Freight, Wage Costs Weigh on TJX, but Long-Term Outlook Remains Favorable; Shares Trade Fairly
We plan a low- to mid-single-digit cut for our $48 per share valuation for narrow-moat TJX after somewhat lackluster third-quarter profitability. The results do not materially alter our long-term thesis (mid-single-digit sales growth, operating margins near fiscal 2018's 11% over the next decade), which gives credit to TJX's strong merchandising operation despite a competitive retail environment. With the shares trading near our valuation (including the likely reduction), we counsel investors to...TJX Companies is an off-price apparel and home fashions retailer. The company's segments comprised of: Marmaxx, which sells family apparel (including footwear and accessories), home fashions (including home basics, decorative accessories and giftware) and other merchandise; HomeGoods, which provides a range of home fashions, including home fashions, including furniture, rugs, lighting, soft home, decorative accessories, tabletop and cookware as well as pet, kids and gourmet food departments; TJX Canada, which operates the Winners, HomeSense and Marshalls chains in Canada; and TJX International, which operates the T.K. Maxx and HomeSense chains in Europe and the T.K. Maxx chain in Australia.
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