Why did TJX's Q4 earnings beat expectations?

Q4 results were well above plan, driven by 5% comparable store sales growth from higher customer transactions, lower-than-expected inventory shrink, and expense leverage on the stronger sales. These gains were partly offset by higher incentive compensation accruals and incremental store wage costs, which raised SG&A to 19.2% of sales.

How is TJX returning capital to shareholders?

In FY25 TJX returned $4.1 billion through $2.5 billion of buybacks and $1.6 billion of dividends. Going forward, it plans to repurchase $2.0 to $2.5 billion of stock in FY26 under a new $2.5 billion authorization, which is about 1.8% of shares outstanding, and to raise the quarterly dividend 13% to $0.425.

What does the FY26 outlook mean for investors?

Full-year FY26 guidance calls for 2% to 3% comp growth and diluted EPS of $4.34 to $4.43, up 2% to 4%. Pretax margin is expected to dip 0.1 to 0.2 points to 11.3% to 11.4%, and FX is a roughly 3% headwind to EPS growth. Q1 EPS is guided down 4% to 6%, so most of the year's growth is expected in the final nine months.

Why is the Q1 FY26 outlook weaker than the full-year outlook?

Management attributes the weaker Q1 to three factors: lapping a reserve release recorded in Q1 FY25, the expected timing of certain expenses, and a planned Q1 pretax margin of 10.0% to 10.1%. The remaining nine months benefit from lower planned incentive compensation accruals, and they are guided to a pretax margin of 11.6% to 11.7% and EPS growth of 4% to 6%.

Did the 53-week fiscal year distort the comparisons?

Yes. Fiscal 2024 included an extra week, which added about $0.10 to both Q4 and full-year FY24 EPS. Management's adjusted comparisons remove this benefit, so FY25 EPS growth is 13% on an adjusted basis versus 10% reported, and Q4 EPS growth is 10% versus 1% reported.

TJX 8-K: Earnings & Results

01—Abstract

Summary

Summary of the 8-K filed February 26, 2025. Cited figures are marked; the original filing is the authoritative source.

TJX Companies reported fourth-quarter and full-year fiscal 2025 results (quarter ended February 1, 2025) that came in well above management's plan on comparable store sales, pretax margin, and EPS.

Q4 consolidated comparable store sales rose 5%, driven by customer transactions, and net sales were flat at $16.4 billion^a against a 14-week prior-year quarter. Q4 diluted EPS was $1.23, up 1% reported and 10% versus adjusted prior-year EPS of $1.12 that excluded the extra week. Full-year FY25 net sales reached $56.4 billion (up 4%), comparable store sales rose 4%, pretax margin was 11.5%, and diluted EPS was $4.26 (up 10% reported, 13% adjusted).

Management attributed much of the margin outperformance to lower inventory shrink, which benefited full-year gross margin by 0.2 percentage points. Capital returns were a key focus. The Board approved a new $2.5 billion^b repurchase authorization, and TJX plans to buy back $2.0 to $2.5 billion of stock in FY26 while raising the quarterly dividend 13% to $0.425 per share, subject to Board approval in March 2025.

In FY25 the company returned $4.1 billion^c to shareholders through buybacks and dividends, and it ended the year with $5.3 billion of cash and $6.1 billion of operating cash flow. FY26 guidance calls for comparable store sales of 2% to 3%, a pretax margin of 11.3% to 11.4% (down 0.1 to 0.2 points), and diluted EPS of $4.34 to $4.43, implying 2% to 4% growth. The first quarter outlook is more cautious, with EPS of $0.87 to $0.89 (a 4% to 6% decline) and a margin of 10.0% to 10.1%, reflecting lapping a prior-year reserve release and the timing of expenses.

Management expects the remaining nine months to be stronger, with EPS of $3.47 to $3.54^d and a pretax margin of 11.6% to 11.7%. Foreign currency is expected to weigh roughly 3% on EPS growth.

02—Key points

Key Highlights

Q4 FY25 comparable store sales rose 5%, well above plan and driven by higher customer transactions across every division; Marmaxx was +4%, HomeGoods +5%, TJX Canada +10%, and TJX International +7%.
Q4 FY25 diluted EPS was $1.23, up 10% versus adjusted prior-year EPS of $1.12 that excluded the 14th-week benefit; pretax margin was 11.6%, 0.7 points above the adjusted prior year and above the top of plan.
FY25 net sales were $56.4 billion (up 4%), comparable store sales rose 4%, and diluted EPS was $4.26 (up 13% on an adjusted basis), with pretax margin of 11.5%.
The quarterly dividend increases 13% to $0.425 per share (subject to Board approval in March 2025), and TJX plans to repurchase $2.0 to $2.5 billion of stock in FY26 under a new $2.5 billion authorization.
FY26 guidance calls for comparable store sales of 2% to 3%, pretax margin of 11.3% to 11.4%, and diluted EPS of $4.34 to $4.43 (2% to 4% growth), with about a 3% negative FX impact on EPS growth.
Q1 FY26 guidance is softer, with EPS of $0.87 to $0.89 (down 4% to 6%) and pretax margin of 10.0% to 10.1%, reflecting a lapped reserve release and expense timing; the remaining nine months imply EPS growth of 4% to 6%.
Lower inventory shrink was a major tailwind to FY25 margins, and total inventory rose to $6.4 billion (up about 1% per store), which management described as positioning the company well for spring.

03—Questions

Frequently Asked Questions

Why did TJX's Q4 earnings beat expectations?
Q4 results were well above plan, driven by 5% comparable store sales growth from higher customer transactions, lower-than-expected inventory shrink, and expense leverage on the stronger sales. These gains were partly offset by higher incentive compensation accruals and incremental store wage costs, which raised SG&A to 19.2% of sales.
How is TJX returning capital to shareholders?
In FY25 TJX returned $4.1 billion through $2.5 billion of buybacks and $1.6 billion of dividends. Going forward, it plans to repurchase $2.0 to $2.5 billion of stock in FY26 under a new $2.5 billion authorization, which is about 1.8% of shares outstanding, and to raise the quarterly dividend 13% to $0.425.
What does the FY26 outlook mean for investors?
Full-year FY26 guidance calls for 2% to 3% comp growth and diluted EPS of $4.34 to $4.43, up 2% to 4%. Pretax margin is expected to dip 0.1 to 0.2 points to 11.3% to 11.4%, and FX is a roughly 3% headwind to EPS growth. Q1 EPS is guided down 4% to 6%, so most of the year's growth is expected in the final nine months.
Why is the Q1 FY26 outlook weaker than the full-year outlook?
Management attributes the weaker Q1 to three factors: lapping a reserve release recorded in Q1 FY25, the expected timing of certain expenses, and a planned Q1 pretax margin of 10.0% to 10.1%. The remaining nine months benefit from lower planned incentive compensation accruals, and they are guided to a pretax margin of 11.6% to 11.7% and EPS growth of 4% to 6%.
Did the 53-week fiscal year distort the comparisons?
Yes. Fiscal 2024 included an extra week, which added about $0.10 to both Q4 and full-year FY24 EPS. Management's adjusted comparisons remove this benefit, so FY25 EPS growth is 13% on an adjusted basis versus 10% reported, and Q4 EPS growth is 10% versus 1% reported.

04—Continue

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