Are Solid Comps Solely Behind TJX Companies' Bull Run?

Shares of TJX Companies Inc. TJX have moved up 36.7% in a year’s time, outperforming the industry’s growth of 35.5%. Also, the Zacks Rank #3 (Hold) stock has comfortably outpaced the S&P 500 and the Zacks Retail-Wholesale sector that gained 14.4% and 29.4%, respectively. 

 

 

While impressive comparable store sales (comps) growth remains TJX Companies’ main growth driver, the company is also gaining from its other strategic initiatives. 

 

Robust Comps Growth

 

TJX Companies has been posting positive comps for quite some time, driven by greater customer traffic that has been rising for 15 straight quarters.  During the first quarter of fiscal 2019, TJX Companies’ consolidated comps grew 3% year over year, fueled by greater customer traffic at all major segments.

 

Management remains particularly impressed with the performance of Marmaxx and the superb show put up by its home and apparel categories. Notably, all major segments reported higher comps, courtesy of consumers’ favorable response to the company’s brands and impressive merchandise assortments at reasonable prices.

 

Management remains optimistic about fiscal 2019 and remains focused on implementing its sales initiatives to attract traffic. TJX Companies’ stores are also expected to benefit from solid merchandise assortments and brands. That said, management projects comps to grow 1-2% in both the second quarter and fiscal 2019.

 

Aggressive Expansion Efforts

 

The company remains poised on its aggressive expansion strategies. It is regularly opening stores and expanding fast across the United States, Europe and Canada. Keeping with this, TJX Companies added around 71 stores in the first quarter.

 

Now with almost 4,141 stores across nine countries, TJX plans to continue expanding its store base with plans to operate about 6,100 stores in the long term. Further, with increasing number of consumers resorting to online shopping, TJX Companies has undertaken several initiatives to boost online sales and strengthen its e-commerce business.

 

Impressive Sales Initiatives

 

TJX Companies’ off-price model, along with its strategic store locations, impressive brands and fashion products, has been driving its performance, both in stores and online. Also, the company remains committed toward boosting comps growth, through effective marketing initiatives and loyalty programs.

 

Incidentally, TJX Companies’ aggressive marketing and advertising campaigns through multiple mediums (TV, radio and social media) have been boosting traffic at its stores. Its gift-giving initiatives, which is unique among off-price retailers, and loyalty card program (which offers consumers a non-credit card choice and soft benefits such as early shopping hours) also help to improve customer engagement.

 

These factors have been fueling TJX Companies, which has witnessed year-over-year growth in both top and bottom lines for a while now. The trend was retained in the first quarter of fiscal 2019, wherein inventories also remained favorable. Markedly, the company’s favorable inventory position is likely to allow it to take advantage of solid opportunities in the market for branded merchandise.

 

Management remains impressed with its consistent rise in customer traffic and is encouraged to witness continued market share gains. Consequently, it raised its fiscal 2019 bottom-line view and now projects adjusted earnings per share in the range of $4.04-$4.10, representing a 5-6% increase from the year-ago period.

 

All said, we believe that TJX Companies’ robust sales-driving efforts should continue attracting greater customer traffic and boost comps growth, which remains TJX Companies’ key driver. 

 

Check Out More Promising Stocks

 

Amazon.com Inc. AMZN, with a long-term earnings growth rate of 30.2%, carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

 

BJ’s Restaurant Inc. BJRI, with a long-term earnings growth rate of 15.25%, carries a Zacks Rank #1.

 

Dillard’s Inc. DDS, with a long-term earnings growth rate of 9.9%, carries a Zacks Rank #1.

 

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