Foolish Forecast: TJX Marshals Another Win

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Low-price retailer TJX (NYSE: TJX) has benefited hugely from U.S. consumers' increased cost-consciousness. Last week, TJX confirmed that first-quarter results will be no exception, as shoppers increasingly frequent its T.J. Maxx and Marshall's stores. Investors will watch for signs of further upside when TJX reports results tomorrow. Here's what to expect.

What analysts say:

• Buy, sell, or waffle? Nineteen analysts currently follow TJX; 10 are bullish on the stock, while nine have hold ratings. The Motley Fool CAPS community has given TJX a three-star rating (out of five stars).
• Revenue. Analysts project $4.4 billion in first-quarter sales, for 6.6% year-over-year growth.
• Earnings. Analysts expect quarterly earnings of $0.40, an 8.1% increase from the $0.37 reported in last year's quarter.

What management says:
Last week, TJX posted better-than-expected April sales results, as total sales jumped 12% and same-store sales increased 8%. This pushed total first-quarter sales up 6%, which management attributed to its "value proposition, offering customers the combination of great fashion, quality, brand and price, [which] continues to serve us well, even in a challenging consumer environment." As a result, the company boosted its first-quarter earnings projections to between $0.40 and $0.41.

What management does:
TJX hardly boasts the highest margins in the business. Over the past 12 months, department-store competitors such as Kohl's (NYSE: KSS) and J.C. Penney (NYSE: JCP) have notched higher gross, operating, and net profits than TJX. Upscale Nordstrom (NYSE: JWN) rules the roost, with a net margin almost twice that of TJX. However, consistency pays, and TJX is one of the few retailers holding up in the current challenging environment.  

Margins	11/06	01/07	04/07	07/07	09/07	01/08
Gross	24.1%	24.1%	24%	24.1%	24.1%	24.5%
Operating	7.4%	7.3%	7.2%	6.2%	6.2%	6.7%
Net*	4.9%	4.2%	4.2%	3.7%	3.7%	4.1%

All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
Discounting is back in fashion, thanks to the slowing economy, and it's benefiting operators such as TJX, Wal-Mart (NYSE: WMT), and Costco (Nasdaq: COST). It's anyone's guess how long this trend will last, but inevitably, domestic consumers will regain their footing and start spending like there's no tomorrow. From an investment standpoint, the more economically sensitive retailers like Kohl's and mall-based apparel providers such as Abercrombie & Fitch (NYSE: ANF) probably have more upside when the cycle does turn, but there's nothing wrong with staying defensive-minded. In that regard, TJX has served shareholders well, with high single-digit sales and cash flow growth over the past five years.

For more related Foolishness:

• Another Good Buy at TJX?
• Business Models Generate Winning Investments
• TJX to the Maxx