Stock Story -
Off-price retail company TJX (NYSE:TJX) reported results in line with analysts' expectations in Q1 CY2024, with revenue up 5.9% year on year to $12.48 billion. It made a GAAP profit of $0.93 per share, improving from its profit of $0.76 per share in the same quarter last year.
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TJX (TJX) Q1 CY2024 Highlights:
- Revenue: $12.48 billion vs analyst estimates of $12.47 billion (small beat)
- EPS: $0.93 vs analyst estimates of $0.88 (6.1% beat)
- Gross Margin (GAAP): 30%, up from 28.9% in the same quarter last year
- Free Cash Flow of $318 million, down 17.2% from the same quarter last year
- Same-Store Sales were up 3% year on year
- Store Locations: 4,972 at quarter end, increasing by 107 over the last 12 months
- Market Capitalization: $110.6 billion
Initially based on a strategy of buying excess inventory from manufacturers or other retailers, TJX (NYSE:TJX) is an off-price retailer that sells brand-name apparel and other goods at prices much lower than department stores.
Discount RetailerDiscount retailers understand that many shoppers love a good deal, and they focus on providing excellent value to shoppers by selling general merchandise at major discounts. They can do this because of unique purchasing, procurement, and pricing strategies that involve scouring the market for trendy goods or buying excess inventory from manufacturers and other retailers. They then turn around and sell these snacks, paper towels, toys, clothes, and myriad other products at highly enticing prices. Despite the unique draw and lure of discounts, these discount retailers must also contend with the secular headwinds of online shopping and challenged retail foot traffic in places like suburban strip malls.
Sales GrowthTJX is a behemoth in the consumer retail sector and benefits from economies of scale, an important advantage giving the business an edge in distribution and more negotiating power with suppliers.
As you can see below, the company's annualized revenue growth rate of 6.8% over the last five years was weak , but to its credit, it opened new stores and grew sales at existing, established stores.
This quarter, TJX grew its revenue by 5.9% year on year, and its $12.48 billion in revenue was in line with Wall Street's estimates. Looking ahead, Wall Street expects sales to grow 3.8% over the next 12 months, a deceleration from this quarter.
Same-Store SalesSame-store sales growth is an important metric that tracks demand for a retailer's established brick-and-mortar stores and e-commerce platform.
TJX's demand within its existing stores has generally risen over the last two years but lagged behind the broader consumer retail sector. On average, the company's same-store sales have grown by 2.5% year on year. With positive same-store sales growth amid an increasing physical footprint of stores, TJX is reaching more customers and growing sales.
In the latest quarter, TJX's same-store sales rose 3% year on year. This performance was more or less in line with the same quarter last year.
Key Takeaways from TJX's Q1 Results It was good to see TJX beat analysts' revenue and EPS expectations this quarter. It also raised its full-year earnings guidance, but the company's projections slightly missed Wall Street's estimates. Overall, the results were decent. The stock is up 1.7% after reporting and currently trades at $99.37 per share.
