22-05-2025
TJX Companies Inc (TJX) Q1 2026 Earnings Call Highlights: Strong Comp Sales Growth and ...
Comp Sales Growth: 3% increase, driven by customer transactions.
Pre-tax Margin: 10.3%, down 80 basis points, but above plan.
Gross Margin: Down 50 basis points due to unfavorable inventory hedges.
SG&A: Increased 20 basis points due to lapping of a reserve benefit and higher store wage costs.
Diluted Earnings Per Share: $0.92, above expectations.
Marmaxx Comp Sales: Increased 2%, with a segment profit margin of 13.7%.
HomeGoods Comp Sales: Increased 4%, with a segment profit margin of 10.2%.
TJX Canada Comp Sales: Increased 5%, with a segment profit margin of 10.6% on a constant currency basis.
TJX International Comp Sales: Increased 5%, with a segment profit margin of 4.2% on a constant currency basis.
Inventory: Balance sheet inventory up 15%, inventory per store up 7%.
Full Year Comp Sales Growth Guidance: 2% to 3% increase.
Full Year Sales Guidance: $58.1 billion to $58.6 billion, up 3% to 4%.
Full Year Pre-tax Profit Margin Guidance: 11.3% to 11.4%.
Full Year Gross Margin Guidance: 30.4% to 30.5%.
Full Year Diluted EPS Guidance: $4.34 to $4.43, a 2% to 4% increase.
Second Quarter Comp Sales Growth Guidance: 2% to 3% increase.
Second Quarter Sales Guidance: $13.9 billion to $14 billion.
Second Quarter Pre-tax Profit Margin Guidance: 10.4% to 10.5%.
Second Quarter Diluted EPS Guidance: $0.97 to $1, up 1% to 4%.
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Release Date: May 21, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
TJX Companies Inc (NYSE:TJX) reported a 3% increase in comp sales, driven by customer transactions, with every division contributing to the growth.
The company exceeded expectations in pre-tax profit margin and earnings per share, highlighting strong financial performance.
The availability of merchandise is outstanding, positioning TJX Companies Inc (NYSE:TJX) to capitalize on market opportunities.
The HomeGoods division delivered a 4% comp sales growth, with segment profit margin up 70 basis points, showcasing strength in the home fashion market.
TJX Companies Inc (NYSE:TJX) is confident in its long-term growth strategy, supported by a flexible business model and a strong global buying infrastructure.
Pre-tax margin decreased by 80 basis points, primarily due to unfavorable inventory hedges and increased SG&A expenses.
Net interest income negatively impacted pre-tax profit margin by 20 basis points due to a lower cash balance and lower interest rates.
The Marmaxx division saw a segment profit margin decrease of 50 basis points, despite a 2% increase in comp sales.
TJX Canada experienced a 170 basis points decline in segment profit margin on a constant currency basis, affected by unfavorable transactional foreign exchange.
The company faces challenges from tariffs and a highly fluid macro environment, which could impact short-term profitability.
Q: Can you provide more context on inventory availability given the current environment with delayed shipments and tariff uncertainties? A: Ernie Herrman, CEO, explained that while there is uneasiness among vendors due to tariff uncertainties, TJX has been able to take advantage of great buys in the market. The company remains flexible and can shift focus to categories with more availability, ensuring they maintain great value for customers.
Q: Could you elaborate on the progression of comp trends at Marmaxx and the strong start to the second quarter? A: John Klinger, CFO, noted that sales improved as the weather got better, with comps increasing month-to-month. Ernie Herrman added that every division is participating in the comp growth, with Marmaxx showing improvement and HomeGoods outperforming the industry.
Q: How are you managing the impact of tariffs on gross margins, especially in the second quarter? A: John Klinger stated that Q2 is the most impacted by tariffs due to pre-committed orders. However, mitigation efforts are in place, including better buying and cost efficiencies, which are expected to continue benefiting the company in the second half of the year.
Q: How does TJX plan to handle potential price increases from vendors due to tariffs, and what strategies are in place to maintain value for customers? A: Ernie Herrman highlighted that TJX can negotiate with vendors and adjust pricing to maintain a value gap with traditional retailers. The company focuses on buying advantageously and maintaining strong vendor relationships to ensure competitive pricing.
Q: What is the current percentage of direct-sourced products, and how might this change in response to the current environment? A: Ernie Herrman mentioned that less than 10% of TJX's business is direct-sourced, and the company maintains a balanced mix. They are strategically buying closer to market to take advantage of potential deals, without significantly altering the direct-sourcing percentage.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
