After several years of making steady market share gains at department stores' expense, off-price giant TJX Companies (TJX -1.50%) stumbled last year. Through the first three quarters of fiscal 2018 (which mainly corresponded to the 2017 calendar year), comp sales rose a little more than 1%, compared to 5% full-year comp sales increases in fiscal 2016 and fiscal 2017. As a result, TJX stock didn't participate in the broader 2017 market rally.

However, TJX got back on track in the fourth quarter, posting a solid 4% comp sales increase. This drove double-digit earnings-per-share growth.

In 2018, TJX will benefit from a lower tax rate and easier year-over-year comparisons. It is also likely to be one of the biggest beneficiaries of Bon-Ton Stores' (NASDAQ: BONT) pending liquidation. This could send TJX stock to new heights later this year.

A big sales opportunity awaits

Bon-Ton never reported full-year results for 2017 due to its early February bankruptcy filing, but it brought in $2.36 billion of revenue in the first 11 months of the fiscal year. This means that full-year revenue probably came in just north of $2.5 billion.

The exterior of a Bon-Ton department store

Bon-Ton Stores recently filed for liquidation. Image source: Bon-Ton Stores.

That's just a fraction of TJX's full-year revenue of $35.9 billion or even its domestic revenue of $27.4 billion. Nevertheless, it's a substantial sum -- and it's going to be up for grabs, now that Bon-Ton has been forced to liquidate rather than restructure in bankruptcy. If TJX can pick up a big chunk of this business, it would have a meaningful positive impact on revenue and earnings growth beginning around mid-year.

Fortunately, TJX is well positioned to capture revenue that would otherwise have gone to Bon-Ton, due to its massive retail footprint. In fact, 42% of Bon-Ton's locations are within a mile of a TJX store -- including the T.J. Maxx, Marshalls, and HomeGoods chains -- and 74% are within five miles of a TJX store.

By contrast, Ross Stores (ROST -2.82%) -- the No. 2 off-price retail company -- has far less store overlap with Bon-Ton. Barely more than a quarter of Bon-Ton's stores are within five miles of a Ross Dress for Less. That's because Ross Stores is still in the middle innings of its growth trajectory in the Midwest and has barely any presence in the Northeast.

TJX also has plenty of merchandise overlap with Bon-Ton. Indeed, TJX stocks high-quality department store merchandise, but sells it at a big discount.

Cheap merchandise will be plentiful

Bon-Ton's bankruptcy will also help TJX on the supply side of its business. Whereas Ross Stores makes extensive use of "packaway" merchandise purchased at the end of a season and held until the beginning of the same season a year later, TJX mainly focuses on buying excess merchandise that becomes available during the season and getting it into stores quickly.

A woman pushing a merchandise-filled cart outside of a Marshalls store

Bon-Ton's liquidation will make more merchandise available for TJX this summer. Image source: Marshalls.

This strategy tends to deliver its best results during periods of disruption. The liquidation of a sizable department store chain would certainly count. Merchandise that would have gone to Bon-Ton will be available at a discount from suppliers over the next several months.

Indeed, the next few quarters could be particularly good for TJX because there will be ample inventory of low-priced merchandise despite a strong economy and a favorable competitive environment. Typically, the best inventory availability comes at times when the economy is struggling and retailers are all offering huge discounts to drive customer traffic and sales.

Primed for profit growth

TJX's forecast for the new 2019 fiscal year calls for adjusted earnings per share of $4.73 to $4.83, up from $3.85 last year. Most of this EPS growth will be driven by tax savings related to corporate tax reform. Based on this guidance range, TJX stock currently trades for about 17 times earnings.

However, this forecast is based on an assumption of 1% to 2% comp sales growth. TJX tends to provide extremely conservative sales forecasts that it can then exceed. Fiscal 2018 was unusual in that the company matched (rather than beating) the high end of its sales guidance.

The combination of easy comparisons and market share gains from the Bon-Ton liquidation should enable TJX to get comp sales growth back to a mid-single-digit pace this year. That could boost EPS to $5 or more and get investors more excited about TJX stock -- potentially pushing the share price into triple-digit territory.