Tjx raises full-year sales and EPS guidance to $59.3B-$59.6B and $4.52-$4.57 amid strong Q2 performance
Aug. 20, 2025 3:49 PM ET
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Earnings Call Insights: The TJX Companies, Inc. (TJX) Q2 2026
Management View- CEO Ernie L. Herrman announced, "I am extremely pleased with our outstanding second quarter performance and our above-plan sales, profit margin and earnings per share results." He highlighted that overall comp sales increased 4%, driven by strong customer transactions across all divisions and emphasized ongoing market share opportunities in both U.S. and international markets.
- Herrman stated, "With our profit results in the second quarter also well exceeding our plan, we are raising our full year guidance for both pretax profit margin and earnings per share." He expressed high confidence for the second half, citing "outstanding buying opportunities in the marketplace for quality branded merchandise" and strong momentum going into Q3.
- CFO John Klinger reported, "Second quarter pretax profit margin of 11.4% was up 50 basis points versus last year and well above our plan." He noted gross margin increased by 30 basis points due to favorable hedges, while merchandise margin remained flat despite higher tariff costs. Klinger added, "SG&A decreased 30 basis points versus last year. This was primarily due to operational efficiencies as well as a benefit from the timing of certain expenses, some of which we expect to reverse out in the third quarter."
- Klinger also highlighted divisional performances, with comp sales growth across all divisions including a 3% rise at Marmaxx, 5% at HomeGoods, 9% at TJX Canada, and 5% at TJX International. He noted, "Segment profit margin grew 10% [at HomeGoods], up 90 basis points versus last year."
Outlook- The company raised its full year consolidated sales guidance to a range of $59.3 billion to $59.6 billion, reflecting a benefit from favorable foreign exchange rates and above-plan Q2 sales. Full year comparable sales growth is now expected at 3%.
- Full year profitability guidance was increased to a range of 11.4% to 11.5%. Gross margin is projected at 30.5% to 30.6% and SG&A at 19.4%. Full year diluted EPS guidance was raised to $4.52 to $4.57, up 6% to 7% from last year.
- Q3 comp sales are expected to increase 2% to 3%, with consolidated sales between $14.7 billion and $14.8 billion. Q3 diluted EPS is expected to be $1.17 to $1.19. For Q4, comp sales guidance is 2% to 3% growth and EPS guidance is $1.33 to $1.36.
- Tariff headwinds are anticipated to be fully offset by mitigation strategies for the remainder of the year.
Financial Results- Consolidated comp sales grew 4%. Diluted earnings per share for Q2 was $1.10, a 15% increase versus last year.
- Pretax profit margin reached 11.4%, up 50 basis points from a year ago and 90 basis points above the high end of the company's plan.
- Gross margin was up 30 basis points compared to last year, driven mainly by favorable hedging. Merchandise margin remained flat despite increased tariff costs, which were offset by mitigation strategies.
- SG&A was down 30 basis points year-over-year, aided by operational efficiencies and expense timing.
- Balance sheet inventory was up 14% and inventory per store was up 10%, with management confident about merchandise availability for the coming seasons.
- During the quarter, $1 billion was returned to shareholders through buybacks and dividends.
Q&A- Matthew Boss, JPMorgan: Asked about comp consistency and product availability. Herrman explained, "Our categories of business were healthy across all areas... our flexible business model... allows us to execute in a more consistent fashion on our comp sales." Klinger added confidence in continuing to offset tariff pressures.
- Brooke Siler Roach, Goldman Sachs: Inquired about market share gains as pricing rises and plans for pricing strategy. Herrman responded, "We don't go in with the strategy that we're going to raise price per se... our buyers work it backwards."
- Lorraine Hutchinson, BofA: Asked if pricing drove tariff mitigation and comps. Klinger attributed comp growth to customer transactions and said, "Tariff costs were higher, and they were a headwind for us in Q2 and year-over-year, just in the end, a little bit lower than we had expected."
- John Kernan, TD Cowen: Sought clarity on comp progression and margin flow-through. Klinger detailed, "Generally, what it is for every point in comp, we would expect to get 10 to 20 basis points on the bottom line."
- Dana Telsey, Telsey Advisory: Asked about merchandise margins and store openings. Klinger affirmed confidence in offsetting tariffs and reported, "We're still on track to hit our plan of just over 130 net new stores."
- Marni Shapiro, The Retail Tracker: Questioned the focus on gifting. Herrman explained a broader year-round approach, stating, "We've evolved in terms of actually going after gifting for not just holiday." Klinger credited in-store merchandising improvements for driving impulse buying.
Sentiment Analysis- Analysts' tone was positive, repeatedly congratulating management and probing for insight into comp drivers, pricing strategy, and margin sustainability.
- Management maintained a confident and upbeat tone, using phrases like "we are very confident" and "we feel great about our value positioning" in both prepared remarks and Q&A.
- Compared to last quarter, both analysts and management exhibited increased optimism, with management notably raising guidance and analysts acknowledging the company's consistency and margin execution.
Quarter-over-Quarter Comparison- Guidance for full year sales and EPS was raised from the previous quarter, with sales now projected at $59.3 billion to $59.6 billion versus last quarter's $58.1 billion to $58.6 billion, and EPS raised to $4.52 to $4.57 from $4.34 to $4.43.
- Comp sales growth guidance increased to 3% from a previous 2% to 3%. Gross margin guidance improved, and expected negative FX impact on EPS lessened.
- Management's tone shifted from cautious optimism last quarter to greater confidence, now emphasizing strong execution, robust inventory, and effective tariff mitigation.
- Analyst questions in both quarters focused on comps, pricing, and tariffs, but with more attention this quarter to the sustainability of market share gains and the impact of new store openings.
- Strategic focus on gifting and younger customer acquisition was more pronounced in this quarter.
Risks and Concerns- Tariff costs remain a headwind, though management reiterated their ability to offset them through buying strategies and operational flexibility.
- Expense timing benefits in SG&A are expected to reverse in the third quarter.
- Inventory levels are higher, but management expressed confidence in the ability to flow assortments and manage stock for upcoming seasons.
- Management acknowledged potential regional and category-specific fluctuations but pointed to planning and allocation capabilities as key mitigants.
Final Takeaway
TJX management conveyed a strong position heading into the second half of fiscal 2026, underpinned by robust Q2 results, raised full-year sales and earnings guidance, and continued market share gains across divisions. With a flexible business model, effective tariff mitigation, and an increased focus on both gifting and younger demographic shoppers, leadership projects confidence in delivering continued growth and value for shareholders throughout the year and beyond.
Read the full Earnings Call Transcript |
