The TJX Companies, Inc. Q2 FY2026 earnings call

Management Statement and Operational Highlights

• Second Quarter Results: Consolidated comp sales increased 4%, pre-tax profit margin was 11.4% (up 50 basis points versus last year), diluted earnings per share was $1.10 (up 15% versus last year). Full-year guidance for pre-tax profit margin and earnings per share is raised.
• Divisional Performance: All divisions saw increased customer transactions. Marmaxx, HomeGoods, TJX Canada, and TJX International all had strong comp sales and margin growth.
• Inventory: Balance sheet inventory was up 14%, and inventory on a per-store basis was up 10% as the company bought into quality branded merchandise.
• Future Opportunities: Confident in second half sales and profitability. Focuses on value, product availability, back-to-school and holiday initiatives, marketing campaigns. Long-term growth factors include being a trusted value leader, flexible business model, store growth potential, and talent.

Segment Performance

• Marmaxx: Comp sales grew 3%, segment profit margin was 14.2%, up 10 basis points versus last year.
• HomeGoods: Comp sales grew 5%, segment profit margin grew 90 basis points versus last year.
• TJX Canada: Comp sales increased 9%, segment profit margin on a constant currency basis grew to 16%, up 100 basis points versus last year.
• TJX International: Comp sales increased 5%, segment profit margin on a constant currency basis grew to 5.2%, up 80 basis points versus last year.

Guidance

• Full-year fiscal 2026: Overall comp sales expected to increase 3%, consolidated sales range $59.3 billion to $59.6 billion, pre-tax profit margin 11.4%-11.5%, diluted earnings per share $4.52-$4.57 (up 6%-7% versus last year).
• Third quarter: Comp sales expected to increase 2%-3%, consolidated sales range $14.7 billion to $14.8 billion, pre-tax profit 12%-12.1%, diluted earnings per share $1.17-$1.19 (up 3%-4% versus last year).
• Fourth quarter: Implied comp sales up 2%-3%, pre-tax profit margin 11.7%-11.8%, diluted earnings per share $1.33-$1.36 (up 8%-11% versus last year).

Risks

• Tariffs: Incremental tariff pressure, but assuming current tariff levels stay in place for the remainder of the year and mitigation strategies in place.
• Macro and Retail Environment: Volatility impacting business flexibility and performance.

Question and Answer

• Q: Thanks and congrats on another nice quarter. Ernie, could you speak to the consistency of your comps despite the volatile macro backdrop and elaborate on the strength that you've seen to start the third quarter and excitement around product availability? And then for John, just maybe puts and takes on merchandise margins in the back half of the year relative to flat performance in the second quarter despite the impact of tariffs that you saw?

A: Ernie Herrman talks about the flexibility of the business model, broad customer base, and strong product availability. John Klinger mentions offsetting tariff pressures and confidence in merchandise margins.

• Q: As pricing in the industry has begun to increase, are you seeing an acceleration of market share gains as consumers look for value at TJX? What are your latest thoughts on pricing as you move into fall and holiday?

A: Ernie Herrman discusses that they don't top-down dictate prices, but buyers work based on out-the-door pricing of competitors, dealing with pricing on a deal-by-deal basis. John Klinger notes customer surveys show strong value perception.

• Q: I wanted to build on Brooke's pricing question. Was pricing a key factor in your tariff mitigation in 2Q in a comp? And how has the customer reacted to some of these higher price points?

A: Ernie Herrman says tariffs were a headwind, but merchants took advantage of market opportunities to buy better and manage markdowns efficiently to offset tariffs. Customers continue to be attracted to values.

• Q: Some of the data we look at and other folks look at showed a nice acceleration in traffic. How would you characterize the comp progression throughout the quarter?

A: Ernie Herrman mentions starting strong, with a lull in the middle but overall strong, emphasizing balance and consistency. John Klinger notes comp progression and the relationship between comp sales and bottom-line impact.

• Q: You hear can you hear me okay? Congratulations on the terrific results. Delivering a flat merchandise margin with tariffs is very impressive. And Ernie, as you mentioned the pricing mechanism of not only comparing against competitors, but even within the mix. How are you thinking about the merch margin going going forward given the planning of tariffs?

A: John Klinger says they were pleased with flat merchandise margin in Q3 despite tariffs, and confident in offsetting tariffs going forward. Ernie Herrman talks about buying flexibility, availability, and ability to diversify sources to handle tariffs.

• Q: Congrats on another great quarter. I had a question on Marmaxx specifically. I'm wondering if you could kind of break that down for us at Marmaxx and and how you think exposure can change over time. And then maybe just one quick one for John. It it seems like that you're embedding more particular, gross margin degradation in the fourth quarter. I'm wondering if there's something specific happening in that quarter or why that's the case?

A: Ernie Herrman discusses Marmaxx's healthy categories and flexibility in families of business. John Klinger explains Q4 margin dynamics related to inventory levels and shrink accruals.

• Q: Good morning and congratulations. The store is both both concepts look fabulous. So the last time that we had sort of a path through at frontline of a real significant kind of price inflation was back kind of 2011 for the apparel retailers. And what we're seeing kind of since July, since these apparel retailers have thematically started to raise initial retailers or retails, we don't see a lot of pricing power. Can you talk about category pricing power?

A: Ernie Herrman talks about apparel being deflationary, buyers managing pricing case by case, and flexibility in sourcing to handle pricing changes. John Klinger mentions tariff flow-through and gradual pricing changes.

• Q: Hey, guys. Thanks for taking our questions. The store is both concepts look fabulous. When I maybe a few quick ones for the model. When I look at the fourth four comp in the quarter, slightly accelerating from the three in first quarter, did overall traffic accelerate? Or is it it same as 1Q? And then on the merch margin, you said it was flat. With the inventory sorry, with the inventory hedge. Would merch margins have been down excluding that benefit? Or how should I think about the inventory hedge impact rest of the year?

A: John Klinger talks about traffic being up across the board and margin considerations related to inventory hedges and future margin outlooks.

• Q: Hey, guys. Congratulations. Great quarter in the store looked beautiful. HomeGoods for back to college. Honestly stunning. I have a quick question for me. You you've mentioned gifting, I think, more than once in your prepared remarks, which which is not always usual for you. So I'm assuming that you feel good about any buys that you've made in advance. In the holiday, and you were able to pack away some of that given how heavily tariffed holiday decor is. But are you seeing a change in consumer behavior in your stores that is kinda shifting your focus a little even more so to gifting?

A: Ernie Herrman discusses evolving gifting focus, merchants merchandising giftable products, and store teams effectively presenting gift items. Marni Shapiro is told about the improved storytelling and merchandising in stores for gifting.