Summary
TJX, best known for TJ Maxx, Marshall's, and HomeGoods, reported a beat-and-raise Q2 Tuesday.
The stock, which had been strong coming into the report, surged to new highs.
This article reviews aspects of the quarter, forward expectations, and the company's many strengths.
My thinking is that the stock may be fully priced, but since the company is firing on all cylinders, it is a strong hold.
Introduction - TJX Companies (TJX) continues to achieve operational alpha
TJX rose over 4% Tuesday despite having already risen sharply since its May report of Q1 earnings, reporting a solid beat-and-raise Q2 most notable for these points:
- Consolidated comp store sales increased 6% over last year’s 3% increase
- Customer traffic was the primary driver of the comp sales increases at every division.
In addition, as was made more clear in the conference call than in the earnings report, ex-US sales grew above-trend and with relatively consistent results across different geographies. Also encouraging was that the Marmaxx clothing-centric stores picked up the pace, coming out of a somewhat sluggish and hyper-competitive period with comp sales up 7% yoy in the US and 6% in Canada. The HomeGoods segment, which now includes a tiny number of Homesense stores in the US (no comps), saw comps increase 3%, which is impressive on top of a 7% prior year comp. Shares outstanding shrank about 2.4% with no increase in long-term debt. Square feet of selling space continued to rise, up about 0.8% just on a qoq basis.
