FRAMINGHAM, Mass. - The TJX Companies, Inc. (NYSE:TJX), a global off-price apparel and home fashions retailer, announced its entry into a joint venture with Grupo Axo, S.A.P.I. de C.V., a retailer operating in Mexico and South America. The partnership will see TJX owning a 49% stake and Grupo Axo the majority 51% share, focusing on Axo's existing off-price store business in Mexico.
The joint venture encompasses over 200 stores under the Promoda, Reduced, and Urban Store banners. The transaction, subject to customary closing conditions and antitrust clearance in Mexico, is slated for completion later in the year, with financial terms to be disclosed post-closing.
Ernie Herrman, CEO and President of TJX, expressed enthusiasm for the expansion into Mexico, highlighting the potential for growth in the region and the opportunity to deliver value to a new customer base. Andrés Gómez, Co-Founder, Chairman & CEO of Axo, also conveyed excitement about partnering with TJX to enhance the off-price retail experience in Mexico.
The partnership is not expected to materially affect TJX's sales, profit, or earnings per share guidance for Fiscal Year 2025. Grupo Axo is noted for its extensive retail presence, including apparel, fashion accessories, and beauty products sold through numerous points of sale and boutiques across multiple Latin American countries.
BofA Securities and Ropes & Gray LLP are advising TJX on financial and legal matters, respectively, regarding the transaction.
TJX operates over 4,900 stores internationally, including well-known chains such as TJ Maxx, Marshalls, and HomeGoods. The company's mission is to offer quality, brand name, and designer merchandise at significantly lower prices than full-price retailers.
This press release statement serves as the source for the information reported.
In other recent news, The TJX Companies reported strong first-quarter results for fiscal year 2025, exceeding expectations. The company saw a 3% increase in comparable store sales, driven by higher customer transactions, and reported higher pretax profit margins and earnings per share than anticipated. Furthermore, TJX provided full-year fiscal '25 guidance with consolidated sales expected between $55.5 billion and $55.9 billion and comparable store sales growth of 2% to 3%.
In addition, TD Cowen maintained a positive stance on TJX, reiterating a Buy rating and a $120.00 stock price target. The firm's analysis indicates that TJX, particularly its Marmaxx segment, is performing stronger than initially expected. TD Cowen has adjusted its fiscal year 2025 earnings per share estimate for TJX to $4.15, up from $4.12, based on an anticipated total comparable sales increase of 3%.
These recent developments underscore TJX's robust position in the retail environment, with a potential for gross margin expansion and bottom-line growth. The firm's confidence in TJX's ability to outperform expectations is rooted in the company's strategic inventory management and the favorable buying environment.
InvestingPro Insights
As The TJX Companies, Inc. (NYSE:TJX) ventures into a promising joint venture with Grupo Axo, the financial health and market performance of TJX remain pivotal factors for investors. With a robust market capitalization of $120.85 billion and a forward-looking P/E ratio of 25.97, TJX stands as a heavyweight in the retail sector. The company's revenue growth is also notable, with a 9.14% increase over the last twelve months as of Q1 2023, underscoring its ability to expand its top line effectively.
An InvestingPro Tip highlights TJX's consistency in rewarding its shareholders, having raised its dividend for 3 consecutive years. Additionally, the company's dividend yield as of mid-2024 is 1.4%, with a dividend growth of 12.78% over the last twelve months as of Q1 2023, signaling a commitment to returning value to its investors.
Another InvestingPro Tip points out that TJX operates with a moderate level of debt, which is a reassuring sign for investors concerned about financial stability, especially when entering new ventures like the partnership with Grupo Axo. Moreover, TJX's prominence as a key player in the Specialty Retail industry is reflected in its strong return over the last decade, further bolstering investor confidence in the company's long-term performance.
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