TJX senses opportunity amid Macy’s store closures

The news: TJX reported solid results for the holiday quarter as it continues to be a major beneficiary of shoppers’ deal-seeking.

• Net sales rose 13% year over year (YoY) to $16.4 billion, outpacing FactSet’s $16.2 billion estimate. Comparable sales grew 5%, again beating expectations of a 4.3% rise.
• Adjusted earnings per share (EPS) rose 26% YoY to $1.12, in line with expectations.

But the company’s guidance for Q1 and fiscal 2025 came in softer than analysts expected.

• Comparable store sales are expected to be up 2% to 3% in Q1 as well as for the full fiscal year; consensus estimates were for 3.8% growth and 3.6% growth, respectively.
• Diluted EPS for Q1 are forecast between 84 cents and 86 cents; analysts expected 88 cents.

The big picture: Its weak forecast notwithstanding, TJX is in an exceptionally strong position. The company saw comparable sales growth across all of its divisions in Q4, including its HomeGoods business, powered entirely by an increase in overall transactions.

• TJX’s selection of quality brands (including a growing assortment of prestige beauty) and its treasure-hunt experience are drawing in shoppers across demographics and income levels and growing the retailer’s market share.
• Store visits to T.J. Maxx rose steadily throughout the year, building on strong growth in 2022. Traffic rose 7.7% YoY in Q4, and grew slightly in January despite a difficult YoY comparison, per Placer.ai.

Looking ahead: TJX is confident about its growth prospects for the year, and for good reason.

• Thanks to retailers’ inventory woes, TJX has plenty of available merchandise to choose from, which is central to its ability to expand and keep shoppers coming through the doors.
• And Macy’s decision to close 150 stores is a sizable opportunity for TJX to take market share, much as it did in the aftermath of Bed Bath & Beyond’s bankruptcy.