By Tonya Garcia, MarketWatch
TJX Cos. says that the early results from the reopening of more than 1,600 stores around the world have been positive, giving analysts reason to believe that if the price is right, shoppers will head back to stores after the coronavirus pandemic.
In the U.S., stores have fully or partially reopened across 25 states.
“[F]or the 1,100-plus stores that have been open for at least a week, sales overall have been above last year across all states and countries where we are open,” said Ernie Herrman, chief executive of TJX on the earnings call, according to a FactSet transcript.
The TJX /zigman2/quotes/203136811/composite TJX +1.11% portfolio includes T.J. Maxx and Marshalls stores.
Herrman attributed the showing to pent-up demand, the “treasure hunt experience” of shopping the company’s stores, and other factors.
“In today’s environment, we believe this kind of shopping experience can serve as a break in the day and as some ‘me time’ for our customers and in the future will continue to be a major draw for consumers to our stores,” he said.
TJX results for the first quarter swung to a loss and sales were nearly chopped in half due to the coronavirus pandemic and lockdowns. The company wrote down $500 million in inventory, largely on items that had already been reduced and were expected to be reduced further. The company expects to sell these items in the second quarter.
Herrman makes the point that predicting consumer behavior is still a challenge in this environment, but analysts were upbeat after these initial signals.
“TJX is seeing much better than feared traffic in stores that are reopening, suggesting many consumers are comfortable in off-price stores and continue to favor TJX’s value proposition,” wrote Cowen analysts led by Oliver Chen.
Cowen rates TJX stock outperform with a $62 price target, up from $52.
Wells Fargo used an image from a T.J. Maxx store in Arkansas as further evidence that shoppers are ready to head back to stores to snap up a deal.
“TJX gave some very bullish initial reads from their reopened location,” analysts led by Ike Boruchow wrote.
“With sales trends inflecting to positive immediately, it settled the one key debate on off-price today, ‘Will shoppers feel comfortable returning to retail stores anytime soon?” With that question now answered (they will…), this is a very noteworthy development that likely gives bulls more ammo for their 2021 thesis.”