TJX results show buyers will return to stores if price is right, analysts say

“[F]or more than 1,100 stores open for at least a week, overall sales were higher than last year in all states and countries where we are open, “said Ernie Herrman, CEO of TJX when calling earnings, according to a transcript of the dataset.

The TJX
TJX
-1.63%
the portfolio includes T.J. Maxx and Marshalls stores.

Herrman attributed the protest to pent-up demand, “shopping treasure experience” from company stores, and other factors.

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“In today’s environment, we believe that this type of shopping experience can serve as a daytime break and” free time “for our customers and will continue to be a great attraction for consumers in our stores. future, “he said. . .

TJX’s first quarter results are down and sales have almost halved due to the coronavirus pandemic and blockages. The company has found $ 500 million in inventory, mostly on items that have already been reduced and are expected to be further reduced. The company plans to sell these items in the second quarter.

Herrman notes that predicting consumer behavior remains a challenge in this environment, but analysts were optimistic after these first signs.

“TJX sees traffic in reopening stores much better than expected, suggesting that many consumers are comfortable in overpriced stores and continue to drive TJX’s value proposition,” wrote Cowen analysts. led by Oliver Chen.

Cowen evaluates the performance of TJX stocks with a target price of $ 62, above $ 52.

Wells Fargo used an image of a T.J. Maxx store in Arkansas as further evidence that buyers are ready to return to stores for a deal.

“TJX has given very optimistic initial readings from its reopened location,” wrote analysts led by Ike Boruchow.

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“Since the sales trends immediately turned positive, this has resolved the key debate over reduced prices today: will buyers be comfortable returning to retail stores soon?” With the answer to this question (they will …), this is a very remarkable development which probably gives the bulls more ammunition for their 2021 thesis. “

Wells Fargo ranks the TJX overweight with an increase of $ 70 from $ 65.

Ross Stores
ROST,
-3.08%
On the other hand, he was “silenced as usual” after announcing his results, said Wells Fargo.

Ross did not provide sales results in the same store in the first quarter as the stores had been open for less than seven weeks. At the time, Ross also lost and sales fell about $ 2 billion.

About 700 Ross stores have reopened. Ross’ portfolio also includes DD discounts. Ross announced shortly before the closure orders that he was closing his e-commerce site.

“Although we are not aware of recent performance (stores have just opened), we expect Ross stores to benefit from strong consumer demand in the same way as TJX, d ‘Perhaps the best product buying environment in the history of off-market prices (which we believe is an additional margin catalyst for next year),’ wrote Roxanne Meyer, Managing Director of MKM Partners.

MKM believes that TJX is better positioned for a short-term return. In addition to its growing e-commerce capacity, its global diversity and its dynamics, the company also realizes half of its income with non-clothing items.

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“In our opinion, the inflection in TJX is a testament to the favor of strip slots, consumer worship after price and buying intention when they appear,” said MKM.