Off-prices aren’t going out of trend anytime soon. Based on the recent trading in TJX Companies stock, that might not be obvious. Club-owned TJX Companies and rival Ross Stores are well-positioned to continue taking market share from other retailers, especially department stores, continuing a long-standing industry trend, UBS said in a recent note. Ta. However, TJX stock has not enjoyed the same positive momentum seen in the company’s underlying business recently and has stalled, making the stock look increasingly attractive. TJX stock is up less than 1% year-to-date, while the S&P 500 is up more than 7%. Especially over the past month, the stock price has fallen by nearly 3% for him. U.S. stock indexes overall fell just 1% in that period. “TJX should continue to benefit from the struggles of department store chains,” said Jeff Marks, the club’s portfolio director. He called Macy’s plan to close 150 stores by 2026 a “great opportunity” for TJX to get quality products at bargain prices. UBS says department stores’ ongoing challenges for more than a decade continue to play into the hands of off-price competitors. The company said its three major publicly traded off-price players, TJX, Ross Stores and Burlington Stores, were accelerating in sales share late last year compared to four publicly traded department stores: Nordstrom, Dillard’s, Macy’s and Kohl’s. I discovered that. Over the past four reported quarters, off-price retailers accounted for 57.6% of total sales, up 3.3 percentage points from a year ago and 10.3 percentage points from five years ago, according to UBS. This analysis strongly supports our long-term investment thesis for TJ Maxx’s parent company, Marshalls and Home Goods. Despite the struggles of other retailers, TJX stands out as a resilient company well-equipped to navigate the industry’s many challenges. It gives TJX an advantage at a time when other companies are struggling and overstock builds up, giving TJX the opportunity to buy high-quality products at low prices across categories such as apparel, personal care and household products. For example, Bed Bath & Beyond’s bankruptcy last year was good news for TJX. Inventories set across the industry remain favorable for TJX, CEO Ernie Herman said on an earnings call in late February. TJX is “in an excellent position to continue offering a fresh selection in stores and online this spring and throughout the year,” he said at the time. Despite management’s optimism, UBS has rated TJX Store and Ross Store equivalent to Hold, arguing that “both companies will have difficulty exceeding market growth expectations.” ing. TJX 1Y Mountain TJX stock price performance over the past 12 months. Chuck Grom, a consumer and retail analyst at Gordon Haskett, said one reason TJX stock hasn’t risen recently could be that TJX stock is trading close to its historical valuation. did. As of Friday, TJX stock was trading at 23 times forward earnings, essentially in line with its five-year average of 23.4 times, according to FactSet. Grom also told CNBC in an email that he expects TJX’s first-quarter same-store sales growth to be closer to the company’s guidance of 2% to 3%, adding, “This is expected to continue in 2024. “This suggests that there may not be much upside to earnings.” “All things considered, I can see why the stock has been in a hold pattern recently,” said Grom, who has a buy rating on TJX stock and a price target of $115 per share, according to FactSet. Loop Capital analysts said in a note Friday that sentiment toward consumer stocks is “generally negative as inflation remains elevated and the timing of potential rate cuts remains uncertain.” Still, the firm remains positive on off-price as a category, suggesting the group’s underperformance compared to the S&P 500 this year is “a buying opportunity for long-term investors.” Corey Tarlow, an analyst who covers discount and specialty retailers at Jefferies, said in an interview with CNBC that TJX has more upside. “If there is upward momentum in earnings and valuations remain where they are, the stock is likely to rise further,” he said. TJX’s business momentum is “driven by a more frequent influx of traffic from new and existing customers,” Tarlow explained. “This bodes well for continued sales growth and basket growth.” Bank of America retail analysts say that traffic comes from customers at various income levels. “We remain positive on off-price retailers as their strong value proposition attracts customers from all income groups, even under inflation and macroeconomic pressures,” they wrote in a note Friday. ing. Analysts, citing Bank of America credit and debit card data, said overall clothing spending fell on an annual basis in March. However, according to the company, discount apparel spending remained positive in the same month, increasing 2.6% year-on-year in March after increasing 2.8% year-on-year in February. Meanwhile, spending at department stores fell 3.7% in March, following a 5.2% drop in February, according to Bank of America. (Jim Cramer’s charitable trust is Long TJX. 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TJMaxx outdoor mall in Port St. Lucie, Florida.
Jeff Greenberg Universal Images Group | Getty Images
Off-prices aren’t going out of trend anytime soon. Based on the recent trading in TJX Companies stock, that might not be obvious.
