TJX (NYSE:TJX) Beats Q2 Sales Targets
Off-price retail company TJX (NYSE:TJX) announced better-than-expected results in Q2 CY2024, with revenue up 5.6% year on year to $13.47 billion. It made a GAAP profit of $0.96 per share, improving from its profit of $0.85 per share in the same quarter last year.
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TJX (TJX) Q2 CY2024 Highlights:
- Revenue: $13.47 billion vs analyst estimates of $13.32 billion (1.1% beat)
- EPS: $0.96 vs analyst estimates of $0.92 (3.9% beat)
- EPS (GAAP) guidance for the full year is $4.11 at the midpoint, roughly in line with what analysts were expecting
- Gross Margin (GAAP): 30.4%, in line with the same quarter last year
- Free Cash Flow Margin: 7.9%, up from 6.9% in the same quarter last year
- Locations: 5,001 at quarter end, up from 4,884 in the same quarter last year
- Same-Store Sales rose 4% year on year (6% in the same quarter last year)
- Market Capitalization: $128.1 billion
Ernie Herrman, Chief Executive Officer and President of The TJX Companies, Inc., stated, “I am extremely pleased with our second quarter performance. Our comparable store sales increase of 4%, pretax profit margin, and earnings per share all exceeded our plans. Our teams sharply executed on our mission to deliver great value to consumers every day. Our overall comp sales growth was entirely driven by customer transactions, which increased at every division. The performance of Marmaxx, our largest division, was outstanding, with a comp sales increase of 5%. With our strong second quarter results, we are raising our full-year guidance for both pretax profit margin and earnings per share. The third quarter is off to a strong start. We see excellent buying opportunities in the marketplace and are strongly positioned to ship fresh and compelling merchandise to our stores and online throughout the fall and holiday selling seasons. We marked a milestone for our Company in the second quarter by opening our 5,000th store! Longer term, we are excited about our potential to capture additional market share in all of our geographies and to continue our global growth, while delivering great value to more consumers around the world and driving the profitability of TJX.”
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 Retailer
Discount 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 Growth
TJX 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 sluggish , but to its credit, it opened new stores and grew sales at existing, established stores.
This quarter, TJX reported solid year-on-year revenue growth of 5.6%, and its $13.47 billion in revenue outperformed Wall Street’s estimates by 1.1%. Looking ahead, Wall Street expects sales to grow 3.6% over the next 12 months, a deceleration from this quarter.
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Same-Store Sales
A company’s same-store sales growth shows the year-on-year change in sales for its brick-and-mortar stores that have been open for at least a year, give or take, and e-commerce platform. This is a key performance indicator for retailers because it measures organic growth and demand.
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 3.6% 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 4% year on year. This growth was a deceleration from the 6% year-on-year increase it posted 12 months ago, showing the business is still performing well but lost a bit of steam.
Key Takeaways from TJX’s Q2 Results
It was good to see TJX beat analysts’ revenue, gross margin, and EPS expectations this quarter. We were also glad it raised its full-year earnings guidance. Overall, this was a solid quarter. The stock traded up 2.6% to $116.25 immediately following the results.
So should you invest in TJX right now? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it’s free.
