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TJX results

Eric J Bokota

TJ Maxx reported 4Q/FY results.  While TJX shares have done well since I first wrote about the company, this is the market starting to look forward to brighter days in 2022 and beyond. Current results remain weak due:

-store closures overall stores were closed for 13% of the quarter during 4Q (closures were mainly in Europe).  Nearly 700 stores remain temporarily closed.

-lower apparel spending - outside of athleisure, most apparel categories remain week as people haven't been going out.  

-higher supply chain/logistics/wage costs/additional cleaning costs

-reduced hours/occupancy limits

That said, management noted some long term positives:

Source: Seeking Alpha transcripts

- vendors are even more eager to sell to TJ Maxx on attractive terms (both price but also payment terms) now than prior to the pandemic given its strong balance sheet and appetite to increase its store base.  We can see this in TJX's reported results as payables have increased ~$2 billion or so (despite sales having fallen) since the pandemic started - TJ Maxx appears to have negotiated significantly longer payment terms with many of its suppliers.  

- more real estate opportunities at attractive rents.  As expected, management noted that rents in some places are declining (particularly in Europe).

Source: Seeking Alpha transcripts

- the duration of the pandemic has lead to more stores closing amongst competitors - I expect this to continue over the course of the year.  

While I believe the future is bright for TJ Maxx, at today's price, most of this is already reflected in the stock and expected returns over the next 3-5 years aren't particularly exciting at this stage.

As always this is NOT INVESTMENT ADVICE.  Do you own work.