TJX Earnings Update

Revenue: $15.2B, +5% YoY

Comps: +4% YoY

Adjusted EPS: $1.22, +11% YoY

Net Income: $1.5B, +22% YoY

Both revenue and adjusted EPS beat estimates on Wall Street. The headline beat, though, wasn’t organic. Of the $15.2B vs. $15.16B expected, $331MM was tariff refunds in the quarter. After other accruals and adjustments, the net effect on the bottom line was $219MM, highlighting the large difference between GAAP and adjusted EPS, as well as what would’ve resulted in a revenue miss.

An interesting divergence occurred in segment comps, with Marmaxx decelerating to 1% from 3% last year. HomeGoods accelerated to 7% from 5%, same with TJX International. TJX Canada decelerated from 9% to 6%, still strong but decelerating nonetheless.

The global business is going strong on top-line and comp growth, while domestic growth softened on acceleration.

TJX has previously outlined a long-term goal of 7,000 worldwide units, but has never given specific growth guidance. However, management has now outlined an accelerated growth target of 7,500 with 4% annual expansion. This reinforces my long-term growth thesis.

Despite the beat, the stock fell post-earnings, followed by small price target cuts across the industry.

My Takeaway:

The tariff-refund noise and adjusted top-line miss caused the fall. Regardless, the fundamentals remain strong. International comps were a standout for a relatively mature company. Management also signaled increased confidence by pushing up their store target.

While revenue didn’t come in as strong, the moat, competitive advantages, and growth story still remain intact. No changes to my thesis or valuation at this time.

Maintaining an Overweight.

Disclaimer:

This blog post is for educational and informational purposes only. It is not financial advice. I am not a licensed financial advisor, and nothing in this post should be interpreted as a recommendation to buy or sell any securities. Trading involves risk, and results are not guaranteed. Past performance is not indicative of future results. Always do your own research and consult with a licensed financial professional before making any investment decisions. None of my statements or points of view are necessarily reflective of the views of Deep Knowledge Investing.