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3 Things TJX Companies Want to Know – The Motley Fool



Today's retail landscape is on the rise, but demand trends are particularly strong in the off-market niche in which TJX Companies (NYSE: TJX) competes. The trader has recently experienced a surprising acceleration in its growth rate between the first and second quarters. Executives see the positive momentum continue to pick up, at least in the second half of the fiscal year.

In a conference call with Wall Street analysts, CEO Ernie Herrman and his team have said more about this brightening. Here are a few highlights from this presentation.

  Two women share a secret while shopping.

Source: Getty Images

Surprising Management Team

… [O] ur 6% consolidated comparable Sales rose 3%, well above our expectations.
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1; CFO Scott Goldenberg

Back in May, management for this quarter forecast sales growth of between 1% and 2%, marking a slight slowdown from the 3% increase in the first quarter. Instead, sales increased 6%, driven by growing US customer traffic. Maxx, Marshall's and HomeGoods banners.

Executives described the clothing business as particularly powerful. They also pointed out that unlike discounters such as Walmart and Target they announced sales growth of 4.5% and 6.5% respectively in the first quarter, TJX Companies & # 39; comparable sales figures exclude the e-commerce channel.

Accepting the Online Challenge

With the vast majority of retail sales still taking place in in-store stores and online retailers of all sizes starting with the opening of retail stores, we are convinced that our four decades of experience in operating Business and the response to consumer trends represent a huge advantage.
– CEO Ernie Herrman

TJX Companies took small steps this quarter to build its small e-commerce segment Management said it was satisfied with the company's success in marketing this channel. But TJX executives spent more time explaining how to best leverage their competitive advantage in the emerging multichannel sales environment.

The retailer has large assets like a large universe of vendors, flexible store layouts, fast inventory turnover and brands grown over the past 40 years. As a result, executives still see plenty of room to expand their physical store base from 4,200 to 6,100 locations.

Looking at the holidays

… [W] we are very pleased with our performance in the second quarter and many initiatives planned to further drive sales and traffic in the second half of the year. The market is full of high quality branded items and we love the buying opportunities we see.
– Herrman

executives described TJX's stock position as "excellent" in the second half of fiscal year 2019. They see many good opportunities to purchase even high quality goods at a discount.

These positive trends and the outperformance that the retailer has achieved so far this year have led to a significant improvement in TJX Companies' full-year outlook. The company now expects revenue growth of 3% to 4%, which would be the 23rd year in a row, according to this indicator. Executives left their core profitability targets unchanged, but noted that higher sales growth should allow earnings per share (excluding tax reform) to increase by about 7%, rather than the 5% to 6% increase forecast in May] ". [W] e are convinced that we will continue to gain market share by increasing our customer base … and making more purchases, "said Mr. Manman, noting that the retailer has aggressive plans to boost traffic in recent months up to and including the demand for holiday shopping hours.


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