TJX shows it’s the right retail stock for this moment with a stellar quarter, guidance boost
TJX Companies on Wednesday reported strong first-quarter results, sending shares of the retailer higher and showcasing why we’ve owned the stock for years. Revenue in the three months ended May 2 increased 9.2% year over year to $14.32 billion, exceeding the consensus estimate of $14.03 billion, according to LSEG. Earnings per share (EPS) jumped 29.3% to $1.19, also exceeding expectations of $1.02, LSEG data showed. Same-store sales increased 6%, ahead of the 4.1% Street estimate, according to FactSet. Shares of TJX are up 6% as of midday trading. It’s a much-needed rebound after a tough month that saw the stock fall more than 10% from its April highs. Not that we were necessarily complaining, because on Friday we used that pullback as an opportunity to add to our position for the first time in 10 months. But it’s encouraging to see Wednesday’s numbers validate that decision. In addition to the strong results, management raised its full-year outlook for earnings per share, with the new target roughly matching Wall Street expectations. To be sure, TJX’s new full-year sales outlook — along with its sales and EPS guide for the ongoing quarter — came up a bit short versus the consensus. But we aren’t concerned because history tells us management is keeping it conservative, setting the team up to overdeliver when all is said and done. The stock reaction is a clear signal the market understands this to be the case as well. TJX YTD mountain TJX’s year-to-date stock performance. Bottom line TJX has certainly found its groove, reporting its fifth consecutive quarter of sales beats across all four operating segments: Marmaxx (Marshalls, T.J. Maxx and the much smaller Sierra in the U.S.), HomeGoods, TJX Canada, and TJX International (Europe & Australia). The company’s business model, which is all about picking up excess inventory from high-quality brands and retailers at a discount and passing the savings along to shoppers, continues to strike a chord with consumers worn down by years of elevated inflation. And that was even before the Iran war sent oil prices soaring and rekindled inflation, which in April reached its hottest annual rate since May 2023 at 3.8%. Same-store sales — defined by TJX as sales at locations or e-commerce sites that have been in operation for at least two consecutive fiscal years — rose 6% in the quarter, well above the 4.1% consensus analyst estimate. It also marked a sequential acceleration from 5% growth in the November-to-January quarter. By division, same-store sales accelerated sequentially at Marmaxx (5% to 6%) and HomeGoods (6% to 9%), with both results coming in better than the 3.9% and 4% consensus, respectively. At TJX Canada and TJX International, the growth rates matched the prior quarter at 7% and 4%. The Canadian operations exceeded the 5% consensus, while the European and Australian segment was in line. On the call, CFO John Klinger said the strong comparable sales growth in the quarter was “driven equally by a higher average basket and an increase in customer transactions.” That’s notable because the transaction growth indicates that despite higher prices, the quality and savings to be had at TJX locations still resonates with customers. Put another way, higher prices don’t seem to be broadly impacting demand, at least for now. While higher prices are likely impacting buyers at the margin, winning or losing in an environment characterized by high oil prices, high inflation and high interest rates, is relative. TJX may well have seen some existing customers pullback. But consider someone who is an infrequent TJX shopper and is starting to feel the pinch of higher oil. They might be taking a few more trips to the company’s locations than they otherwise would. And if you’re the kind of shopper that usually shops at full-priced retailers but appreciates the TJX treasure hunt experience, you’re probably doing a bit more treasure hunting these days than before. TJX as a company is also facing the impact of higher fuel prices; it’s not just consumers. Asked about this on the call, management said hedges have been effective to manage their costs. And on the specific dynamic detailed above, CEO Ernie Herrman said, “Fuel prices can cause pressure all around the board. We try not to get too theoretical about what the impact is going to be, other than we know … the better value we offer and the more exciting we make the treasure hunt shopping experience for our customers, the more market share we will gain.” Why we own it The owner of T.J. Maxx, Marshalls, and HomeGoods is well-suited to the current economic environment, offering inflation-weary customers a wide range of merchandise at compelling prices and an in-person “treasure hunt” shopping experience. It is also better suited to respond to tariffs than retailers that import most of their merchandise directly. Competitors : Ross Stores and Burlington Stores Last buy : May 15, 2026 Initiation : Aug. 24, 2022 In the quarter, TJX generated $1.1 billion in operating cash flow, returned $1.1 billion to shareholders via share repurchases and dividends, and upped its targeted share repurchase range for the year to $2.75 billion to $3 billion, an increase of $250 million at the high and low ends. TJX’s inventory levels were up 7% from the year-ago period — something that executives chalked up to “excellent buying opportunities” during the quarter. Investors in retailers always need to be watching inventory levels, with the hopes the company doesn’t accumulate way more than they can sell. With TJX, though, we like that it is seeing plenty of high-quality clothes and home decor to buy to ensure their stores are well stocked for the spring and summer. The more excess inventory in the system, the better it is for off-price retailers. On the earnings call, Herrman described the availability of quality, branded merchandise as “off the charts.” Looking ahead, Herrman also said the current quarter is off to a good start, and that the company has “many initiatives underway that we believe can continue to drive sales and customer traffic.” As a result of another excellent quarter, we are reiterating our buy-equivalent 1 rating and $180 price target. Guidance Management’s expectation for the fiscal first quarter of 2027: Sales for the second quarter are expected to be between $15 billion and $15.1 billion, a bit below the $15.15 billion expected. Same-store sales in the range of 2% to 3% growth, below the 3.5% consensus. Pretax profit margin in the range of 11.4% to 11.5%, below the 11.7% estimate. Earnings per share (EPS) in the range of $1.15 to $1.17, below the consensus EPS estimate of $1.19 per share. For fiscal 2027: Sales of $63.2 to $63.7 billion, below the $63.85 billion expected. However, that is above the $62.7 billion to $63.3 billion range previously forecast. Same-store sales are expected to rise 3% to 4%, up from the previously provided 2% to 3% range, and a tick better than the 3.4% estimate, at the midpoint. Pretax profit margin of 11.9% to 12%, up from the prior 11.7% to 11.8% target, and in line with expectations. EPS of $5.08 to $5.15, up from the prior range of $4.93 to $5.02, and largely in line with the $5.12 per share expected. (Jim Cramer’s Charitable Trust is long TJX. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
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