TJX Earnings: Retailer’s Value Proposition Shines Amid Challenging Macro; Shares Expensive

We believe TJX’s stellar fiscal 2024 third-quarter marks testify to its ability to navigate the tough macroenvironment, thanks to its high-quality value offerings and scavenger hunt shopping experience. During the quarter, TJX saw 9% top-line growth, to $13.3 billion, and a 12% pretax profit margin (up 80 basis points annually on higher sales and benefit from expense timing), outpacing our $12.9 billion and 11.3% preprint estimates, respectively. Still, the updated fourth-quarter outlook of 10.4%-10.6% pretax profit margin (from 10.7%-10.9% prior) and reiterated 3%-4% comparable sales imply more margin pressure than previously anticipated due to higher expenses. In aggregate, this should lead to a modest lift in our outlook for sales of $54 billion and EPS of $3.66, which will bring us in line with updated full-year guidance for 4%-5% comps and $3.71-$3.74 in EPS. As such, we don’t plan a material change to our $73 fair value estimate. Shares still strike us as rich at a 20%-plus premium, even after a 3% drop after the print.