TJX Delivers Robust Q3 Results; Shares Hit All-Time High

Shares of The TJX Companies, Inc. (TJX) hit a new all-time high of $76.94 after the company delivered robust third-quarter results, with both earnings and sales exceeding expectations.

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Despite the COVID-19 pandemic and supply chain disruptions, TJX’s home businesses witnessed outstanding growth across all divisions, and its overall apparel open-only comparable store sales increased mid-single digits.

TJX also stated that it is extremely well-positioned for the upcoming holiday season with overall open-only comp store sales already up mid-teens at the start of Q4.

Following the news, shares of the American off-price apparel and home fashion retailer jumped 5.8% to close at $73.55 on November 17.

Robust Results

The company posted earnings of $0.84 per share, up 18.3% year-over-year and 4 cents better than analysts’ estimates of $0.80 per share.

Moreover, net sales came in at $12.53 billion, increasing 24% compared to the prior-year period, surpassing analysts’ estimates of $12.24 billion.

Due to the COVID-19 pandemic, some of the company’s Australian stores were closed for 57% of the third quarter, while total stores were closed for 1% of the third quarter, which negatively impacted its results.

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Management Comments

Ernie Herrman, President and CEO of TJX, said, “We feel great about our ability to deliver customers an exciting mix of gift-giving merchandise and amazing brands and values throughout the holiday selling period. We are in an excellent inventory position, with most of the product needed for the holiday season either on hand or scheduled to arrive at our stores and online in time for the holidays.”

Herrman concluded, “We are very confident in our ability to continue to gain market share, improve our profitability in the medium to long term, and reach our strategic vision of TJX becoming a $60 billion company.”

Shareholder Return

During Q3, TJX paid $313 million worth of common dividends and repurchased $800 million worth of common stock.

Further, the company increased its share buyback program by $500 million and now expects to repurchase approximately $1.75 billion to $2 billion in common stock through FY22.

TJX also expects to declare a quarterly dividend of $0.26 per share in Q4, subject to Board approval.

Wall Street View

Responding to TJX’s solid performance, Guggenheim Securities analyst Robert Drbul, said, “The company notes product availability in the marketplace remains excellent, and TJX continues to flex its buying power to the categories with the strongest demand (inventory +4%). As we expect higher inventory turnover, a better pricing environment, and strong HomeGoods sales, we believe TJX is in a solid position to continue improving margins.”

Drbul believes, “TJX is the strongest company and operator in terms of management, finance, and from a buying organization standpoint among their off-price coverage.” The analyst backs the stock with a a Buy rating and a price target of $85, which implies 15.6% upside potential to current levels.

Overall, the stock commands a Strong Buy consensus rating based on 11 Buys and 3 Holds. The average TJX price target of $83.07 implies 12.94% upside potential to current levels. Shares have gained 18.1% over the past year.