By Juveria Tabassum
(Reuters) -TJX Cos raised its outlook for fiscal 2024 on Wednesday, buoyed by steady sales of its discount apparel and accessories and an uptick in demand for home decor goods.
The company's shares were up as much as 5% after it topped second-quarter revenue and profit expectations.
Signs of cooling inflation have boosted demand at off-price retailers such as TJX (NYSE:TJX), which offers brands ranging from Jimmy Choo to Alexander McQueen at discounts between 20% and 60%.
U.S. comparable sales at the apparel and accessories segment Marmaxx rose 8% in the second quarter, supported by a rebound in its HomeGoods outlets, where comparable sales rose by 4%.
"Bed Bath & Beyond (OTC:BBBYQ)'s bankruptcy has also created an opening for TJX's HomeGoods banner to grab market share, helping rejuvenate it after several lackluster quarters," said Insider Intelligence analyst Rachel Wolff.
The HomeGoods owner also benefited freight costs easing sharply, as gross profit margins rose 2.6 percentage points from a year earlier to 30.2% in the quarter ended July 29.
Data from Placer.ai showed foot traffic at T.J. Maxx and Marshalls saw a roughly 17% spurt in June and July as "Back-to-School" shoppers hunted for bargains on schools supplies.
"The third quarter is off to a very strong start," said CEO Ernie Herrman, adding that healthy buying opportunities and a diverse mix of products held TJX in good stead as the holiday season approached.
The T.J. Maxx parent now expects annual adjusted profit for fiscal 2024 between $3.56 and $3.62 per share, compared with its previous forecast of between $3.39 and $3.48 per share.
Beyond offering value to customers, TJX is "becoming increasingly important to brands," BMO Capital Markets analyst Simeon Siegel said, at a time when top brands are attempting to trim their inventories, helping TJX snap up merchandise at lower prices.