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TJX Falls 17.4% in the Past Month as Strong Results Meet Key Risks
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Key Takeaways
TJX fell 17.4% in a month despite an earnings beat and a raised fiscal 2027 adjusted earnings outlook.
Marmaxx comparable sales rose just 1%, but trends improved early in the third quarter.
TJX faces higher wage and fuel costs while its forward price-to-sales ratio remains above key benchmarks.
The TJX Companies, Inc. (TJX - Free Report) shares have fallen 17.4% in the past month even after second-quarter fiscal 2027 adjusted earnings of $1.22 per share beat the Zacks Consensus Estimate of $1.18 and management raised its full-year adjusted earnings outlook.
The decline leaves investors weighing improving profit expectations against execution, cost and valuation risks.
The TJX Companies, Inc. Price, Consensus and EPS Surprise
Marmaxx comparable sales rose just 1% in the second quarter, below management's expectations. The increase came from a higher average basket, partly offset by a small decline in customer transactions.
Management said the issue was self-inflicted and tied to merchandise mix, with the right goods not always reaching the right stores at the right time. Marmaxx trends improved early in the third quarter, and management expects greater improvement by the holiday season.
TJX Still Has Growth Across Most Divisions
Consolidated comparable sales increased 4% in the second quarter, while net sales rose 5% to $15.18 billion. HomeGoods comparable sales advanced 7%, TJX Canada gained 6% and TJX International increased 7%, helping offset softer Marmaxx growth.
Peer results provide additional context for the off-price category. Ross Stores, Inc. (ROST - Free Report) , another off-price apparel and home retailer, reported a 10% comparable-store sales increase in its latest quarter. Burlington Stores, Inc. (BURL - Free Report) , also an off-price retailer, posted 2% comparable-store sales growth and an 11% rise in total sales.
TJX Faces Wage, Fuel and Currency Pressure
Adjusted selling, general and administrative costs reached 19.7% of sales in the second quarter, 20 basis points unfavorable from a year earlier, mainly because of higher store wage and payroll costs. These expenses can limit operating leverage even when sales remain healthy.
Third-quarter adjusted gross margin is projected at 32.1% to 32.2%, down 40-50 basis points year over year, primarily because of higher fuel costs. Currency movements also reduced second-quarter reported net sales growth by 1 percentage point.
Image Source: Zacks Investment Research
TJX's Valuation Leaves Less Room for Error
TJX's forward 12-month price-to-sales ratio is 2.06, above the Zacks sub-industry's 1.58 and its own five-year median of 1.95. The stock has declined sharply, but its valuation still carries a premium on this measure.
That premium places more weight on execution. Investors will be watching whether Marmaxx improves as expected and whether TJX can deliver its raised fiscal 2027 adjusted earnings outlook of $5.15 to $5.20 per share while managing wage and fuel pressure.
TJX's Short-Term Signal Stays Constructive
The 17.4% monthly decline has reset the share price, but it has not removed the operating and valuation questions. Raised profit guidance and early Marmaxx improvement support the near-term case, while cost pressure and a premium sales multiple remain important offsets.
The stock also has a Growth Score of B, Momentum Score of B and VGM Score of B, indicating favorable growth and momentum characteristics when paired with a top Zacks Rank. The Value Score of D is the counterweight, signaling weaker valuation characteristics despite the constructive short-term setup.
View the Zacks #1 Rank List
Image: Bigstock
TJX Falls 17.4% in the Past Month as Strong Results Meet Key Risks
Key Takeaways
The TJX Companies, Inc. (TJX - Free Report) shares have fallen 17.4% in the past month even after second-quarter fiscal 2027 adjusted earnings of $1.22 per share beat the Zacks Consensus Estimate of $1.18 and management raised its full-year adjusted earnings outlook.
The decline leaves investors weighing improving profit expectations against execution, cost and valuation risks.
The TJX Companies, Inc. Price, Consensus and EPS Surprise
The TJX Companies, Inc. price-consensus-eps-surprise-chart | The TJX Companies, Inc. Quote
TJX's Marmaxx Weakness Complicates the Selloff
Marmaxx comparable sales rose just 1% in the second quarter, below management's expectations. The increase came from a higher average basket, partly offset by a small decline in customer transactions.
Management said the issue was self-inflicted and tied to merchandise mix, with the right goods not always reaching the right stores at the right time. Marmaxx trends improved early in the third quarter, and management expects greater improvement by the holiday season.
TJX Still Has Growth Across Most Divisions
Consolidated comparable sales increased 4% in the second quarter, while net sales rose 5% to $15.18 billion. HomeGoods comparable sales advanced 7%, TJX Canada gained 6% and TJX International increased 7%, helping offset softer Marmaxx growth.
Peer results provide additional context for the off-price category. Ross Stores, Inc. (ROST - Free Report) , another off-price apparel and home retailer, reported a 10% comparable-store sales increase in its latest quarter. Burlington Stores, Inc. (BURL - Free Report) , also an off-price retailer, posted 2% comparable-store sales growth and an 11% rise in total sales.
TJX Faces Wage, Fuel and Currency Pressure
Adjusted selling, general and administrative costs reached 19.7% of sales in the second quarter, 20 basis points unfavorable from a year earlier, mainly because of higher store wage and payroll costs. These expenses can limit operating leverage even when sales remain healthy.
Third-quarter adjusted gross margin is projected at 32.1% to 32.2%, down 40-50 basis points year over year, primarily because of higher fuel costs. Currency movements also reduced second-quarter reported net sales growth by 1 percentage point.
Image Source: Zacks Investment Research
TJX's Valuation Leaves Less Room for Error
TJX's forward 12-month price-to-sales ratio is 2.06, above the Zacks sub-industry's 1.58 and its own five-year median of 1.95. The stock has declined sharply, but its valuation still carries a premium on this measure.
That premium places more weight on execution. Investors will be watching whether Marmaxx improves as expected and whether TJX can deliver its raised fiscal 2027 adjusted earnings outlook of $5.15 to $5.20 per share while managing wage and fuel pressure.
TJX's Short-Term Signal Stays Constructive
The 17.4% monthly decline has reset the share price, but it has not removed the operating and valuation questions. Raised profit guidance and early Marmaxx improvement support the near-term case, while cost pressure and a premium sales multiple remain important offsets.
TJX currently carries a Zacks Rank #2 (Buy). The Zacks Rank is a short-term rating driven by earnings estimate revisions and is designed for a one- to three-month horizon. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The stock also has a Growth Score of B, Momentum Score of B and VGM Score of B, indicating favorable growth and momentum characteristics when paired with a top Zacks Rank. The Value Score of D is the counterweight, signaling weaker valuation characteristics despite the constructive short-term setup.