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TJX Cos raised its outlook for fiscal 2024 on Wednesday, buoyed by steady sales of its discount apparel and accessories and an uptick in demand for home decor goods.
Signs of cooling inflation have boosted demand at off-price retailers such as TJX, which offers brands ranging from Jimmy Choo to Alexander McQueen at discounts between 20 percent and 60 percent.
US comparable sales at the company’s apparel and accessories segment Marmaxx rose 8 percent in the second quarter. TJX was also supported by a rebound in demand at its HomeGoods outlets, where comparable sales rose by 4 percent.
“Bed Bath & Beyond’s bankruptcy has also created an opening for TJX’s HomeGoods banner to grab market share, helping rejuvenate it after several lacklustre quarters,” said Insider Intelligence analyst Rachel Wolff.
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The HomeGoods owner also benefited from higher prices of some products and freight costs easing sharply, as gross profit margins rose 2.6 percentage points from a year earlier to 30.2 percent in the quarter ended July 29.
Data from Placer.ai showed foot traffic at T.J. Maxx, and Marshalls saw a roughly 17 percent spurt in June and July as “Back-to-School” shoppers hunted for bargains on school supplies, clothes and backpacks.
Excluding items, the company reported a second-quarter profit of 85 cents per share, topping market expectations of 77 cents.
Beyond offering value to customers, TJX is “becoming increasingly important to brands” in the retail sector, BMO Capital Markets analyst Simeon Siegel said, at a time when top brands are attempting to trim their inventories, helping TJX snap up merchandise at lower prices.
The T.J. Maxx parent now expects annual adjusted profit for fiscal 2024 between $3.56 and $3.62 per share, compared with its previous forecast of between $3.39 and $3.48 per share.
By Juveria Tabassum; Editor Krishna Chandra Eluri
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T.J. Maxx Parent Raises Profit View as Cost Pressures Ease
TJX Companies Inc. lifted its annual profit forecast on Wednesday, banking on easing cost pressures to cushion a pullback in consumer spending on discretionary items.
