, 892 Marshalls, and 393 HomeGoods stores in the U.S.; In Canada it operated 220 Winners, 87 HomeSense, and 12 Marshalls stores; and operated 337 T.K. Maxx and 24 HomeSense stores in Europe.

As of fiscal year 2012, The TJX Companies operated 983 T.J. Maxx, 884 Marshalls, and 374 HomeGoods stores in the U.S.; In Canada it operated 216 Winners, 86 HomeSense, 6 Marshall stores. It operated 342 T.K. Maxx and 24 HomeSense stores in Europe.

Future Planning

On the back of the strong sales performance in June, 2012, the company raised its fiscal second quarter 2013 earnings guidance to be in the range of 52 to 53 cents from the previously announced guidance of a range of 47 to 50 cents. The guidance represents a double-digit growth over second quarter fiscal 2012.

The company further raised its fiscal 2013 earnings guidance to a range of $2.31 to $2.39 compared with previously announced guidance of $2.27 to $2.37 per share. According to the Zacks Consensus Estimate, earnings for second quarter fiscal 2013 are expected to be 51 cents a share. The fiscal 2013 earnings are expected to be $2.42.

TJX has been consistently reporting increased comparable store sales for the past several quarters. This reflects increased customer traffic and demand for the commodities in the company’s stores.

We are encouraged by the company’s flexible off-price business model that is allowing it to react according to market trends. TJX Companies has a low-cost structure compared to many other traditional retailers. It focuses aggressively on expenses throughout its business.

Off price retailers like the TJX Companies are well positioned to gain significantly during economic downturns, when consumers tend to become more price-sensitive and prefer to buy discounted merchandises.

However, its close competitor, Kohl’s Corporation (KSS) reported 4.2% decline in comparable store sales for the five-week period ended June 30, 2012. Total sales went down 2.6% to $1.7 billion.

Based in Framingham, Massachusetts, TJX Companies is a owns some popular retail stores like T.J. Maxx, Marshalls, Homegoods, Winners, Homesense and T.K. Maxx.

Currently, The TJX Companies carries a Zacks #2 Rank (short-term Buy rating).

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