The off-price retail trend has taken the retail wholesale sector by storm in the current economic climate. Consumers are looking to stretch their budgets without sacrificing quality, which has led to a surge in demand for off-price retailers. These stores, like TJX Companies, offer brand-name merchandise at deeply discounted prices, often between 20% to 60% off regular retail prices. This ‘treasure hunt’ shopping experience appeals to bargain hunters, who enjoy the excitement of finding great deals on a variety of products.
TJX Companies, the world’s leading off-price apparel and home fashion retailer, operates popular stores like TJ Maxx, Marshalls, and HomeGoods. The company’s success is evident in its strong financial performance. In the fiscal second quarter of 2025, Marmaxx (which combines TJ Maxx and Marshalls) saw 5% year-over-year comparable sales growth, building upon the 8% growth from the previous year. HomeGoods also saw solid growth, with comparable sales rising 2% year-over-year. TJX Canada and TJX International, comprising operations in Australia and Europe, also reported strong sales growth.
In its fiscal second-quarter earnings report, TJX exceeded analysts’ expectations, reporting earnings per share of 92 cents, surpassing the consensus estimate by 4 cents. Revenue increased 5.6% year-over-year to $13.47 billion, exceeding the estimated $13.31 billion. The company’s same-store sales (SSS) rose 4%, exceeding its guidance range of 2% to 3%. This growth was driven by increased customer transactions. Pre-tax margin rose 50 basis points to 10.9%, up from 10.4% in the previous year. TJX also bought back $559 million in stock and ended the quarter with $5.3 billion in cash. The company opened its 5,000th store during the quarter, demonstrating its continued expansion and growth.
Looking ahead, TJX expects continued momentum. For the third quarter of 2024, the company projects earnings per share of $1.06 to $1.08, while analysts anticipate $1.10. Same-store comps are expected to be between 2% and 3%. For the full-year fiscal 2025, TJX anticipates earnings per share between $4.09 and $4.13, slightly exceeding the consensus estimate of $4.03 to $4.13. Full-year comps are expected to be 3%, compared to the previous guidance of 2% to 3%. TJX CEO Ernie Herrman expressed confidence in the company’s ability to drive traffic and sales, highlighting the availability of quality branded merchandise and a compelling assortment of fresh goods for the fall and holiday seasons.
From an investment perspective, TJX stock is showing bullish signs. The stock has formed a symmetrical triangle pattern, which often precedes a breakout or breakdown. Analysts have given TJX 13 Buy ratings and 3 Hold ratings, with an average consensus price target of $126.76. Bullish investors can take advantage of pullbacks by using cash-secured puts to buy the dip, leveraging the elevated premiums at the Fibonacci pullback support levels. They can also write covered calls to execute a wheel strategy for income, in addition to the 1.28% annual dividend yield. Overall, TJX appears well-positioned to capitalize on the ongoing off-price retail trend and deliver continued growth for investors.
