TJX Bears Are Running Out Of Ammunition

TJX Companies Inc TJX reported impressive global comps of 7 percent for 1Q17. Bernstein’s Anne-Charlotte Windal maintained an Outperform rating for the company, while raising the price target from $82 to $83.

TJX’s total comps included +6 percent comps from its US Marmawxx business and were driven by healthy consumer traffic, especially in apparel and accessories. The company’s robust performance was in contrast to last week’s dismal results reported by department store companies.

Robust Comps Performance

Compelling assortments, great value items and increased marketing spend in certain regions and markets boosted the company’s comps during the latest quarter. TJX also announced that May was off to a solid start.

“The quarter confirms in our view a continued shift in consumer footfall towards Off-Price,” analyst Anne-Charlotte Windal wrote. She said TJX’s focus on offering fresh goods at a great value was a winning formula with value conscious US consumers.

The analyst believes the company has the potential to expand its share in the US apparel and footwear market from the current 4 percent. Although TJX’s EPS growth outlook for FY17 and FY18 continues to be under pressure from forex, wage increases and growth initiatives, its investments should keep the growth momentum going.

Windal also noted TJX’s ability to generate robust cash flows, despite continued growth investments. The company re-affirmed its intent to repurchase $1.5-$2.0B in stock in FY17.