In the cutthroat retail sector, it seems that most companies are either on top of their game -- think Target (NYSE:TGT) or Best Buy (NYSE:BBY) -- or not in the game at all, as in the case of poor Pier 1 (NYSE:PIR). TJX (NYSE:TJX), operator of the T.J. Maxx, Marshalls, HomeGoods, and A.J. Wright chains, definitely seems to be in the former camp.
On Thursday, the company reported October sales up 10% over last year and 9% higher for the 39-week period ended Oct. 28. Perhaps most importantly, same-store sales rose 5% for the month.
Shareholders should see little to complain about there. Management reported that October's results exceeded even its own expectations. TJX now expects third-quarter earnings per share top the company's previous estimation of $0.44-$0.45.
While figures aren't broken down for each store concept, management did comment that Marshall's and TJ Maxx (Marmaxx, for short) provided much of the "oomph" behind October's results. Are they hinting that sales didn't come through as expected from the smaller concepts? It's difficult to say, but I find it reassuring that Nathan Parmelee's July commentary on TJX's concept chains noted strong results.
TJX shares are valued at more than 18 times trailing-12-month earnings, and they pay a 1% dividend yield, matching the valuations and yields of similar apparel companies. Considering the company's 10% long-term growth rate, and the current P/E ratio nearly twice that, I don't sense a bargain at this point. However, I do like management's willingness to experiment with new store concepts. If even one of those pays off, I'm sure TJX stands to see improved growth in the years to come.
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Fool contributor Jason Ramage holds no financial interest in the companies mentioned here.
