We’re raising our price target on TJX after an impressive beat-and-raise quarter

Published: Wednesday, August 20, 2025 · 5:45 PM  |  Updated: Wednesday, August 20, 2025 · 5:45 PM

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TJX Companies on Wednesday reported better-than-expected quarterly results, vaulting over the high bar inherent for a stock hovering near its record high into earnings. Revenue in the three months ended Aug. 2 increased 7% year over year to $14.4 billion, exceeding the consensus estimate of $14.1 billion, according to LSEG. Earnings per share (EPS) in the period came in at $1.10, beating expectations of $1.01, LSEG data showed, indicating growth of nearly 15% year over year. Same-store sales also came in ahead of expectations at 4%, better than the 3.3% the Street was looking for, according to FactSet. As a result of the strong release and increase to management’s full-year outlook, TJX is one of the top-performing stocks in S & P 500 on Wednesday, in an otherwise down day for the market. Better yet, TJX shares are well on their way to a fresh record close. TJX YTD mountain TJX Companies’ year-to-date stock performance. Bottom line We can’t ask for much more from TJX Companies. The parent company of TJ Maxx, Marshalls and HomeGoods delivered results that exceeded expectations on the top and bottom lines thanks to strength in all four operating segments: Marmaxx, which is home to the T.J. Maxx, Marshalls and outdoor-focused Sierra chains in the U.S. HomeGoods in the U.S. TJX Canada TJX International, which covers Europe and Australia. All four operating units saw a sequential acceleration in revenue growth. Plus, all but TJX International also saw a quarter-over-quarter pickup in same-store sales, which is a key retail industry metric. TJX International’s comparable sales held steady. Across the entire company, same-store sales came in better than expected, with customer transactions increasing in every division. Profitability was also strong. Gross margin performance exceeded expectations, as the merchandise margin managed to come in flat versus the prior year despite the impact of tariffs. Meanwhile, TJX’s selling, general and administrative expenses as a percentage of sales declined versus the year-ago period. While total SG & A costs came in slightly higher than analysts predicted, there’s no cause for concern here. To top it all off, TJX raised its full-year outlook to a level above what the Street was looking for. The outlook for its ongoing fiscal Third quarter outlook was a tad below expectations, but management is notorious for under-promising only to over-deliver later. Indeed, TJX has now exceeded the high end of its own quarterly earnings guidance for 10 straight quarters. TJX Companies Why we own it : The owner of T.J. Maxx, Marshalls and HomeGoods is well-suited for the current economic environment, offering inflation-weary customers wide-ranging merchandise at compelling prices and a “treasure hunt” in-person shopping experience. It is also better suited to respond to tariffs than retailers that directly import most of their merchandise. Competitors : Ross Stores and Burlington Stores Last buy : July 21, 2025 Initiation : Aug. 24, 2022 At the end of the day, the story comes down to one key factor: value. Inflation is still above the Federal Reserve’s 2% target and tariffs are putting upward pressure on certain spending categories, which in turn is cutting into discretionary incomes. The counterbalance to this setup is that unemployment remains low. As a result, consumers aren’t looking to cut spending all together. They are simply looking to stretch each dollar as much as possible by purchasing high-quality products and great prices — in other words, maximize value. Whether it’s in apparel, footwear, or home furnishings, TJX provides a strong value in a “treasure hunt” experience that keeps customers returning to its stores. A key ingredient to this successful recipe, perhaps unsurprisingly, is inventory. And on the earnings call, CEO Ernie Herrman made it clear that the availability of merchandise will “continue to be outstanding,” giving him confidence that TJX will keep its shelves and racks filled with fresh, desirable products in the fall and holiday season. That’s why the second quarter was so strong and why we believe the back half of the year will also be strong as the third quarter benefits from the back-to-school selling season and the fourth quarter benefits from the holiday season. Herrman also left little doubt about TJX’s ability to navigate the tariff environment. On the call, management explained that its edge on mitigating the impact of tariffs is that roughly 90% of goods come from third parties, meaning they aren’t directly imported. As a result, TJX can concern itself less with the how much the initial cost of the good went up due to tariffs and more on what it’s really worth to their shoppers. If a given category is tariffed to the point that it’s no long a good value, management said the breadth of TJX’s offerings means they can simply downplay that category and lean more strongly into the categories that still provide a strong value to the consumer. Putting this all together, we’re reiterating our buy-equivalent 1 rating and upping our price target on TJX’s stock to $150 a share from $145. Quarterly commentary As we can see in the chart above, this was an across-the-board beat, with all divisions performing better than expected. Same-store sales results also accelerated on a sequential basis at Marmaxx (from 2% to 3%), HomeGoods (from 4% to 5%), and TJX Canada (from 5% to 9%). Same-store sales at TJX International held in at the 5% rate we saw last quarter. For context, TJX defines same-store sales as locations or e-commerce sites that have been in operation for at least two consecutive fiscal years. TJX’s cost of sales was higher than expected — but that’s not concerning because, as the chart shows, its gross margins were above estimates. That’s what we care about most, and it gives us confidence that the higher cost of sales was simply the result of TJX selling more things than the Street expected, rather than the company poorly managing its spending. The same can be said for the slightly higher-than-expected SG & A expense, given as a percentage of sales it was down 30 basis points versus the year-ago period. Guidance For TJX’s fiscal 2026 third quarter, here’s what the company expects to deliver (all estimates are from FactSet, except from sales and earnings, which are from LSEG): Sales for the third quarter are expected to be between $14.7 and $14.8 billion, ahead of expectations of $14.72 billion at the midpoint. Same-store sales in the range of 2% to 3% growth, which at the midpoint of 2.5% is below the consensus projection for a 2.9% increase. Pretax profit margin in the range of 12% to 12.1%, a slight decrease from 12.2% realized in the year-ago period, and a bit below the 12.5% analysts were looking for. Earnings per share (EPS) in the range of $1.17 to $1.19, compared with the consensus EPS estimate of $1.22 per share. As mentioned, TJX also raised its full-year guidance across all the metrics for which it provides an outlook. It is as follows: Sales for the full year are now expected to be between $59.3 and $59.6 billion, up from the prior range of $58.1 to $58.6 billion range and ahead of expectations of $59.18 billion. Same-store sales are now expected to be up 3%, versus the 2% to 3% range previously provided. That’s also a tick above the 2.9% the Street was expecting. Pretax profit margin in the range of 11.4% to 11.5%, up from the 11.3% to 11.4% range previously provided, and ahead of the 11.4% the Street was looking for at the midpoint. EPS in the range of $4.52 to $4.57, up from the prior range of $4.34 to $4.43, and better than the $4.50 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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