TJX Companies (TJX) leverages the power of stores and the Internet

TJX Companies, Inc. TJX leverages its successful off-price business model and strong brand portfolio as key growth drivers. The company is committed to driving growth through strategic marketing initiatives. With a focus on expanding both its physical store presence and e-commerce capabilities, the leading off-price retailer continues to strengthen its market position. However, the company is not immune to rising costs.

Let’s take a closer look at this.

Strong marketing activities

TJX is committed to driving growth through effective marketing initiatives and loyalty programs. Incidentally, its aggressive marketing and advertising campaigns across multiple media are driving growth. In the U.S. and Canada, management is leveraging the strengths of its retail brand portfolio and multi-banner campaigns to drive efficiencies and awareness. The company is well-positioned to attract new customers of all ages to drive growth. In addition, the company’s treasure-hunt shopping experience is gaining traction with shoppers. In addition, its gifting initiatives, unique among discount retailers, and its loyalty card program (which offers customers choices other than credit cards and soft benefits such as early shopping hours) have improved customer engagement.

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Growth initiatives moving forward

TJX Companies is building on its solid store growth and e-commerce efforts. The company is rapidly expanding its presence in the United States, Europe, Canada and Australia. In the first quarter of fiscal 2025, the company added 18 new stores, ending the quarter with 4,972 stores. Looking ahead, management anticipates the ability to expand its current retail banners by adding at least 1,300 more stores in these regions in the foreseeable future.

As more consumers turn to online shopping, TJX Companies has launched a series of initiatives to increase online sales and strengthen its e-commerce business. The company plans to introduce new assortments in stores and online throughout the spring, summer and beyond.

Obstacles on the way

Over time, TJX Companies has been negatively impacted by high selling and operating expenses. In the first quarter of fiscal 2025, SG&A as a percentage of sales was 19.2%, an increase of 0.2 percentage points. The increase was driven by additional store compensation and payroll costs. The company’s selling and operating expenses increased 4.4% to $8,739 million in the quarter. Management expects additional store compensation and payroll costs in fiscal 2025.

TJX Companies’ emphasis on the benefits listed above is expected to continue to drive the growth narrative. Shares of the Zacks Rank #3 (Hold) company are up 16.5% over the past three months versus the industry’s 11.5% growth.

Take a look at these solid choices

We have distinguished three actions of higher rank, namely: Abercrombie & Fitch Co. ANF Gap Inc. GPS and DICK’S Sporting Goods DKSs.

Abercrombie & Fitch, a specialty retailer of premium, high-quality casual apparel, currently has a Zacks Rank #1 (Strong Buy). ANF has a trailing four-quarter average earnings surprise of 210.3%. You can see complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimates for Abercrombie & Fitch’s sales and earnings for the current fiscal year are projecting growth of 10.4% and 47.3%, respectively, from the prior-year period.

Gap, a fashion apparel and accessories retailer, currently boasts a Zacks Rank #1. GPS has posted an average annual earnings surprise of 202.7% over the trailing four quarters.

The Zacks Consensus Estimate for Gap’s sales and earnings per share for the current fiscal year is projecting an increase of 0.2% and 21.7%, respectively, from the prior-year levels.

DICK’S Sporting operates as an omni-channel sporting goods retailer. It currently has a Zacks Rank #2 (Buy). DKS has an average earnings surprise of 4.7% for the trailing four quarters.

The Zacks Consensus Estimates for DICK’S Sporting’s sales and earnings for the current fiscal year are expected to improve by 1.8% and 6.6%, respectively, from the prior-year period.

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