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TJX Companies Inc Earnings - Analysis & Highlights for Q4 2025
Overview
PositivesNegativesOutlook
- Overall comp sales growth of 5% was driven by strong consistent comp increases of 4% or above at each of the divisions.
- The company is well positioned to flow fresh assortments to its stores and online this spring.
- The company is confident that the key strengths and flexibility of its business will allow it to navigate through the current China tariff environment.
- The company is bullish on its home business.
- The company opened its 5,000th store, a milestone for the company.
- The company is planning a small negative impact in the first half of the year from the current China tariffs on merchandise.
- The company is planning lower pre-tax profit margin and EPS for Q1.
- The company is still analyzing data on the shrink results.
- The company is planning an overall comp store sales growth of 2% to 3%.
- The company expects full-year diluted EPS to be in the range of $4.34 to $4.43, up 2% to 4% versus last year's $4.26.
- The company expects a small negative impact in the first half of 2026 from the current China tariffs on merchandise.
- The company expects net interest income of $27 million to delever its YoY pre-tax profit margin by 20 bps, with a tax rate of 23.2% and a weighted average share count of approximately 1.13 billion shares.
Q&A Highlights from TJX Companies Inc Earnings Call Q4 2025
- Analyst asked about the factors that contributed to the stronger performance in Canada and International, specifically if there were any changes in the macro environment that benefited the company or if it was due to better execution.
- Ernie L. Herrman explained that the strong performance in Canada and International was due to a combination of factors, including better execution, tactical planning, and a healthy home business. The company executed a flow plan to ship freshness prior to Christmas, which benefited their pre-Christmas and post-Christmas business. They also went after specific gift categories, improving their mix advantage and owning those categories more deeply. Additionally, the healthy home business helped their total performance as well.
- Ernie L. Herrman explained that the strong performance in Canada and International was due to a combination of factors, including better execution, tactical planning, and a healthy home business. The company executed a flow plan to ship freshness prior to Christmas, which benefited their pre-Christmas and post-Christmas business. They also went after specific gift categories, improving their mix advantage and owning those categories more deeply. Additionally, the healthy home business helped their total performance as well.
- Analyst asked about the continued strength in transactions across divisions and the company's approach to product assortment and value proposition.
- The company continues to see strong transaction growth and attracts more customers to its stores, particularly in the 18 to 34 age range. The company is conscious about continually expanding its vendor base and category of items, and its breadth of product is kicked up a notch from last year. The company's approach to product assortment and value proposition is to continually bring in new vendors and new product categories while not alienating customers or category purchases.
- The company continues to see strong transaction growth and attracts more customers to its stores, particularly in the 18 to 34 age range. The company is conscious about continually expanding its vendor base and category of items, and its breadth of product is kicked up a notch from last year. The company's approach to product assortment and value proposition is to continually bring in new vendors and new product categories while not alienating customers or category purchases.
- Analyst asked about the company's expectations for continued expansion in merchandise margins and how it will consider mark-on versus tariffs.
- The company's approach to mark-on and merchandise margin is to assess the retail level of what it can retail product for and work backwards to determine the cost. The company does not factor in tariffs or other costs that could play into the picture. The company's buyers focus on buying goods and determining the cost based on the retail they can put the goods out at. The company is excited about the sales and margin opportunity in the current environment, which is a textbook situation.
- The company's approach to mark-on and merchandise margin is to assess the retail level of what it can retail product for and work backwards to determine the cost. The company does not factor in tariffs or other costs that could play into the picture. The company's buyers focus on buying goods and determining the cost based on the retail they can put the goods out at. The company is excited about the sales and margin opportunity in the current environment, which is a textbook situation.
- Analyst asked about the company's expectations for gross margins and shrink for the year.
- The company is pleased with its shrink rates and has a small improvement baked into its plan for this year, centered around the annualization of initiatives from last year. The company is analyzing data on shrink results and will use that data to lean into some of the things that worked last year. The overarching strategy is to continue to maintain a great shopping environment for customers and a safe shopping environment for associates and customers.
- The company is pleased with its shrink rates and has a small improvement baked into its plan for this year, centered around the annualization of initiatives from last year. The company is analyzing data on shrink results and will use that data to lean into some of the things that worked last year. The overarching strategy is to continue to maintain a great shopping environment for customers and a safe shopping environment for associates and customers.
- Analyst asked about competition for boxes from retailers that go bankrupt and the availability of real estate in the US.
- Ernie L. Herrman, CEO, stated that the company sees opportunities to expand into rural areas and fill the void left by department store closures. He also mentioned that the company is seeing large box closures, providing an opportunity to either go into a new area or relocate stores to better shopping areas.
- Ernie L. Herrman, CEO, stated that the company sees opportunities to expand into rural areas and fill the void left by department store closures. He also mentioned that the company is seeing large box closures, providing an opportunity to either go into a new area or relocate stores to better shopping areas.
- Analyst asked about the company's plans for business categories in 2026 and the current state of shrink accrual levels relative to 2019.
- Ernie L. Herrman, CEO, stated that the company is bullish on its home business, which is a third plus of TJX. He mentioned that the home business has performed well compared to the industry and that the company is looking to expand its offerings in this category. He also stated that the company has a differentiator in its home business, which utilizes goods from Europe, creating an umbrella of fashion, brand, and quality that other home retailers don't offer. He mentioned that the company has an offensive sales driver in Europe and some of its other accessories categories, which customers love. He also stated that the company still has an opportunity to improve its shrink rates going forward, but did not provide specifics.
- Ernie L. Herrman, CEO, stated that the company is bullish on its home business, which is a third plus of TJX. He mentioned that the home business has performed well compared to the industry and that the company is looking to expand its offerings in this category. He also stated that the company has a differentiator in its home business, which utilizes goods from Europe, creating an umbrella of fashion, brand, and quality that other home retailers don't offer. He mentioned that the company has an offensive sales driver in Europe and some of its other accessories categories, which customers love. He also stated that the company still has an opportunity to improve its shrink rates going forward, but did not provide specifics.
- Analyst asked about the structural barriers preventing HomeGoods from reaching Marmaxx levels of performance over the long term and also asked for insights into the moving pieces of margin in both segments in 2025.
- Ernie L. Herrman explained that there are no major structural barriers preventing HomeGoods from reaching Marmaxx levels of performance, but there are some categories that are innately higher margin in Marmaxx versus the home business. He mentioned that the company's goal is to keep pushing the needle and close the gap between the two segments.
- Ernie L. Herrman explained that there are no major structural barriers preventing HomeGoods from reaching Marmaxx levels of performance, but there are some categories that are innately higher margin in Marmaxx versus the home business. He mentioned that the company's goal is to keep pushing the needle and close the gap between the two segments.
- Analyst asked about the selection process for new store locations and whether there is an opportunity to open smaller footprint stores beyond the planned 800 stores.
- Ernie L. Herrman explained that the company takes a case-by-case approach when selecting new store locations, considering factors such as potential transfer sales and the presence of other brands in the vicinity. He mentioned that the company sees opportunities for smaller footprint stores in some areas, and that they have had success with smaller format stores in the past.
- Ernie L. Herrman explained that the company takes a case-by-case approach when selecting new store locations, considering factors such as potential transfer sales and the presence of other brands in the vicinity. He mentioned that the company sees opportunities for smaller footprint stores in some areas, and that they have had success with smaller format stores in the past.
- Analyst asked about Grupo Axo and Brands for Less and whether they are joint ventures.
- John Joseph Klinger clarified that Brands for Less is an investment, while Axo is a joint venture. He stated that the company is optimistic about the long-term opportunities for Brands for Less in Mexico, but it is still early days to provide specific insights.
- John Joseph Klinger clarified that Brands for Less is an investment, while Axo is a joint venture. He stated that the company is optimistic about the long-term opportunities for Brands for Less in Mexico, but it is still early days to provide specific insights.
- Analyst asked about the company's success in breaking into smaller brands and developing relationships with them.
- The company has a priority to nurture relationships with smaller brands and they are desired on both sides of the equation. The company is always trying to add new vendors to their list, and they have a 21,000 vendor list that is not stagnant, with vendors falling off and new ones being added every year. The company wants to have a home for the leftover inventory of these smaller brands, and they are relying on a specialty store business.
- The company has a priority to nurture relationships with smaller brands and they are desired on both sides of the equation. The company is always trying to add new vendors to their list, and they have a 21,000 vendor list that is not stagnant, with vendors falling off and new ones being added every year. The company wants to have a home for the leftover inventory of these smaller brands, and they are relying on a specialty store business.
- Analyst asked about the wage and payroll piece and inflation on that one line.
- The company does not provide specific details on their wages, but they do see legislative increases come every January.
- The company does not provide specific details on their wages, but they do see legislative increases come every January.
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