Apparel retailers TJX Companies (TJX) and Foot Locker (FL) are set to deliver quarterly results this week, as consumers continue to be squeezed by a slowing economy and still-persistent inflation. But the Club holdings are well-positioned to navigate an increasingly complicated economic landscape, while retaining customer loyalty — and we remain long-term buyers of each. Off-price retailer TJX reports first-quarter earnings on Wednesday before the opening bell and analysts expect revenue to have climbed by 3.5 % year-over-year, to $11.80 billion, while earnings-per-share (EPS) should have risen by 4.4 % to 71 cents, according to Refinitiv. Sneaker retailer Foot Locker reports Friday before the opening bell, with Refinitiv estimates showing revenue should have fallen by 8.3 % annually, to $1.90 billion, with EPS falling 49 % to, 81 cents. Both earnings reports come as new government data Tuesday showed U.S. retail sales in April grew at a slower rate than expected. Inflation , meanwhile, continued to rise last month on an annual basis, even as the data showed the pace of price rises is cooling. TJX Companies TD Cowen favors TJX over competitors Ross Stores (ROSS) and Burlington (BURL), with an outperform, or buy, rating and price target of $89 per share. “Our intra-quarter checks with industry consultants suggested TJX appearing to be the best positioned from an execution and inventory standpoint,” analysts at TD Cowen wrote in a recent note. They expect TJX to deliver a first-quarter earnings beat and raised their growth estimate for total comparable sales to 2.3%, up from 1.3%. The analysts noted that TJX beat consensus sales estimates by more than 3%, on average, over the past eight quarters, while beating on EPS in seven of those quarters. TJX YTD mountain TJX’s stock performance year-to-date. At the same time, home-goods retailer Bed Bath & Beyond’s recent bankruptcy creates an opening for TJX to gain market share by mopping up BB & B’s excess inventory, according to TD Cowen. TJX, which operates stores like T.J. Maxx, Marshalls and HomeGoods, is “likely uniquely positioned to benefit from these opportunities,” the analysts wrote. That’s a position we share . Telsey Advisory Group expects “continued outperformance given the strength of the company’s execution” but said TJX’s home business “remains a soft spot,” with post-pandemic consumer spending still normalizing. Still, the analysts said high-quality brands are helping TJX gain “further market share of the consumer’s wallet” in a challenging economy. The firm has an outperform rating on TJX stock, with a price target of $95 per share. Foot Locker CEO Mary Dillon, who took over the top job at the start of the year, is in the process of implementing her “Lace Up” turnaround plan that includes diversifying the company’s offerings away from Nike to include popular brands like On, Hoka and Puma. As part of the restructuring, Foot Locker plans to exit 400 underperforming stores, wind down…
Read More: Here’s what to expect when TJX and Foot Locker report this wek