Retail sales have rebounded strongly in 2021. Brick-and-mortar chains have done especially well, as many consumers eagerly returned to their old shopping habits after receiving their COVID-19 vaccinations. TJX Companies (TJX 1.58%) took full advantage last quarter, as sales and earnings surged well above pre-pandemic levels. Let's take a look.

TJX returned to growth earlier this year

In the first quarter of its 2022 fiscal year, TJX reported that "open-only" comparable store sales -- which exclude stores that were temporarily closed -- rose 16% compared to the same period two years earlier. Total sales more than doubled year over year to a first-quarter record of $10.1 billion.

That said, total sales in Q1 "only" increased 9% over the prior high logged two years ago (fiscal 2020). Moreover, while TJX's earnings per share of $0.44 crushed analysts' estimates, the company had posted EPS of $0.57 two years earlier. Management attributed the earnings decline to the impact of lingering store closures on sales outside the U.S., especially in Europe.

Growth accelerates

TJX posted even stronger open-only comp sales growth of 20% for the second quarter (again compared to fiscal 2020). The HomeGoods unit led these gains with a 36% increase, but all four of TJX's business segments delivered double-digit open-only comp sales growth.

The exterior of a HomeSense store.

Image source: TJX Companies.

Importantly, the impact of store closures faded significantly last quarter. The company's stores were closed for an average of 3% of the second quarter, compared to 14% of the first quarter. As a result, TJX's total sales skyrocketed 23% relative to Q2 of fiscal 2020 and 81% year over year, reaching $12.1 billion. On average, analysts had expected sales of just $11 billion.

Meanwhile, adjusted EPS soared to $0.79, excluding a one-time debt extinguishment charge of $0.15 per share. This exceeded the off-price retail giant's Q2 2020 EPS of $0.62 by about 27% and beat the analyst consensus of $0.57 by a staggering 39%.

While temporary store closures had a smaller impact last quarter than in the first quarter, management estimates that they still caused TJX to miss out on $300 million to $350 million of sales in Q2. That likely reduced EPS by $0.05 to $0.07. Additionally, the company had to absorb abnormally high freight costs last quarter. This weighed particularly heavily on the HomeGoods unit (which tends to deal in bulkier items). In other words, TJX's reported results understate its underlying profitability, if anything.

Plenty of upside left for long-term shareholders

TJX may not be a particularly exciting stock, but it has been a reliable winner for investors for a quarter of a century. TJX shares jumped another 6% after the company's impressive second-quarter earnings report, reaching a new all-time high.

TJX Chart

TJX Companies stock performance, data by YCharts.

Management chose not to provide formal guidance for the third quarter or full year, given the significant uncertainty associated with the recent surge of COVID-19 cases (especially in the U.S.) due to the delta variant. That said, sales trends have remained strong in August, with open-only comp sales up "mid-teens" compared to Q3 of fiscal 2020 so far.

Furthermore, management was confident enough to increase its plan for share buybacks this fiscal year by $250 million, to a range of $1.25 billion-$1.5 billion. TJX's cash balance has swelled by nearly $5 billion over the past two years -- versus a $1.1 billion increase in its debt -- so share buybacks will likely accelerate over the next few years.

Even after its big gain on Wednesday, TJX stock trades for just 23 times forward earnings. And given the company's penchant for beating analysts' estimates, the stock may be even cheaper than it appears. That leaves plenty of room for share-price appreciation as TJX continues to increase its store count, boost sales at existing locations, and expand its profit margin over the next decade.