TJX Companies (NYSE:TJX) held its first-quarter earnings conference call on Wednesday. Below is the complete transcript from the call.
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Watch the full earnings call below:
Summary
TJX Companies reported first-quarter fiscal 2027 results with sales, profitability, and earnings per share exceeding expectations; comp sales rose 6%.
The company increased its full-year sales and profitability outlook, driven by strong performance across all divisions, including notable growth in apparel and home categories.
Strategic initiatives include expanding the global footprint, enhancing marketing strategies targeting younger demographics, and leveraging a diverse merchandise mix.
Operational highlights include a 9% comp sales increase at HomeGoods and a successful store opening in Spain, indicating international growth potential.
Management emphasized strong execution and the potential to capture additional market share, with plans to open more stores and invest in marketing and talent development.
Full Transcript
OPERATOR
Ladies and gentlemen, thank you for standing by. Welcome to The TJX company’s first quarter fiscal 2027 financial results conference call. At this time, all participants are in listen only mode. Later, we will conduct a question and answer session at that time. If you have a question, you will need to press star one. As a reminder, this conference is being recorded May 20, 2026. I would like to turn the conference call over to Mr. Ernie Herman, Chief Executive Officer and President of the TJX Companies. Please go ahead sir.
Ernie Herman (Chief Executive Officer and President)
Thanks Ted. Before we begin, Deb has some opening comments.
Deb
Thank you Ernie and good morning. Today’s call is being recorded and includes forward looking statements about our results and plans. These statements are subject to risks and uncertainties that could cause the actual results to vary materially from these statements, including, among others, the factors identified in our filings with the sec. Please review our press release for a cautionary statement regarding forward looking statements as well as the full safe harbor statements included in the Investor section of our website tjx.com we have also detailed the impact of foreign exchange on our consolidated results and our international divisions in today’s press release and in the investor section of tjx.com along with reconciliations to non GAAP measures we discuss. Thank you and now I’ll turn it back over to Ernie.
Ernie Herman (Chief Executive Officer and President)
Good morning. Joining me and Deb on the call is John. I want to begin by thanking our global associates for their hard work. I truly appreciate their ongoing commitment to both TJX and to our customers. Now to an overview of our first quarter results. I am extremely pleased with our excellent first quarter results. First quarter sales, profitability and earnings per share were all well above our expectations. Overall comp sales were up an outstanding 6%. I am particularly pleased that each of our divisions delivered strong comp sales growth and drove increases in customer transactions. With our above planned first quarter sales, we are raising our full year sales and profitability outlook. John will give some more detail about our first quarter results and full year guidance in a moment. Our terrific first quarter performance is a testament to the strong execution across the company. Our global teams work together as one TJX to offer customers across a wide demographic excellent values in an exciting treasure hunt shopping experience every day. I am confident that our values and merchandise assortment resonated with consumers across all of our retail banners and that each of our divisions grew their customer base. Looking ahead, the second quarter is off to a good start and we have many initiatives underway that we believe can continue to drive sales and customer traffic. Availability of quality branded merchandise continues to be outstanding and we are in a great position to take advantage of the plentiful opportunities we’re seeing in the marketplace. Longer term, we are energized by the opportunities we see to continue driving sales and profitability and expanding our global footprint and gaining market share in the US and internationally. Now I’ll turn the call over to John to cover our first quarter results in more detail.
John
Thanks Ernie. I also want to add my gratitude to all of our global associates for their continued hard work and commitment to TJX. Now I’ll share some additional details on the first quarter versus last year as Ernie mentioned, our first quarter consolidated comp sales increased 6% which is well above our plan. Our first quarter comp was driven equally by a higher average basket and an increase in customer transactions. Further, we saw very strong comp sales increases in both our apparel and home categories. Pretax Profit margin was 12%, up 170 basis points and well above our plan. Gross margin was 31.3% up 180 basis points. This increase was primarily driven by an increase in merchandise margin, a benefit from favorable inventory and fuel hedges and expense leverage on sales. SGA was 19.5%, unfavorable by 10 basis points. Net interest income was neutral to pretax profit margin versus last year. All this led to diluted earnings per share of $1.19 up 29% and well above our plan. First quarter pretax profit margin and diluted earnings per share were both well above our plan. This was primarily due to expense leverage on our above planned sales, favorable fuel hedges and stronger than expected merchandise margin. Now to our first quarter divisional performance. Once again, we are extremely pleased that every division delivered strong comp sales growth and saw increases in customer transactions. At Marmax, comp sales grew an outstanding 6% and segment profit margin increased 100 basis points to 14.7%. Comp sales in both Marmax’s apparel and home categories were strong. Also, we were very pleased with the broad strength of comp sales across each of Marmax’s region and income demographics at our Sierra stores and U.S. e commerce sites which we report as part of this division comp we saw a very strong comp increase. We continue to see excellent opportunities to keep growing Marmax, our largest division across the U.S. at HomeGoods, comp sales increased a remarkable 9%. Similar to Marmax, HomeGoods saw strong comp sales increases across each of their region and income demographics. Segment Profit margin increased 270 basis points to 12.9% HomeGoods offers consumers an exciting, eclectic assortment of merchandise sourced from around the world, all at great value. We believe our HomeGoods and HomeSense banners are highly differentiated from other home fashion retailers and would be very hard for others to replicate. We see a tremendous opportunity to grow this division further and believe we are very well positioned to capture additional share with of the US home market. TGX Canada comp sales were up an outstanding 7% segment profit margin on a constant currency basis grew 100 basis points to 11. Across all three of our Canadian banners. We are Canada’s only major off price retailer and we believe we are well positioned to keep growing our customer base across across the country. At TJX International Comp sales increased a strong 4%. We were pleased with our sales growth in Europe and the strong sales increase in Australia. TJX International segment profit margin on a constant currency basis improved by 40 basis points to 4.7% during the quarter. We opened our first store in Spain and the customer response was terrific. We are very excited about our growth plans in Spain and remain confident in the opportunities we see to capture additional market share in both Europe and Australia. Moving to inventory first quarter balance sheet inventory was up 8% and inventory on a per store basis was up 7%. We feel great about our inventory levels and the excellent availability we’re seeing in the marketplace. As to our capital allocation, we continue to reinvest in the growth of our business while returning $1.1 billion to shareholders through our buyback and dividend programs in the first quarter. As we mentioned in our press release this morning, we have increased our fiscal 2027 share buyback guidance to a range of 2.75 billion to $3 billion, which will allow us to buy more opportunistically at favorable stock price levels. Now I’ll turn it back to Ernie.
Ernie Herman (Chief Executive Officer and President)
Thanks John. I would now like to delve into the ways we are playing offense to drive our top line and gain larger share of both the apparel and home fashions markets. First is how we’re approaching our marketing this year. Many of our retail banners are launching fresh new campaigns and exciting partnerships that continue to reinforce our value leadership. Our marketing targets a broad demographic, including younger shoppers through a wide variety of channels with a strong emphasis on digital media. We are continuously testing new ways to engage today’s consumers to demonstrate our value proposition, highlight the joy of shopping our stores and build loyalty among our customers. I am very pleased with the results we have seen so far and I’m confident our marketing Strategy will continue to attract new shoppers and encourage existing shoppers to visit more often. Next is our exciting mix of merchandise at great value every day. This all starts with our team of more than 1,400 buyers who are in the marketplace. Throughout the year. They work with our vast vendor network to find the best assortments at the best values across good, better and best brands. Our planning and allocation team does the terrific work of allocating the goods based on the demographic characteristics of each individual store. This allows us to offer a curated mix of exciting categories and brands that we believe will resonate with shoppers every time they visit. Whether it’s their first time shopping with us or they are a long time customer availability of merchandise is off the charts. In addition to our long term mutually beneficial relationships, we typically add thousands of new vendors each year. We work hard to be the first call for vendors when they have excess goods. As TJX continues to open stores, grow its top line and attract broad range of shoppers, we believe we are becoming even more appealing to vendors who are looking to clear inventory and and grow their business further. With our global footprint, we can introduce brands to new geographies around the world. As we pursue our future growth plans, we are extremely confident there will be more than enough merchandise to support our growth. In fact, the bigger we have become, the more availability we see. Next is the in store shopping experience and investing in our stores through our remodeling program and new prototypes. We believe keeping our stores refreshed helps drive consistent comp sales growth across different store ages. Further, we continue to invest in our store payroll to maintain a high level of customer satisfaction and are always looking at ways to improve the store environment and the speed of checkout. All of this has led to very strong customer satisfaction scores at each of our divisions, moving to our global store growth and increasing our exposure to our price around the world. We now operate stores in 10 countries and we see the potential to add another 1700 plus stores in these countries alone. With our existing banners again, we recently opened our first store in Spain and customer reaction has been outstanding. We are on track to open additional stores in Spain this year and are excited about our growth potential in that country. In Mexico, we are very pleased with our joint venture with AXO and the Promota stores. The teams are working together very effectively combining our merchandising expertise with their local operating knowledge. While still early, we are very optimistic about the long term potential in Mexico regarding our investment in brands for less in the Middle East. Beyond the current geopolitical environment we remain confident in the long term opportunity for that business. Lastly, and most importantly, we continue to play offense by investing in the teaching and training of our associates. I strongly believe the tenure and depth of our off price knowledge and expertise within TJX is unmatched. We have a very deep bench and are laser focused on developing the next generation of TJX leaders in order to maintain continuity in the business for many years to come. I am so proud of our culture which I believe will continue to be a major contributor to our success going forward. Summing up we are extremely pleased with our performance in the first quarter and with the opportunities we see for our business going forward. Our teams across our entire organization are driving excellent execution of our off price fundamentals. We feel great about our plans for the remainder of the year and as always, we will strive to beat them throughout our 50 year history. We believe that the flexibility and resiliency of our business model and our wide customer demographic have been tremendous advantages that have allowed us to successfully navigate through many types of macroeconomic and retail environments. We are convinced that our strategies to play offense and the characteristics of our business set us up very well to capitalize on the market share and growth opportunities that we see for many years to come. Now I’ll turn the call back to John to cover our second quarter and full year guidance and then we’ll open it up for questions.
John
Thanks again Ernie. I’ll start with our second quarter guidance. We are planning overall comp sales to increase 2 to 3%. Consolidated sales to be in the range of 15 to $15.1 billion, up 4 to 5%. Pretax profit margin to be in the range of 11.4 to 11.5% flat to up 10 basis points versus last year’s 11.4%. Gross margin to be in the range of 30.9 to 31% which would be up 20 to 30 basis points versus last year’s 30.7%. We are expecting an increase in merchandise margin in the second quarter SG&A to be 19.6% 10 basis points unfavorable versus last year. This would be due to incremental store wage and payroll costs. We’re assuming net interest income of 28 million which we expect to be neutral to the second quarter. Pre tax. Also assumes a tax rate of 24.9% and a weighted average share count of approximately 1.12 billion shares. As a result of these assumptions, we expect second quarter diluted earnings per share to be in the range of $1.15 to $1.17, up 5 to 6% versus last year’s $1.10. Moving to the full year, we now expect overall comp sales growth of 3 to 4%. We are increasing our full year consolidated sales guidance to be in the range of 63.2 to $63.7 billion, up 5% to 6% versus last year. We are increasing our full year pretax profit margin guidance to be in the range of 11.9 to 12% up 20 to 30 basis points versus last year’s adjusted 11.7%. Moving to gross margin, we now expect it to be in the range of 31.2% to 31.3%, up 20 to 30 basis points versus last year’s adjusted 31%. We continue to expect full year SGA to be 19.5% flat versus last year’s adjusted 19.5%. We’re now assuming net interest income of about $122 million, which we expect to be neutral to our full year pretax profit margin versus last year. Our full year guidance assumes a tax rate of 24.7% and a weighted average share count of approximately 1.12 billion shares. As a result of these assumptions, we are increasing our full year diluted earnings per share to be in the range of $5.08 to $5.15. This will represent a 7 to 9% increase versus last year’s adjusted $4.73. I want to mention that we did not flow the entire first quarter pre tax profit and earnings per share beat to the full year as we are now planning current fuel prices to remain in place for the rest of the year. Of course, if fuel prices come down from their current levels, we would expect to see favorability to our full year profitability plan. In closing, I want to reiterate that we are excited about the growth and market share opportunities we see in the near and long term. We are in an excellent position to …
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