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The TJX Companies (TJX) Up More Than 25% in 3 Months: Here's Why
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The TJX Companies, Inc. (TJX - Free Report) has been undertaking solid marketing strategies to fuel growth. The leading off-price retailer’s growth initiatives to enhance offline and online businesses are working favorably.
TJX’s stock has increased 27.6% in the past three months compared with the industry’s 4.4% growth.
Let’s discuss this further.
Marketing Efforts Solid
The TJX Companies remains committed to boosting growth through effective marketing initiatives and loyalty programs. The company’s aggressive marketing and advertising campaigns through multiple mediums (TV, radio and social media) are adding growth. To fuel growth, management is on track to attract new shoppers of every age, including many Gen Z and millennial shoppers. Also, its treasure hunt shopping experience is gaining traction among shoppers. The TJX Companies’ gift-giving initiatives, unique among off-price retailers and loyalty card program (which offers consumers a non-credit card choice and soft benefits such as early shopping hours) have helped improve customer engagement.
Image Source: Zacks Investment Research
What Else is Working Well?
The Zacks Rank #3 (Hold) company has been expanding its footprint fast in the United States, Europe, Canada and Australia. During third-quarter fiscal 2023, the company increased its store count by 57 stores to reach 4,793. It increased square footage by 1% quarter over quarter during this time. 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.
With more consumers resorting to online shopping, the company has undertaken several initiatives to boost online sales and strengthen its e-commerce business. We believe that The TJX Companies’ off-price model, strategic store locations, impressive brands and fashion products and efficient supply-chain management are likely to aid its performance. Management is committed to driving traffic and sales in the fiscal fourth quarter. In this regard, it is committed to providing products at great value throughout the store and online. The company expects to deliver an impressive assortment of branded gifts during the holiday season to fuel sales.
Hurdles on the Way
The TJX Companies is grappling with increased freight costs. To some extent, the company’s merchandise margin was hurt by incremental freight pressure in the third quarter of fiscal 2023. The company also witnessed incremental wage costs, which weighed on the pretax profit margin. The TJX Companies saw additional wage costs of 80 basis points (bps). The company’s fiscal third-quarter gross profit margin was 29.1%, down 0.4 percentage points. In its last earnings call, management highlighted that for modeling purposes, it is currently projecting nearly 130 bps of incremental freight expense and 70 bps of additional wage costs for fiscal 2023.
We believe that the upsides mentioned above will likely keep driving The TJX Companies’ growth.
Dillard's, a retail department store operator, currently sports a Zacks Rank #1 (Strong Buy). DDS has a trailing four-quarter earnings surprise of almost 144.2%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Dillard's current financial year sales and earnings per share (EPS) suggests growth of 6.2% and 4.5%, respectively, from the year-ago period’s tally.
Ross Stores, an off-price retailer of apparel and home accessories in the United States, currently sports a Zacks Rank #1. ROST has an expected EPS growth rate of 10.5% for three to five years.
The Zacks Consensus Estimate for Ross Stores’ current-year sales and EPS suggests declines of 1.6% and 11.7%, respectively, from the year-ago period’s reported figures. ROST has a trailing four-quarter earnings surprise of 10.5%, on average.
Ulta Beauty currently carries a Zacks Rank #2 (Buy). ULTA has an expected EPS growth rate of 13.8% for three to five years.
The Zacks Consensus Estimate for Ulta Beauty’s current financial-year sales suggests growth of 15.7% from the year-ago period. ULTA has a trailing four-quarter earnings surprise of 26.2%, on average.
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The TJX Companies (TJX) Up More Than 25% in 3 Months: Here's Why
The TJX Companies, Inc. (TJX - Free Report) has been undertaking solid marketing strategies to fuel growth. The leading off-price retailer’s growth initiatives to enhance offline and online businesses are working favorably.
TJX’s stock has increased 27.6% in the past three months compared with the industry’s 4.4% growth.
Let’s discuss this further.
Marketing Efforts Solid
The TJX Companies remains committed to boosting growth through effective marketing initiatives and loyalty programs. The company’s aggressive marketing and advertising campaigns through multiple mediums (TV, radio and social media) are adding growth. To fuel growth, management is on track to attract new shoppers of every age, including many Gen Z and millennial shoppers. Also, its treasure hunt shopping experience is gaining traction among shoppers. The TJX Companies’ gift-giving initiatives, unique among off-price retailers and loyalty card program (which offers consumers a non-credit card choice and soft benefits such as early shopping hours) have helped improve customer engagement.
Image Source: Zacks Investment Research
What Else is Working Well?
The Zacks Rank #3 (Hold) company has been expanding its footprint fast in the United States, Europe, Canada and Australia. During third-quarter fiscal 2023, the company increased its store count by 57 stores to reach 4,793. It increased square footage by 1% quarter over quarter during this time. 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.
With more consumers resorting to online shopping, the company has undertaken several initiatives to boost online sales and strengthen its e-commerce business. We believe that The TJX Companies’ off-price model, strategic store locations, impressive brands and fashion products and efficient supply-chain management are likely to aid its performance. Management is committed to driving traffic and sales in the fiscal fourth quarter. In this regard, it is committed to providing products at great value throughout the store and online. The company expects to deliver an impressive assortment of branded gifts during the holiday season to fuel sales.
Hurdles on the Way
The TJX Companies is grappling with increased freight costs. To some extent, the company’s merchandise margin was hurt by incremental freight pressure in the third quarter of fiscal 2023. The company also witnessed incremental wage costs, which weighed on the pretax profit margin. The TJX Companies saw additional wage costs of 80 basis points (bps). The company’s fiscal third-quarter gross profit margin was 29.1%, down 0.4 percentage points. In its last earnings call, management highlighted that for modeling purposes, it is currently projecting nearly 130 bps of incremental freight expense and 70 bps of additional wage costs for fiscal 2023.
We believe that the upsides mentioned above will likely keep driving The TJX Companies’ growth.
Eye These Solid Retail Picks
We have highlighted three better-ranked stocks — Dillard's, Inc. (DDS - Free Report) , Ross Stores (ROST - Free Report) and Ulta Beauty (ULTA - Free Report) .
Dillard's, a retail department store operator, currently sports a Zacks Rank #1 (Strong Buy). DDS has a trailing four-quarter earnings surprise of almost 144.2%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Dillard's current financial year sales and earnings per share (EPS) suggests growth of 6.2% and 4.5%, respectively, from the year-ago period’s tally.
Ross Stores, an off-price retailer of apparel and home accessories in the United States, currently sports a Zacks Rank #1. ROST has an expected EPS growth rate of 10.5% for three to five years.
The Zacks Consensus Estimate for Ross Stores’ current-year sales and EPS suggests declines of 1.6% and 11.7%, respectively, from the year-ago period’s reported figures. ROST has a trailing four-quarter earnings surprise of 10.5%, on average.
Ulta Beauty currently carries a Zacks Rank #2 (Buy). ULTA has an expected EPS growth rate of 13.8% for three to five years.
The Zacks Consensus Estimate for Ulta Beauty’s current financial-year sales suggests growth of 15.7% from the year-ago period. ULTA has a trailing four-quarter earnings surprise of 26.2%, on average.