Jefferies conducted a real estate analysis to study the proximity of Macy's 500 stores to Marshalls and T.J. Maxx's 2,500 stores in the US.
The Zhitong Finance App learned that Jefferies thoroughly studied the impact of Macy's (M.US) closing 150 underperforming stores and found that the low-cost clothing retailer TJX Company (TJX.US) may be the best retailer to occupy additional market share.
Analyst Corey Tarlowe and his team conducted a real estate analysis to study the proximity of 500 Macy's stores to the 2,500 Marshalls and T.J. Maxx stores in the US. The company pointed out that Macy's upcoming store overlaps significantly with TJX stores, and sees TJX as a beneficiary of overlapping customers.
“Additionally, when comparing Macy's and TJX customer profiles, we found that the two were comparable in terms of household income: approximately 47% of Macy's shoppers had a household income of more than $100,000, compared to 50% of TJX shoppers. In contrast, Burlington Department Store (BURL.US) and Ross Department Store (ROST.US) had a ratio of only 30% and 34%, respectively.
Macy's announced earlier this year that it will close 150 stores in the next three years and 50 stores by the end of 2024. Meanwhile, the department store released its fourth-quarter earnings report, which showed that revenue declined during the holiday quarter. While Macy's is reducing its total retail area, the company will open 15 new high-end stores at Bloomingdale's and 30 new high-end cosmetics stores at Blue Mercury.
TJX is one of Jefferies's top choices in the retail sector. The agency is optimistic about TJX's view that the company's performance guidelines are conservative and winnable. The company's target price of $120 on TJX is based on the price-earnings ratio of about 26 times the stock price in fiscal year 26, and EV/EBITDA of about 17 times.