Indra Bhattacharjee's Avatar
Indra Bhattacharjee
published in Blogs
May 27, 2019
TJX (TJX, $$51.62) holds strong amidst challenging retail scenario

TJX (TJX, $$51.62) holds strong amidst challenging retail scenario

In a cunning move, TJX survived even though many of its brick-and-mortar peers crumbled by selling products cheaper than Amazon, quickly rotating products to retain customers, and channeling clearance products from other retailers through its own shelves.

As per its latest Q1 filing, TJX’s comparable store sales rose 5% ahead of its 3% growth last year. It clocked in a total revenue rise of 7% to $9.3 billion ahead of forecasts by nearly $70 million. Even though its net income fell by 2% to $700 million, its buybacks enhanced its EPS by a penny to $0.57 beating estimates by three cents.

If its full-year comps rose by 2% - 3%, it would mark the company’s 24th consecutive year of positive comps growth. It increased its full-year EPS guidance by a penny which means that it is expecting its earnings to grow 5%-7%.

Analysts posit a number of reasons behind the company’s resilience. At a time of the e-commerce giant Amazon is crushing smaller retailers, TJX brings down their inventories at rock-bottom prices. This strategy enables the company to sell its products at a 20%-60% discount couple by a quick rotation of the products.

The company also invests considerably its excess cash on buybacks and dividends. During the first quarter, it brought back $350 million in shares that shot up its stock by nearly 20%. It also plans to repurchase up to $2.25 billion in shares for the full year accounting for 3% of the current market cap.

However solid the core business looks lower merchandise margin, higher supply chain costs, higher freight costs, and new store openings caused its gross margin to contract 40 basis points annually to 28.5%. It is expected that its Q2 gross margin to hover between 28.2% and 28.3% versus 28.9% a year earlier.

Despite the headwinds recently worsened by the U.S tariff hike on Chinese goods, analysts are optimistic that TJX is the best bet in the crumbling retail scenario.

Related Tickers: TJX
Sergey Savastiouk's Avatar
Sergey Savastiouk
published in Blogs
Mar 07, 2021
4 Tricks Hedge Funds Use to Get Ahead

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If the stock market were Major League Baseball, hedge funds and institutional investors would be the pros on championship teams while everyday self-directed investors (SDIs) are the benchwarmers in the minors.It’s how they get ahead, and it’s why 90% of SDIs lose money trying to play (invest and trade) in the major leagues. The 4 tricks we discuss below are rooted in one common theme: they all use Artificial Intelligence and algorithms to generate data and ideas.
John Jacques's Avatar
John Jacques
published in Blogs
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Sergey Savastiouk's Avatar
Sergey Savastiouk
published in Blogs
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Edward Flores's Avatar
Edward Flores
published in Blogs
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Alla Petriaieva's Avatar
Alla Petriaieva
published in Blogs
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Sergey Savastiouk
published in Blogs
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Abhoy Sarkar's Avatar
Abhoy Sarkar
published in Blogs
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Rick Pendergraft's Avatar
Rick Pendergraft
published in Blogs
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published in Blogs
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published in Blogs
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