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Date

Wednesday, May 20, 2026 at 11 a.m. ET

Call participants

• Chief Executive Officer and President — Ernie L. Herrman
• Chief Financial Officer — John Klinger
• Executive Vice President, Global Communications — Debra McConnell

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Takeaways

• Comp sales growth -- Consolidated comparable sales increased 6%, driven equally by higher average basket and increased customer transactions.
• Segment performance -- Marmaxx comp sales rose 6% with profit margin up 100 basis points to 14.7%; HomeGoods comp increased 9% with segment margin up 270 basis points to 12.9%; TJX Canada comp grew 7% and segment margin up 100 basis points to 11.0% (constant currency); TJX International comp sales up 4% with profit margin rising 40 basis points to 4.7% (constant currency).
• Gross margin -- Gross margin was 31.3%, up 180 basis points, driven by improved merchandise margin, favorable inventory and fuel hedges, and expense leverage.
• Pretax profit margin -- Pretax profit margin reached 12.0%, an increase of 170 basis points.
• SG&A -- Selling, general, and administrative expenses represented 19.5% of sales, unfavorable by 10 basis points.
• Diluted EPS -- Earnings per share were $1.19, up 29%.
• Inventory -- Balance sheet inventory rose 8%, and inventory per store increased 7%.
• Shareholder return -- $1.1 billion was returned to shareholders via buybacks and dividends.
• Buyback guidance -- Full-year share buyback guidance increased to $2.75 billion-$3.0 billion.
• Guidance: Q2 -- Comp sales expected to rise 2%-3%; total sales to reach $15.0 billion-$15.1 billion (up 4%-5%); pretax profit margin projected at 11.4%-11.5%; diluted EPS targeted at $1.15-$1.17 (up 5%-6%).
• Guidance: full year -- Comp sales expected to grow 3%-4%; consolidated sales projected at $63.2 billion-$63.7 billion (up 5%-6%); pretax profit margin forecasted at 11.9%-12.0%; gross margin at 31.2%-31.3%; diluted EPS range of $5.08-$5.15 (up 7%-9%).
• Store expansion -- The company operates in 10 countries with plans to add over 1,700 stores using existing banners.
• New market entry -- First store opened in Spain during the quarter, with additional stores planned for this year.
• Customer profile -- New customer acquisition is disproportionately among Gen Z and millennial shoppers relative to the general population.
• Merchandise availability -- Management described merchandise availability as "off the charts" and noted increased attractiveness to vendors seeking to move inventory.
• International operations -- Management remains pleased with the performance of TJX’s businesses in Canada, Europe, Australia, and Mexico, citing market share gains and healthy comps.
• Segment turnover speed -- HomeGoods and Marmaxx divisions were highlighted for rapid category turn and operational adaptability.

Summary

The TJX Companies (TJX +5.93%) raised both its sales and earnings outlooks for the fiscal year following outsized quarterly gains, driven by broad-based comp growth, merchandise margin gains, and favorable fuel hedges. Store traffic and ticket gains contributed equally to comp sales growth across all segments, and new customer growth skewed toward younger demographics. International expansion included the opening of the first store in Spain, with management signaling further geographic and banner growth potential. The company increased full-year buyback plans, and inventory levels rose to support ongoing initiatives. Management stated that fuel costs were embedded at current levels in guidance, suggesting upside to profitability if diesel prices decline. Additional investments in marketing and store refresh initiatives were positioned as strategic priorities to drive both sustained customer growth and market share gains.

• Management reported very strong comp sales increases in both apparel and home categories, with customer growth consistent across income groups.
• HomeGoods' segment margin improvement was attributed to both leverage from top-line growth and merchandise margin gains.
• In response to macro uncertainty, management emphasized that value and merchandising strategies remained key to capturing incremental market share, especially as consumer behavior did not show material shifts by price point or demographic.
• On marketing, the company highlighted new digital-first campaigns and improved marketing efficiency through enhanced modeling tools.
• Regarding supply chain, management noted an outstanding ability to procure excess branded goods and rapidly adapt store assortments to prevailing trends.
• Internationally, growth in Australia and Canada was cited as significant, and the company referenced strong ongoing partnerships in Mexico and the Middle East despite geopolitical challenges.
• Segment-level commentary suggested that all divisions executed operating models that enabled quick adaptation to both category strength and weakness, supporting margin expansion.
• Guidance for the year did not include potential tariff refunds, and management said guidance currently does not assume any benefit from any potential refund.

Industry glossary

• Marmaxx: TJX’s U.S.-based segment including T.J. Maxx, Marshalls, and Sierra banners.
• HomeGoods: TJX’s U.S. segment focused exclusively on home fashion and décor banners, including HomeGoods and Homesense.
• Comp sales: Comparable store sales metric measuring year-over-year changes in sales at stores open for at least one full year.
• Pretax profit margin: Operating profit before taxes as a percentage of net sales.
• SG&A: Selling, general, and administrative expenses—covering overhead, marketing, and operating costs not allocated to cost of goods sold.

Full Conference Call Transcript

Operator: Ladies and gentlemen, thank you for standing by. Welcome to The TJX Companies First Quarter Fiscal 27 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session. You will need to press *1. As a reminder, this conference is being recorded. 05/20/2026. I would like to turn the conference call over to Mr. Ernie Herrman, Chief Executive Officer and President of The TJX Companies. Please go ahead, sir.

Ernie L. Herrman: Thanks, Ted. Before we begin, Debra has some opening comments.

Debra McConnell: Thank you, Ernie, and good morning. Today's call is being recorded and includes forward looking statements about our results and plans. These statements are subject to risks and uncertainties that could cause the actual results to vary materially from these statements, including, among others, the factors identified in our filings with the SEC. Please review our press release for a cautionary statement regarding forward looking statements as well as the full safe harbor statements included in the Investors section of our tjx.com. We have also detailed the impact of foreign exchange on our consolidated results and our international divisions in today's press release and in the Investors section of tjx.com. Along with reconciliations to non GAAP measures we discuss.

Thank you. And now I will turn it back over to Ernie.

Ernie L. Herrman: Good morning. Joining me and Debra on the call is John. I want to begin by thanking our global associates for their hard work. I truly appreciate their ongoing commitment to both TJX and to our customers. Now to an overview of our first quarter results. I am extremely pleased with our excellent first quarter results. First quarter sales, profitability and earnings per share were all well above our expectations. Overall comp sales were up an outstanding 6%. I am particularly pleased that each of our divisions delivered strong comp sales growth and drove increases in customer transactions. With our above planned first quarter sales, we are raising our full year sales and profitability outlook.

John will give some more detail about our first quarter results and full year guidance in a moment. Our terrific first quarter performance is a testament to the strong execution across the company. Our global teams work together as 1 TJX to offer customers across a wide demographic excellent values and an exciting treasure hunt shopping experience every day. I am confident that our values and merchandise assortment resonated with consumers across all of our retail banners, and that each of our divisions grew their customer base. looking ahead, the second quarter is off to a good start and we have many initiatives underway that we believe can continue to drive sales and customer traffic.

Availability of quality branded merchandise continues to be outstanding, and we are in a great position to take advantage of the plentiful opportunities we are seeing in the marketplace. Longer term, we are energized by the opportunities we see to continue driving sales and profitability. and expanding our global footprint and gaining market share in The U. S. And internationally. Now I will turn the call over to John to cover our first quarter results in more detail.

John Klinger: Thanks, Ernie. I also want to add my gratitude to all of our global associates for their continued hard work and commitment to TJX. Now I will share some additional details on the first quarter versus last year. As Ernie mentioned, our first quarter consolidated comp sales increased 6%, which was well above our plan. Our first quarter comp was driven equally by a higher average basket and an increase in customer transactions. Further, we saw very strong comp sales increases in both our apparel and home categories. Pretax profit margin was 12.0% up 170 basis points and well above our plan. Gross margin was 31.3%, up 180 basis points.

This increase was primarily driven by an increase in merchandise margin, a benefit from favorable inventory and fuel hedges, and expense leverage on sales. SG&A was 19.5%, unfavorable by 10 basis points. Net interest income was neutral to pretax profit margin versus last year. All this led to diluted earnings per share of $1.19, up 29% and well above our plan. First quarter pretax profit margin and diluted earnings per share were both well above our plan. This was primarily due to expense leverage on our above plan sales favorable fuel hedges and stronger than expected merchandise margin. Now to our first quarter divisional performance.

Once again, we are extremely pleased that every division delivered strong comp sales growth and saw increases in customer transactions. At Marmaxx, comp sales grew an outstanding 6% and segment profit margin increased 100 basis points to 14.7%. Comp sales in both Marmaxx's apparel and home categories were strong. Also, we were very pleased with the broad strength of comp sales across each of Marmaxx's region and income demographics. At our Sierra stores, and US e commerce sites, which we report as part of this division, we saw a very strong comp increase. We continue to see excellent opportunities to keep growing Marmaxx our largest division, across The U. S.

At HomeGoods, comp sales increased a remarkable 9% Similar to Marmaxx, HomeGoods saw strong comp sales increases across each of their region and income demographics. Segment profit margin increased 270 basis points to 12.9%. HomeGoods offers consumers an exciting eclectic assortment of merchandise sourced from around the world all at great value. We believe our HomeGoods and HomeSense banners are highly differentiated from other home fashion retailers and would be very hard for others to replicate. We see a tremendous opportunity to grow this division further and believe we are very well positioned to capture additional share of The U. S. Home market. At TGX Canada, comp sales were up an outstanding 7%.

Segment profit margin on a constant currency basis grew 100 basis points to 11.0% across all 3 of our Canadian banners. We are Canada's only major off price retailer and we believe we are well positioned to keep growing our customer base across the country. At TJX International, comp sales increased a strong 4%. We were pleased with our sales growth in Europe and the strong sales increase in Australia. TJX International segment profit margin on a constant currency basis improved by 40 basis points to 4.7%. During the quarter, we opened our first store in Spain and the customer response was terrific.

We are very excited about our growth plans in Spain, and remain confident in the opportunities we see to capture additional market share in both Europe and Australia. Moving to inventory. First quarter balance sheet inventory was up 8% and inventory on a per store basis was up 7%. We feel great about our inventory levels in the excellent availability we are seeing in the market. As to our capital allocation, we continue to reinvest in the growth of our business while returning $1.1 billion to shareholders through our buyback and dividend programs in the first quarter.

As we mentioned in our press release this morning, we have increased our fiscal 27 share buyback guidance to a range of $2.75 billion to $3.0 billion which will allow us to buy more opportunistically at favorable stock price levels. Now I will turn it back to Ernie.

Ernie L. Herrman: Thanks, John. I would now like to delve into the ways we are playing offense to drive our top line and gain larger share of both the apparel and home fashions markets. First is how we are approaching our marketing. This year, many of our retail banners are launching fresh new campaigns and exciting partnerships that continue to reinforce our value leadership. Our marketing targets a broad demographic, including younger shoppers through a wide variety of channels with a strong emphasis on digital media. We are continuously testing new ways to engage today's consumers to demonstrate our value proposition, highlight the joy of shopping our stores and build loyalty among our customers.

I am very pleased with the results we have seen so far and I am confident that our marketing strategy will continue to attract new shoppers and encourage existing shoppers to visit more often. Next is our exciting mix of merchandise at great value every day. This all starts with our team of more than 1.4 thousand buyers who are in the marketplace throughout the year. They work with our vast vendor network to find the best assortments at the best values across good better and best brands. Our planning and allocation team does the terrific work of allocating the goods based on the demographic characteristics of each individual store.

This allows us to offer a curated mix of exciting categories and brands that we believe will resonate with shoppers every time they visit. Whether it is their first time shopping with us or they are a long time customer. Availability of merchandise is off the charts. In addition to our long term mutually beneficial relationships, we typically add thousands of new vendors each year. We work hard to be the first call for vendors when they have excess goods. As TJX continues to open stores, grow its top line, and attract a broad range of shoppers, we believe we are becoming even more appealing to vendors who are looking to clear inventory and grow their business.

Further, with our global footprint, we can introduce brands to new geographies around the world. As we pursue our future growth plans, we are extremely confident there will be more than enough merchandise to support our growth. In fact, the bigger we have become, the more availability we see. Next, is the in store shopping experience and investing in our stores through our remodeling program and new prototypes. We believe keeping our stores refreshed helps drive consistent comp sales growth across different store ages. Further, we continue to invest in our store payroll to maintain a high level of customer satisfaction and are always looking at ways to improve the store environment and the speed of checkout.

All of this has led to very strong customer satisfaction scores at each of our divisions. Moving to our global store growth and increasing our exposure to off price around the world. We now operate stores in 10 countries and we see the potential to add another 1.7 thousand-plus stores in these countries alone with our existing banners. Again, we recently opened our first store in Spain and customer reaction has been outstanding. We are on track to open additional stores in Spain this year, and are excited about our growth potential in that country. In Mexico, we are very pleased with our joint venture with Axo and the Promota stores.

The teams are working together very effectively combining our merchandising expertise with their local operating knowledge. While still early, we are very optimistic about the long term potential in Mexico. Regarding our investment in Brands 4 Less in The Middle East, beyond the current geopolitical environment, we remain confident in the long term opportunity for that business. Lastly and most importantly, we continue to play offense by investing in the teaching and training of our associates. I strongly believe the tenure and depth of our off price knowledge and expertise within TJX is unmatched.

We have a very deep bench and are laser focused on developing the next generation of TJX leaders in order to maintain continuity in the business for many years to come. I am so proud of our culture, which I believe will continue to be a major contributor to our success going forward. Summing up, we are extremely pleased with our performance in the first quarter and with the opportunities we see for our business going forward. Our teams across our entire organization are driving excellent execution of our off price fundamentals. We feel great about our plans for the remainder of the year And as always, we will strive to beat them.

Throughout our 50-year history, we believe that the flexibility and resiliency of our business model and our wide customer demographic have been tremendous advantages that have allowed us to successfully navigate through many types of macroeconomic and retail environments. We are convinced that our strategies to play offense, and the characteristics of our business set us up very well to capitalize on the market share and growth opportunities that we see for many years to come. Now I will turn the call back to John to cover our second quarter and full year guidance.

John Klinger: And then we will open it up for questions. Thanks again, Ernie. I will start with our second quarter guidance. We are planning overall comp sales to increase 2% to 3%. Consolidated sales to be in the range of $15.0 billion to $15.1 billion, up 4% to 5%. Pretax profit margin to be in the range of 11.4% to 11.5%, flat to up 10 basis points versus last year's 11.4%. Gross margin to be in the range of 30.9% to 31.0%, which would be up 20 to 30 basis points versus last year's 30.7%. We are expecting an increase in merchandise margin for the second quarter.

SG and A to be 19.6%, 10 basis points unfavorable versus last year, This would be due to incremental store wage and payroll costs. We are assuming net interest income of $28 million which we expect to be neutral to the second quarter pretax. It also assumes a tax rate of 24.9% and a weighted average share count of approximately 1.12 billion shares. As a result of these assumptions, we expect second quarter diluted earnings per share to be in the range of $1.15 to $1.17, up 5% to 6% versus last year's $1.10. Moving to the full year. We now expect overall comp sales growth of 3% to 4%.

We are increasing our full year consolidated sales guidance to be in the range of $63.2 billion to $63.7 billion, up 5% to 6% versus last year. We are increasing our full year pretax profit margin guidance to be in the range of 11.9% to 12.0%, up 20 to 30 basis points versus last year's adjusted 11.7%. Moving to gross margin. We now expect it to be in the range of 31.2% to 31.3%, up 20 to 30 basis points versus last year's adjusted 31%. We continue to expect full year SG and A to be 19.5%, flat versus last year's adjusted 19.5%.

We are now assuming net interest income of about $122 million which we expect to be neutral to our full year pretax profit margin versus last year. Our full year guidance assumes a tax rate of 24.7% and a weighted average share count of approximately 1.12 billion shares. As a result of these assumptions, we are increasing our full year diluted earnings per share to be in the range of $5.08 to $5.15 This will represent a 7% to 9% increase versus last year's adjusted $4.73.

I want to mention that we did not flow the entire first quarter pretax profit and earnings per share beat to the full year as we are now planning current fuel prices to remain in place for the rest of the year. Of course, if fuel prices come down from their current levels, we would expect to see favorability to our full year profitability plan. In closing, I wanna reiterate that we are excited about the growth and market share opportunities we see in the near and long term. We are in an excellent position to continue to invest in the growth of TJX while simultaneously returning significant cash to our shareholders. Thank you.

And now we are happy to take your questions. The phone lines are now open for questions. If you would like to ask a question over the phone, please press *1 and record your name.

Operator: The first question in the queue is from Lorraine Hutchinson with Bank of America. Your line is open.

Analyst (Lorraine Hutchinson): Hi. Thank you. Good morning. Ernie, you had called out ticket for a couple quarters, and now the comp is equally transaction driven. Is this a signal that the customer is shying away from some of the higher priced products? Or said differently, are you seeing any change in behavior from your customer based on macro factors?

Ernie L. Herrman: Hi, Lorraine. No. No change in behavior. Again, we kind of-- you know, we do not top down drive that. We do it from bottom up with our merchants. And because we are across good, better, and best, and we do monitor even, purchases by income group, by ticket, etcetera, and we have seen no change in the pattern across any of that.

John Klinger: Yeah. So yeah. And Lorraine, you know, what similar to the last few quarters, when we look at the, comp performance in Marmaxx by department, and the ticket change by department there is no correlation at all to the ticket movement and the comp performance. So, again, we continue to just see that we are pricing our goods at fantastic value against what the full price out the door retail is. And to your point, Lorraine, transactions have remained healthy.

Ernie L. Herrman: And what is nice is another thing that is consistent, guess, of the headlines that I would be consistency, is we are consistent across all our divisions. In that respect. Right, John? In terms of And then even the dynamics of what you were asking about, that applies to every division.

John Klinger: Great. Thank you.

Ernie L. Herrman: Thank you.

Operator: The next question in the queue is from Brooke Roach with Goldman Sachs. Your line is open.

Analyst (Brooke Roach): I was hoping you could elaborate on the cost implications that you are seeing as a result of higher oil prices and macro factors Can you help us understand the magnitude of the fuel headwinds that you expect particularly into the back half of the year? It looks like gross margins are expected to turn negative in the back. and what the offset that you see as a result of that. And then John, can you quantify the benefit from the fuel hedge gain in the first quarter? Thank you.

John Klinger: Yes. So the cost of the fuel so when we beat our guidance in the first quarter by 20 cents and we are flowing 13 cents to the year. That differential is the fuel cost that we have embedded into our plan. If we are assuming that the current fuel rates that we are seeing for diesel today are going to remain for the rest of the year. So, again, if we do see if the-- if the issues in the straight are resolved and we see, you know, the price of diesel start to go down, we will see savings against our plan.

As far as the we are not going to parse out the components of our gross margin, but it we did see a benefit because we are hedged in fuel.

Ernie L. Herrman: That benefit came through in the first quarter.

John Klinger: So when you look at the back 9, we have already taken the benefit of the fuel hedge assuming that the price stays where it is. If the price continues to go up, then we will we will have more savings to that fuel hedge. Likewise, if it goes down, there will be a little bit of a hit from what we took in the first quarter. But our assumptions are that fuel price would remain flat for the remainder of the year. Which may or may not happen. Right. Great.

Operator: Thanks so much. The next question in the queue is from Matthew Boss with JPMorgan. Your line is open.

Analyst (Matthew Boss): Great, thanks and congrats. So, Ernie, strong first quarter, further comp acceleration. You raised top line for the year, despite the macro backdrop. So is it value? Is it product improvement, or is it is it just great management here? And more realistic. Can you-- Matthew, this is a great question.

Ernie L. Herrman: It does not get bigger than that 1, I guess. I figured you would like this 1. Yeah. Yeah, I do. On the back end of it, is it is it new customer acquisition or, I guess, is there a way to think about the durability of the comp drivers in place And as you talked about, the good start to the second quarter, just kind of thinking beyond the quarter and the consistency and the durability, where do we go from here?

Analyst (Matthew Boss): Well, first of all, you have set the record. This is a 4-part. that is good. But it is good. it is under A, B, C, D. Right?

Ernie L. Herrman: So the, the well, the value-- let's start with as you know, we try to stay steady with the with the value, proposition. I mentioned it in the script. The 1.4 thousand buyers that are going around in this environment, which you also referred to briefly, we always try to take advantage of what is going on in the economy, right, or in the markets. So, like, this is, you know, like any other. 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 off 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. And I believe our teams did a great job in the first quarter. Which is why those results and you asked about product depth. it is both Product and value. We look at the nature of our product, the quality level, the fashion, the brand, and at the price that it is at. Our merchants have done a terrific job in that.

And remember, when you have a situation like this where there is uneasiness out there, we look at it as an opportunity for us to, to capture additional market share. And the consumer is looking for they will have more consumers looking for value is an opportunity for us. Going forward. Secondly, I love the way we are positioned. We talk about our good start to the second quarter, we are positioned so well going forward here, with our inventories, our liquidity, the availability of merchandise, I believe I mentioned in the script, I think I said it was off the charts. You know, we are always trying to think of new words. To describe it.

But we have, in most cases, I think the first call from the vendors. We mean more to them we than we ever have before. And yet our buyers are so good at maintaining such good level relationships with them that I think that is why we have consistent great value on the floor from the right brands, which also is important. You mentioned new customers. You know, 1 of 1 of the things that our marketing teams have done and, obviously, our goal is when you talk durability also, our goal is to increase visits from our existing customers, obviously, but to also attract another visit from our infrequent customer or an entirely new customer.

So a metric we are always looking at is our first time new customers, that we are acquiring been at a disproportionately younger age group relative to the general population. So that has continued. I have we talked about that before. I think that speaks to our durability and consistency for the future. Because we are playing this for the long game, not just for quarter by quarter. Right? We are in it for years of strong growth.

So, yeah, we are as you can see, we are very bullish on the year. that is why John and I took the year guidance up on the sales, granted for flowing it through in the profitability because it is clearly, it is not just about sales. it is about doing it profitably. And, really, I do not know when we have done that before in the first quarter where we would have adjusted the year. Like this. So I hope I have answered your questions. You did.

Analyst (Matthew Boss): Congrats to the whole team. Best of luck.

Ernie L. Herrman: Alright. Thank you, Matthew.

Operator: The next question in the queue is from Ike Boruchow with Wells Fargo. Your line is open.

Analyst (Ike Boruchow): Good morning. Thank you for taking my question. This is Juliana. On for Ike. I was wondering if you could expand upon the category trends that you are seeing within Marmaxx and then separately within HomeGoods. Thank you.

Ernie L. Herrman: Hi, Juliana. We actually do not give that information out. For understandable reasons, competitive reasons. What I would tell you is obviously, when we run a 6% comp at and healthy across all the divisions is that it is very widespread. So we have numerous categories contributing or as you can imagine, the math never works. The business is not as healthy unless we have most category trends taking place. I cannot really give you the I mean, I could. We just do not give the specifics of category trends. What I would tell you is we are aggressive about the hot categories that have been helping to drive the incremental comp sales.

We are aggressive with funding, we are aggressive with real estate in the stores, and we are aggressive with moving people internally-- merchants, whether it is in planning and or in our buying teams, to the hot businesses to further fuel the procurement of those goods as well as the shipping to the stores. We are very flexible, as you know, in our model. So of our big advantages is hand to mouth. We can adjust to strong category performance. And we can back off weaker category performance faster than most other retailers. That we know of.

So without giving you the I can assure you without giving you which categories that we will maximize the hot categories that we are and we will actually downplay sooner than most ones that are just not performing that well. Due to the speed of our turn.

John Klinger: Yeah. Speed of our turn.

Ernie L. Herrman: Yeah. that is another point.

John Klinger: You know, we turn so fast. And you can see, if you wanna see that on a different highly lovely look at our home goods business, which just continues to perform at a rapid rate. 1 of our fast turning businesses and probably 1 of the ones we are most adaptable in terms of moving fast. But Marmaxx moves super fast Every division moves super fast on adjusting the category trends. To John's point, though, turns allow us to do that also.

Analyst (Ike Boruchow): Got it. Thank you. And then maybe separately, a follow-up if I may. Going back to the prior question on marketing and the new consumers you are seeing in the business, How much runway do you see left on these marketing improvements that you have had? Just any commentary on there. Thank you.

Ernie L. Herrman: Oh, on the marketing wow. We I will tell you. We our marketing team, our core we see a lot of ability going forward that we have made a lot of improvement, and there is more we can still do. We have-- we have talked about this before. We have become a lot more with our marketing mix modeling. We are able to analyze and spend more wisely on the advertising vehicles and the campaigns that we utilize so we are more efficient in our marketing If you look at the different campaigns, for example, Marshall's, we continue to run the hustlers campaign. HomeGoods, we continue to run the never shop the same campaign.

At Canada, when did we stop the stop wandering, start winning campaign? We measure each 1 of these and we can determine whether or not we are going to spend the working media similarly to what we have been doing or we are going to improve on it And these tools really have we have started utilizing these tools over the last few years greater than ever before. And I think we have a long runway, to your question, to continue to continue to do more of that going forward.

Also, on the creative, our teams are, I think, have done some of the best new marketing in years to try to go after new customers at the same time create a reason for an additional visit from our existing customers. So it is a 2-pronged effort, on part of the marketing team, and I think they have done an amazing job on it. So as you could see, I am very bullish in a time when believe TJX in every geography we are in can continue to gain market share marketing has become more of a weapon for us to continue to do to do that and play offense. You heard me talk about play offense in the script.

And I really believe that, you know, what any good business does, just like a good sports team, is they are able to play, offense and defense, but you always have to have good offense. And marketing is a tool for us that we are using more of as an offensive tool than we ever had before.

John Klinger: And I will just add to Ernie's comments that we only have a single digit market share for apparel and home in The US. And we still see opportunity to grow in the other thing is we see a lot of opportunity to continue to grow our footprint of our store base. As well. And so both of those are going to give us the ability to continue to gain market share.

Analyst (Ike Boruchow): Got it. Thank you very much.

Ernie L. Herrman: Thank you.

Operator: The next question in the queue is from Michael Binetti with Evercore. Your line is open.

Analyst (Michael Binetti): Hey guys. For taking our question here. So congrats on a great quarter.

John Klinger: Let me ask on the bridge to the home goods margin. Really nice to see the margin there. How do we how do we think about that through the year? I know you do not guide on margins, just conceptually, considering freight is what we are taking from EPS the rest of the year. I know it is it is pretty sensitive to that. And then maybe just but bigger picture on the home goods margin, maybe separate cyclical stuff from what is happening on the underlying efficiency of that business.

I know you guys have some long term goals for the profitability of that business and always look at Marmaxx as a north star for, you know, what you like your businesses to strive for someday. Just maybe orient us there And then I will just ask the opposite of Lorraine's question on transaction versus ticket. it is I think that was the clearest signal you have given us on traffic in a few quarters. It sounds maybe like it improved a little bit sequentially.

Ernie L. Herrman: This quarter.

John Klinger: If that is the case, you know, maybe why you think that is or if that if that is right.

Ernie L. Herrman: So on the I will give you a little more detail on the HomeGoods.

John Klinger: So, I mean, the 9 comp is when we look at leveraging 1 of the biggest levers that we can pull is on the driving the top line. And that allows us to be more efficient in our expenses, which we saw in HomeGoods goods for our store in DC.

Ernie L. Herrman: And then, of course, merchandise margin improvement we saw as well. We are not giving full year guidance on HomeGoods. But again, we are as Ernie talked about earlier, you know, we are we are hitting on all cylinders as far as that business model.

John Klinger: And then your other question, I am sorry? Transaction. Transactions. Yeah. So you know, the last couple quarters, the basket has been the primary driver.

Ernie L. Herrman: In this quarter, we are seeing about half and half. We really do not look at it that closely because to us, it is it is really up to the customer And our goal is just to execute the model to the highest level that we can. And, And we see the results in the top line. Yeah, Michael. Over the over the you number we have talked about this, from for many seasons, I think, is we sometimes have our average ticket go up and down, the transactions dovetail, and they can move around a little bit.

But the thing that is difficult to measure in off price because of it is not so preplanned and preprogrammed item to item is you can have some, and mix can do it as well. Because we do a little like that other question I was talking about, we will chase trends very aggressively. Regardless of what the ticket, wherever the if it is going to drive sales, we do not worry so much about ticket or worry about ultimately is it gonna drive incremental sales. So, again, to John's point, it is kind of a something we do not necessarily manage Right. So specifically.

Analyst (Michael Binetti): I guess I was wondering because if you if you did see something clear in a sequential improvement in traffic, I am wondering if you would tie that to some evidence that a value-seeking consumer might be showing you some improving signs on trade down into the into the store or anything like that.

Ernie L. Herrman: No. We I mean, look. Across all geographies, income demographic bands, you know, we are very pleased with what we saw.

John Klinger: Yeah.

Ernie L. Herrman: Although to your point, Mike, yeah, what we can tell you is we saw a growth in all the income levels. Levels. In Q1. So, yeah, across the board. Consistent. Very consistent. Okay. Alright. Thanks. And remarkably consistent by, income group.

John Klinger: Yeah.

Ernie L. Herrman: Interesting. Okay.

Analyst (Michael Binetti): Thanks a lot, guys. Congrats again.

John Klinger: Yep. Thank you. Thanks, Michael.

Operator: The next question is from Jay Sole with UBS. Your line is open.

Analyst (Jay Sole): Terrific. Thanks so much. Ernie, you talked about how you opened up the store in Spain. It sounds like you are excited about what you have seen. You mentioned Group OX. I think it is been over a year now since, you put out that 7 thousand number. For the total store count potential for TJX. I think you essentially implied that again today. it is also been over a year since the Brands for Less deal, and you mentioned GroupWax. So what do you how do you think about potentially raising that 7 thousand number? I mean, based on what you have seen, you know, what would give you the confidence to sort of say, hey.

Maybe we can be more. Maybe we can do more? Can you give us a little color on that? Thank you.

Ernie L. Herrman: Absolutely, Jay. So, where I cannot be too specific here is these are things we are talking about internally. And, you know, we are always looking at this especially where I mentioned we are in 10 countries now. And you are probably also getting at domestically. We have successful brands. There has been store closures and impending store closures in The U. S and in other countries. Such as in Canada as well, So as we speak, we are looking at it. And I think at 1 point, you will see us revisit those numbers. To be very, upfront with your question. So very timely question, Jay.

And, you know, John and his team and the senior team were very strategic and, thoughtful about you know, those issues before we come out with them. But we are feeling pretty bullish, and we know we have by the way, our model has worked wherever we go. As we have shown that when we put in the right people, we have learned in the past when we have not put it in the right teams to start with in a new market, But to add fuel to your fire, for example, our Australia business is also doing really well. Which, as you know, we started there about 10 years ago, and that has really had a good run.

And so we end, Mexico, to your point. And we have you know, space still here in The States, I think, given what is going on. So we will stand by to stand by, I would say, and we will be we will be back to you on that.

Analyst (Jay Sole): I mean, that is super interesting. Would you say there is obviously opportunities to start you know, entering the markets from scratch like the ones you mentioned? Are there other opportunities to do partnerships like you have done? Do you see maybe different regions where there is opportunity to establish a JV or a minority interest in a partner that could sort of be an unlock to figuring out how to grow in an incremental market as well?

Ernie L. Herrman: it is almost like you have been talking to a couple people. But the we all of, all of, all of those things you just said are of interest. I will put it that way. Yes. And various ways to approach it. joint venture, investment, and our-- starting up or just new markets where we are already kind of in the market and we can go to an adjacent country type of thing. So all of those things would apply. Yes. And to your time here, because we show I think I have talked about those in we have a we have talent here. We built the talent over years. So we are able to do things now.

And you have seen us do it the last few years because we do not risk the core business in the way which you have seen that as we have opened up in Australia or Mexico, we have had zero distraction for our core execution across the big, banners. And that is why we feel there is an opportunity exactly as you have exactly as your question would speak to.

John Klinger: And we spent many years preparing and making sure that when we enter a country that we understand the culture, the customer, what they are looking for, the real estate, that we are looking for. And so that is why we have been successful in every country we have entered.

Ernie L. Herrman: Yep. To date. So your timing is good on your question. And stand by to stand by, we will be back in touch, so to speak. Right.

Analyst (Jay Sole): Well, thank you so much.

Ernie L. Herrman: Thank you.

Operator: Star 1 and record your name. Next question is from Dana Telsey with Telsey Group. Your line is open.

Analyst (Dana Telsey): Hi, good morning, everyone and congratulations on the nice progress.

Ernie L. Herrman: Hi.

Analyst (Dana Telsey): 1 of the banners that I have seen-- 1 of the banners-- hi, Dana, that seems to be doing nicely is Sierra Trading Post. Any updates there? How you are thinking about the growth of that banner? And then just lastly, so impressive, the sales growth and the operating income growth of every brand-- of every banner nearly double. Is there a difference between 1 or the other gross margin or SG and A that was the real driver for each? And how you are thinking of that sustainability going forward. Thank you.

Ernie L. Herrman: Alright. So, Dana, I will take Sierra Yes. And John you know, will take the margin. So in Sierra, yes, we have been very happy. We are growing the store comp pretty aggressive. what is what the team has done a great job on over the last few years is really creating this different DNA and a good, better, best within that, lifestyle, you know, from gear to outdoor, apparel, to various hardlines, to a pet business, to a healthy outdoor food, and to actually an upper income customer. And the sales, average sales per store, we have been very happy with over the last few years, which is why we are growing it.

And, you know, we do not talk about a lot because it is still kind of in its younger stage. But we are very bullish on the potential there as well as the different customers that it brings into us. We are also, more highly a male customer there than we are in some of our other brands, which is good. And they do tend to be some different customers. You know, the, market awareness is not out there yet because we do not have that many in certain markets. So that is another thing we are working on. The marketing team there has really worked on programs to do that.

In a very balanced manner given the, you know, the size of the business and spending the appropriate amount. But the team, we really have strong talent in there. And I think you are going to see us talk about more about Sierra as we move forward because it will be, you know, 5 years from now, so to speak, a bigger player on the bottom line in TJX.

Operator: And then Dana, just to answer your question about the sales and profit, the profit margin expansion.

John Klinger: I mean, it just it really comes down to the just continued executing the at a high level. And, you know, and, again, Ernie talked a lot about earlier in the call about you know, being liquid and being able to respond to the customer's needs as you know, by turning quickly and going after those hot departments. So it is it is nothing more than that.

Analyst (Dana Telsey): Thank you.

Ernie L. Herrman: Thank you, Dana. Thanks.

Operator: Our next question is from Bob Drbul with BTIG. Your line is open.

Analyst: Hi, good morning and great results. Good morning. Couple of questions for me. I guess the first 1 is, in terms of the US, are the full price selling trends continued at a very high level? I was wondering if you could comment around that piece within the business. And I guess the second question is, within the international markets, you know, on the consumer are you seeing any changes to know, the consumer spending levels, you know, in Canada or throughout Europe and any major markets that you might call out? Thanks.

Ernie L. Herrman: Yeah, Bob. So the just wanna make sure I am clear on the, on the first question. The US full price selling trends, are you saying on what you would consider our full our ticketed price Yes. Exactly. Oh, okay. Yeah. So well, now they have been extremely strong, which is 1 reason we have had this strong merchandise margin and the merchants have been able to buy a really extreme value and exciting value. So our full price selling has been really terrific. We, you know, we call it our we sell most items. I cannot give you the number, but we sell most at full price.

And then we do, you know, mark downs and some sub mark downs. But most of what we sell we sell at the first full price and then most at the first markdown once we go to markdown. And our model has been you know, we never sell off our end of clearance because we always eventually hit the price where the goods all sell out. And so, that is been encouraging.

I do not see any change in that because, again, our merchants do a great job in ensuring our out the door value is so strong relative to what other retailers are selling it for at their end, quote, unquote, full price even though it is their maybe sale price. So I think that is built into our model why we are always providing our customers great value. And internationally, we-- so I have heard you know, there is been a lot of talk about concern, fuel prices or whatever on the international markets. And it is been actually written and talked about more recently over the last week And we have not experienced that.

Partly there could be the whole market share thing where we are over indexing on grabbing more of the market internationally, but our Europe business and Canada business and our Australia business, have all been, have all been very healthy. You see it in the comp. You can see it in our comp and all those geographies. So, I would say we might be I do hear, though, there could be reports of tough international retail business. We are not falling into that fortunately, knock on wood. Great. Thank you very much.

Operator: The next question is from Corey Tarlow with Jefferies. Your line is open.

Analyst: Great. Thanks. John, I was wondering if you could talk a little bit more about the gross margin performance in the quarter. it is been I think, a couple years since you have had gross margin expansion. As significant as 200 basis points? So we would love to just get a little bit more color there as to, you know, what drove that. If possible. And then I had 2 other questions. 1 was just on The Middle East, if there is any impact you could share there. And then thirdly, anything on tariff refunds that you can provide any details on, that would be great. Thanks so much.

John Klinger: Yeah. Sure. So gross margin, I mean, it is it is it is pretty straightforward. Obviously, a 6% comp is generates margin expansion. Merchandise margin through better buying, You know, again, the 6 comp helps us leverage our DC expenses. And then we talked about the inventory and fuel hedge in the first quarter. So that was a piece of it as well. And so yeah, we are we are we are just very pleased with how the quarter how the quarter came together.

Ernie L. Herrman: And getting to your next questions, you wanna answer Middle East or Meenu?

John Klinger: Or I mean, I can jump to tariffs.

Ernie L. Herrman: Yeah. Yeah. The, the Middle East, fortunately, you know, there, you know, there was a little, softness there you know, when the war was closer in, so to speak, but they have actually been performing, surprisingly well.

John Klinger: Yeah. And so I would say, given the circumstances and so we are we are pretty happy with that, and we are, again, looking at we are just, full steam ahead on working with them. We put a couple people in that we think are gonna help with the, with the merchandising there because that is we think 1 of the places where we will help with that investment and with that total business. And so, relatively speaking, given everything going on, we have been actually happy with their performance.

Ernie L. Herrman: Yeah. Yeah.

John Klinger: And then from the tariff front, I mean, we so we have submitted for tariff refunds. But our guidance currently does not assume any benefit from any potential refund and nothing more to add on that. Okay. And then just 1 quick follow-up. On a in a on a fixed comp, also SG&A, I think, delevered. About 10 basis points. Curious as to why that was. Well, again, we came out with our guidance was 40 basis points of deleverage, and we came in at 10. So versus our guidance, we definitely saw you know, store efficiencies you know, we gain from to store efficiencies from our guidance.

Analyst: Understood. Great. Thanks so much, and best of luck.

Ernie L. Herrman: Thank you.

Operator: The next question in the queue is from Mark Alschwager with Baird. Your line is open.

Analyst: Good morning. Thanks for taking the question. Wanted to ask on Europe, if you could talk a little bit more about what you are seeing in the consumer there today, if there is any change by market or category as some of the macro uncertainty has picked up, Relatively, yeah, are you seeing the value proposition resonate more in an environment in this environment that could support traffic, or, is the consumer just behaving pretty consistently with what you saw exiting, the fourth quarter? Thank you. Yes. No, Marni, good question.

Ernie L. Herrman: I mean, overall, the headline there is we think as and as you know, when you are a for example, some fuel prices, especially in The UK, can be a significant increase, even more so than in The States. I do feel there is a bit of a value play there in that they will gravitate certain customer percent percentages more open to going to value when maybe they were shopping more the high street as they call it there. So, do think there is a possibility of that is has been going on and would continue to go on.

So what the teams do, our teams do is they focus on just like we said before, again, key differentiator for us, is all income levels can feel that over in Europe. And so we want to continue to emphasize that we have good, better, best product across good, better, best brands and various price points from moderate to better to best price points. And quality level always consistent. And our store shopping experience, that division, they have done an amazing job on that. Keeping convenience in the shopping experience so that we can take advantage.

Because even when you are starting to grab maybe some from customers that have not been into your store for a bit and they are coming in because they are looking for the value given the situation that is going on. We wanna ensure that we are capitalizing on that and retaining them for future purchases. Because, you know, if the fuel to us we look at this as opportunity to if fuel prices do come down at 1 point, we want to we wanna hang on to the customers that maybe we have grabbed and started situations due to the fuel, and due to them being value We want them for the long term. So hopefully, that makes sense.

But, yes, we feel like that could be playing in for a bit.

Analyst: That does make sense. Thank you. And if I could follow-up once more on merch margin. You outperformed plan the biggest driver to the expansion was merch margin, which you attributed to better buying. In terms of those tailwinds, the better buying, what are you incorporating in your outlook for the remainder of the year? I guess asked another way, if you perform in line with what you did in Q1 from a buying execution standpoint, would that be upside to your gross margin for the remainder of the year? Or how are you thinking about that? Thank you.

John Klinger: Yes. Our gross margin, we our forecast contemplates everything we are thinking today as far as our the rest of the year gross margin And again, it was not just the merch margin. It was the it was the sales as well. And the expense efficiencies or expense leverage. If we outperform our sales for the remainder or for second quarter and back half, then we would expect to see again, some type of expansion based on our sales growth.

Ernie L. Herrman: So right now, on a 2 to 3 for the back half, I mean, with the forecast we are giving you is what we are seeing And the final question of the day is gonna come from Paul Lejuez from Citigroup.

Operator: Your line is open.

Analyst (Paul Lejuez): Hey. Thanks, guys. I am curious what beat your plan in Q1 from a traffic versus ticket perspective? And maybe if you can talk about these metrics in terms of what you are seeing quarter to date or how you expect them to look in the second quarter And then second, Ernie, you mentioned each division growing their customer base. I am curious what is the profile of the new customer at each of the divisions. How do they look different? From your existing customer base? Are you seeing a greater percentage of your customers that are higher income, lower income, young or old, or anything that you could frame the new customers that you are seeing by division? Thanks.

John Klinger: Sure. Hey, Paul. Your first question, are asking for the second quarter what we expect the transactions in the basket to be I would love to know that, but the first part of that question was what is your plan first quarter from a traffic versus ticket respect? Yeah.

We do not parse we did not it is look. it is it is we just do not we just do not we do not we do not parse that out, and it is it is really not significantly important. it is you know, whether it comes from somebody making a trip or having a bigger basket, it is it is just driving the top line, and that is really what we focus on.

Ernie L. Herrman: On the yeah. Paul, though, on what you were asking about customer we are seeing is that and I kind of alluded to before. But at all the TJX brands, we are continuing to track a disproportionate number of really new Gen Z and millennial shoppers. And that is, and it is disproportionate from what our current mix or the general population would be, which, again, I think bodes well for us for the future. Not as dramatic, again, our income what we like about our it has not moved as much on the new versus existing.

But what we like on our income breakdown with our customer base is we skew, you know, a little higher than the general population, but the key is it is very balanced. So we are very and, again, it goes back to the good, better, best. What we absolutely love about our customer base from an income perspective is it is very balanced by income groups. So, you know, under 50, 50 to a 100, over a 100, We compare it to the general population.

And by the way, we monitor this consistently Obviously, I cannot give you the numbers, but all I can tell you is, it is a portfolio-- a balanced portfolio that any of us would like to see. If you owned a little store yourself, you would like to see that you are selling merchandise to all different income groups. Yeah. Very proportional.

Analyst (Paul Lejuez): So I hope that helps. Got it. Okay.

Ernie L. Herrman: Thanks.

John Klinger: Thank you. Yes. Goodbye.

Ernie L. Herrman: Thanks, Paul. And thank you all for joining us today. We look forward to updating you again on our second quarter earnings call in August. Thank you.

Operator: Ladies and gentlemen, that concludes your conference call for today. May all disconnect. Thank you for participating.