TJX Companies on Wednesday reported a beat-and-raise quarter as consumers continue to focus on getting the most bang for their depreciating buck. The stock is a bright spot in the banged-up retail sector. Revenue in the three months ended Nov. 1 increased 7.5% year over year to $15.12 billion, exceeding the consensus estimate of $14.85 billion, according to LSEG. Earnings per share (EPS) in the period came in at $1.28, beating expectations of $1.22 and indicating year-over-year growth of more than 12%. Same-store sales also came in ahead of expectations at 5%, better than the 4% the Street was looking for, according to FactSet. Shares of TJX, owner of T.J. Maxx, Marshalls, Homesense, Sierra, and HomeGoods, gave up early-session gains — a move we attribute to profit-taking, as the initial rise pushed the stock to a fresh all-time high. Nothing in the numbers or the earnings call changes our view that the off-price retailer is winning, and will continue to win, thanks to its ability to offer best-in-class value to consumers increasingly worried about affordability. TJX 1Y mountain TJX 1-year return Bottom line TJX posted better-than-expected results in each of its four operating segments — Marmaxx, HomeGoods, TJX Canada, and TJX International (Europe & Australia)— for the third straight quarter. In addition, consolidated same-store sales results beat expectations, rising 5% from 4% in the second quarter. That was driven by a combination of a “higher average basket” and an increase in customer transactions, CFO John Klinger said on the earnings call with investors. Better yet, management said the streak should continue and raised its full-year outlook. The results provide a stark contrast to another retailer that reported on Wednesday: Target , which reported underwhelming quarterly revenue and a downbeat profit outlook. TJX’s advantage? Its ability to deliver “very good value” at a time when consumers remain highly price sensitive, Jim Cramer said on CNBC. Indeed, we started a position in TJX back in 2022 with the view that elevated inflation would push consumers to seek better deals at TJX, Costco , and Amazon , retailers that, thanks to their enormous scale, can offer top brands at discount prices. (We also own Costco and Amazon.) That is exactly what happened to TJX in the third quarter, and it should continue into the critical holiday shopping season, which can account for nearly 30% of a retail company’s annual sales. On the call, CEO Ernie Herrman said the current (fourth) quarter is “off to a strong start” and the “availability of quality branded merchandise has been exceptional.” Given the results, forward commentary, and our view that the company’s business model of taking high-quality excess inventory off the hands of full-priced retailers and reselling it at a discount is working, we are reiterating our buy-equivalent 1 rating and increasing our price target to $160 from $150. TJX Companies Why we own it : The owner of T.J….
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