TJX Companies on Wednesday held up its end of the bargain for consumers and investors — delivering a great quarter and strong guidance. It’s no wonder shares of the off-price retailer — already up 21% for the year before the release — were jumping another roughly 6% in afternoon trading and heading for record high close. Sales during TJX’s fiscal second quarter ended Aug. 3 rose 5.6% year-over-year to $13.47 billion, beating the LSEG-compiled consensus estimate of $13.31 billion. Adjusted earnings per share advanced 12.9% on an annual basis to 96 cents, exceeding the EPS estimate of 92 cents. TJX Companies Why we own it: The owner of T.J. Maxx, Marshalls and HomeGoods is well-suited for the current economic environment, offering inflation-wary customers wide-ranging merchandise at compelling prices and a “treasure hunt” in-person shopping experience. The struggles and store closures of other retailers benefit TJX’s inventory and market share. The company also has been working to expand margins. Competitors: Ross Stores and Burlington Stores Last buy: May 2, 2024 Initiation: Aug. 24, 2022 Bottom Line TJX Companies certainly met the moment. The company’s ever-increasing ability to attract deal-hungry shoppers was on display, with a 4% increase in quarterly comparable store sales entirely driven by more purchases rather than higher prices. TJX is pairing that flourishing customer appeal with its well-oiled corporate operations, enabling the company to deliver the financial results that investors have come to expect. With Wednesday’s results in hand, the off-price retailer has now delivered top- and bottom-line beats in four straight quarters. Gross margin of 30.4% in the second quarter exceeded estimates and was up from 30% in the first quarter. TJX’s largest and most important segment by far — T.J. Maxx and Marshalls stores in the U.S., referred to as Marmaxx — easily beat revenue estimates. The monthly pace of sales, known as cadence, was encouraging, as well. TJX upped its full-year outlook on pretax profit margin and earnings per share. While still a bit shy of Wall Street estimates, we’re not concerned. Not only is executives’ conservatism with guidance well-documented, but on Wednesday’s earnings call, they were upbeat about the trends in the current fiscal third quarter so far and the chunk of the holiday shopping season contained in the fourth quarter. TJX YTD mountain TJX Companies’ year-to-date stock performance. Inventory is the lifeblood of TJX’s business. Is it able to acquire the clothes, shoes and home decor people want to buy and spend time in the stores hunting for? Executives said Wednesday the answer to that question, as it has been for a few years now, is a resounding yes. CEO Ernie Herrman said the availability of branded merchandise is “outstanding,” adding that he’s confident the company will have an “exciting” selection of merchandise for the fall and holidays. TJX has “access to more goods than we could ever…
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