TJX Companies Inc
TJX Companies Inc. is currently in one of the most secure subsets of the retail industry. The economy is a factor always present in the minds of consumers today, and the retail establishments operated under TJX Companies all cater towards the price conscience customer. They are hitting all ages and genders in the apparel industry in addition to home good products including furniture and accessories. They have expanded to reach many markets, and are continuing their expansion across the United States and throughout international countries in Europe.
Their ability to payout higher dividends than the majority of the competitors in their industry, while still expanding their market segment proves their profitability along with their profit margin. The profit margin experienced by TJX has been increasing rapidly. There perfect placement in the marketplace and their successful current performance proves the strengths which lie with TJX Companies Inc. As of right now, TJX should work on growing their revenue to a higher value. Although the company is increasing in revenue from year to year, they have only jumped 4. %.
A possible weakness right now, the company’s current expansion should turn that around. Even still a stagnant revenue is much better than a declining revenue growth, which in this economy is not uncommon. If their revenue is able to grow, than they can focus on reestablishing their previous inventory method. Due to the economy, TJX restructured their inventory system in order to keep a smaller quantity on hand. With larger revenues and more sales, they will be able to profitably keep larger stocks of merchandising inventory on hand.
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Due to excess inventory in the market, TJX Company is able to selling designer name merchandise at low cost prices. TJX currently operates more than 800 stores by way of owning T. J. Maxx, Marshalls, HomeGoods, A. J. Wright, in addition to T. K. Maxx expanding through Europe, and HomeSense located in Canada. TJX Companies Inc (TJX) is traded on the New York Stock Exchange. Reed Elsevier is the external auditor of TJX Companies Inc.
Industry Attributes: Retail TJX companies, not fitting exactly into a specific industry within could be categorized with family clothing stores even though TJX offers a wider variety of merchandise then many competitors in this industry. TJX currently holds 13. 4% of the industries market share. The retail industry is in the mature stages of its life cycle, allowing little room for growth, although, the increasing trend of price conscious shoppers is increasing, which brings good news for off priced establishments such as TJX Companies.
With the economy as it is, many shoppers are sitting back and watching their spending. Luckily this industry is not taking as great of a hit as many other retail institutions. The two factors which have a great ability to control the performance are population growth rate and per capita disposable income. According to IBISworld. com, the population growth rate is staying on a slight incline, while the per capita disposable income is expected to steadily rise over the next few years.
In addition, consumer sentiment, the measure of consumer confidence, will also affect a households spending. Unfortunately the present economy has delivered weak consumer sentiment across the country. Good news for all shoppers, price deflation has lowered the cost apparel due primarily to outsourcing. With more focus on the conditions and current wages in these cheap production countries, rising minimum wages laws throughout the world will result in an increase cost of production and ultimately higher prices for consumers once again.
Profitability: The past three years have proved to be nothing but good news for TJX Companies. They have experienced growth in their revenue and net income, allowing the company to experience profitable years even through the economic downturn. After a few years of little movement, their stock performance in the first quarter has taken a huge jump from 209. 2 million to 331. 4 million representing a 58% profitability increase. In addition, the companies retained earnings have increased noticeably as well.
The return on assets has been increasing steadily over the past few years proving the companies strength in effectively converting their available investment funds into net income. These positive financial times for TJX can be largely attributed to an increase in consumer spending on the off-price inventory supplied by TJX stores. In addition, TJX Companies recently sold its ownership of Bob’s Stores, and is currently expanding through Europe opening locations in new countries. These changes both convert assets to cash and increase available sales.