TJX Companies reported another positive quarter and shared that the current one has started strong, this despite facing more difficult comparisons in the same periods of 2022 and 2023.As shown in the table below, the business is now over 25% larger than it was pre-pandemic on a comparable basis and 35% including new locations. Our data showed a +5.9% increase in visits per location for T.J. Maxx, which was well ahead of comparable sales and comparable transactions, implying a slight decline in conversion rate. Management cited adverse weather as a headwind for the quarter and also implied that average ticket was down, which may reflect weather (merchandise mix) or the price points that the consumer was buying. They also cited higher transaction growth by lower-income consumers, which would have yielded a lower average ticket. Lastly, as we saw with Dillard’s and some grocery chains, there appears to be a headwind from the earlier Easter which resulted in less spend for the event.
The point behind the subtitle above reading “By Less” is that last year’s sales outperformance by off-price was double-digits, that has moderated to low-single-digits in 2024, as shown in the table above. Last year was an outsized year for off-price to capture household trade-in by affluent consumers. That is less so this year given management’s comments, reported comps, and Placer traffic. It will be exciting to see if department stores can build upon that stability in the second half of the year.
From our purview in SoCal, California weather was benign during the period; as shown below, Marshalls traffic for the state and region strongly outperformed the nationwide average, thus providing evidence to support the “weather” view. Moreover, the upswing in late March demonstrates strong momentum around spring and Easter (i.e., that is a strong seasonal period and the consumer responded). Recall this has been the pattern--showing up for the seasonal periods, whereas the shoulder periods settle lower.
