TJX Companies shares climbed to an all-time high Wednesday after reporting better-than-expected fiscal first-quarter results Wednesday. The report showcased the off-price retailer’s appeal to bargain-hunting shoppers and prompted us to boost our price target on the stock. Total revenue for the three months ended May 4 advanced 6% year over year, to $12.48 billion, exceeding analysts’ forecasts of $12.46 billion, according to estimates compiled by LSEG. Adjusted earnings per share climbed 22% on an annual basis to 93 cents, outpacing analysts’ estimates of 87 cents per share, LSEG data showed. Shares closed up 3.5% Wednesday, at $101.12 each, after trading at record intraday levels during the session. Its all-time closing high of $101.42 a share came on March 28. Wednesday’s move brings TJX’s year-to-date gain to nearly 8%. 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 Our thesis is playing out as expected. Consumers are seeking out best-in-class value against the backdrop of sustained inflation, and that is leading them straight to TJX Companies locations. Results were a bit mixed under the hood, but strength at TJX Canada and its European and Australian segment was more than enough to offset minor misses at HomeGoods and Marmaxx, which consists of T.J. Maxx and Marshalls stores in the U.S. Crucially, same-store sales growth was positive across all divisions. That’s a closely followed metric in retail. Management continues to like the inventory landscape, indicating there are still healthy amounts of excess goods in the marketplace for TJX to acquire for its business. Executives also said they see further ability to grow because TJX is becoming an increasingly important channel for its vendors. As a result, those vendors — think product makers and other retailers — are figuring out ways to work with TJX in a more consistent manner than in the past. “It really encompasses all the reasons why we’re so bullish,” CEO Ernie Herrman said on the call. “I mean, we have the value leadership positioning right now,” he said, adding that its stores have become “a cooler place to shop.” Being a “cooler place to shop” has many benefits to the company and, by extension, its investors. On the call, management made it clear that its value proposition is resonating across income and age levels — not exactly a shock to us after reading The Wall Street Journal’s recent story about millionaires who shop at T.J. Maxx and Marshalls. Same-store sales in the Marmaxx division increased in demographic…
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