EPS of $1.10 increased by 13.4% from previous year
Gross margin of 30.7%
Net income of 1.24B
"I am extremely pleased with our outstanding second quarter performance and our above-plan sales, profit margin, and earnings per share results." - Ernie Herrman, Chief Executive Officer and President
The TJX Companies Inc (TJX) QQ2 2026 Earnings Analysis — Off-Price Value Leader Delivers 4% Comp, Margin Resilience, and a Strong Growth Path Across U.S. and International Divisions
Executive Summary
The TJX Companies reported a solid second quarter in fiscal 2026 (QQ2 2026) with 4% comparable sales growth driven by broad strength across divisions and a resilient value proposition. Revenue was $14.40 billion, gross margin stood at 30.7%, and operating margin reached 11.25% with diluted EPS of $1.10, up 15% year over year. Management highlighted successful tariff mitigation, above-plan sales, and a favorable mix of categories (notably HomeGoods and Canada) that supported profitability. The company raised full-year guidance on pre-tax margins and EPS, reflecting continued operating leverage on strong top-line momentum and continued inventory availability. The near-term outlook remains constructive as TJX leverages its flexible off-price model, broad demographic reach, and global footprint to capture market share, while funding growth through cash flow generation and capital returns.
Management emphasized ongoing opportunities in back-to-school and holiday assortments, as well as the ability to attract a broad, value-seeking customer base through a comprehensive marketing and merchandising strategy. Looking ahead, TJX plans to open net approximately 130 stores in the year (just over 3% net unit growth) and remodel nearly 500 stores, supporting a long runway for global expansion beyond current footprints. However, tariff exposure, FX movements, and macro consumer headwinds remain key sensitivities to watch as the year progresses.
Net Income: $1.243B, Net Margin 8.63% (YoY +13.10%, QoQ +19.98%)
EPS (Diluted): $1.10, YoY +13.40%, QoQ +19.57%
Financial Highlights
- Revenue: $14.401B, YoY +6.93%, QoQ +9.84% (Q2 FY2026)
- Gross Profit: $4.425B, Gross Margin 30.73% (YoY +8.24%, QoQ +14.49%)
- Operating Income: $1.620B, Operating Margin 11.25% (YoY +13.92%, QoQ +23.10%)
- Net Income: $1.243B, Net Margin 8.63% (YoY +13.10%, QoQ +19.98%)
- EPS (Diluted): $1.10, YoY +13.40%, QoQ +19.57%
- Pre-tax Margin: 11.4% (above plan, up ~50 bps YoY)
- Inventory: +14% total; per-store +10% vs year-ago period, signaling thoughtful replenishment of branded merchandise opportunities
- Free Cash Flow: $1.33B; Net Cash Provided by Operating Activities: $1.791B; Cash at End of Period: $4.639B
- Net Debt: $8.482B; Total Debt: $13.121B; Cash Balance: $4.639B
- Full-year guidance raised: Comp sales +3%; Revenue $59.3B–$59.6B; Gross Margin 30.5%–30.6%; SG&A 19.4%; EPS $4.52–$4.57 (up 6–7% vs prior year)
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
14.40B
6.93%
9.84%
Gross Profit
4.43B
8.24%
14.49%
Operating Income
1.62B
13.92%
23.10%
Net Income
1.24B
13.10%
19.98%
EPS
1.10
13.40%
19.57%
Key Financial Ratios
Net Income vs. Revenue
Expense Breakdown
Management Commentary
- Strategy and execution: Management reiterated that TJX remains a value leader with a diversified, off-price platform across banners (Marmaxx, HomeGoods, TJX Canada, TJX International) and a compelling one-TJX operating model. Ernie Herrman emphasized that the company is “laser-focused on keeping [value perception] strong” and intends to leverage its global buying organization (1,300+ buyers) and 21,000+ vendors to deliver the right assortment at the right values during the fall and holiday seasons.
- Tariff mitigation and margins: John Klinger highlighted that merchandise margin was flat despite tariff pressures, and that mitigation strategies offset tariff costs. He noted favorable hedges and efficient SG&A as drivers of margin resilience. Management underscored the ability to offset incremental tariff pressure through offsetting cost efficiencies and better buying opportunities driven by market availability.
- Category and regional strengths: The call drew attention to category strength across divisions, with HomeGoods up 5% and Canada up 9%, while international sales grew 5% (all in Q2). This aligns with TJX’s narrative of broad-based demand for value, brands, and the “treasure hunt” shopping experience across a wide demographic. Management cited strong product availability and a continued market-share opportunity in both the U.S. and international markets.
- Growth and capital allocation: Ernie highlighted the long-term growth runway including potential to open 1,800+ stores globally (in existing regions and Spain) and continued expansion in Europe and Australia. The firm reiterated a disciplined capital allocation framework, returning ~$1B to shareholders in Q2 via buybacks and dividends while investing in growth.
- Outlook and sustainability: Management reiterated confidence in the second half of the year, anchored by durable value messaging and consumer preference for branded merchandise at compelling prices. They stressed the importance of consumables, gifts, and a broad assortment to drive foot traffic and cross-shopping across banners.
I am extremely pleased with our outstanding second quarter performance and our above-plan sales, profit margin, and earnings per share results.
— Ernie Herrman, Chief Executive Officer and President
We are raising our full-year guidance for both pre-tax profit margin and earnings per share.
— Ernie Herrman, Chief Executive Officer and President
Forward Guidance
The company is guiding for a return to mid-single-digit top-line growth with improving profitability in the back half of FY2026. Key assumptions include: 3% comp growth for the full year, revenue between $59.3B and $59.6B, gross margin near 30.5%–30.6%, SG&A at 19.4%, and net interest income around $108M. Third quarter guidance implies EPS of $1.17–$1.19, with a 2%–3% comp and gross margin of 31.6%–31.7%, while fourth quarter guidance implies EPS of $1.33–$1.36 with 2%–3% comp and a gross margin modestly higher (11.7%–11.8% pre-tax margin on the fiscal year basis). The guidance assumes tariffs stay at current levels for the remainder of the year, with management expecting tariff mitigation to continue through a combination of hedging, diversified sourcing, and flexible buying. The expected inventory cap in Q3 and shrink accrual in Q4 are noted as near-term drivers of quarterly margin path. Investors should monitor: (1) tariff trajectory and FX effects (translation benefits already embedded in guidance), (2) holiday and back-to-school demand and promotional intensity, (3) store growth cadence (net ~130 new stores, remodels approaching 500), and (4) ongoing mix shifts toward high-turning categories and consumables that support margin resilience.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
TJX Focus
30.73%
N/A
N/A
N/A
BURL
42.90%
4.33%
6.89%
53.97%
GES
43.70%
6.52%
-2.16%
-27.73%
URBN
36.50%
10.70%
5.24%
9.12%
PLCE
35.00%
-6.81%
46.60%
-72.80%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
TJX remains well-positioned to weather near-term tariff and macro headwinds due to its flexible off-price model, broad customer reach, and strong execution across categories and geographies. The QQ2 2026 results reinforce a disciplined growth trajectory underpinned by: (1) continued market-share gains driven by value leadership and broad assortments, (2) a robust capital allocation framework supporting store expansion, remodels, and sustainable buybacks, (3) a diversified geographic footprint that provides resilience to regional demand shifts, and (4) a constructive back-half outlook anchored by back-to-school and holiday demand, with inventory availability and merchandising execution as key differentiators. The investment thesis rests on durable cash flow, steady earnings growth (EPS guidance of $4.52–$4.57 for FY2026, up ~6–7% YoY), and a balance of expanding gross margins through hedges and selective price/mix optimization in a deflationary apparel environment. Key catalysts include international footprint expansion, the continued evolution of giftable and consumable offerings, and sustained, value-driven consumer traffic. Risks to monitor include tariff policy changes, FX volatility, and competition from other discount retailers with aggressive promotional strategies. Given the current trajectory, TJX should maintain a balanced path to mid-single-digit revenue growth and mid-to-high single-digit earnings growth in the near term, supported by strong operating leverage and ongoing capital discipline.
Key Investment Factors
Growth Potential
- Global expansion opportunities in Europe and Australia, plus potential Middle East ventures through JV and investments
- Long runway for store expansion in current markets (targeting 1,800+ additional locations across existing footprints and Spain)
- Strengthening gifting and consumables categories to drive year-round traffic and cross-shopping across banners
- Robust off-price platform with 1,300+ buyers and a broad vendor network enabling selective, opportunistic buys and strong assortments
Profitability Risk
- Tariff exposure remains a headwind; tariff dynamics and potential policy shifts could pressure costs and margins
- FX volatility can impact translated international results and reported guidance
- Macro consumer sentiment and discretionary spending sensitivity in consumer cyclical segment
- Competitive intensity from Ross Stores, Burlington, and other discount retailers; online channel competition could erode share if not matched by value proposition
Financial Position
- Strong cash generation: Operating cash flow $1.791B and free cash flow $1.33B in QQ2 2026
- Solid balance sheet: Cash & equivalents $4.64B; total debt $13.12B; net debt $8.48B; total assets $32.89B; equity $8.87B
- Significant capital returns: Approximately $1B returned via buybacks and dividends in Q2; capacity to fund ongoing expansion and remodels while returning capital to shareholders
SWOT Analysis
Strengths
Leading off-price retailer with a broad customer base across banners (Marmaxx, HomeGoods, TJX Canada, TJX International) and a diversified product mix (apparel, home, accessories)
Strong value proposition supported by a long history of buying scale (1,300+ buyers, 21,000+ vendors across 100+ countries)
Resilient business model with high product availability and flexible sourcing, store formats, and allocation
Solid cash flow generation and ability to reinvest in growth while returning capital to shareholders
Global platform with potential for continued international expansion (Europe, Australia, Middle East) and a sizeable plan for new stores and remodels
Weaknesses
Tariff exposure and ongoing trade policy uncertainty affecting costs and sourcing
FX translation risk from international operations impacting reported results
Executive reliance on discount-driven consumer spending which can be sensitive to macro headwinds
Tariff-driven volatility in certain categories could pressure gross margins if not offset by pricing or mix changes
Opportunities
Accelerated international expansion (Europe, Australia, Middle East) and potential new markets
Threats
Tariff and import cost volatility; potential escalation of protectionist measures
Competition from other off-price and fast-fashion retailers pressuring price competition