TJX Has Global Expansion Plans. The Stock Is Up. -- Barrons.com

By Amethyst Martinez

Shares of TJX are up after the off-price retailer announced a plan to expand its global footprint through a joint venture in Mexico.

The venture between Mexican retailer Grupo Axo and TJX -- which would own 51% and 49%, respectively -- is expected to close later this year, TJX said Friday in a press release. Financial terms will be released after the deal is closed, the company said.

TJX has taken a stake in Axo's bricks-and-mortar business, which includes more than 200 stores under the company's Promoda, Reduced, and Urban Store banners.

TJX, the parent of retailers Marshalls, TJMaxx, and others, sees "excellent potential to grow in another region and deliver our value proposition to a growing population of fashion- and value-conscious consumers in Mexico," CEO and President Ernie Herrman said in the release.

TJX shares are up 1.3% in Friday afternoon trading, and have gained 5% this week, on pace for their best week since November 2022.

Citi analysts said in a note that in an environment "where we are likely to see a short-lived period of less spending power, we favor names that have mindshare for value," mentioning TJX stock.

In May, TJX's first-quarter earnings showed lower-than-expected same-store sales of a 3% gain year over year, lower than consensus estimates of 3.7%. Earnings per share were 93 cents, beating Wall Street's 88 cents estimate, according to FactSet.

"I believe we are set up for a long runway of exciting growth in our geographies around the world," Herrman said in an earnings call last month. "Over the long term, we see potential to further expand our store footprint by at least another 1,300-plus stores with our current retailer banners in our existing countries alone."

TJX said that the deal isn't expected to have an impact on its current fiscal year. The company currently has over 4,900 stores across nine countries.

"We believe Home and International expansion represent unique growth opportunities for TJX," Jefferies analysts wrote in a note.

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June 07, 2024 15:26 ET (19:26 GMT)

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