The TJX Companies, Inc. Q3 FY2026 earnings call

• Appreciated global associates for their hard work in delivering merchandise at excellent values. - Third quarter comp sales, profitability, and EPS were well above plan; overall comp sales increased 5% across divisions. - Raised full-year guidance for sales and profitability. - Strong start to the fourth quarter with excitement around holiday initiatives, including fresh merchandise flow, holiday marketing campaigns, and being a gifting destination. - Inventory up 12% balance sheet and 8% per-store; reinvested in the business and returned $1.1 billion to shareholders through buyback and dividend programs in the third quarter.

Marmaxx: Comp sales grew 6%, segment profit margin was 14.9%, up 60 basis points versus last year. HomeGoods: Comp sales up 5%, segment profit margin improved to 13.5%, up 120 basis points versus last year. TJX Canada: Comp sales increased 8%, segment profit margin on a constant currency basis was 14.9%, down 20 basis points versus last year due to unfavorable transactional foreign exchange. TJX International: Comp sales grew 3%, segment profit margin on a constant currency basis increased to 9.2%, up 190 basis points versus last year.

• Fourth quarter: Expected comp sales increase of 2%-3%, consolidated sales range of $17.1 billion to $17.3 billion, pre-tax profit margin range of 11.7%-11.8%, gross margin range of 30.5%-30.6%, SG&A range of 18.9%, and diluted EPS range of $1.33 to $1.36. - Full-year: Expected comp sales increase of 4%, consolidated sales range of $59.7 billion to $59.9 billion, pre-tax profit margin of 11.6%, gross margin of 30.9%, SG&A of 19.5%, and diluted EPS range of $4.63 to $4.66.

• Impact of tariffs on merchandise costs and pricing, with assumptions that current tariff levels on US imports will remain in place. - Uncertainty in freight dynamics and its impact on gross margin, including spot freight rates and container availability. - Potential challenges in managing inventory and avoiding overbuying despite strong sales momentum, requiring careful buying strategies to maintain liquidity and profitable sales.

Q: Brooke Roach from Goldman Sachs asks about comp momentum and pricing gaps.

A: Ernie and John discuss comp momentum driven by the value proposition and shopping experience, and pricing gaps being managed by monitoring competitors' pricing.

Q: Paul Lejuez from Citi asks about basket drivers and income demographics.

A: John and Ernie talk about basket being driven by a combination of price and mix, and consistent performance across income demographics in various geographies.

Q: Alex Straton from Morgan Stanley asks about gross margin guidance and AI strategy.

A: John explains gross margin guidance due to shrink accrual adjustments, and Ernie discusses AI strategy focusing on enhancing efficiency, fraud detection, customer service, and HR processes.

Q: Matthew Boss from JPMorgan asks about new customer acquisition and fourth quarter business.

A: Ernie and John talk about new customer acquisition and the strong start to the fourth quarter, emphasizing marketing campaigns and merchandise availability.

Q: Michael Binetti from Evercore ISI asks about freight, tariffs, and margin headwinds.

A: John and Deb discuss freight dynamics, tariff management, and considerations for margin headwinds in future models.

Q: Cory Tarlow from Jefferies asks about value perception and comp shape.

A: Ernie and John talk about value perception improvement and comp shape driven by the company's value proposition and shopping environment.

Q: Jay Sole from UBS asks about inventory availability and tariffs.

A: Ernie discusses inventory availability due to retailer challenges and team execution in navigating tariff impacts.

Q: Adrienne Yih from Barclays asks about holiday shopping behavior and supply chain.

A: Ernie and John talk about holiday shopping behavior influenced by brand equity and supply chain efficiency.

Q: Mark Alschwager from Baird asks about segment margin convergence.

A: Ernie and Deb discuss narrowing gap between HomeGoods and Marmaxx due to merchandise and top-line driving factors.