by boolean_10
- What is TJX -> It’s a company that owns TJ Maxx, Marshalls, and Homegoods. These are discount stores that sell clothing and assorted other stuff, mostly to women. They do well when the economy is strong, weak, neutral, etc. They recovered fast after the financial crisis. “and as e-commerce can’t replace the off-price experience of bargain hunting in stores. Likewise, diverse assortments drive high sourcing and warehousing costs making off-price profitability difficult to replicate online, and off-price shares are often perceived as a step removed from U.S. trade tensions as well as recession proof.” ( source)
- Why Now -> Q1 earnings were posted at the end of May and obviously were poor. Really you should have gotten in last week but what is the market without some FOMO. Basically, they shut down everything over the bat flu, including their online sales and now they are beginning to open up some stores with all to be open by the end of June. There share price jumped significantly on Friday and has continued to go up in after hours. This with a better than expected jobs report bodes well for their sales. They are almost at pre-pandemic prices and as such, getting in soon makes more sense than trying to play Q2 earnings.
- Who Shops There -> Women, mostly, although they stock men’s clothing too. These stores are popular with a pretty wide age range, check out their twitter page to get an idea/sentiment. The pent up demand is real. People are waiting outside the store to get in and checkout lines can take up to an hour. These stores are being completely cleared out.
- The actual DD -> They are starting to buy merchandise from Macy’s because of how fast they are selling their own merchandise. I confirmed this today (speaking with several managers at local stores). I have heard rumors that they have also been buying JC Penneys and Pier 1 merchandise but I don’t have any sources for that yet.
Links:
Fox complaining about social distancing with “hordes of shoppers”
TLDR: Rona cancelled, pent up demand turned out to be real.
I think they will be at their pre-‘rona price long before Q2 earnings, that said:
Positions: 6/19 60C, 7/17 60C, selling at the money puts as the price goes up. Don’t go too far above 60 (in my opinion).
Disclaimer: This information is only for educational purposes. Do not make any investment decisions based on the information in this article. Do you own due diligence.
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