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    TJX
    Earnings call· Jan 2025(Q4 FY25)

    TJX COMPANIES INC /DE/ TJX

    Feb 26, 2025 Source

    Executive summary

    The TJX Companies Q4 FY25 — Strong Transaction-Driven Sales and Increased Store Potential

    The TJX Companies delivered an outstanding Q4 FY25, exceeding expectations across sales, profitability, and EPS, primarily driven by strong customer transaction growth across all divisions. The company is confident in its value proposition and ability to gain market share, leading to an increased long-term store potential. While Q1 FY26 guidance reflects some near-term headwinds from FX and tariffs, management remains optimistic about future growth and shareholder returns.

    Highlights

    5

    • Consolidated comp sales growth of 5% in Q4 FY25, driven by strong customer transactions across all divisions.

    • Full-year FY25 overall sales surpassed $56 billion, with diluted EPS of $4.26, up 13% YoY.

    • Increased long-term store potential to 7,000 stores globally, an increase of over 1,900 stores.

    • Planned 13% increase in quarterly dividend to $0.425 per share for FY26.

    • Generated $6.1 billion in operating cash flow and ended FY25 with $5.3 billion in cash.

    Concerns

    4

    • Q1 FY26 diluted EPS expected to be $0.87-$0.89, down from $0.93 last year, due to unfavorable inventory hedges and incremental wage/payroll costs.

    • Unfavorable foreign exchange rates expected to have a 1% negative impact on FY26 consolidated sales growth and a 3% negative impact on FY26 EPS growth.

    • FY26 pretax profit margin expected to be 11.3%-11.4%, down 10-20 bps versus last year, partly due to FX.

    • A small negative impact is assumed in H1 FY26 from current China tariffs on merchandise committed to when these tariffs were in place.

    Guidance & targets

    22
    CategoryTargetConfidence
    Full-year FY26 Comp Store Sales Growth
    2% to 3%
    high materiality
    High
    Full-year FY26 Consolidated Sales
    $58.1 billion to $58.6 billion
    high materiality
    High
    Full-year FY26 Pretax Profit Margin
    11.3% to 11.4%
    high materiality
    High
    Full-year FY26 Gross Margin
    30.4% to 30.5%
    medium materiality
    High
    Full-year FY26 SG&A
    19.3%
    medium materiality
    High
    Full-year FY26 Net Interest Income
    $98 million
    low materiality
    High
    Full-year FY26 Tax Rate
    25.1%
    low materiality
    High
    Full-year FY26 Diluted Earnings Per Share
    $4.34 to $4.43
    high materiality
    High
    Q1 FY26 Comp Store Sales Growth
    2% to 3%
    medium materiality
    High
    Q1 FY26 Consolidated Sales
    $12.8 billion to $12.9 billion
    medium materiality
    High
    Q1 FY26 Pretax Profit Margin
    10% to 10.1%
    high materiality
    High
    Q1 FY26 Gross Margin
    29.8% to 29.9%
    medium materiality
    High
    Q1 FY26 SG&A
    20%
    medium materiality
    High
    Q1 FY26 Net Interest Income
    $27 million
    low materiality
    High
    Q1 FY26 Tax Rate
    23.2%
    low materiality
    High
    Q1 FY26 Diluted Earnings Per Share
    $0.87 to $0.89
    high materiality
    High
    Full-year FY26 Capital Expenditures
    $2.1 billion to $2.2 billion
    medium materiality
    High
    Full-year FY26 Net New Stores
    about 130
    medium materiality
    High
    Full-year FY26 Quarterly Dividend Increase
    13% to $0.425 per share
    high materiality
    High
    Full-year FY26 Stock Buyback
    $2 billion to $2.5 billion
    high materiality
    High
    Long-term Store Potential
    7,000 stores
    high materiality
    High
    Spain Store Openings
    first stores
    low materiality
    High

    Segment performance

    4
    SegmentRevenueYoYQoQMargin
    Marmaxx
    Overall sales for the full year exceeded $34 billion. Full year comp store sales increased 4%. Full year segment profit margin increased to a strong 14.1%. Includes Sierra's strong performance. See plenty of opportunities to open new stores, attract more shoppers and further grow sales.
    Apparel comp sales: increasedHome comp sales: increasedComp sales across all regions: increasedComp sales across all income demographics: increased
    		$34 billion4%—14.1%
    HomeGoods
    Annual sales grew to $9.4 billion. Comp store sales increased 4%. Opened 1,000th store. Segment profit surpassed $1 billion and its margin returned to double-digit levels at 10.9%. Largest off-price home fashions retailer in the United States, with opportunities to capture additional market share with HomeGoods and HomeSense banners.
    Segment profit: surpassed $1 billion
    		$9.4 billion4%—10.9%
    TJX Canada
    Full year sales increased to $5.2 billion. Comp store sales were up 5%. Segment profit margin on a constant currency basis was 13.5%. All three Canadian retail banners delivered similar comp store sales increases. Canada's leading off-price apparel and home fashions retailer, with banners on track for continued successful growth.
    Consistent performance at all 3 retail banners: similar comp store sales increases
    		$5.2 billion5%—13.5%
    TJX International
    Full year sales exceeded $7 billion. Comp store sales increased 4% with strength in both Europe and Australia. Segment profit margin on a constant currency basis was 5.8%. Growing footprint in existing countries in Europe and announced plans to open first stores in Spain in calendar 2026. Expanding T.K. Maxx banner across Australia.
    Strength in Europe: notedStrength in Australia: noted
    		$7 billion4%—5.8%

    Operational metrics

    35
    Cash balance
    $5.3 billion
    end of FY25

    Ended the year with this amount.

    Shareholder returns
    $4.1 billion
    FY25

    Returned through buyback and dividend programs.

    Pretax profit margin (adjusted)
    10.9%
    Q4 FY24

    Adjusted for the extra week in the fiscal calendar.

    Pretax profit margin
    11.6%up 70 bps vs adjusted Q4 FY24
    Q4 FY25

    70 basis points above the high end of plan, primarily due to lower shrink and expense leverage, partially offset by higher incentive compensation accruals.

    Gross margin (adjusted)
    29.5%
    Q4 FY24

    Adjusted for the extra week in the fiscal calendar.

    Gross margin
    30.5%up 100 bps vs adjusted Q4 FY24
    Q4 FY25

    Primarily driven by a benefit from year-end true-up of shrink expense and strong mark-on.

    SG&A
    19.2%up 30 bps vs last year
    Q4 FY25

    Due to incremental wage and payroll costs.

    Net interest income impact on pretax profit margin
    neutralneutral vs last year
    Q4 FY25

    Neutral of pretax profit margin versus last year.

    Diluted EPS (adjusted)
    $1.12
    Q4 FY24

    Adjusted for the extra week in the fiscal calendar.

    Diluted EPS
    $1.23up 10% vs adjusted Q4 FY24
    Q4 FY25

    Well above plan.

    Net sales (adjusted)
    $53.2 billion
    FY24

    Adjusted for the extra week in the fiscal calendar.

    Net sales
    $56.4 billionup 6% vs adjusted FY24
    FY25

    Full year sales.

    Pretax profit margin (adjusted)
    10.9%
    FY24

    Adjusted for the extra week in the fiscal calendar.

    Pretax profit margin
    11.5%up 60 bps vs adjusted FY24
    FY25

    Full year pretax profit margin.

    Gross margin
    30.6%up 70 bps vs adjusted FY24
    FY25

    Full year gross margin. Driven by strong mark-on, lower freight costs and 20 basis points from shrink favorability, partially offset by higher supply chain investments.

    SG&A
    19.4%up 10 bps vs FY24
    FY25

    Full year SG&A. Due to incremental store wage and payroll costs.

    Net interest income impact on pretax profit margin
    neutralneutral vs last year
    FY25

    Neutral to the full year pretax profit margin versus last year.

    Diluted EPS
    $4.26up 13% vs FY24
    FY25

    Full year diluted earnings per share.

    Inventory balance sheet growth
    up 8%
    end of FY25

    Balance sheet inventory growth.

    Inventory per store growth
    up 1%
    end of FY25

    Inventory on a per store basis growth.

    Store growth rate
    about 3%
    FY26

    Expected store growth, bringing year-end total to over 5,200 stores.

    Stores to remodel
    about 500
    FY26

    Planned remodels in fiscal '26.

    Stores to relocate
    approximately 40
    FY26

    Planned relocations in fiscal '26.

    FX impact on consolidated sales growth
    1% negative impact
    FY26

    Expected from unfavorable foreign exchange rates.

    FX impact on pretax profit margin
    20 basis point negative impact
    FY26

    Expected due to unfavorable foreign exchange rates and transactional FX.

    FX impact on EPS growth
    3% negative impact
    FY26

    Expected due to unfavorable translational and transactional foreign exchange.

    Q1 FY26 pretax profit margin deleverage drivers
    100 to 110 basis points
    Q1 FY26

    Explains why Q1 FY26 pretax profit margin is planned lower than the remainder of the year.

    Q1 FY26 gross margin deleverage drivers
    10 to 20 basis points
    Q1 FY26

    Primarily due to unfavorable inventory hedges.

    Q1 FY26 SG&A increase drivers
    80 basis points
    Q1 FY26

    Primarily due to incremental store wage and payroll costs and the lapping of a one-time benefit last year.

    Q1 FY26 net interest income deleverage
    20 basis points
    Q1 FY26

    Expected to delever year-over-year pretax profit margin.

    Last 9 months FY26 pretax profit margin
    flat to up 10 basis points
    last 9 months of FY26

    Implied guidance for the remainder of the fiscal year after Q1.

    Last 9 months FY26 EPS
    up 4% to 6%
    last 9 months of FY26

    Implied guidance for the remainder of the fiscal year after Q1.

    Direct imports from China
    extremely small percentage
    ongoing

    Of the company's business, making tariff impact manageable.

    Vendor base
    over 21,000 vendors
    ongoing

    Source from over 100 countries, with thousands of new vendors added annually.

    Buyers
    1,300-plus buyers
    ongoing

    Global buying organization with deep experience.

    Industry KPIs

    8
    MetricValueDetails
    Sg a OPEX ratio19.4%%
    Comparable sales5%%
    Store count growth5,000stores
    Gross margin drivers30.5%%
    Share buyback capital return$4.1 billionUSD
    Inventory position markdown riskup 8%%
    Same sku like for like inflationsmall negative impact
    Distribution supply chain cost economicshigher supply chain investments

    Deals & partnerships

    2
    Grupo AxoNewly formed joint venture in Mexico.

    The joint venture is seen as a great way to participate in the growth of off-price in Mexico.

    Brands for LessInvestment in Brands for Less in the Middle East.

    The investment is seen as a great way to participate in the growth of off-price in the Middle East.

    Risks & headwinds

    5
    Unfavorable Foreign Exchange RatesFY26

    1% negative impact to FY26 consolidated sales growth; 20 basis point negative impact to FY26 pretax profit margin; 3% negative impact to FY26 EPS growth.

    Mitigation: Implied in guidance, but not explicitly detailed.

    China TariffsFirst half of FY26

    Small negative impact.

    Mitigation: Management is confident in navigating the environment, leveraging experience with past tariffs and flexible buying strategies for future buys.

    Incremental Wage and Payroll CostsQ4 FY25, Q1 FY26

    Q4 FY25 SG&A up 30 bps; Q1 FY26 SG&A up 80 bps.

    Mitigation: Managed within SG&A guidance, with a benefit from annualization of higher incentive compensation accruals in FY26.

    Unfavorable Inventory HedgesQ1 FY26

    Q1 FY26 Gross Margin down 10 to 20 basis points.

    Mitigation: Not explicitly stated.

    Unfavorable WeatherStart of Q1 FY26

    Not quantified, but noted as 'not favorable to the start of the quarter'.

    Mitigation: Performance improved as weather normalized.

    What to watch in Q1 FY26

    5

    Q1 FY26 Comp Sales Growth

    next quarter
    Current2% to 3% (planned)
    TargetAchieve 2% to 3% growth

    Why it matters

    Verifies initial sales momentum for the new fiscal year, especially after weather normalization.

    We expect overall comp store sales to increase 2% to 3%. While weather was not favorable to the start of the quarter, we have been pleased with what we've seen recently as weather has normalized.

    Q&A highlights

    6

    What drove the stronger performance in Canada and International, and do you expect these businesses to continue to outperform in the coming year?

    The strong Q4 performance in Canada and International was due to tactical execution of flow plans, particularly shipping fresh merchandise late before Christmas, and a beneficial mix of gift categories. Both divisions also saw healthy home businesses. Management expects continued strong execution from seasoned management teams in these regions.

    “Yes, we've seen both of them continuing to -- very happy with the way they've been performing, and they both have really some seasoned management across those areas.”

    asked by Paul Lejuez · answered by Ernie Herrman

    2 min read6 chapters

    Detailed Narrative

    01

    Strong Q4 Performance Across Divisions

    The TJX Companies reported an outstanding fourth quarter, with consolidated comp sales growth of 5%, significantly exceeding expectations. This growth was consistently strong across all divisions, with each achieving comp sales increases of 4% or above, notably TJX Canada at 10% and TJX International at 7%. This performance was entirely driven by an increase in customer transactions, highlighting the strength of the company's value proposition and its ability to gain market share.

    02

    Full Year FY25 Highlights and Milestones

    For the full fiscal year 2025, overall sales surpassed $56 billion, marking a 6% increase over the prior year's adjusted sales. Consolidated comp store sales were up 4%, also driven by customer transactions. Diluted earnings per share reached $4.26, representing a 13% increase year-over-year. A significant milestone was achieved with the opening of the company's 5,000th store globally, underscoring its continued expansion.

    03

    Healthy Inventory and Merchandise Availability

    The company ended FY25 with a healthy inventory position, with balance sheet inventory up 8% but only 1% on a per-store basis. Management expressed confidence in current inventory levels and the outstanding availability of merchandise in the marketplace. This strong position is expected to facilitate the flow of fresh assortments to stores and online platforms for the upcoming spring season, supporting continued sales momentum.

    04

    Strategic Growth Initiatives and Store Expansion

    TJX is increasing its long-term store potential to a total of 7,000 stores globally, representing an addition of over 1,900 stores in existing and announced geographies. This includes plans for HomeGoods to expand to 1,800 stores, Sierra to 325 stores, and Spain to 100 stores. The company also highlighted new strategic partnerships, including a joint venture with Grupo Axo in Mexico and an investment in Brands for Less in the Middle East, aimed at participating in global off-price growth.

    05

    Navigating Tariffs and Market Conditions

    Management conveyed confidence in its ability to navigate the current China tariff environment, noting that direct imports from China represent an extremely small percentage of its business. They emphasized that their flexible business model and buyer approach, which focuses on retail pricing and then working backward to cost, allows them to adapt. The current market conditions, characterized by consumer confidence slowdowns and competitor store closures, are seen as creating increased buying opportunities for TJX.

    06

    Commitment to Shareholder Returns

    In FY25, TJX returned $4.1 billion to shareholders through its buyback and dividend programs. For FY26, the company plans to continue this commitment by increasing its quarterly dividend by 13% to $0.425 per share. Additionally, it expects to buy back between $2 billion and $2.5 billion of its stock, demonstrating a strong focus on delivering value to shareholders.

    AI-generated summary of the company’s earnings call. Not investment advice.