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TJX Companies (TJX) Gains on Solid Store & Online Business

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The TJX Companies, Inc. (TJX - Free Report) is an attractive investment pick courtesy of its efforts to remain on growth trajectory. The company is undertaking initiatives to drive store and e-commerce business. Moreover, TJX Companies is benefiting from marketing strategy and loyalty programs. Also, a favorable inventory position bodes well.

On the back of these upsides, shares of the company have increased 16.6% in the past six months compared with the industry’s growth of 13.9%. Further, this Zacks Rank #2 (Buy) company has long-term earnings growth rate of 10.6%.


Let’s take a closer look.

What’s Driving TJX Companies’ Performance?

TJX Companies is committed toward boosting comparable sales (comps) growth through effective marketing initiatives and loyalty programs. Incidentally, the company’s aggressive marketing and advertising campaigns through multiple mediums (TV, radio and social media) have been driving traffic at its stores. Its gift-giving initiatives (unique among off-price retailers) and loyalty card program (that offers a non-credit card choice and soft benefits like early shopping hours to customers) are improving customer engagement.

Evidently, these factors have enabled TJX Companies to draw traffic and boost comps. During the third quarter of fiscal 2020, the company’s consolidated comps rose 4% year over year. The upside can be attributed to increased customer traffic at all major segments. Notably, the quarter marked its 21st straight period of higher customer traffic. Most segments reported higher comps, courtesy of consumers’ favorable response to the company’s brands and impressive merchandise assortments at reasonable prices.

Further, TJX Companies has a commendable store-opening strategy. The company added 107 stores during fiscal third quarter, taking the total count to 4,519 as of Nov 2, 2019. Further, management intends to continue expanding store base with plans to operate about 6,100 stores in the long term. Additionally, with increasing number of consumers resorting to online shopping, the company has undertaken several initiatives to boost online sales and strengthen its e-commerce business. TJX Companies’ off-price model along with its strategic store locations, impressive brands and fashion products has been driving performance.

Moreover, the company’s impressive inventory position bodes well. TJX Companies’ consolidated inventories, on a per-store basis (including distribution centers, and excluding e-commerce, inventory in transit and Sierra stores), increased 9% (also at constant currency) year over year during fiscal third quarter. This enables the company to benefit from solid market scenario.

We believe that these upsides are likely to help TJX Companies maintain its solid position in investors’ good books.

Top picks

Dollar General Corporation (DG - Free Report) , with a Zacks Rank #2, has a long-term earnings per share (EPS) growth rate of 11.4%.You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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