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    TJX
    Earnings call· Oct 2025(Q3 FY26)

    TJX COMPANIES INC /DE/ TJX

    Nov 19, 2025 Source

    Executive summary

    The TJX Companies Q3 FY26 — Strong Comp Sales and Profitability Above Plan

    TJX delivered strong Q3 FY26 results, exceeding plans across sales, profitability, and EPS, driven by broad-based comp sales growth and effective tariff mitigation. The company is confident in its value proposition and market share gains, raising full-year guidance while maintaining focus on opportunistic buying and a compelling in-store experience for the holiday season. Management also highlighted ongoing efforts to integrate AI across various business functions to enhance efficiency.

    Highlights

    5

    • Consolidated comp sales increased 5%, well above plan, with strong growth across all divisions.

    • Diluted EPS of $1.28 increased 12% versus last year, exceeding expectations.

    • Pretax profit margin of 12.7% was up 40 basis points year-over-year and 60 basis points above the high end of plan.

    • Gross margin increased 100 basis points year-over-year, driven by lower freight costs, expense efficiencies, and expense leverage on sales.

    • All tariff pressure was successfully offset by mitigation strategies in the third quarter.

    Concerns

    3

    • SG&A increased 60 basis points versus last year due to incremental store wage and payroll costs, a contribution to the TJX Foundation, and higher incentive compensation accruals.

    • Net interest income negatively impacted pretax profit margin by 10 basis points versus last year.

    • TJX Canada's segment profit margin on a constant currency basis was down 20 basis points versus last year, driven by unfavorable transactional foreign exchange.

    Guidance & targets

    18
    CategoryTargetConfidence
    Overall comp sales
    2% to 3% increase
    high materiality
    High
    Consolidated sales
    $17.1 billion to $17.3 billion
    high materiality
    High
    Pretax profit margin
    11.7% to 11.8%
    high materiality
    High
    Gross margin
    30.5% to 30.6%
    medium materiality
    High
    SG&A
    18.9%
    medium materiality
    High
    Net interest income
    $26 million
    low materiality
    High
    Tax rate
    25.4%
    low materiality
    High
    Diluted earnings per share
    $1.33 to $1.36
    high materiality
    High
    Overall comp sales
    4% increase
    high materiality
    High
    Consolidated sales
    $59.7 billion to $59.9 billion
    high materiality
    High
    Pretax profit margin
    11.6%
    high materiality
    High
    Gross margin
    30.9%
    medium materiality
    High
    SG&A
    19.5%
    medium materiality
    High
    Net interest income
    $111 million
    low materiality
    High
    Tax rate
    24.5%
    low materiality
    High
    Diluted earnings per share
    $4.63 to $4.66
    high materiality
    High
    Tariff impact
    offset
    medium materiality
    High
    Store growth target
    7,000 stores
    medium materiality
    High

    Segment performance

    4
    SegmentRevenueYoYQoQMargin
    Marmaxx
    Extremely pleased with Marmaxx's momentum and continue to see terrific opportunities for our largest division to grow its footprint and capture additional market share.
    Strong increases in both apparel and home businessesStrength in store performance across all regions and income demographicsComp increase driven by higher average basket and growth in customer transactions
    		—6%—14.9%
    HomeGoods
    See a significant opportunity to further grow our store base and attract more customers, which we believe will allow us to capture a bigger piece of the U.S. home market.
    Very strong sales momentumSegment profit margin improved by 120 basis points versus last yearHighly differentiated mix of home fashions
    		—5%—13.5%
    TJX Canada
    Believe our position as a top value retailer in Canada sets us up very well to continue our growth in this country for many years to come.
    Segment profit margin on a constant currency basisDown 20 basis points versus last year due to unfavorable transactional foreign exchangeLeading off-price retailer in CanadaExcellent brand awareness and strong customer loyalty
    		—8%—14.9%
    TJX International
    Convinced that we will continue to gain market share across both Europe and Australia. Excited about growth plans in existing countries and planned entry into Spain in the spring of 2026.
    Segment profit margin on a constant currency basisUp 190 basis points versus last yearIncreases in both Europe and Australia
    		—3%—9.2%

    Operational metrics

    17
    Pretax profit margin
    12.7%up 40 bps YoY
    Q3 FY26

    Consolidated pretax profit margin.

    Gross margin increase
    100 bpsYoY
    Q3 FY26

    Consolidated gross margin.

    SG&A increase
    60 bpsYoY
    Q3 FY26

    Consolidated SG&A.

    Net interest income impact on pretax profit margin
    -10 bpsYoY
    Q3 FY26

    Negative impact on consolidated pretax profit margin.

    Diluted EPS growth
    12%YoY
    Q3 FY26

    Consolidated diluted earnings per share growth.

    Merchandise margin
    stronger than expected
    Q3 FY26

    Contributed to above-plan results.

    Incentive compensation accruals
    higher
    Q3 FY26

    Due to above-plan results.

    Capital returned to shareholders
    $1.1 billion
    Q3 FY26

    Total capital returned in the quarter.

    Customer transactions
    increase
    Q3 FY26

    Contributed to consolidated comp sales growth.

    Average basket
    higher
    Q3 FY26

    Contributed to consolidated comp sales growth.

    Ticket
    driver
    Q3 FY26

    Ticket was the primary driver of the increase in average basket.

    Pricing
    more of the driver
    Q3 FY26

    Pricing increases contributed more to the higher ticket than merchandise mix.

    Value perception scores
    extremely strong
    Q3 FY26

    Constantly monitored and remain very strong despite pricing adjustments.

    Shrink accrual comparison
    favorablevs last year
    Q1-Q3 FY26

    Had a favorable shrink comparison to last year for Q1, Q2, Q3. Q4 will be a negative comparison due to last year's positive adjustment.

    Freight costs
    lower
    Q3 FY26

    Contributed to stronger merchandise margin and gross margin improvement.

    SG&A favorability
    30 bpsfavorable vs last year
    Q4 FY26

    Expected for Q4 FY26 guidance.

    Gross margin leverage point
    flat to up 10 bps
    long-term

    Anticipated leverage point for gross margin with no outsized expense increases.

    Industry KPIs

    7
    MetricValueDetails
    Sg a OPEX ratio19.5%%
    Comparable sales5%%
    Store count growth7,000stores
    Gross margin drivers100 bpsbps
    Share buyback capital return$1.1BUSD
    Inventory position markdown risk12%%
    Distribution supply chain cost economicsfavorable ocean rates and efficiencies

    Deals & partnerships

    3
    SpainPlanned entry into new market

    TJX International plans to enter Spain in the spring of 2026 as part of its growth plans.

    MexicoJoint venture to expand off-price reach

    Company has a joint venture in Mexico, expanding its off-price reach.

    Middle EastInvestment to expand off-price reach

    Company has an investment in the Middle East, further expanding its off-price reach around the world.

    Risks & headwinds

    3
    Tariff pressure on imports into the U.S.Q3 FY26, Q4 FY26

    Not explicitly quantified in dollars, but stated as a pressure.

    Mitigation: Mitigation strategies allowed offsetting all pressure in Q3; expected to continue to offset in Q4.

    Unfavorable transactional foreign exchangeQ3 FY26

    Caused TJX Canada segment profit margin to be down 20 bps YoY on a constant currency basis.

    Mitigation: Not explicitly stated, but management expressed confidence in continued growth in Canada.

    Potential for over-buying inventoryOngoing, especially with strong sales momentum and high merchandise availability.

    Not quantified, but identified as the 'biggest challenge'.

    Mitigation: Management emphasizes fighting the urge to buy too much too soon to maintain liquidity and entrepreneurial buying.

    What to watch in Q4 FY26

    4

    Full-year FY26 diluted EPS

    Q4 FY26
    Current$4.63 to $4.66
    TargetAchievement of raised guidance

    Why it matters

    Key indicator of overall financial performance and management's ability to execute against raised guidance.

    As a result of these assumptions, we're increasing our full year diluted earnings per share to be in the range of $4.63 to $4.66, up 9% versus last year's diluted earnings per share of $4.26.

    Q&A highlights

    7

    What gives confidence in continued comp momentum, and what was the impact of AUR/pricing on Q3 comp sales, along with future pricing plans?

    Confidence stems from the unique value proposition (branded, good/better/best at value), pleasant shopping environment, and diligent price gap maintenance. Q3 comp was driven by higher average basket, with ticket being the primary driver. Pricing increases were more impactful than mix, but value perception remains strong.

    “our out-the-door retail is below their promotional retail or promotional retails. And we'll continue to do that regard -- and that's where it gets down to item and SKU and our teams are so good at staying laser-focused on executing that.”

    asked by Brooke Roach · answered by Ernie Herrman

    2 min read6 chapters

    Detailed Narrative

    01

    Q3 Performance Highlights

    TJX exceeded its Q3 plan with a 5% consolidated comp sales increase, driven by a combination of a higher average basket and an increase in customer transactions. Pretax profit margin was 12.7%, up 40 basis points year-over-year, and diluted EPS grew 12% to $1.28. Gross margin improved 100 basis points due to lower freight costs, expense efficiencies, and expense leverage, with all tariff pressure🌐 successfully mitigated.

    02

    Divisional Strength and Market Share Gains

    Marmaxx delivered a strong 6% comp sales increase with robust apparel and home businesses, achieving a segment profit margin of 14.9%. HomeGoods saw very strong sales momentum with 5% comp sales growth and an improved segment profit margin of 13.5%. TJX Canada achieved an outstanding 8% comp sales increase, while TJX International grew 3% with significant margin expansion of 190 basis points. The company is confident in gaining market share across all geographies.

    03

    Inventory and Merchandise Availability

    Balance sheet inventory was up 12% and per-store inventory up 8% year-over-year, reflecting opportunistic buying of quality branded merchandise. Management highlighted exceptional merchandise availability in the marketplace, positioning the company strongly to flow fresh assortments to stores and online for the holiday season. This opportunistic buying strategy is seen as a key driver of continued sales and profitable growth.

    04

    Holiday Season Strategy and Customer Engagement

    TJX is positioning its banners as a prime destination for value-conscious shoppers and gift-giving during the holiday season. The strategy includes emphasizing compelling values, flowing fresh selections multiple times a week, and launching targeted marketing campaigns across various media channels, with an emphasis on digital. The goal is to keep retail brands top-of-mind, encourage cross-shopping, and attract new customers.

    05

    Long-Term Growth Drivers and Competitive Advantage

    The company reiterated its confidence in long-term global growth, citing its unique value proposition, broad customer demographic appeal, flexible buying and supply chain model, and significant store growth potential with a long-term target of 7,000 stores. The appeal of the in-store 'treasure hunt' shopping experience and the deep off-price expertise within TJX are considered key competitive advantages.

    06

    AI Integration and Efficiency

    TJX is actively evaluating, testing, and deploying AI across various business functions to enhance efficiency and augment associate work. Key areas of focus include fraud detection, in-store analytics, HR processes, customer service, marketing optimization, and IT operations. The company emphasizes a thoughtful approach to AI, ensuring it supports existing strengths without disrupting core merchandising strategies.

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