Off-priced retail giant TJX Companies (TJX) posted fantastic second quarter results, bucking the broader trend in retail. Considering TJX’s divergence from the broader retail marketplace, superb capital allocation, and durable business model, I think shares look quite attractive at their current price, which represents over a 20% discount to my fair value estimate of $87. Let’s take a look at quarterly results, and insight from management that demonstrates why TJX is one of the best retailers in the world.
Q2 Comps: A World Away from Competitors
With Q2 comps relatively weak across the board at competitors like Macy’s (M) (-2.5%) and Dillard’s (DDS) (-1%), TJX surprised to the upside with a consolidated same-store sales growth rate of 3% y/y. The company continues to take share from department stores, and, in my view, athletic apparel retailers like Dick’s Sporting Goods (DKS). Strength was fairly broad-based, with the core Marmaxx concept comping up 2%, HomeGoods up 7%, TJX Canada up 7%, and TJX International up 1%. TJX International results weren’t great, but in total, international was only 13% of sales in Q2. Overall, sales were up 6% y/y to $8.4 billion as the company continues to open more doors.
