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    TJX
    Earnings call· Jul 2025(Q2 FY26)

    TJX COMPANIES INC /DE/ TJX

    Aug 20, 2025 Source

    Executive summary

    The TJX Companies, Inc. Q2 FY26 — Strong Sales and Profitability Exceed Expectations

    The TJX Companies delivered an outstanding second quarter, driven by strong comparable sales and robust profit margins, leading to an upward revision of full-year guidance. The company's flexible off-price model, effective tariff mitigation, and strong customer value perception are key to its consistent performance and market share gains, despite some expense timing shifts impacting the third quarter outlook.

    Highlights

    5

    • Consolidated comparable sales increased 4% in Q2 FY26, exceeding internal plans and showing strength across all divisions.

    • Diluted earnings per share rose 15% to $1.10 in Q2 FY26, significantly above expectations.

    • Pretax profit margin reached 11.4% in Q2 FY26, up 50 basis points year-over-year and 90 basis points above the high end of the company's plan.

    • Customer transactions increased at every division in Q2 FY26, highlighting the strong appeal of the company's value proposition.

    • Merchandise margin remained flat in Q2 FY26 despite higher tariff costs, attributed to effective mitigation strategies.

    Concerns

    4

    • SG&A expenses in Q2 FY26 benefited from the timing of certain costs, with some expected to reverse in Q3 FY26.

    • Net interest income negatively impacted Q2 FY26 pretax profit margin by 10 basis points year-over-year.

    • Full-year FY26 diluted EPS guidance includes a negative 1% impact from unfavorable foreign exchange rates.

    • Q3 FY26 pretax profit margin is projected to decline by 20 to 30 basis points year-over-year, partly due to the aforementioned expense timing reversal.

    Guidance & targets

    22
    CategoryTargetConfidence
    Full-year FY26 overall comparable sales growth
    3%
    high materiality
    High
    Full-year FY26 consolidated sales
    $59.3 billion to $59.6 billion
    high materiality
    High
    Full-year FY26 pretax profit margin
    11.4% to 11.5%
    high materiality
    High
    Full-year FY26 gross margin
    30.5% to 30.6%
    medium materiality
    High
    Full-year FY26 SG&A
    19.4%
    medium materiality
    High
    Full-year FY26 net interest income
    ~$108 million
    low materiality
    High
    Full-year FY26 tax rate
    24.5%
    low materiality
    High
    Full-year FY26 weighted average share count
    ~1.13 billion shares
    low materiality
    High
    Full-year FY26 diluted EPS
    $4.52 to $4.57
    high materiality
    High
    Q3 FY26 overall comparable sales growth
    2% to 3%
    high materiality
    High
    Q3 FY26 consolidated sales
    $14.7 billion to $14.8 billion
    medium materiality
    High
    Q3 FY26 pretax profit
    12% to 12.1%
    high materiality
    High
    Q3 FY26 gross margin
    31.6% to 31.7%
    medium materiality
    High
    Q3 FY26 SG&A
    19.8%
    medium materiality
    High
    Q3 FY26 net interest income
    ~$25 million
    low materiality
    High
    Q3 FY26 tax rate
    24.7%
    low materiality
    High
    Q3 FY26 weighted average share count
    ~1.13 billion shares
    low materiality
    High
    Q3 FY26 diluted EPS
    $1.17 to $1.19
    high materiality
    High
    Q4 FY26 overall comparable sales growth
    2% to 3%
    high materiality
    High
    Q4 FY26 pretax profit margin
    11.7% to 11.8%
    high materiality
    High
    Q4 FY26 diluted EPS
    $1.33 to $1.36
    high materiality
    High
    Tariff impact
    offset incremental tariff pressure
    medium materiality
    High

    Segment performance

    4
    SegmentRevenueYoYQoQMargin
    Marmaxx
    Comp sales grew a strong 3%, driven by a combination of higher average basket and increased customer transactions. Strength was seen across all income demographics. Sierra stores and U.S. e-commerce sites also saw strong sales results. Segment profit margin was up 10 basis points versus last year.
    Customer transactions: increasedAverage basket: higher
    		—3%—14.2%
    HomeGoods
    Comp sales grew a very strong 5%, with strength at both HomeGoods and HomeSense banners. Segment profit margin grew 10%, up 90 basis points versus last year. The eclectic assortment of home fashions is resonating with customers.
    		—5%—10%
    TJX Canada
    Comp sales increased an outstanding 9%. Segment profit margin on a constant currency basis grew to a very strong 16%, up 100 basis points versus last year. Retail banners (Winners, Marshalls, HomeSense) have extremely high brand awareness and customer loyalty.
    		—9%—16%
    TJX International
    Comp sales increased a very strong 5%. Sales strength was seen in Europe and outstanding sales in Australia. Segment profit margin on a constant currency basis grew to 5.2%, up 80 basis points versus last year.
    		—5%—5.2%

    Operational metrics

    15
    Consolidated comparable sales growth
    4%YoY
    Q2 FY26

    Exceeded expectations and was strong across all divisions.

    Customer transactions
    up
    Q2 FY26

    Drove the overall comp sales increase and is an excellent indicator of the strength of the value proposition.

    Pretax profit margin
    11.4%up 50 bps YoY
    Q2 FY26

    Well above plan, due to lower-than-expected tariff costs, expense leverage on above-plan sales, and timing of certain expenses, partially offset by higher incentive compensation accruals and charitable contributions.

    Gross margin change
    30 bpsincrease YoY
    Q2 FY26

    Primarily due to favorable hedges.

    Merchandise margin
    flatYoY
    Q2 FY26

    The company was pleased with its mitigation strategies that offset tariff pressure.

    SG&A change
    -30 bpsdecrease YoY
    Q2 FY26

    Primarily due to operational efficiencies and a benefit from the timing of certain expenses, some of which are expected to reverse in Q3.

    Net interest income impact on pretax profit margin
    -10 bpsYoY
    Q2 FY26

    Negatively impacted pretax profit margin.

    Diluted earnings per share
    $1.10increased 15% YoY
    Q2 FY26

    Well above expectations.

    Balance sheet inventory growth
    14%YoY
    Q2 FY26

    Reflects buying into excellent opportunities for quality branded merchandise.

    Inventory per store growth
    10%YoY
    Q2 FY26

    Reflects buying into excellent opportunities for quality branded merchandise.

    Capital returned to shareholders
    $1B
    Q2 FY26

    The company continues to reinvest in growth while returning significant cash to shareholders.

    Net new stores
    >130
    Full-year FY26

    On track to hit the plan, with optimism for roughly 3% net unit opening over the next couple of years.

    Store remodels
    ~500
    Full-year FY26

    Planned for this year to ensure a consistent shopping experience across all stores.

    Comp sales flow-through to bottom line
    10 to 20 bpsper 1 point comp
    going forward

    This is the expected flow-through for every point of comparable sales growth.

    Full-year EPS FX impact
    -1%vs. previous guidance of -3%
    Full-year FY26

    Negative impact to EPS growth due to unfavorable foreign exchange.

    Industry KPIs

    6
    MetricValueDetails
    Sg a OPEX ratio19.4%%
    Comparable sales4%%
    Store count growth>130stores
    Gross margin drivers30 bpsbps
    Share buyback capital return$1BUSD
    Inventory position markdown riskup 14%%

    Deals & partnerships

    2
    MexicoJoint venture for growth potential

    The company sees great growth potential with its joint venture in Mexico.

    Middle EastInvestment for growth potential

    The company sees great growth potential with its investment in the Middle East.

    Risks & headwinds

    3
    Higher tariff costsQ2 FY26, Q3 FY26, Q4 FY26, full year FY26

    higher tariff costs versus last year

    Mitigation: Effective mitigation strategies, buying better, efficient markdown management, diversified sourcing, downplaying highly tariff-driven categories, satellite buying offices. Guidance assumes ability to offset incremental tariff pressure.

    Timing of certain SG&A expensesQ3 FY26

    SG&A benefited from timing in Q2, some expected to reverse in Q3

    Mitigation: Management has factored this into Q3 guidance, which projects SG&A to be 30 bps unfavorable to last year.

    Unfavorable foreign exchange ratesFull-year FY26

    negative 1% impact to full-year EPS growth

    Mitigation: The impact is quantified and factored into the updated full-year EPS guidance.

    What to watch in Q3 FY26

    5

    Merchandise Margin Trajectory

    Q3 FY26
    Currentflat in Q2 FY26 despite higher tariffs
    Targetcontinued offset of tariff pressures

    Why it matters

    Indicates the durability of tariff mitigation strategies and impact on profitability.

    Merchandise margin was flat despite higher tariff costs versus last year. Importantly, we are very pleased with our mitigation strategies, which allowed us to offset the tariff pressure🌐 we saw in the second quarter.

    Q&A highlights

    6

    Asked about the drivers of consistent comp performance despite macro volatility, the strong start to Q3, and the outlook for merchandise margins in the back half given tariff impacts.

    Ernie attributed comp consistency to the broad customer base, healthy category performance, and flexible business model, noting strong product availability. John stated that FX still negatively impacts Q3, but they are confident in offsetting tariff pressures in the back half.

    “I think the flexibility of the business model and at the same time, we're taking advantage, I think, of a marketplace out there where you've had store closures and perhaps less exciting execution across the board in retail brick-and-mortar specifically.”

    asked by Matthew Boss · answered by Ernie Herrman

    2 min read6 chapters

    Detailed Narrative

    01

    Strong Q2 Performance and Raised Guidance

    TJX delivered strong Q2 FY26 results with consolidated comparable sales up 4% and diluted EPS increasing 15% to $1.10, both exceeding internal plans. This robust performance led to an upward revision of full-year guidance for sales, profit margin, and EPS, reflecting management's confidence in the company's momentum and strategic positioning for the remainder of the year.

    02

    Customer Traffic and Value Proposition

    Customer transactions increased across all divisions, indicating the continued strength of TJX's value proposition. The company's ability to offer quality branded merchandise at compelling prices resonates with a broad customer base, attracting shoppers across various income demographics. Customer surveys show that TJX's value perception has improved over the last couple of years, reinforcing its market appeal.

    03

    Effective Tariff Mitigation Strategies

    Despite higher tariff costs year-over-year, merchandise margin remained flat in Q2 FY26, demonstrating the effectiveness of TJX's mitigation strategies. Management highlighted leveraging market opportunities for excess inventory, efficient markdown management, and the flexibility of its buying model to 'buy better' and offset tariff pressures🌐. The company's diverse sourcing capabilities and global buying offices also contribute to navigating tariff challenges🌐.

    04

    Strategic Store Growth and Remodels

    TJX remains on track to open over 130 net new stores in FY26 and plans nearly 500 remodels. This strategy aims to capitalize on available prime locations, improve shopping environments through relocations, and ensure a consistent, appealing experience across its store fleet. This ongoing investment in physical footprint is expected to drive continued growth and market share capture.

    05

    Gifting Destination Strategy

    The company is increasingly positioning itself as a year-round gifting destination, expanding beyond holiday seasons to events like Mother's Day and Father's Day. This focus, combined with strategic product sourcing and in-store merchandising, aims to capture market share in gifting categories and drive frequent customer visits. Management noted that TJX brands have become desirable gifting destinations for consumers.

    06

    Operational Efficiencies and Talent Depth

    Operational efficiencies contributed to a 30 basis point decrease in SG&A in Q2 FY26, although some timing-related📎 benefits are expected to reverse in Q3. The company emphasized the longevity and expertise of its 1,300-plus global buyers and the critical role of planning and allocation teams in balancing merchandise mix and managing markdowns, which are key to consistent performance and margin health.

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