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TJX (TJX) delivered a modest $0.01 EPS beat for 1Q26, which is less pronounced than in prior quarters, reflecting pressures from ongoing tariff-related costs. The company achieved comparable store sales growth of +3%, hitting the high end of its guidance range, underscoring the resilience of TJX’s off-price retail model and its treasure-hunt shopping experience. However, this positive comp performance is overshadowed by TJX’s downside EPS and revenue guidance for Q2 and FY26, driven by persistent tariff pressures, FX headwinds, expected gross margin contraction, and a cautious view, expressed through a reaffirmation of its FY26 comp guidance of 2-3%, despite the upside Q1 result.

• TJX's better-than-expected comp of +3% was driven by strong customer traffic across its divisions, with Marmaxx US posting +2% comp growth and HomeGoods achieving a standout +4%.
  • Marmaxx, encompassing T.J. Maxx, Marshalls, and Sierra, benefited from solid demand for apparel and accessories, particularly in value-driven categories like casual and athletic wear, though home furnishings within the segment saw softer performance amid macroeconomic pressures on discretionary spending. 
  • HomeGoods’ robust +4% comp growth was fueled by strong sales in decorative accessories, tabletop, and cookware, as consumers gravitated toward refreshing home aesthetics at discounted prices, though furniture lagged due to higher price points and reduced big-ticket purchases.
• Macroeconomic factors, including persistent inflation and high interest rates, have driven value-conscious consumers to TJX’s off-price model, while company-specific initiatives—such as sharp inventory management, opportunistic buying, and an engaging in-store experience—continue to support comp growth. These trends reflect TJX’s ability to capture market share in a retail landscape where full-price competitors struggle to maintain foot traffic.
• TJX's gross profit margin declined by 50 bps yr/yr to 29.5%, a notable contraction that reflects several headwinds. The primary driver was the impact of tariffs on imports, particularly from China, which increased merchandise costs and squeezed margins. Additionally, incremental freight costs, though less severe than in prior years, continued to pressure profitability, as did a slight uptick in markdowns to maintain competitive pricing in a value-sensitive market.
• For Q2 and FY26, TJX’s downside EPS guidance signals caution, reflecting ongoing tariff pressures, which TJX assumes will remain at current levels through FY26. Historically, TJX has a track record of conservative guidance, often exceeding expectations, suggesting potential for upside if tariff impacts are mitigated or consumer spending stabilizes. TJX also reaffirmed its FY26 comp guidance of +2–3%, with management noting that Q2 is off to a strong start, driven by continued customer traffic and robust apparel and home category performance. The Q2 comp guidance of +2–3%, aligning with consensus estimates, appears achievable given TJX’s operational momentum and ability to source compelling merchandise.

In summary, TJX’s 1Q26 results highlight the strength of its off-price model, with +3% comps reflecting robust customer traffic and category resilience. However, the company’s cautious EPS guidance for Q2 and FY26, driven by tariff pressures and gross margin contraction, tempers optimism, signaling near-term profitability challenges despite a favorable sales outlook.