TJX Misses by a Penny

Europe posted strong results, too. T.K. Maxx in the U.K. and Ireland comped up 4% in local currency, with an 8.3% margin. Germany is exceeding plan, with inventory turns equal to the U.K. despite a smaller store based. HomeSense launched in the U.K. and should have seven stores by year end. Similar to the U.S., there are seeing many real estate opportunities to accelerate growth.

Probably more discouraging to investors was the slice that management took out of forward guidance. The fourth quarter is a bit confusing, because it contains a fifty-third week, which confounds comparability, but management gave two sets of numbers to help with attemots at analysis. The bottom line is that the company sees EPS between 68 cents and 72 cents for the quarter, a bit below the 74-cents consensus. Comps should be flat to down 2%, excluding foreign exchange effects, with a flat gross margin, excluding inventory hedges. Foreign exchange is definitely a headwind, since the company expects it to knock upward of 5 percentage points out of comps for the next three months.

All things considered, the quarter wasn't too bad, and TJX is certainly better positioned in our trade-down economy than its high-end brethren. Despite relatively good results, TJX is taking the severity of the environment seriously and is taking action on expenses, inventory and buying in order to capitalize on other retailers' distress. Investors will need to pass judgment on retail as a whole, but TJX should be able to outperform the group through the depths of this recession.

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Know What You Own: TJX operates in the department store industry, and some of the other stocks in its field include Kohl's (KSS - commentary - Cramer's Take), Sears Holdings (SHLD - commentary - Cramer's Take), JCPenney (JCP - commentary - Cramer's Take), Macy's (M - commentary - Cramer's Take), Dillard's (DDS - commentary - Cramer's Take) and Saks (SKS - commentary - Cramer's Take). For more on the value of knowing what you own, visit TheStreet.com's Investing A-to-Z section.

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At the time of publication, Dvorchak was long/short..., although positions can change at any time.

Gary Dvorchak is a managing partner of Aviance Capital Management, a Sarasota, Fla.-based institutional asset manager that manages $200 million in growth and value equities and fixed income. Dvorchak holds a master's degree in business administration from Northwestern University and a bachelor's degree in computer science from the University of Iowa.