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TJX (TJX) Up 8.3% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for TJX (TJX - Free Report) . Shares have added about 8.3% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is TJX due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
TJX Companies' Q2 Loss Wider Than Expected, Sales Drop
TJX Companies came up with yet another quarter of drab results with its second-quarter fiscal 2021 numbers. The company reported a loss of 18 cents per share, wider than the Zacks Consensus Estimate of a loss of 8 cents. The quarterly loss compares unfavorably with earnings of 62 cents reported in the year-ago period. Net sales slumped 31.8% year over year to $6,667.6 million and lagged the Zacks Consensus Estimate of $7,005.4 million. Results were marred by temporary store closures in one-third of the quarter due to COVID-19.
Management stated that owing to temporary store closures amid the pandemic, the comp store sales definition was not applicable in the quarter under review. Thus, to offer a performance indicator for the stores as they reopen, TJX Companies has come up with a temporary new sales measure — open-only comp store sales. This includes stores that were initially classified as comp stores (in the beginning of fiscal 2021), with sales reporting done for the number of days these stores were open in the quarter under review.
Markedly, open-only comp store sales for the company fell 3% year over year. The metric declined 6%, 18% and 1% at the Marmaxx (U.S.), TJX Canada and TJX International divisions, respectively, whereas the same was up 20% in the HomeGoods (U.S.) segment.
Other Financial Updates
The company ended the quarter with cash and cash equivalents of $6,620.4 million, long-term debt of $5,445.3 million and total shareholders’ equity of $4,660.6 million.
Management generated $3.4 billion of operating cash flow during the second quarter, while it paid the $1 billion, which was drawn under the revolving credit facilities in March. Also, the company boosted the borrowing capacity under its credit facilities with another facility of $500 million in the third-quarter beginning, making $1.5 billion available for the company. Dividend payments are not anticipated in the third quarter and the share buyback plan has been suspended.
Total inventories as of Aug 1, 2020, were $3.7 billion, down from $5.1 billion in the year-ago period. The company is focused on keeping inventory levels in line with its sales plans and has elevated its buying considerably since July beginning to facilitate inventory flow. The company is also concentrating its inventory purchases on categories that are witnessing higher demand since store reopening.
Store & More Updates
During the second quarter, the company opened 12 new stores in the reported quarter, taking the total count to 4,557.
TJX Companies has reopened more than 4,500 stores worldwide along with each of its online shopping sites. The company has implemented actions to ensure safety and well-being of its workers as well as customers. These include social-distancing norms, access to PPE and better cleaning and sanitization, among other efforts. Notably, the company saw robust initial sales at all its retail banners and countries when it reopened stores. After an initial demand spike, sales and traffic moderated as the second quarter progressed and also in the third quarter. This could be accountable to consumer behavior and lighter-than-planned store inventories. In Canada, the company’s inventory flow was hurt by supply-chain hurdles and logistics-related headwinds. Nonetheless, the company has undertaken strategies to cut down on inventory delays.
Outlook
Management remains impressed with its merchandise margins in the second quarter. Further, the company’s HomeGoods and Homesense chains saw robust sales. Also, home departments in other company chains did well. The company expects to keep gaining market share again when more customers restart shopping in stores.
In the third quarter of fiscal 2021, management expects to see overall open-only comp store sales decline of 10-20%. This goes in tandem with the sales trends witnessed since mid-July through August (to date). The outlook also reflects the uncertainty surrounding consumer behavior, traffic and demand amid the pandemic, including a sluggish back-to-school selling season. Management did not offer any guidance for fiscal 2021.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month. The consensus estimate has shifted -36.48% due to these changes.
VGM Scores
Currently, TJX has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise TJX has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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TJX (TJX) Up 8.3% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for TJX (TJX - Free Report) . Shares have added about 8.3% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is TJX due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
TJX Companies' Q2 Loss Wider Than Expected, Sales Drop
TJX Companies came up with yet another quarter of drab results with its second-quarter fiscal 2021 numbers. The company reported a loss of 18 cents per share, wider than the Zacks Consensus Estimate of a loss of 8 cents. The quarterly loss compares unfavorably with earnings of 62 cents reported in the year-ago period. Net sales slumped 31.8% year over year to $6,667.6 million and lagged the Zacks Consensus Estimate of $7,005.4 million. Results were marred by temporary store closures in one-third of the quarter due to COVID-19.
Management stated that owing to temporary store closures amid the pandemic, the comp store sales definition was not applicable in the quarter under review. Thus, to offer a performance indicator for the stores as they reopen, TJX Companies has come up with a temporary new sales measure — open-only comp store sales. This includes stores that were initially classified as comp stores (in the beginning of fiscal 2021), with sales reporting done for the number of days these stores were open in the quarter under review.
Markedly, open-only comp store sales for the company fell 3% year over year. The metric declined 6%, 18% and 1% at the Marmaxx (U.S.), TJX Canada and TJX International divisions, respectively, whereas the same was up 20% in the HomeGoods (U.S.) segment.
Other Financial Updates
The company ended the quarter with cash and cash equivalents of $6,620.4 million, long-term debt of $5,445.3 million and total shareholders’ equity of $4,660.6 million.
Management generated $3.4 billion of operating cash flow during the second quarter, while it paid the $1 billion, which was drawn under the revolving credit facilities in March. Also, the company boosted the borrowing capacity under its credit facilities with another facility of $500 million in the third-quarter beginning, making $1.5 billion available for the company. Dividend payments are not anticipated in the third quarter and the share buyback plan has been suspended.
Total inventories as of Aug 1, 2020, were $3.7 billion, down from $5.1 billion in the year-ago period. The company is focused on keeping inventory levels in line with its sales plans and has elevated its buying considerably since July beginning to facilitate inventory flow. The company is also concentrating its inventory purchases on categories that are witnessing higher demand since store reopening.
Store & More Updates
During the second quarter, the company opened 12 new stores in the reported quarter, taking the total count to 4,557.
TJX Companies has reopened more than 4,500 stores worldwide along with each of its online shopping sites. The company has implemented actions to ensure safety and well-being of its workers as well as customers. These include social-distancing norms, access to PPE and better cleaning and sanitization, among other efforts. Notably, the company saw robust initial sales at all its retail banners and countries when it reopened stores. After an initial demand spike, sales and traffic moderated as the second quarter progressed and also in the third quarter. This could be accountable to consumer behavior and lighter-than-planned store inventories. In Canada, the company’s inventory flow was hurt by supply-chain hurdles and logistics-related headwinds. Nonetheless, the company has undertaken strategies to cut down on inventory delays.
Outlook
Management remains impressed with its merchandise margins in the second quarter. Further, the company’s HomeGoods and Homesense chains saw robust sales. Also, home departments in other company chains did well. The company expects to keep gaining market share again when more customers restart shopping in stores.
In the third quarter of fiscal 2021, management expects to see overall open-only comp store sales decline of 10-20%. This goes in tandem with the sales trends witnessed since mid-July through August (to date). The outlook also reflects the uncertainty surrounding consumer behavior, traffic and demand amid the pandemic, including a sluggish back-to-school selling season. Management did not offer any guidance for fiscal 2021.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month. The consensus estimate has shifted -36.48% due to these changes.
VGM Scores
Currently, TJX has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise TJX has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.