The TJX Companies (TJX) Up More Than 25% in a Year: Here’s Why

September 6, 2021 4 min read

This story originally appeared on Zacks

The TJX Companies, Inc. TJX is in a robust shape, courtesy of strength in the HomeGoods segment. The company is undertaking initiatives to enhance its offline and online businesses. Its marketing strategies are noteworthy. These trends were reflected in its second-quarter fiscal 2022 results, with earnings and net sales rising year over year as well as beating the Zacks Consensus Estimate.

The Zacks Rank #1 (Strong Buy) stock has rallied 28.8% in the past year against the industry’s decline of 9.4%. Meanwhile, the Zacks Retail and Wholesale sector encountered a drop of 1.9% in the same time period.

Let’s delve deeper.

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HomeGoods Category Fuels Growth

The TJX Companies’ HomeGoods segment is seeing robust demand for a while. Owing to store closures amid the pandemic, management came up with a temporary new sales measure — open-only comp store sales — to offer a better view. During the fiscal second quarter, open-only comp store sales surged 36% in the HomeGoods (U.S.) segment from fiscal 2020’s level. The upside can be attributed to solid growth in every major category as well as geographic region for HomeGoods and Home Sense. The TJX Companies is on track to roll out homegoods.com during the fiscal third quarter. With this launch, the company expects to offer impressive home fashion products at great value on its digital platform.

What Else is Driving Growth?

The TJX Companies’ is benefiting from its solid store and e-commerce growth efforts. It regularly opens stores and is expanding rapidly across the United States, Europe, Canada and Australia. The TJX Companies opened 26 new stores, taking the total count to 4,665 during second-quarter fiscal 2022. The company expanded its square footage by 0.5% from the previous quarter’s levels.

With an increasing number of consumers resorting to online shopping, The TJX Companies has undertaken several initiatives to boost online sales and strengthen its e-commerce business. In the second-quarter earnings call, management highlighted that it is seeing impressive sales for the U.S. and U.K. online businesses. The company’s off-price model along with its strategic store locations, impressive brands and fashion products are likely to drive its performance, in stores and online.

The TJX Companies remains committed toward boosting growth through effective marketing initiatives and loyalty programs. Its aggressive marketing and advertising campaigns through multiple mediums have been contributing to growth. In its last earnings call, management highlighted that it is on track to roll out effective marketing campaigns across television and digital media for the fall and holiday season. Also, the company’s treasure hunt shopping experience is gaining traction among shoppers. The TJX Companies’ gift-giving initiatives, 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) have been helpful in improving customer engagement.

We believe that the above-mentioned upsides are likely to keep working for The TJX Companies.

Other Solid Retail Picks

Costco Wholesale Corporation COST, which currently carries a Zacks Rank #2 (Buy), has a long-term earnings growth rate of 9.1%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Macy’s, Inc. M,which currently sports a Zacks Rank #1, has a long-term earnings growth rate of 12%.

Kohl’s Corporation KSS, which currently sports a Zacks Rank #1, has a long-term earnings growth rate of 8%.

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