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The TJX Companies, Inc. (TJX - Free Report) has been witnessing strength in its Marmaxx (U.S.) segment. In the third quarter of fiscal 2024, net sales came in at $8,107 million, up 9% year over year in the Marmaxx (U.S.) division.
U.S. comparable store sales grew 7% in Marmaxx, buoyed by solid apparel and home categories’ sales. Customer traffic remained the key driver behind comparable store sales growth. Also, solid momentum in its HomeGoods (U.S.) division, driven by a rise in customer traffic, remains a tailwind.
The company has been benefiting from its solid store and e-commerce growth efforts. It has been rapidly expanding its footprint in the United States, Europe, Canada and Australia. It plans to add net new stores in the near term, taking its year-end total to roughly 5,000 stores. With an increasing number of consumers resorting to online shopping, TJX has undertaken several initiatives to boost online sales and strengthen its e-commerce business.
The TJX Companies also remains committed to rewarding shareholders through dividend payouts and share buybacks. For instance, in the fiscal third quarter, it paid out dividends of $380 million and repurchased shares worth $650 million. The company expects to repurchase shares worth $2.25-$2.5 billion in fiscal 2024.
Driven by strength across its businesses, the company raised its outlook for fiscal 2024. For the fiscal year, it currently expects overall comparable store sales to grow by 4-5%. Consolidated sales are now envisioned in the band of $53.7-$53.9 billion, suggesting 7.5-8% year-over-year growth. For the fiscal fourth quarter, comparable store sales are expected to rise by 3-4% and consolidated sales are expected to increase by approximately 10% to $15.9-$16.1 billion.
Image Source: Zacks Investment Research
The Zacks Rank #3 (Hold) company’s shares have gained 12% in the past six months compared with the industry’s growth of 12.7%.
Despite the positives, TJX has been encountering escalating operating costs and expenses. In the fiscal third quarter, its cost of sales grew 6% while selling, general and administrative expenses increased by 18%. The company expects incremental wage and payroll costs to remain hurdles in the rest of fiscal 2024.
The company’s high debt profile poses a concern as well. Exiting third-quarter fiscal 2024, its long-term debt (including long-term operating lease liabilities) totaled $10.8 billion, reflecting an increase of 1.9% from the end of fiscal 2023. Further, an increase in debt levels can raise its financial obligations and hurt profitability.
Key Picks
We have highlighted three better-ranked stocks, namely Abercrombie & Fitch (ANF - Free Report) , American Eagle Outfitters (AEO - Free Report) and Gap .
The Zacks Consensus Estimate for Abercrombie & Fitch’s current financial year sales implies growth of 13.3% year over year. ANF delivered an earnings surprise of 713% in the last reported quarter.
Gap, a fashion retailer of apparel and accessories, currently sports a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 137.9%, on average.
The Zacks Consensus Estimate for Gap’s current financial year earnings per share (“EPS”) indicates growth of 387.5% year over year.
American Eagle Outfitters, a retailer of casual apparel, accessories and footwear, currently has a Zacks Rank #2 (Buy). AEO delivered a trailing four-quarter average earnings surprise of 23%.
The Zacks Consensus Estimate for American Eagle Outfitters’ current financial year sales and EPS implies growth of 4% and 39.2%, respectively, from that reported a year ago.
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TJX Companies (TJX) Exhibits Bright Prospects Amid Headwinds
The TJX Companies, Inc. (TJX - Free Report) has been witnessing strength in its Marmaxx (U.S.) segment. In the third quarter of fiscal 2024, net sales came in at $8,107 million, up 9% year over year in the Marmaxx (U.S.) division.
U.S. comparable store sales grew 7% in Marmaxx, buoyed by solid apparel and home categories’ sales. Customer traffic remained the key driver behind comparable store sales growth. Also, solid momentum in its HomeGoods (U.S.) division, driven by a rise in customer traffic, remains a tailwind.
The company has been benefiting from its solid store and e-commerce growth efforts. It has been rapidly expanding its footprint in the United States, Europe, Canada and Australia. It plans to add net new stores in the near term, taking its year-end total to roughly 5,000 stores. With an increasing number of consumers resorting to online shopping, TJX has undertaken several initiatives to boost online sales and strengthen its e-commerce business.
The TJX Companies also remains committed to rewarding shareholders through dividend payouts and share buybacks. For instance, in the fiscal third quarter, it paid out dividends of $380 million and repurchased shares worth $650 million. The company expects to repurchase shares worth $2.25-$2.5 billion in fiscal 2024.
Driven by strength across its businesses, the company raised its outlook for fiscal 2024. For the fiscal year, it currently expects overall comparable store sales to grow by 4-5%. Consolidated sales are now envisioned in the band of $53.7-$53.9 billion, suggesting 7.5-8% year-over-year growth. For the fiscal fourth quarter, comparable store sales are expected to rise by 3-4% and consolidated sales are expected to increase by approximately 10% to $15.9-$16.1 billion.
Image Source: Zacks Investment Research
The Zacks Rank #3 (Hold) company’s shares have gained 12% in the past six months compared with the industry’s growth of 12.7%.
Despite the positives, TJX has been encountering escalating operating costs and expenses. In the fiscal third quarter, its cost of sales grew 6% while selling, general and administrative expenses increased by 18%. The company expects incremental wage and payroll costs to remain hurdles in the rest of fiscal 2024.
The company’s high debt profile poses a concern as well. Exiting third-quarter fiscal 2024, its long-term debt (including long-term operating lease liabilities) totaled $10.8 billion, reflecting an increase of 1.9% from the end of fiscal 2023. Further, an increase in debt levels can raise its financial obligations and hurt profitability.
Key Picks
We have highlighted three better-ranked stocks, namely Abercrombie & Fitch (ANF - Free Report) , American Eagle Outfitters (AEO - Free Report) and Gap .
Abercrombie & Fitch, a leading casual apparel retailer, currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Abercrombie & Fitch’s current financial year sales implies growth of 13.3% year over year. ANF delivered an earnings surprise of 713% in the last reported quarter.
Gap, a fashion retailer of apparel and accessories, currently sports a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 137.9%, on average.
The Zacks Consensus Estimate for Gap’s current financial year earnings per share (“EPS”) indicates growth of 387.5% year over year.
American Eagle Outfitters, a retailer of casual apparel, accessories and footwear, currently has a Zacks Rank #2 (Buy). AEO delivered a trailing four-quarter average earnings surprise of 23%.
The Zacks Consensus Estimate for American Eagle Outfitters’ current financial year sales and EPS implies growth of 4% and 39.2%, respectively, from that reported a year ago.