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TJX Companies (TJX) Gains From Business Strength Amid Risks
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The TJX Companies, Inc. (TJX - Free Report) is poised to benefit from solid momentum in its Marmaxx segment. For instance, Marmaxx’s net sales increased 9% year-over-year to $7,903 million in second-quarter fiscal 2024. U.S. comparable store sales grew 8% in Marmaxx, buoyed by solid apparel and accessories categories’ sales. Customer traffic remained the key driver behind comparable store sales growth. We believe that strength in Marmaxx is likely to continue aiding the company’s overall sales.
TJX has also been witnessing a recovery in its HomeGoods (U.S.) division due to a rise in customer traffic. In the HomeGoods (U.S.) division, the company’s fiscal second-quarter net sales amounted to $2,011 million, up 8.3% on a year-over-year basis. In the quarter, U.S. comparable store sales rose 4% in the HomeGoods category.
Driven by strength across its businesses, TJX provided a robust outlook for fiscal 2024. For the fiscal year, it expects overall comparable store sales growth of 3-4%, excluding sales from the 53rd week. The consolidated sales are envisioned in the band of $53.5-$53.8 billion, suggesting 7-8% year-over-year growth. For the third quarter, comparable store sales are expected to rise by 3-4% and consolidated sales are expected to increase by 6-7% to $12.9-$13.1 billion.
With the growing popularity of online shopping among consumers, The TJX Companies has undertaken several initiatives to boost online sales and strengthen its e-commerce business. In 2022, the company added several new categories and brands to all its online banners. It also plans to add nearly 125 net new stores in fiscal 2024, taking its year-end total to roughly 5,000 stores.
TJX believes in rewarding shareholders through dividend payouts and share buybacks. In the fiscal second quarter, it repurchased shares worth $550 million and paid out dividends of $382 million. The company plans to repurchase shares worth $2-$2.5 billion in fiscal 2024.
Despite the positives, TJX has been grappling with high costs and operating expenses. For instance, in the fiscal second quarter, 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.
Its high debt profile also remains a concern. Exiting second-quarter fiscal 2024, its long-term debt (including long-term operating lease liabilities) was nearly $11 billion. The metric reflects an increase from $10.7 billion at the end of first-quarter fiscal 2024. An increase in debt levels can raise its financial obligations and hurt profitability.
Given its extensive presence across international markets, TJX is exposed to unfavorable foreign currency translations. Incidentally, foreign currency movements had a 1 percentage point adverse impact on net sales growth in the second quarter of fiscal 2024.
The TJX Companies also operates in the highly competitive retail apparel and home fashion industry. The company, which belongs to the Zacks Retail - Discount Stores industry faces stiff competition from several competitors like Target Corporation (TGT - Free Report) , Ross Stores, Inc. (ROST - Free Report) and Burlington Stores, Inc. (BURL - Free Report) .
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TJX Companies (TJX) Gains From Business Strength Amid Risks
The TJX Companies, Inc. (TJX - Free Report) is poised to benefit from solid momentum in its Marmaxx segment. For instance, Marmaxx’s net sales increased 9% year-over-year to $7,903 million in second-quarter fiscal 2024. U.S. comparable store sales grew 8% in Marmaxx, buoyed by solid apparel and accessories categories’ sales. Customer traffic remained the key driver behind comparable store sales growth. We believe that strength in Marmaxx is likely to continue aiding the company’s overall sales.
TJX has also been witnessing a recovery in its HomeGoods (U.S.) division due to a rise in customer traffic. In the HomeGoods (U.S.) division, the company’s fiscal second-quarter net sales amounted to $2,011 million, up 8.3% on a year-over-year basis. In the quarter, U.S. comparable store sales rose 4% in the HomeGoods category.
Driven by strength across its businesses, TJX provided a robust outlook for fiscal 2024. For the fiscal year, it expects overall comparable store sales growth of 3-4%, excluding sales from the 53rd week. The consolidated sales are envisioned in the band of $53.5-$53.8 billion, suggesting 7-8% year-over-year growth. For the third quarter, comparable store sales are expected to rise by 3-4% and consolidated sales are expected to increase by 6-7% to $12.9-$13.1 billion.
With the growing popularity of online shopping among consumers, The TJX Companies has undertaken several initiatives to boost online sales and strengthen its e-commerce business. In 2022, the company added several new categories and brands to all its online banners. It also plans to add nearly 125 net new stores in fiscal 2024, taking its year-end total to roughly 5,000 stores.
TJX believes in rewarding shareholders through dividend payouts and share buybacks. In the fiscal second quarter, it repurchased shares worth $550 million and paid out dividends of $382 million. The company plans to repurchase shares worth $2-$2.5 billion in fiscal 2024.
Despite the positives, TJX has been grappling with high costs and operating expenses. For instance, in the fiscal second quarter, 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.
Its high debt profile also remains a concern. Exiting second-quarter fiscal 2024, its long-term debt (including long-term operating lease liabilities) was nearly $11 billion. The metric reflects an increase from $10.7 billion at the end of first-quarter fiscal 2024. An increase in debt levels can raise its financial obligations and hurt profitability.
Given its extensive presence across international markets, TJX is exposed to unfavorable foreign currency translations. Incidentally, foreign currency movements had a 1 percentage point adverse impact on net sales growth in the second quarter of fiscal 2024.
The TJX Companies also operates in the highly competitive retail apparel and home fashion industry. The company, which belongs to the Zacks Retail - Discount Stores industry faces stiff competition from several competitors like Target Corporation (TGT - Free Report) , Ross Stores, Inc. (ROST - Free Report) and Burlington Stores, Inc. (BURL - Free Report) .