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LivestreamMenuWe are buying 100 shares of TJX Companies at roughly $140.50. Following the trade, Jim Cramer’s Charitable Trust will own 950 shares of TJX, increasing its weighting in the portfolio to 3.4% from about 3%. We’re picking up shares of TJX Companies as we think management will quickly fix inventory issues and reaccelerate comparable sales growth at its key Marmaxx division, which includes T.J. Maxx, Marshalls, and Sierra stores. Shares of the off-price retailer have dropped roughly 7% in the past three sessions after reporting mixed earnings on Wednesday. It was mostly a typical TJX quarter, with companywide comparable sales growth and adjusted earnings per share above the high end of management’s forecast. However, investors took issue with the 1% comp growth at Marmaxx. Importantly, the rest of TJX’s divisions delivered comp growth of 6% to 7%. When asked what went wrong at Marmaxx, management explained the divison suffered from a self-inflected wound of having the wrong “mix,” or assortment of inventory, and missed demand in a bunch of categories. Essentially, Marmaxx didn’t have enough inventory where demand was strongest, and it had too much of what wasn’t as popular. We’re giving TJX a pass and buying into this sell-off for a few reasons. First off, the company has already identified the affected categories and implemented additional planning and monitoring processes to prevent it from happening again. Given TJX’s long track record of success, this should be a temporary issue. Also, the company has already seen an improvement in August, which is a good signal that they have already put this problem in the rearview mirror. While investors may look at this week’s results from off-price rival Ross Stores and Target and conclude that TJX is losing share, we believe the company’s plan to accelerate new store openings is evidence that management remains confident in the brand and value proposition. (Jim Cramer’s Charitable Trust is long TJX. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.Read More
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