When you think about retail stocks, which ones come to mind? For me, Wal-Mart (NYSE: WMT) and Target (NYSE: TGT) are at the top of the list. I think it has to do with the powerful brand equity that both possess. That, and they receive a lot of press between them. Honestly, I don't think of TJX (NYSE: TJX) as being in that league. I don't shop at T.J. Maxx, Marshalls, or any of the company's brands. I don't know many people who do.
But I thought I would take a look at the retailer's latest earnings report to see how it was doing. Unfortunately, there was nothing too impressive about the numbers. It wasn't disastrous or anything like that, it just didn't convince me that more due diligence was necessary.
For the fiscal third quarter, diluted earnings per share on an adjusted basis dropped two pennies to $0.54. The bottom line met results. Excluding the effect of currency exchange, same-store sales rose 1%. Not that great, really. Plus, the outlook from management was cautious, as one might expect. I will give TJX credit for its cash-flow statement: there was a nice increase in the amount of cash the company generated from operations for the thirty-nine-week period.
But is that enough to make me want to add TJX to my portfolio? No, it isn't. The retailer's stock closed on Tuesday not too far from the 52-week low. I don't see that as a value in this case.
Let me go back to the issue of brand equity. When the stock of a Wal-Mart or a Target gets close to a 52-week low, that would signal me to take things seriously and get going on some due diligence. TJX just doesn't do it for me. I just don't buy that it would do much for my portfolio during a recession. In fact, I've been impressed as of late by some of the commercials I've seen for Wal-Mart. That company is really reaching out to its core demographic during these difficult times. TJX? It really doesn't have that kind of skilled marketing presence.
Management is going to need to up its game to compete. So, I'll stay away from TJX for now.
Disclosure: I don't own any company mentioned; positions can change at any time.
Nuclear power is on the comeback trail
Apple backs AT&T in continuing spat with Verizon
Closing Bell: The recession is still over, still... do you feel it?
