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A Narrow-Moat Retailer at a Bargain-Basement Price

The recent decline in same-store sales growth at TJX is being driven by temporary weather trends and not an erosion of the firm's moat.

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Bridget Weishaar: TJX [Companies] is my top pick in the apparel retail space. It sells clothing at a 20% to 60% discount to brand prices, and it's really in the sweet spot right now of what consumers are looking for. The consumer has been very, very cautious in spending and really focused on finding the best value for their money. TJX is sitting squarely in that spot.

We have given the stock a narrow moat rating, and we think that it has sustainable competitive advantages due both to scale and to cost advantages. In scale, they have 900 buyers shopping 16,000 vendors, and that really gives them an upside over their competitors in finding the best merchandise out there and stocking their stocks.

Bridget Weishaar does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

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