01—Abstract
Summary
Summary of the 8-K filed May 21, 2025. Cited figures are marked; the original filing is the authoritative source.
The TJX Companies reported first quarter Fiscal 2026 results (quarter ended May 3, 2025) that met or beat its internal plan on the key metrics.
Net sales rose 5% to $13.1 billiona, and consolidated comparable sales grew 3%, at the high end of plan and driven by higher customer transactions. Pretax profit margin was 10.3%, above plan but 0.8 percentage points below last year's 11.1%, and diluted EPS was $0.92 versus $0.93 a year earlier, also above plan. Gross margin fell 0.5 points to 29.5%, mainly from negative mark-to-market adjustments on inventory hedges, while SG&A rose to 19.4% of sales.
Management maintained full-year FY26 guidance for comparable sales growth of 2% to 3%, a pretax margin of 11.3% to 11.4%, and diluted EPS of $4.34 to $4.43b. The guidance assumes current U.S. tariff levels persist and that TJX can offset significant incremental tariff pressure. For Q2, the company guided to comparable sales of 2% to 3%, a pretax margin of 10.4% to 10.5%, and EPS of $0.97 to $1.00, with the Q2 outlook including tariff costs on merchandise committed after the March and April 2025 tariff announcements.
Inventory rose 14% year over year to $7.1 billionc, up 7% on a per-store basis, which management described as taking advantage of outstanding availability in the marketplace. Capital returns remained strong: TJX returned $1.0 billion to shareholders in the quarter, including $613 million of buybacks and $420 million of dividends, and it reiterated plans to repurchase $2.0 to $2.5 billion of stock for the full year, with about $2.9 billion of authorization available. Operating cash flow dropped to $394 million from $737 million, largely because of the inventory build.
02—Key points
Key Highlights
- Net sales grew 5% to $13.1 billion, and consolidated comparable sales rose 3%, at the high end of plan, with all divisions posting comp gains.
- Pretax profit margin of 10.3% and diluted EPS of $0.92 both beat internal plan, but EPS was down from $0.93 and margin fell 0.8 points year over year.
- Gross margin declined 0.5 points to 29.5%, primarily due to negative mark-to-market adjustments on inventory hedges; SG&A rose 0.2 points to 19.4% of sales.
- Full-year FY26 guidance was maintained: comp sales of 2% to 3%, pretax margin of 11.3% to 11.4%, and diluted EPS of $4.34 to $4.43, assuming current tariff levels persist.
- Q2 FY26 guidance calls for comp sales of 2% to 3% and EPS of $0.97 to $1.00, with a pretax margin of 10.4% to 10.5%, including incremental tariff costs.
- Operating cash flow fell to $394 million from $737 million, reflecting a $604 million inventory build, while inventories rose 14% to $7.1 billion.
- TJX returned $1.0 billion to shareholders in Q1 and reaffirmed $2.0 to $2.5 billion in planned full-year buybacks, with about $2.9 billion of authorization available.
03—Questions
Frequently Asked Questions
Did TJX meet expectations in Q1 FY26?
Largely yes. Comparable sales of 3% landed at the high end of plan, and both pretax margin (10.3%) and diluted EPS ($0.92) came in above the company's internal plan. Year-over-year, however, EPS slipped from $0.93 and margin declined 0.8 points, so the beat was against plan rather than against last year.
Why did margins decline in the quarter?
Gross profit margin fell 0.5 points to 29.5%, mainly from negative mark-to-market adjustments on inventory hedges. SG&A rose 0.2 points to 19.4% of sales because of lapping a prior-year reserve release and higher store wage and payroll costs. Net interest income also reduced margin by 0.2 points versus the prior year.
Has TJX changed its full-year outlook because of tariffs?
No. TJX maintained its full-year FY26 guidance, but the guidance assumes current U.S. tariff levels remain in place and that the company can offset significant incremental tariff pressure. The Q2 outlook explicitly includes incremental tariff costs on merchandise committed after the March and April 2025 announcements.
Is the inventory build a concern for investors?
Inventory rose 14% to $7.1 billion, and per-store inventory grew 7%. Management said it is taking advantage of outstanding availability in the marketplace and is positioned to flow fresh assortments this spring and summer. The build contributed to operating cash flow falling to $394 million from $737 million, so investors may want to watch whether it converts into sales growth and margin.
How is TJX returning capital to shareholders?
In Q1, TJX repurchased 5.1 million shares for $613 million and paid $420 million in dividends, for a total of $1.0 billion. The company expects to repurchase $2.0 to $2.5 billion of stock in fiscal 2026 and had approximately $2.9 billion of repurchase authorization available as of May 3, 2025. Quarterly dividends per share were $0.425, up from $0.375 a year earlier.
04—Continue