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The TJX Companies (TJX) Store & Online Strength Aid, Costs High
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The TJX Companies, Inc. (TJX - Free Report) has been benefiting from its solid store and e-commerce growth efforts. Strategic store locations, impressive brands and fashion products and efficient supply-chain management have been working well for the company amid elevated cost concerns.
Store & E-Commerce Initiatives
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. TJX has been rapidly expanding its footprint in the United States, Europe, Canada and Australia. It plans to add net new stores in the near term, taking its year-end total to roughly 5,000 stores.
The company stated that in the long run, it anticipates opening more than 1,300 stores in its current locations. 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.
Image Source: Zacks Investment Research
Strength Across Segments
The TJX Companies has been seeing strength in the Marmaxx segment. In the third quarter of fiscal 2024, net sales came in at $8,107 million, up 9% year over year in the Marmaxx (U.S.) division. U.S. comparable store sales grew 7% in Marmaxx, buoyed by solid apparel and home 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.
Also, TJX has been witnessing solid momentum in its HomeGoods (U.S.) division, driven by a rise in customer traffic. In the HomeGoods (U.S.) division, the company’s net sales amounted to $2,208 million in the fiscal third quarter, up 13% from the figure reported in the year-ago quarter. In the quarter, U.S. comparable store sales rose 9% in the HomeGoods category. In addition, the recovery of TJX Canada and TJX International segments with comparable store sales growth of 3% and 1%, respectively, was a tailwind in the third quarter.
Hurdles on Way
The TJX Companies has been dealing with the adverse impacts of the high cost of sales and operating expenses. In the third quarter of fiscal 2024, the company's cost of sales increased by 6%, and SG&A expenses rose by 18%. TJX has also been witnessing incremental wage and payroll costs along with higher incentive accruals. It expects these cost headwinds to remain hurdles in fiscal 2024.
Looking Ahead
The TJX Companies’ off-price model, along with its store and digital operations, impressive brands and fashion products and efficient supply-chain management, is likely to aid its performance.
For fiscal 2024, management expects overall comparable store sales growth of 4-5%, excluding sales from the 53rd week. It expects consolidated sales in the band of $53.7-$53.9 billion, suggesting 7.6-8% year-over-year growth. For the fourth quarter, comparable store sales are expected to rise 3-4% and consolidated sales are anticipated to increase approximately 10% to $15.9-$16.1 billion.
Shares of the Zacks Rank #3 (Hold) company have rallied 12.1% in the past six months compared with the industry’s growth of 15.1%.
The Zacks Consensus Estimate for Abercrombie & Fitch’s current financial-year sales suggests growth of 15.1% from the year-ago reported number. ANF’s bottom line has outpaced the Zacks Consensus Estimate by a wide margin in the trailing four quarters, on average.
The Gap, Inc. (GPS - Free Report) , a fashion retailer of apparel and accessories, currently sports a Zacks Rank #1. GPS has a trailing four-quarter earnings surprise of 137.9%, on average.
The Zacks Consensus Estimate for Gap’s current financial year EPS indicates growth of 387.5% year over year.
American Eagle Outfitters (AEO - Free Report) , a retailer of casual apparel, accessories and footwear, currently has a Zacks Rank #2 (Buy). AEO delivered a trailing four-quarter average earnings surprise of 23%.
The Zacks Consensus Estimate for American Eagle Outfitters’ current financial year sales and EPS implies growth of 4.6% and 41.2%, respectively, from that reported a year ago.
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The TJX Companies (TJX) Store & Online Strength Aid, Costs High
The TJX Companies, Inc. (TJX - Free Report) has been benefiting from its solid store and e-commerce growth efforts. Strategic store locations, impressive brands and fashion products and efficient supply-chain management have been working well for the company amid elevated cost concerns.
Store & E-Commerce Initiatives
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. TJX has been rapidly expanding its footprint in the United States, Europe, Canada and Australia. It plans to add net new stores in the near term, taking its year-end total to roughly 5,000 stores.
The company stated that in the long run, it anticipates opening more than 1,300 stores in its current locations. 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.
Image Source: Zacks Investment Research
Strength Across Segments
The TJX Companies has been seeing strength in the Marmaxx segment. In the third quarter of fiscal 2024, net sales came in at $8,107 million, up 9% year over year in the Marmaxx (U.S.) division. U.S. comparable store sales grew 7% in Marmaxx, buoyed by solid apparel and home 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.
Also, TJX has been witnessing solid momentum in its HomeGoods (U.S.) division, driven by a rise in customer traffic. In the HomeGoods (U.S.) division, the company’s net sales amounted to $2,208 million in the fiscal third quarter, up 13% from the figure reported in the year-ago quarter. In the quarter, U.S. comparable store sales rose 9% in the HomeGoods category. In addition, the recovery of TJX Canada and TJX International segments with comparable store sales growth of 3% and 1%, respectively, was a tailwind in the third quarter.
Hurdles on Way
The TJX Companies has been dealing with the adverse impacts of the high cost of sales and operating expenses. In the third quarter of fiscal 2024, the company's cost of sales increased by 6%, and SG&A expenses rose by 18%. TJX has also been witnessing incremental wage and payroll costs along with higher incentive accruals. It expects these cost headwinds to remain hurdles in fiscal 2024.
Looking Ahead
The TJX Companies’ off-price model, along with its store and digital operations, impressive brands and fashion products and efficient supply-chain management, is likely to aid its performance.
For fiscal 2024, management expects overall comparable store sales growth of 4-5%, excluding sales from the 53rd week. It expects consolidated sales in the band of $53.7-$53.9 billion, suggesting 7.6-8% year-over-year growth. For the fourth quarter, comparable store sales are expected to rise 3-4% and consolidated sales are anticipated to increase approximately 10% to $15.9-$16.1 billion.
Shares of the Zacks Rank #3 (Hold) company have rallied 12.1% in the past six months compared with the industry’s growth of 15.1%.
3 Promising Retail Picks
Abercrombie & Fitch (ANF - Free Report) , a specialty retailer, currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here
The Zacks Consensus Estimate for Abercrombie & Fitch’s current financial-year sales suggests growth of 15.1% from the year-ago reported number. ANF’s bottom line has outpaced the Zacks Consensus Estimate by a wide margin in the trailing four quarters, on average.
The Gap, Inc. (GPS - Free Report) , a fashion retailer of apparel and accessories, currently sports a Zacks Rank #1. GPS has a trailing four-quarter earnings surprise of 137.9%, on average.
The Zacks Consensus Estimate for Gap’s current financial year EPS indicates growth of 387.5% year over year.
American Eagle Outfitters (AEO - Free Report) , a retailer of casual apparel, accessories and footwear, currently has a Zacks Rank #2 (Buy). AEO delivered a trailing four-quarter average earnings surprise of 23%.
The Zacks Consensus Estimate for American Eagle Outfitters’ current financial year sales and EPS implies growth of 4.6% and 41.2%, respectively, from that reported a year ago.