The TJX Companies, Inc. 1QFY25: Solid Quarter Reflects Business Model Strength

Jun 5, 2024 | Corporate Insights, No Bull Economics

The TJX Companies reported that its 2Q is off to a good start, inventory levels are in good shape & the company is in a great position to capitalize on outstanding buying opportunities in the marketplace. Management plans to flow fresh assortments to its stores & online this summer and throughout the year. While positive sales were reported for income cohorts both above & below $100k, sales growth during the quarter skewed more toward the lower-income customer.

Big Picture

  • TJX (the leading off-price apparel & home fashion retailer) enjoys an extensive customer demographic reach driven by its expansive assortment of good, better & best merchandise for shoppers.
  • The company continues to attract new Gen Z & millennial customers, with multiple generations shopping together at its stores.
  • Stores receive multiple weekly deliveries of fresh branded merchandise to surprise & excite its customers. With a rapidly changing assortment, shoppers are inspired to visit frequently to see what’s new.
  • The company’s buyers source from 21,000+ vendors located in 100+ countries & also purchase excess e-com inventories at attractive prices.
  • Plans to expand its global store footprint by at least another 1,300+ stores within its current retail banners in existing countries.
  • While management expects their competitors to lower prices on commodity items (consistent with Target’s recent announcement), TJX is insulated from this threat given its focus on branded goods & its ability to source product at the best available prices. 

Revenue Trends

  • 1QFY25 comps increased +3% y/y, driven entirely by customer transactions. Growth was as expected across home, apparel, & accessories.
  • Marmaxx (TJ Maxx, Marshals & Sierra) comps increased +2% y/y, reflecting positive results in apparel & home categories (home outperforming apparel).
  • HomeGoods comps increased +4% y/y. While the furniture industry has been soft, HomeGoods attract consumers by offering many affordable products (outside of expensive decor & big-ticket items).
  • FY25 enterprise comp guidance: +2% to +3%.

Margin Trends

  • 1QFY25 gross margin increased +1.1% y/y, driven by lower freight costs & favorable mark-on, partially offset by the timing of capitalized inventory cost & supply chain investments.
  • FY25 gross margin is expected to increase +10 to +20 bps y/y to a range of 30% to 30.1%, driven by a higher merchandise margin (a small benefit from freight & flat retail theft) partially offset by supply chain investments).

TJX 1QFY25 Financials

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