Brick-and-mortar retailers recovered in 2021 after recording significant losses during the pandemic. However, supply chain disruptions, labor challenges, and inflationary pressures faded the recovery to some extent.
Massachusetts-based The TJX Companies, Inc. (NYSE: TJX) is one such retailer that provides off-price apparel and home fashion products through more than 4,700 discount stores in nine countries. It has a very small share of e-commerce sales, and therefore, the forced closure of stores during lockdowns had a substantial impact on its operations.
Despite supply-chain issues and cost pressure, TJX Companies has posted strong revenues for the first quarter of Fiscal 2023. Following the news, shares of the retailer rose 7.14% at the close on Wednesday.
Results in Detail
TJX Companies reported net sales of $11.4 billion in the quarter, up 13% year-over-year, but missed analysts’ expectations of $11.58 billion. U.S. comp-store sales growth was flat in the quarter compared with a 17% jump in U.S. open-only comp-store sales in the comparable quarter last year.
On a segment basis, net sales at U.S. Marmaxx came in at $6.9 billion, up 4.5% year-over-year, while U.S. HomeGoods division net sales declined 4.8% to $2 billion.
Additionally, TJX Canada recorded net sales of $1.1 billion, up 41.3%, while TJX International (Europe & Australia) reported net sales of $1.4 billion, which more than doubled on a year-over-year basis.
TJX Companies reported adjusted earnings of $0.68 per share, topping the Street’s estimate of $0.60 per share.
Adjusted consolidated pretax margin stood at 9.4%, compared with 7.2% in the first quarter of Fiscal 2022. Reduced COVID-related expenses and other factors benefitted the margin, partly mitigated by freight and wage costs pressure.
As of April 30, 2022, the company had $4.3 billion in cash.
Capital Deployment
During the first quarter, TJX Companies returned $907 million to shareholders in the form of share repurchases and dividends. The company repurchased 9.5 million shares at a total cost of $600 million and paid $307 million as dividends.
Outlook
For Fiscal Q2 2023, the company expects U.S. comparable store sales to be down 1% to down 3%. Additionally, earnings are expected in the range of $0.65 to $0.69 per share.
For Fiscal 2023, U.S. comparable-store sales are expected to be up 1% to 2%. Meanwhile, adjusted EPS is forecast to land between $3.13 to $3.20.
Official Comments
Looking forward, TJX Companies CEO Ernie Herrman said, “For the full year, we see opportunity to further improve our profitability…We believe our value proposition is as appealing as ever for consumers in today’s retail environment, and we are excited about our initiatives to drive customer traffic and sales. We remain focused on our long-term vision to become an increasingly profitable, $60-billion-plus company.”
Analysts’ Recommendation
Consensus among analysts is a Strong Buy based on 15 Buys versus three Holds. The average TJX Companies price target of $75.53 implies 25.49% upside potential from current levels. However, shares have lost 9.2% over the past year.
Website Traffic
TipRanks’ Website Traffic Tool which uses data from SEMrush Holdings (SEMR) offers insight into TJX Companies’ performance.
According to the tool, a website traffic uptrend was visible. In Fiscal Q1 2023, total estimated visits on marshalls.com, sierra.com, and tjmaxx.com showed an increasing trend, on a global basis, representing a 21.1% jump from the first quarter of Fiscal 2022.
The predictions that were based on TipRanks’ website visits data turned out to be correct, with TJX Companies reporting a year-over-year surge in revenues in Q1 2023.
Bottom-Line
Investors may add TJX Companies to their portfolio because of the company’s excellent analyst ratings, decent stock price performance, solid revenues, and positive outlook. Also, eyeing the website trends reflected on TipRanks’ Website Traffic Tool could be a prudent guide for investment decisions.
Learn more about the Website Traffic tool in this video by YouTube sensation Tom Nash.
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