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Why TJX Companies Failed to Impress Investors in Fiscal 3Q18

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Third quarter results

TJX Companies (TJX) disappointed investors with lower-than-expected sales for fiscal 3Q18, which ended on October 28, 2017. The leading off-price retailer’s fiscal 3Q18 earnings were in line with analysts’ expectations. The company reported its fiscal 3Q18 results on November 14. TJX Companies stock fell 4.0% on November 14 but was up 1.6% the following day. As of November 16, TJX Companies stock is down 8.1% on a YTD (year-to-date) basis.

Comparison with peers

As of November 16, stocks of Ross Stores (ROST) and Burlington Stores (BURL) have risen 0.1% and 18.2%, respectively, since the start of 2017. Aside from its peers, TJX Companies also lags the broad market represented by the S&P 500 Index. As of November 16, the S&P 500 Index has risen 15.4% on a YTD basis.

TJX Companies’ off-price model has helped it in performing consistently amid tough market conditions over the past few years. The company has delivered annual same-store sales increases in each of the past 21 years.

However, the company reported flat same-store sales in fiscal 3Q18. TJX Companies’ performance in fiscal 3Q18 was adversely impacted by hurricanes and lower apparel demand at the company’s TJ Maxx and Marshalls US stores due to unfavorable warm weather conditions.

Series overview

This series on TJX Companies’ fiscal 3Q18 results will discuss in detail the factors that impacted the earnings, sales, and margins of the company. We’ll also discuss the performance of the company’s international segment, valuations, and analysts’ recommendations for the company.

We’ll start with a discussion of the company’s earnings in fiscal 3Q18.

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