TJX's In-Line Quarter Despite Macro Pressures Win Analyst Conviction

Telsey Advisory Group analyst Dana Telsey reiterated an Outperform rating on the shares of TJX Companies Inc TJX with a price target of $95.
TJX reported 4Q22 EPS of $0.89 (versus $0.78 last year), in line with the consensus of $0.89 and at the high end of company guidance of $0.85-$0.89.
For the quarter, total sales rose 4.8% to $14.520 billion (up 7% in constant currency), above guidance of $13.9 billion-$14.1 billion, and the market's expectation of 1.5% growth to $14.067 billion.
TJX reported solid Q4 results with better-than-expected U.S. comps driven by strength in MarMaxx's apparel and accessories businesses and better SG&A control, offsetting a weaker gross margin, the analyst added.
The home business remained a soft spot, but the category and the Home Goods banner will be lapping easier compares this year as consumer demand shifts begin to normalize coming away from the pandemic, the analyst remarked.
Some gross margin pressure in Q4 does not come as a surprise, in the analyst's view, as consumers responded to markdowns and clearance after the holidays.
While the company's FY23 outlook fell slightly short of the current consensus estimates, the analyst believes the company is taking an appropriately cautious view of this current fiscal year but still anticipating nice U.S. comparable gains and pre-tax margin expansion.
The analyst will be looking for more clarity on the first quarter's expected pre-tax margin contraction, as management noted this year was off to a strong start.
Price Action: TJX shares are trading lower by 0.98% at $78.04 on the last check Wednesday.

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