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TJX (TJX) is trading nicely higher after reporting strong Q1 (Apr) results this morning. The leading off-price retailer comfortably beat expectations, delivering a large double-digit EPS beat, while revenue increased 9.2% yr/yr to $14.32 bln. Although Q2 guidance for EPS of $1.15-1.17 and revenue of $15.0-15.1 bln came in slightly below expectations, TJX raised its FY27 guidance for EPS, revenue, and comps.

• Comp sales increased 6%, well above guidance for +2-3% and accelerating from +5% in Q4, driven equally by higher customer transactions and a higher average basket. 
• Strength was broad-based across the business, with HomeGoods leading at +9% comps (+6% in Q4), followed by TJX Canada at +7% (+7% in Q4), Marmaxx at +6% (+5% in Q4), and TJX International at +4% (+4% in Q4). Importantly, every division delivered transaction growth.
• On the consumer, management described demand as broad and remarkably consistent across regions and income groups, with no meaningful change in customer behavior. TJX continues to benefit from its off-price value proposition and treasure-hunt shopping experience.
• Pre-tax profit margin expanded 170 bps yr/yr to 12.0%, well above prior guidance for 10.3-10.4%. The upside was primarily driven by expense leverage on above-plan sales, favorable fuel hedges, and stronger-than-expected merchandise margin. Gross margin expanded 180 bps to 31.3%.
• TJX said Q2 is off to a good start, though guidance remains conservative. For FY27, TJX raised its comp outlook to +3-4% from +2-3%, revenue to $63.2-63.7 bln from $62.7-63.3 bln, EPS to $5.08-5.15 from $4.93-5.02, and pretax margin to 11.9-12.0%. TJX did not flow through the full Q1 pretax profit and EPS beat due to higher fuel assumptions.

Briefing.com Analyst Insight

TJX continues to benefit from a favorable off-price backdrop. The +6% comp was particularly strong, accelerating from an already solid +5% holiday quarter and driven equally by transactions and average basket. That balanced growth reinforces TJX's consistency and shows shoppers are still responding to its value proposition. Importantly, management also described customer behavior as remarkably consistent across regions and income groups, with no meaningful signs of pullback. Meanwhile, TJX said merchandise availability remains outstanding, giving it plenty of opportunity to source quality branded goods and reinforce its value proposition. Overall, the quarter reinforced the strength of TJX's off-price model, its consistency in a choppy retail backdrop, and its ability to continue gaining share. Additional growth opportunities abroad, including early momentum in Spain, along with the increased share buyback target, further underscore management's confidence.