The TJX Companies, Inc.

Second-quarter consolidated comp sales increased 4%. Adjusted pretax profit margin was 11.9%, up 50 basis points year over year. Adjusted gross margin was 31.4%, up 70 basis points year over year, helped by a higher merchandise margin, mostly due to tariff favorability. Adjusted SG&A was 19.7%, unfavorable by 20 basis points year over year, and adjusted diluted EPS was $1.22, up 11% year over year. By division, Marmaxx comp sales increased 1%, HomeGoods 7%, TJX Canada 6%, and TJX International 7%. For the third quarter, TJX expects comp sales up 2% to 3%, consolidated sales of $15.6 billion to $15.8 billion, adjusted pretax margin of 12.3% to 12.4%, adjusted gross margin of 32.1% to 32.2%, and adjusted EPS of $1.30 to $1.32. For the full year, it now expects comp sales growth of 3% to 4%, consolidated sales of $63.4 billion to $63.8 billion, adjusted pretax margin of 12% to 12.1%, adjusted gross margin of 31.2% to 31.3%, and adjusted EPS of $5.15 to $5.20. For the fourth quarter, it expects comp sales up 2% to 3% and adjusted EPS of $1.44 to $1.47.

Ernie Herrman emphasized that TJX’s global diversification helped drive above-plan results, especially as Marmaxx underperformed while the other divisions delivered strong comps. He repeatedly described the Marmaxx issue as self-inflicted, said the company has identified the problem, and said improvement began in August with greater improvement expected by the holiday season and into Q4. He also struck an upbeat tone on longer-term growth, saying TJX sees a long runway through store growth, market share gains, and continued investment in merchandising, marketing, and talent.

John Klinger said the quarter benefited from higher average basket and more transactions, with profit outperforming plan because of operational expense efficiencies, a higher merchandise margin, and expense leverage on better sales, partially offset by charitable foundation contributions. He highlighted adjusted gross margin of 31.4% and said it rose 70 basis points year over year mainly due to merchandise margin and tariff favorability, while SG&A was 19.7% due to incremental store wage and payroll costs. On capital allocation, he said TJX returned $1.3 billion to shareholders in the quarter through buybacks and dividends and noted the company will pay off the $1 billion note maturing in September.

Analysts focused heavily on the Marmaxx miss, asking what went wrong, whether weaker transactions were traffic or conversion related, and how quickly comps could return to a 2% to 3% cadence. Management said the issue was a mix/execution problem in a handful of areas, not competition, and that transaction weakness reflected missing product rather than traffic deterioration; they said improvement was already visible in August and expected more significant improvement by Q4. Questions also centered on the raised long-term store target and the strong HomeGoods result; management said store growth potential was lifted because of opportunities across formats and geographies, and that HomeGoods’ strength reflects both differentiated merchandising and strong execution.