Breaking News
0

Can TJX Companies' Sales Drivers Aid Growth Amid Hurdles?

By Zacks Investment ResearchStock MarketsSep 17, 2019 07:58AM ET
www.investing.com/analysis/can-tjx-companies-sales-drivers-aid-growth-amid-hurdles-200465268
Can TJX Companies' Sales Drivers Aid Growth Amid Hurdles?
By Zacks Investment Research   |  Sep 17, 2019 07:58AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

The TJX Companies, Inc. (NYSE:TJX) is well positioned for growth, courtesy of its store and e-commerce expansion efforts. These upsides have been driving the company’s comparable store sales (comps) and helping it stay afloat amid hurdles like increased supply-chain expenses. Let’s delve deeper.

Hurdles in TJX Companies’ Way

TJX Companies’ gross margin has been contracting year over year for quite some time now, due to increased supply-chain expenses, among other factors. The trend continued in second-quarter fiscal 2020, wherein gross margin fell 0.7 percentage points to 28.5% due to elevated supply-chain expenses and lower merchandise margins.

In the first quarter, gross margin fell 0.4 percentage points, thanks to elevated freight costs and supply-chain expenses. Persistence of this trend is a threat to margins. Apart from this, high wage costs have long been a hurdle for the company. Management earlier projected wage increases to dent the bottom line in fiscal 2020.

Strategies Likely to Act as Saviors

The company has an aggressive store-opening strategy. While many retailers are resorting to store closures, TJX Companies added 31 stores during the second quarter of fiscal 2020, taking the total count to 4,412 as of Aug 3. The company intends to continue expanding the store base with plans to operate about 6,100 stores in the long term.

Further, with an increasing number of consumers resorting to online shopping, TJX Companies has undertaken several initiatives to boost online sales and strengthen its e-commerce business. The company’s off-price model along with strategic store locations, impressive brands and fashion products has been driving its performance both in stores and online.

Also, the company is committed toward boosting comps 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 (unique among off-price retailers) and loyalty card program (offering consumers a non-credit card choice and soft benefits such as early shopping hours) also help improve customer engagement.

Such upsides have been driving the company’s comps, which increased 2% year over year in the second quarter of fiscal 2020, fueled by increased customer traffic at all segments.

Notably, the quarter marked the 20th straight period of higher customer traffic. In fiscal 2020, both consolidated comps and comps at Marmaxx are expected to grow 2-3%.



Such strong efforts along with TJX Companies’ impressive inventory management are likely to help it counter the headwinds and drive the stock further. Markedly, this Zacks Rank #3 (Hold) stock has rallied 25.5% year to date compared with the industry’s growth of 40.3%.

Looking for Retail Stocks? Check These

Target (NYSE:TGT) , with a Zacks Rank #2 (Buy), has a long-term earnings per share growth rate of 7.1%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Burlington Stores (NYSE:BURL) , also with a Zacks Rank #2, has a long-term earnings per share growth rate of 15.9%.

Tuesday Morning (NASDAQ:TUES) , with a Zacks Rank #2, has an impressive earnings surprise record.

5 Stocks Set to Double

Zacks experts released their picks to gain +100% or more in 2020. One is a famous cutting-edge food company that is “hiding in plain sight.” Swamped with competitors and ignored by Wall Street, its stock price floundered. Now, suddenly, it acquired a company that gives it an advantage none of its peers have.

Today, see all 5 stocks with extreme growth potential >>



The TJX Companies, Inc. (TJX): Free Stock Analysis Report

Burlington Stores, Inc. (BURL): Free Stock Analysis Report

Target Corporation (TGT): Free Stock Analysis Report

Tuesday Morning Corp. (TUES): Free Stock Analysis Report

Original post

Zacks Investment Research
Can TJX Companies' Sales Drivers Aid Growth Amid Hurdles?
 
Can TJX Companies' Sales Drivers Aid Growth Amid Hurdles?

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email