TJX Companies (TJX) Q4 FY26 earnings call: guidance and Q&A

How are pricing actions impacting customer reaction, especially with higher ticket prices, and are there demographic differences in response?

Pricing actions are selective and driven by competitive market pricing to maintain a value gap. Higher average retail can also result from a change in merchandise mix, such as offering more 'better goods.' Customer perception of value has actually improved over the last six months, and the company's model allows it to react to market price movements.

“our out-the-door value is still exceptionally strong. We do the -- we always -- and I think I've talked about this before, we do surveys to ensure customer perception of the value is still where -- and in fact, it's actually improved over the last 6 months.”

asked by Lorraine Maikis · answered by Ernie Herrman

What is TJX's ability to accelerate its global offense given market disruption, and how has Q1 started relative to Q4?

TJX is aggressively pursuing market share through enhanced marketing, more aggressive brand acquisition (with vendors seeking TJX), and continuous investment in store experience. Q1 is seeing a continuation of strong performance, with balanced comp growth across all income demographics (above and below $100k) and a favorable skew towards younger customers.

“our marketing teams are very aggressive. We are using marketing as an offensive weapon more than we ever have before.”

asked by Matthew Boss · answered by Ernie Herrman

Why was Q4 SG&A leverage lighter than guided, and what are the expected traffic vs. ticket drivers for the 2-3% comp assumption for FY27?

Q4 SG&A was lighter than guidance primarily due to incentive accruals. Q4 comp was driven by both a higher average basket and increased customer transactions, with transactions up across all divisions except HomeGoods (which was flat but trending up before storms). For FY27, the 2-3% comp assumption is based on a combination of basket and transactions, without planning for one to dominate.

“the Q4 SG&A compared to our guidance is essentially the incentive accrual, plain and simple.”

asked by Paul Lejuez · answered by John Klinger

What are the key drivers for the forecasted merchandise margin improvement in the upcoming year?

Merchandise margin improvement is driven by the company's flexibility to navigate a 'glutted market' of merchandise, allowing buyers to secure optimal deals. Strong liquidity and the ability to benefit from market confusion, such as tariff changes, also contribute. These factors enable both healthy merchandise margins and strong sales by offering exciting value mixes.

“we have the flexibility to bob and weave with a truly glutted market of merchandise, which allows us to wait out which buys are the best buys.”

asked by Brooke Roach · answered by Ernie Herrman

Do you see an opportunity for HomeGoods to catch up to Marmaxx's margin levels, and what are the non-IMU related gross margin drivers for next year?

HomeGoods leveraged 150 basis points in Q4 and 110 basis points for the year, driven by sales leverage, merchandise margin improvement, freight favorability, shrink reduction, and operational efficiencies. While not speculating on reaching Marmaxx levels, HomeGoods is highly driven to improve. Shrink has seen 20 basis point improvements in each of the last two years, returning to pre-COVID levels, and future gains will be harder to achieve.

“HomeGoods, they leveraged 150 basis points in the fourth quarter, and they've leveraged 110 basis points on the year.”

asked by Aneesha Sherman · answered by John Klinger

What are the potential impacts of tariff uncertainty on vendors and channel inventory, and what is the outlook for shrink going forward?

It's too early to determine the full impact of tariff uncertainty on vendors, but potential price adjustments could occur if tariffs are lowered. TJX's model allows it to react to market changes. Shrink has returned to pre-COVID levels after two years of 20 basis point improvements; while efforts continue, future improvements are expected to be less significant.

“We're not taking the foot off the gas here on shrink at all. It's just that now that we're pretty much back to where we were pre-COVID, we're going to continue to look for wins, but I don't think the wins will be as great as they were as we brought it back to where we were pre-COVID.”

asked by Simeon Siegel · answered by John Klinger

Can you elaborate on the drivers of HomeGoods' 6% comp, specifically if new categories or broader trends are contributing to this growth?

HomeGoods' strong performance is widespread across numerous categories. The team has successfully targeted categories where other retailers have reduced their presence, creating demand. Basic categories like bedding, sheets, towels, and utilitarian items (e.g., picture frames, candles) offer strong value. Home is a key strategic advantage for TJX, with HomeGoods being a significant part of the overall home business, known for its impulse-driven shopping experience.

“HomeGoods team has done an amazing job, is going after some of the categories that around us, stores have closed in or downplayed. And so there's this opening need for demand in certain categories that the HomeGoods team has gone after because they have a bit of a captive audience now.”

asked by Jay Sole · answered by Ernie Herrman