TJX Corp a Winner as Consumers Shop Less, Lazard Capital Says

If anything became apparent during the recent stretch of disappointing same-store sales reports and earnings announcements from retailers, its that something consumers are clearly spending less.

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It’s gotten bad enough that Lazard Capital Market’s Jennifer Davis posed the question “What’s happened to the consumer?” in a report released today, as she considers next week’s announcements from American Eagle Outfitters (AEO), Aeropostale (ARO), the Gap (GPS), L Brands (LTD) and TJX (TJX). She writes:

The consumer has clearly cut back spending at department stores and specialty apparel retailers (as we have been saying throughout the quarter). The question is why. We have several theories: (1) a shift in wallet share toward automobiles and houses (see Exhibits 2-4), (2) a lack of meaningful new fashion trends (on top of LY's strong color cycle), and (3) a compressed spring/summer season resulting in less of a need for summer apparel. If theory 3 is the case, then consumers should come out and spend for fall/winter. We will be spending a lot of time in the malls over the next several weeks to try to get a better understanding of the mindset of the consumer.

Thank fully, disappointing announcements from other retailers–as well as earlier guidance lower at American Eagle Outfitters and Aeropostale–have set the bar low for earnings. Guidance, however, will matter. Davis sees in line numbers from Aero Postale and L Brands, a big miss at Aeropostale and higher guidance for the full year from the Gap.

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The big winner in all this, however, should be TJX–regardless of what happens with earnings. Davis writes:

We have gotten mixed reads on TJX, but whether it beats, misses or hits cons 2Q estimates, we believe it is one of the best positioned retailers in the current environment. The general slowdown in specialty and department store sales has resulted in abundant buying opportunities in the marketplace, and we believe off-pricers like TJX are well positioned to capitalize on those opportunities.

TJX has gained 0.7% to %51.12 today at 12:42 p.m., Aeropostale has gained 0.2% to 12.53 unchanged at $12.50, the Gap has dropped 0.1% to $43.49 and American Eagle Outfitters is unchanged at$16.54. L Brands has dropped 0.8% to $59.62.