TJX Companies (TJX) has been delivering consistent performance over the years as its off-price business model continues to resonate with consumers. The company has delivered same-store sales growth for 19 consecutive years. For fiscal 2016, the company expects its same-store sales to increase by 3%–4%.
Competition in off-price retailing
The success of off-price retailers such as TJX Companies and Ross Stores (ROST) has been attracting many players to this space. In September 2015, Macy’s, the largest department store, marked its debut in the US off-price retail space with the opening of three off-price Macy’s Backstage stores in New York. The company plans to end the year with six stores. Kohl’s (KSS) has opened its first Off Aisle by Kohl’s store, which will address the growing merchandise returns by selling the items at discounted prices.
Nordstrom (JWN) has achieved considerable success through its off-price Nordstrom Rack stores. The company has been opening its Rack stores at an accelerated pace, with Rack stores now outnumbering the upscale full-line stores.
TJX Companies has an extensive presence in the off-price space. As of August 1, 2015, the company had 2,269 stores in the United States alone.
The portfolio holdings of the SPDR S&P 500 ETF (SPY) have 0.3% exposure to TJX Companies.
3Q16 sales expectations
Based on the guidance issued in August 2015, TJX Companies’ sales in 3Q16 are expected to be in the $7.6–$7.7 billion range, assuming a 3% negative impact of adverse foreign currency movements. The company expects 3Q16 same-store sales growth in the 2%–3% range, up from the previous expectation of 1%–2% growth. The consensus Wall Street analyst sales expectation for 3Q16 is $7.7 billion.