Deutsche Bank Expect Apparel Sector to Remain Strong
Monday, October 03, 2021 4:11 PM

Analysts at Deutsche Bank believe that with off-price product flow continuing strong in comin g month as in September, several apparel companies including TJX Cos., Inc. (NYSE: TJX) and Ross Stores Inc. (NYSE: TJX) should beat Wall Street consensus in growth.  They maintain Buy rating with $61 price target on TJX and Hold rating with $80 PT on Ross.


DB analysts state that they are expecting TJX to be at 3.5 percent to 4 percent, better that consensus of 2.8 percent. For Ross, they believe, they expect a 3 percent to 4 percent versus 1 percent to 2 percent plan and 2.7 percent consensus. They add that they are looking for average September competitions ahead of the +2.4 percent expected by the Street.  They state that key driver include mostly seasonal weather, a ramp in discounting and promotions, and some higher product pricing. They add that the pressures include flat-lined employment, waning consumer incomes, and generally higher cost trends.  They state that TJX with its positive product availability thesis and potential second half competition or margin outperformance. They add that the positive aspects involving apparel sector include the US apparel sales remaining resilient, pricing of cotton declining and growth in internet sales. They add that the negative aspects include industry valuation remaining closer to historic averages than recession levels and slowdown in Asia.


On a year-to-date basis, TJX has a share performance of 27.44 percent, and as compared to Standard & Poor’s 500, it has an YTD share performance of 41.03 percent. Ross has an YTD share performance of 25.74 percent and as compared to S&P’s 500, it has YTD share performance of 39.15 percent.


Shares of TJX fell 2.36 percent or $1.33 to trade at $54.14. Shares of Ross Stores were down 2.60 percent or $2.05 to trade at $76.64.