TJX Companies (NYSE:TJX) reported second-quarter fiscal 2027 results that exceeded its internal plan, supported by strong comparable-store sales at HomeGoods, TJX Canada and TJX International. The off-price retailer raised its full-year outlook for adjusted pre-tax profit margin and adjusted earnings per share, although its Marmaxx division posted a more modest sales gain after what management described as self-inflicted merchandising execution issues.
Consolidated comparable sales rose 4% in the quarter, above the company’s plan. Adjusted diluted earnings per share increased 11% from a year earlier to $1.22, while adjusted pre-tax profit margin expanded 50 basis points to 11.9%.
Division Results Highlight Diversification
Chief Executive Officer and President Ernie Herrman said the quarter demonstrated the value of TJX’s global and diversified business model. While Marmaxx sales were below the company’s expectations, its other three divisions generated comparable-sales growth of between 6% and 7%.
- Marmaxx: Comparable sales increased 1%, driven entirely by a higher average basket and partly offset by a small decline in customer transactions. Adjusted segment profit margin was flat year over year at 14.2%.
- HomeGoods: Comparable sales climbed 7%, with both average basket and customer transactions contributing. Adjusted segment profit margin increased 240 basis points to 12.4%.
- TJX Canada: Comparable sales rose 6%, primarily reflecting higher customer transactions. Adjusted segment profit margin, on a constant-currency basis, increased 30 basis points to 16.3%.
- TJX International: Comparable sales increased 7%, also driven primarily by transactions. Constant-currency adjusted segment profit margin rose 210 basis points to 7.3%.
Home categories outperformed apparel categories companywide. Klinger said second-quarter adjusted gross margin rose 70 basis points to 31.4%, mostly due to higher merchandise margin from tariff favorability. Adjusted selling, general and administrative expense was 19.7% of sales, 20 basis points less favorable than the prior year because of incremental store wage and payroll costs.
At HomeGoods, Herrman cited performance across decorative, higher-ticket and replenishment-oriented categories, along with store execution and merchandising. Klinger said the division’s margin improvement reflected its 7% comparable-sales gain, operational efficiencies and lower tariff costs.
Marmaxx Addresses Merchandise-Mix Issues
Management said Marmaxx’s slower growth resulted from shortcomings in the merchandise mix at TJ Maxx and Marshalls rather than competition, pricing or value perceptions. Herrman said the division could have been “sharper on having the right goods in the right stores at the right time.”
He described the issue as entirely within the company’s control and said teams across buying, merchandising, planning and allocation had identified the affected areas. The company has added systematic planning processes intended to help monitor and mitigate similar issues in the future, though Herrman did not provide specific category details for competitive reasons.
“We’re seeing a trend improvement already in August versus in Q2,” Herrman said. He said he was most confident Marmaxx would return toward a more normal 2% to 3% comparable-sales cadence by the fourth quarter, with a transition toward that level over the next several months.
Klinger said Marmaxx began the second quarter somewhat stronger in May, followed by consistent sales in June and July, with all three months posting positive comparable sales. Management also said its reported transaction measure is based on register transactions rather than store footfall.
Inventory, Store Growth and Capital Returns
Second-quarter balance-sheet inventory increased 7% year over year, while inventory per store rose 2%. Klinger said the company was comfortable with its inventory position and believed it was well prepared to pursue plentiful merchandise-buying opportunities.
TJX returned $1.3 billion to shareholders in the quarter through share repurchases and dividends while continuing to invest in expansion. The company raised its long-term store potential by 500 locations to 7,500 stores across its existing banners in its current 10 countries. That total represents more than 2,200 additional stores.
The revised opportunity includes capacity for TJ Maxx and Marshalls to add 300 stores to reach a combined 3,300 locations, and for HomeGoods to add 200 stores to reach 2,000 locations. TJX plans to accelerate annual store openings to 4% beginning next year, compared with its previous 3% growth rate.
Klinger said new stores have been exceeding the company’s expectations for an extended period. Management also pointed to rural markets, denser urban locations enabled by smaller formats, and growth opportunities across all of its brands. Sierra and HomeSense are expected to grow at rates above the companywide 4% target, Herrman said.
Raised Full-Year Outlook
For the third quarter, TJX expects comparable sales growth of 2% to 3%, sales of $15.6 billion to $15.8 billion, adjusted pre-tax profit margin of 12.3% to 12.4%, and adjusted diluted earnings per share of $1.30 to $1.32.
The company maintained its full-year comparable-sales growth expectation of 3% to 4% and projected sales of $63.4 billion to $63.8 billion, representing growth of 5% to 6% from the prior year. It raised its full-year adjusted pre-tax profit margin outlook to 12.0% to 12.1%, from adjusted 11.7% in the prior year, and increased its adjusted diluted EPS forecast to $5.15 to $5.20, up 9% to 10% from adjusted EPS of $4.73.
Klinger said the second half reflects higher fuel and freight costs, as well as comparisons against merchandise-margin favorability in the first half. The company expects freight costs to rise in part because of lower driver availability in trucking.
Herrman said third-quarter sales had begun strongly across the business and that merchandise availability remained “off the charts.” He said TJX plans to emphasize value, gifting initiatives, digital and social-media marketing, and its treasure-hunt shopping experience through the fall and holiday season.
About TJX Companies (NYSE:TJX)
TJX Companies, Inc is a leading off-price retailer of apparel, footwear, home fashions and other consumer goods. The company operates multiple retail concepts that offer discounted brand-name and designer merchandise, including well-known banners such as T.J. Maxx and Marshalls in the United States, HomeGoods for home furnishings, TK Maxx in parts of Europe, and Winners and Homesense in Canada. Merchandise categories span women’s, men’s and children’s apparel, accessories, beauty, home décor, kitchenware and small furniture, with frequent changes in assortment that create a “treasure-hunt” shopping experience for consumers.
The company’s business model centers on opportunistic buying, purchasing excess, irregular or out-of-season inventory from manufacturers, department stores and other suppliers, and passing savings to customers through lower prices.
-plc-logo-1200x675.png){kind=logo}
