TJX’s Value Resonates During Holiday Selling Season; Margin Pressure Tempers Fiscal 2024 Outlook

We don’t plan to alter our $68 per share fair value estimate materially for narrow-moat TJX after fourth-quarter earnings and view shares as overvalued. The negative impact on our intrinsic value from the weaker-than-expected fiscal 2023 profitability (9.3%, hindered by an unplanned 30-basis-point shrink charge) and the firm’s fiscal 2024 slightly disappointing outlook (pretax profit margin of 10.1%-10.3%, versus our 10.5% estimate) is offset by favorable fourth-quarter top-line outperformance (5% sales growth). Against the backdrop of a strong buying environment, we suspect customers reacted favorably to TJX’s value during the holiday selling season, as evidenced by quarterly comparable sales at Marmaxx (up 7%) and HomeGoods (down 7%) that were ahead of our 4% lift and 9% decline preprint estimates, respectively.