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TJX (TJX) is trading lower today after reporting its Q2 (Jul) results this morning. The off-price retailer continued its stretch of EPS beats, although results included a benefit from tariff refunds, while revenue increased 5.4% yr/yr to $15.18 bln, roughly in line with expectations. TJX also raised its FY27 EPS outlook to $5.31-5.36, nicely above expectations, while slightly increasing its revenue outlook to $63.4-63.8 bln from $63.2-63.7 bln, which remained below expectations. While TJX typically guides conservatively, much of the EPS upside reflects tariff refunds, while the below-consensus revenue outlook and reaffirmed +3-4% comp guidance despite strong first half results likely keep some focus on the back-half sales trajectory.

• Comp sales: Comp sales increased 4%, above TJX's guidance for +2-3%, driven by both a higher average basket and increased customer transactions. Home categories outperformed apparel categories.
• Divisional performance: Each division delivered positive comps, led by HomeGoods and TJX International at +7%, followed by Canada at +6%. However, Marmaxx was the clear soft spot at just +1%, below TJX's expectations, with management attributing the weakness largely to self-inflicted merchandise-mix and planning/allocation issues that left some stores without the right goods at the right time. HomeGoods benefited from both higher average basket and transactions, while strength in Canada and International was primarily transaction-driven.
• Consumer demand: TJX remained upbeat on the consumer backdrop, saying shoppers continue to seek value and its banners resonate across a wide range of age and income demographics. Despite its softer overall comp, Marmaxx still delivered positive comps across all regions and income demographic bands, as did HomeGoods.
• Margins: Adjusted pretax margin expanded 50 bps yr/yr to 11.9%, well above TJX's 11.4-11.5% guidance. The upside reflected operational expense efficiencies, higher merchandise margin and expense leverage on better sales. Adjusted gross margin increased 70 bps to 31.4%, driven by higher merchandise margin, mostly reflecting tariff favorability.
• Store growth: TJX plans to accelerate annual store growth to 4% beginning in FY28 and increased its long-term global store target by 500 locations to 7,500. The higher target includes another 300 TJ Maxx and Marshalls locations and another 200 HomeGoods stores.

Briefing.com Analyst Insight

Overall, TJX delivered another solid quarter, although comp growth moderated to +4% from +6% in Q1, which may have fallen short of elevated expectations, particularly with Marmaxx increasing just 1% and coming in below plan. Management did not attribute the Marmaxx weakness to softer consumer demand, which is supported by positive comps across regions and income demographics, instead pointing to self-inflicted merchandise-mix and planning issues that left some stores without the right goods at the right time. Importantly, strength remained broad across the rest of the business. Pretax margin also remained a bright spot, coming in well above plan on operational efficiencies, higher merchandise margin and expense leverage. The raised FY27 EPS outlook looks strong on the surface, although much of the upside reflects tariff refunds, while revenue guidance was only modestly increased and the +3-4% comp outlook was reaffirmed despite strong first-half results. With Q3 off to a strong start, TJX appears to retain some conservatism in its outlook, making execution at Marmaxx and the pace of sales through back-to-school and the holiday season important in determining whether its recent stretch of outperformance can continue in the back half.