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The TJX Companies' (TJX) Store & Online Growth Aids, Costs Hurt
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The TJX Companies, Inc. (TJX - Free Report) appears well-placed for growth due to strength in its Marmaxx segment. Also, solid store and e-commerce growth efforts have been aiding. Apart from these, the off-price retailer has been witnessing a rise in the pre-tax profit margin.
Management expects a fiscal 2024 adjusted pretax profit margin of 10-10.2%. The company’s adjusted pre-tax margin came in at 9.7% in fiscal 2023. For the first quarter of fiscal 2024, management anticipates a pretax profit margin in the range of 9.2-9.5% compared with 7.5% in the first quarter of fiscal 2023.
However, the HomeGoods (U.S.) division has been seeing soft sales for the past few quarters. Apart from this, the company has been grappling with increased wage and supply-chain costs. Management expects these costs to be deterrents in fiscal 2024 and 2025. Let’s delve deeper.
The TJX Companies, Inc. Price, Consensus and EPS Surprise
The TJX Companies has been benefiting from its solid store and e-commerce growth efforts. The company has been expanding its footprint fast in the United States, Europe, Canada and Australia. It plans to add nearly 150 net new stores in fiscal 2024, taking its year-end total to roughly 5,000 stores. It also plans to remodel 400 stores and relocate about 55 stores in the fiscal.
On its fourth-quarter fiscal 2023 earnings call, The TJX Companies stated that it anticipates opening more than 1,400 stores in the current locations in the long run. The TJX Companies has been witnessing solid demand for an in-person shopping experience in the last few years. Its flexible buying supply chain and store formats aid the company in opening stores across a wide customer demographic.
Further, 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. In the full-year 2022, the company added several new categories and brands to all its online banners.
TJX has been seeing strength in the Marmaxx segment. In the fourth quarter of fiscal 2023, net sales came in at $8,983 million, up 8% year over year at the Marmaxx (U.S.) division.
U.S. comp store sales grew 7% in Marmaxx, buoyed by solid apparel and accessories categories’ sales. Customer traffic remained the key driver behind comp store sales growth, with the average basket size also increasing. We believe that strength in Marmaxx is likely to continue aiding the company’s overall sales.
Will Hurdles be Offset?
In the HomeGoods (U.S.) division, the company’s net sales amounted to $2,424 million in the fourth quarter of fiscal 2023, down 4% from the figure reported in the year-ago quarter. U.S. comp-store sales fell 7% in the HomeGoods category. For the full year, comp store sales tumbled 11% due to a fall in customer traffic, partly made up by a rise in the average basket size.
High costs are also a concern for the company. However, we believe that The TJX Companies’ off-price model, along with its strategic store locations, impressive brands and fashion products, and efficient supply-chain management are likely to aid its performance.
For fiscal 2024, management expects overall comp store sales growth of 2-3%, excluding sales from the 53rd week. It expects consolidated sales in the band of $52.5-$53.2 billion, suggesting 5-7% year-over-year growth. For the first quarter, comp store sales are expected to rise 2-3% and consolidated sales are expected to increase 3-4% to $11.7-$11.8 billion.
Shares of this Zacks Rank #3 (Hold) company have rallied 20.8% in the past six months compared with the industry’s growth of 9.6%.
3 Solid Retail Picks
Here we have highlighted three better-ranked stocks.
The Zacks Consensus Estimate for Kroger’s current financial-year EPS suggests growth of 6.2% from the year-ago reported figure. KR has an expected EPS growth rate of 6% for three to five years.
DICK'S Sporting Goods (DKS - Free Report) operates as a sporting goods retailer and currently carries a Zacks Rank #2 (Buy). DKS has an expected EPS growth rate of 5.4% for three to five years.
The Zacks Consensus Estimate for DICK'S Sporting’s current financial-year EPS suggests a rise of 11.1% from the year-ago reported figure. DKS has a trailing four-quarter earnings surprise of 10%, on average.
Ulta Beauty (ULTA - Free Report) operates specialty retail stores selling cosmetics, fragrances, haircare and skincare products, and related accessories and services. ULTA currently carries a Zacks Rank #2.
The Zacks Consensus Estimate for Ulta Beauty’s current financial-year EPS suggests an increase of 5% from the year-ago reported figure. ULTA has a trailing four-quarter earnings surprise of 26.2%, on average.
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The TJX Companies' (TJX) Store & Online Growth Aids, Costs Hurt
The TJX Companies, Inc. (TJX - Free Report) appears well-placed for growth due to strength in its Marmaxx segment. Also, solid store and e-commerce growth efforts have been aiding. Apart from these, the off-price retailer has been witnessing a rise in the pre-tax profit margin.
Management expects a fiscal 2024 adjusted pretax profit margin of 10-10.2%. The company’s adjusted pre-tax margin came in at 9.7% in fiscal 2023. For the first quarter of fiscal 2024, management anticipates a pretax profit margin in the range of 9.2-9.5% compared with 7.5% in the first quarter of fiscal 2023.
However, the HomeGoods (U.S.) division has been seeing soft sales for the past few quarters. Apart from this, the company has been grappling with increased wage and supply-chain costs. Management expects these costs to be deterrents in fiscal 2024 and 2025. Let’s delve deeper.
The TJX Companies, Inc. Price, Consensus and EPS Surprise
The TJX Companies, Inc. price-consensus-eps-surprise-chart | The TJX Companies, Inc. Quote
Key Upsides
The TJX Companies has been benefiting from its solid store and e-commerce growth efforts. The company has been expanding its footprint fast in the United States, Europe, Canada and Australia. It plans to add nearly 150 net new stores in fiscal 2024, taking its year-end total to roughly 5,000 stores. It also plans to remodel 400 stores and relocate about 55 stores in the fiscal.
On its fourth-quarter fiscal 2023 earnings call, The TJX Companies stated that it anticipates opening more than 1,400 stores in the current locations in the long run. The TJX Companies has been witnessing solid demand for an in-person shopping experience in the last few years. Its flexible buying supply chain and store formats aid the company in opening stores across a wide customer demographic.
Further, 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. In the full-year 2022, the company added several new categories and brands to all its online banners.
TJX has been seeing strength in the Marmaxx segment. In the fourth quarter of fiscal 2023, net sales came in at $8,983 million, up 8% year over year at the Marmaxx (U.S.) division.
U.S. comp store sales grew 7% in Marmaxx, buoyed by solid apparel and accessories categories’ sales. Customer traffic remained the key driver behind comp store sales growth, with the average basket size also increasing. We believe that strength in Marmaxx is likely to continue aiding the company’s overall sales.
Will Hurdles be Offset?
In the HomeGoods (U.S.) division, the company’s net sales amounted to $2,424 million in the fourth quarter of fiscal 2023, down 4% from the figure reported in the year-ago quarter. U.S. comp-store sales fell 7% in the HomeGoods category. For the full year, comp store sales tumbled 11% due to a fall in customer traffic, partly made up by a rise in the average basket size.
High costs are also a concern for the company. However, we believe that The TJX Companies’ off-price model, along with its strategic store locations, impressive brands and fashion products, and efficient supply-chain management are likely to aid its performance.
For fiscal 2024, management expects overall comp store sales growth of 2-3%, excluding sales from the 53rd week. It expects consolidated sales in the band of $52.5-$53.2 billion, suggesting 5-7% year-over-year growth. For the first quarter, comp store sales are expected to rise 2-3% and consolidated sales are expected to increase 3-4% to $11.7-$11.8 billion.
Shares of this Zacks Rank #3 (Hold) company have rallied 20.8% in the past six months compared with the industry’s growth of 9.6%.
3 Solid Retail Picks
Here we have highlighted three better-ranked stocks.
Kroger (KR - Free Report) , a renowned grocery retailer, currently sports a Zacks Rank #1 (Strong Buy). KR has a trailing four-quarter earnings surprise of 9.8%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Kroger’s current financial-year EPS suggests growth of 6.2% from the year-ago reported figure. KR has an expected EPS growth rate of 6% for three to five years.
DICK'S Sporting Goods (DKS - Free Report) operates as a sporting goods retailer and currently carries a Zacks Rank #2 (Buy). DKS has an expected EPS growth rate of 5.4% for three to five years.
The Zacks Consensus Estimate for DICK'S Sporting’s current financial-year EPS suggests a rise of 11.1% from the year-ago reported figure. DKS has a trailing four-quarter earnings surprise of 10%, on average.
Ulta Beauty (ULTA - Free Report) operates specialty retail stores selling cosmetics, fragrances, haircare and skincare products, and related accessories and services. ULTA currently carries a Zacks Rank #2.
The Zacks Consensus Estimate for Ulta Beauty’s current financial-year EPS suggests an increase of 5% from the year-ago reported figure. ULTA has a trailing four-quarter earnings surprise of 26.2%, on average.