Some might say that the prevailing economic climate over the past several months has been torture, but TJX (NYSE: TJX) wouldn't use that word to describe the environment. The recession has been more like tickle-torture than anything else for the discount retailer of apparel and home fashions. The company reported impressive results for its fiscal second quarter, but whether you should buy TJX depends on a few key factors about the future.

Sales grew by 4% to $4.7 billion on higher foot traffic. President and CEO Carol Meyrowitz declared, "We saw strength across the board, with virtually all of our divisions either meeting or exceeding our second quarter targets." Sales for its stores in Europe and Canada suffered from foreign currency exchange rate fluctuations, but even so, earnings landed at $0.61 per share, an improvement of 27% compared with the same quarter last year.

TJX vs. the Street
However, management provided conservative full-year guidance of $2.26 to $2.38 per share, which is more or less in line with analysts' expectations. Quarterly earnings beat consensus estimates by a penny -- driven by fundamental improvements in TJX's gross and operating margins. That's promising because it's pretty easy to take action on below-the-line items like overhead, but it's no small feat to exceed expectations through key-margin expansions and top-line growth.

Still, because of its off-price nature, TJX has relatively lackluster gross margins compared with some of its key competitors.

Company (Ticker)

Gross Margin (TTM):

Macy's (NYSE: M)

40%

J.C. Penney (NYSE: JCP)

38%

Kohl's (NYSE: KSS)

37%

Target (NYSE: TGT) Continued...