Q2 2025 The TJX Companies Inc Earnings Call

August 21, 2024

Conference call at this time, all participants are in a listen only mode. Later, we will conduct a question and answer session at that time. If you have a question you will need to press star One as a reminder, this conference call is being recorded August 21st 2024.

Speaker Change: [music].

I would like to turn the conference call over to Mr. Ernie Herrman, Chief Executive Officer, and President of the T. J X companies incorporated. Please go ahead Sir.

Thanks, Amanda before we begin Deb has some opening comments.

Deb: Thank you Ernie and good morning, today's call is being recorded and includes forward looking statements about our results and plans.

Speaker Change: 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 website.

Speaker Change: T J X dot 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 T. J X dot com along with reconciliations to non-GAAP measures. We discuss thank you and now I'll turn it back over to her.

Speaker Change: Ernie.

Ernie Herrman: Good morning.

Ernie Herrman: Joining me and Deb on the call is John.

Ernie Herrman: I want to start by thanking all of our global associates for their ongoing commitment to T J X.

Ernie Herrman: Thanks to their hard work and collective efforts, we continued to deliver an excellent shopping experience and outstanding value to our shoppers every day.

Hum.

[music].

Ernie Herrman: Now to our business update and second quarter results.

Speaker Change: I am extremely pleased with our second quarter performance and the terrific execution of our flexible off price business model by our teams.

Speaker Change: Sales profitability and earnings per share all exceeded our plans.

Speaker Change: I am, particularly pleased that our comp sales increases across all of our divisions were once again entirely driven by an increase in customer transactions.

Speaker Change: We believe this is an excellent indicator of the strength of our business as our exciting merchandize assortment, great brands and outstanding values.

Speaker Change: To resonate with consumers across our geographies.

Speaker Change: I also want to highlight the strong performance of our largest division Mara Max which drove mid single digit increases in both comp sales and customer transactions.

Speaker Change: As to profitability with our second quarter outperformance.

Speaker Change: Once again, raising our full year guidance for both pre tax profit margin and earnings per share.

Speaker Change: John will talk to our profitability performance and guidance in more detail in a moment.

Speaker Change: Yeah.

Speaker Change: Also during the second quarter, we were thrilled to open our 5000th store, making another milestone for our company.

Speaker Change: This is a terrific achievement for T J X.

John: We see plenty of additional store growth opportunities for our current retail banners in our existing geographies over the long term.

John: Additionally, with our recent announcements with Grupo <unk> and branch for less we expect to participate in the growth of off price and several additional countries around the world.

John: As we look at the remainder of the year I am excited about the opportunities we see for this business.

John: The third quarter is off to a strong start.

John: And we have numerous plans underway to drive traffic and sales.

John: Availability of quality branded merchandise is excellent and we are confident we will have an exciting assortment of fresh goods across all of our stores and online throughout the fall and holiday selling seasons.

John: I'll talk more about our second half opportunities in a moment, but first I'll turn the call over to John to cover our second quarter results in more detail.

John: John.

John: Thanks, Ernie I also want to add my gratitude to all of our global associates for their continued hard work.

John: Now I'll share some additional details on the second quarter as Ernie mentioned, our consolidated comp sales increased 4%, which was above our plan entirely driven by customer transactions, both our apparel and home categories saw comp sales increases.

Yeah.

Hum.

Pre tax profit margin of 10, 9% was up 50 basis points versus last year.

Hum.

[music].

John: Pre tax profit margin was 40 basis points above our plan. This was primarily due to lower freight costs, which includes a benefit from a true up of accruals and lower operational freight costs as well as stronger sales. These.

John: These benefits were partially offset by higher incentive compensation accruals and a contribution to the <unk> Foundation.

John: Gross margin was up 20 basis points versus last year. This increase was driven by strong mark on and a benefit from freight partially offset by higher supply chain costs.

John: SG&A decreased 30 basis points versus last year. This decrease was primarily due to a benefit this year from lapping a reserve related to a German government Covid program receivable last year as well as expense favorability. These.

John: These benefits were partially offset by incremental store wage and payroll costs.

John: Lastly, we were very pleased that diluted earnings per share of <unk> 96 were up 13% versus last year and also well above our plan.

Speaker Change: Now to our second quarter Division performance again, this quarter across all of our divisions. The comp increases were entirely driven by customer transactions, which we see as a good indicator of the strength of the business.

Speaker Change: At <unk> comp store sales increased 5% and segment profit margin was 14, 1% up 40 basis points versus last year.

Uh huh.

[music].

Hum.

Speaker Change: <unk> apparel and home categories, both saw strong strong comp sales growth and we saw comp strength across all regions.

[music].

Speaker Change: We were also happy with the strong sales performance of our U S e-commerce sites and Sierra stores, which we report as part of this division.

Speaker Change: We're very pleased with the momentum at <unk> and continue to see numerous opportunities to keep growing our largest division.

Speaker Change: Homegoods comp store sales increased 2% segment profit margin grew to nine 1% up 40 basis points versus last year, we see home goods and home sense as highly differentiated from other retailers in the home fashion space, we focus everyday on bringing customers <unk>.

Speaker Change: <unk> assortments sourced around the world at exciting values, we continue to see significant opportunity to open new stores and capture additional traditional share of the U S home market.

Speaker Change: Moving to our international divisions.

Speaker Change: At <unk>, Canada comp store sales were up.

Speaker Change: Up 2% segment profit margin on a constant currency basis was 15% down 70 basis points versus last year.

Speaker Change: At <unk> International comp store sales increased 1% and were up in both Europe and Australia.

Speaker Change: Segment profit margin on a constant currency basis was four 3% up 230 basis points versus last year.

Speaker Change: With our leadership position in decades of international operating experience. We are confident we will continue to be an attractive shopping destination for value seeking customers around the world.

Speaker Change: Moving to inventory balance sheet inventory and inventory on a per store basis were both down 2% and driven by lower inventory at our distribution centers, we feel great about our inventory levels and believe we are well positioned to take advantage of the outstanding availability, we're seeing in the <unk>.

Matthew Boss: 2025 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. At that time, if you have a question, you will need to press star one. As a reminder, this conference call is being recorded 21 August 2024. I would like to turn the conference call over to Mr. Ernie Herrman, Chief Executive Officer and President of The TJX Companies, Incorporated. Please go ahead, sir.

Around the world at exciting values, we continue to see significant opportunity to open new stores and capture additional traditional share of the U S home market.

Moving to our international divisions.

At <unk>, Canada comp store sales were up.

Speaker Change: Marketplace and flow fresh assortments to our stores and online this fall and holiday season.

2% segment profit margin on a constant currency basis was 15% down 70 basis points versus last year.

Speaker Change: As to our capital allocation, we were pleased to generate another quarter of strong cash flow. While also reinvesting in the growth of our business and returning cash to shareholders through our buyback and dividend programs now ill turn it back to Ernie.

At <unk> International comp store sales increased 1% and were up in both Europe and Australia.

Ernie Herrman: Thanks, Amanda. Before we begin, Deb 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 investor section of our website, 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 investor section of TJX.com, along with reconciliations to non-GAAP measures we discussed. Thank you, and now I'll turn it back over to Ernie.

<unk> profit margin on a constant currency basis was four 3% up 230 basis points versus last year.

Ernie Herrman: Thanks, John.

Ernie Herrman: Now I will highlight the opportunities we see that give us confidence that we can continue to drive sales and customer transactions in the second half of the year.

With our leadership position in decades of international operating experience. We are confident we will continue to be an attractive shopping destination for value seeking customers around the world.

Ernie Herrman: First we are convinced that consumers will keep seeking value.

Moving to inventory balance sheet inventory and inventory on a per store basis were both down 2% and driven by lower inventory at our distribution centers, we feel great about our inventory levels and believe we are well positioned to take advantage of the outstanding availability we're seeing.

Ernie Herrman: We believe our strategy of trading across a broad range of income and age demographics differentiates us from other retailers and remains a tremendous advantage.

Im confident that our value proposition will continue to resonate with shoppers when they visit any one of our retail banners.

Ernie Herrman: Second we feel great about our product category plans and have exciting initiatives planned for the fall and holiday selling seasons.

In the marketplace and flow fresh assortments to our stores and online this fall and holiday season.

Ernie Herrman: Good morning. Joining me and Deb on the call is John. I want to start by thanking all of our global associates for their ongoing commitment to TJX. Thanks to their hard work and collective efforts, we continue to deliver an excellent shopping experience and outstanding value to our shoppers every day. Now, to our business update and second-quarter results. I'm extremely pleased with our second-quarter performance and the terrific execution of our flexible off-price business model by our teams. Sales, profitability, and earnings per share all exceeded our plans. I am particularly pleased that our comp sales increases across all of our divisions were once again entirely driven by an increase in customer transactions. We believe this is an excellent indicator of the strength of our business as our exciting merchandise assortment, great brands, and outstanding values continue to resonate with consumers across our geographies.

As to our capital allocation, we were pleased to generate another quarter of strong cash flow. While also reinvesting in the growth of our business and returning cash to shareholders through our buyback and dividend programs now I'll turn it back to Ernie.

Ernie Herrman: Further we have made our stores a year round shopping destination for gifts and believe we are becoming more top of mind with shoppers with our consumable offerings.

Ernie Herrman: We believe that all of this will create an even more exciting shopping experience and encourage consumers to visit our stores more frequently.

Thanks, John.

Now I'll highlight the opportunities we see that give us confidence that we can continue to drive sales and customer transactions in the second half of the year.

Ernie Herrman: Third as I said earlier availability of quality branded merchandise is outstanding.

First we're convinced that consumers will keep seeking value.

I want to emphasize that we consistently have access to more goods than we could ever buy.

We believe our strategy of trading across a broad range of income and age demographics differentiates us from other retailers and remains a tremendous advantage I am confident that our value proposition will continue to resonate with shoppers when they visit any one of our retail banners.

Ernie Herrman: Overall, I believe our vendor relationships are as good as ever.

Ernie Herrman: Some have been getting even stronger as vendors see us as an attractive way to grow their business.

Ernie Herrman: This gives me great confidence that we can bring shoppers the right assortment at the right values throughout the remainder of the year and for many years to come.

Second.

We feel great about our product category plans and have exciting initiatives planned for the fall and holiday selling seasons.

Ernie Herrman: Next the flexibility of our buying and planning and allocation teams.

Further we have made our stores a year round shopping destination for gifts and believe we are becoming more top of mind with shoppers with our consumable offerings.

Ernie Herrman: Allows us to go after the hottest categories and trends that drive customer excitement.

Ernie Herrman: I also want to highlight the strong performance of our largest division, Marmaxx, which drove mid-single-digit increases in both comp sales and customer transactions. As to profitability, with our second-quarter outperformance, we are once again reaching our full-year guidance for both pre-tax profit margin and earnings per share. John will talk to our profitability performance and guidance in more detail in a moment. Also, during the second quarter, we were thrilled to open our 5,000th store, making another milestone for our company. This is a terrific achievement for TJX. We see plenty of additional store growth opportunities for our current retail banners and our existing geographies over the long term. Additionally, with our recent announcements with Grupo Axo and Brands for Less, we expect to participate in the growth of off-price in several additional countries around the world.

I also want to highlight the strong performance of our largest division, Marmaxx, which drove mid-single-digit increases in both comp sales and customer transactions. As to profitability, with our second-quarter outperformance, we are once again reaching our full-year guidance for both pre-tax profit margin and earnings per share. John will talk to our profitability performance and guidance in more detail in a moment. Also, during the second quarter, we were thrilled to open our 5,000th store, making another milestone for our company. This is a terrific achievement for TJX. We see plenty of additional store growth opportunities for our current retail banners and our existing geographies over the long term. Additionally, with our recent announcements with Grupo Axo and Brands for Less, we expect to participate in the growth of off-price in several additional countries around the world.

Ernie Herrman: With the flexibility of our supply chain.

Ernie Herrman: I am confident that we can merchandise each of our stores with a curated assortment of good better and best brands that will excite and inspire our shoppers.

We believe that all of this will create an even more exciting shopping experience and encourage consumers to visit our stores more frequently.

Third as I said earlier availability of quality branded merchandise is outstanding.

Ernie Herrman: Yes.

Lastly, we feel great about our marketing plans.

Ernie Herrman: Our campaigns will reinforce our value leadership and focus on capturing additional visits from our existing customers, attracting new shoppers and encouraging cross shopping of our.

I want to emphasize that we consistently have access to more goods than we could ever buy.

Overall, I believe our vendor relationships are as good as ever.

Ernie Herrman: Our retail banners.

<unk> been getting even stronger as vendors see us as an attractive way to grow their business.

Ernie Herrman: Additionally, we plan to showcase a wide selection of products to highlight that there is something for everyone.

It gives me great confidence that we can bring shoppers the right assortment at the right values throughout the remainder of the year and for many years to come.

And demonstrate that our great values are available or available to every shopper everyday.

Next the flexibility of our buying and planning and allocation teams.

Ernie Herrman: Further we plan to continue to represent a broad range of shoppers in our advertising and leverage a wide variety of media channels to target a wide customer base.

Allows us to go after the hottest categories and trends that drive customer excitement.

Ernie Herrman: As we look at the remainder of the year, I am excited about the opportunities we see for this business. The third quarter is off to a strong start, and we have numerous plans underway to drive traffic and sales. Availability of quality branded merchandise is excellent, and we are confident we will have an exciting assortment of fresh goods across all of our stores and online throughout the fall and holiday selling seasons. I'll talk more about our second-half opportunities in a moment, but first, I'll turn the call over to John to cover our second-quarter results in more detail. John?

As we look at the remainder of the year, I am excited about the opportunities we see for this business. The third quarter is off to a strong start, and we have numerous plans underway to drive traffic and sales. Availability of quality branded merchandise is excellent, and we are confident we will have an exciting assortment of fresh goods across all of our stores and online throughout the fall and holiday selling seasons. I'll talk more about our second-half opportunities in a moment, but first, I'll turn the call over to John to cover our second-quarter results in more detail. John?

With the flexibility of our supply chain.

Ernie Herrman: Also giving us confidence is that our customer surveys continue to tell us that our value perception and overall satisfaction scores remained strong.

I am confident that we can merchandise each of our stores with a curated assortment of good better and best brands that will excite and inspire our shoppers.

Ernie Herrman: Further each of our divisions continue to attract an outsized number of younger customers to our stores.

Yeah.

Lastly, we feel great about our marketing plans.

Ernie Herrman: Which we believe bodes well for the future.

Our campaigns will reinforce our value leadership and focus on capturing additional visits from our existing customers, attracting new shoppers learned encouraging cross shopping of our retail banners.

Ernie Herrman: Okay.

Ernie Herrman: Beyond this year I am confident that T. J X has significant opportunities to capture additional market share over the long term.

Ernie Herrman: Let me quickly reiterate why we believe we are so well positioned.

Additionally, we plan to showcase a wide selection of products to highlight that there is something for everyone.

Operator: Thanks, Ernie. I also want to add my gratitude to all of our global associates for their continued hard work. Now, I'll share some additional details in Q2. As Ernie mentioned, our consolidated comp sales increased 4%, which was above our plan, entirely driven by customer transactions. Both our apparel and home categories saw comp sales increases. Pre-tax profit margin of 10.9% was up 50 basis points versus last year. Pre-tax profit margin was 40 basis points above our plan. This was primarily due to lower freight costs, which includes a benefit from a true-up of our freight accrual and lower operational freight costs, as well as stronger sales. These benefits were partially offset by higher incentive compensation accruals and a contribution to the TJX Foundation. Gross margin was up 20 basis points versus last year.

John Klinger: Thanks, Ernie. I also want to add my gratitude to all of our global associates for their continued hard work. Now, I'll share some additional details in Q2. As Ernie mentioned, our consolidated comp sales increased 4%, which was above our plan, entirely driven by customer transactions. Both our apparel and home categories saw comp sales increases. Pre-tax profit margin of 10.9% was up 50 basis points versus last year. Pre-tax profit margin was 40 basis points above our plan. This was primarily due to lower freight costs, which includes a benefit from a true-up of our freight accrual and lower operational freight costs, as well as stronger sales. These benefits were partially offset by higher incentive compensation accruals and a contribution to the TJX Foundation. Gross margin was up 20 basis points versus last year.

Ernie Herrman: First is our reputation as a value leader in the United States, Canada, Europe and Australia.

And demonstrate that our great values are available or available to every shopper every day.

Ernie Herrman: Second we believe we are the only global brick and mortar off price retailer, that's able to take brand fashion and quality and put it all together in a differentiated treasure hunt shopping experience for consumers across a wide demographic.

Further we plan to continue to represent a broad range of shoppers in our advertising and leverage a wide variety of media channels to target a wide customer base.

Also giving us confidence is that our customer surveys continue to tell us that our value perception and overall satisfaction scores remained strong.

Ernie Herrman: We also offer a wide fashion assortment, which we believe will appeal to a broad range of shoppers.

Ernie Herrman: Third all aspects of our business model are driven by flexibility, which allows us to constantly pivot to take advantage of market trends.

Further each of our divisions continue to attract an outsized number of younger customers to our stores.

Which we believe bodes well for the future.

Ernie Herrman: Next we see the opportunity to grow our store base to nearly 6300 stores with our current retail banners in just our current geographies.

[noise].

Beyond this year I am confident that T. J X has significant opportunities to capture additional market share over the long term.

Ernie Herrman: Again, I am extremely confident there will always be plenty of quality merchandise available to us to meet our store growth plans.

Let me quickly reiterate why we believe we are so well positioned.

Operator: This increase was driven by strong mark-on and a benefit from freight, partially offset by higher supply chain costs. SG&A decreased 30 basis points versus last year. This decrease was primarily due to a benefit this year from lapping a reserve related to a German government COVID program receivable last year, as well as expense favorability. These benefits were partially offset by incremental store wage and payroll costs. Lastly, we were very pleased that diluted earnings per share of $0.96 were up 13% versus last year and also well above our plan. Now, to our second-quarter division performance. Again, this quarter, across all of our divisions, the comp increases were entirely driven by customer transactions, which we see as a good indicator of the strength of the business. At Marmaxx, comp store sales increased 5%, and segment profit margin was 14.1%, up 40 basis points versus last year.

This increase was driven by strong mark-on and a benefit from freight, partially offset by higher supply chain costs. SG&A decreased 30 basis points versus last year. This decrease was primarily due to a benefit this year from lapping a reserve related to a German government COVID program receivable last year, as well as expense favorability. These benefits were partially offset by incremental store wage and payroll costs. Lastly, we were very pleased that diluted earnings per share of $0.96 were up 13% versus last year and also well above our plan. Now, to our second-quarter division performance. Again, this quarter, across all of our divisions, the comp increases were entirely driven by customer transactions, which we see as a good indicator of the strength of the business. At Marmaxx, comp store sales increased 5%, and segment profit margin was 14.1%, up 40 basis points versus last year.

First is our reputation as a value leader in the United States, Canada, Europe and Australia.

Ernie Herrman: Lastly, I truly believe the depth of off price knowledge and expertise within T. J X is unmatched.

Second we believe we are the only global brick and mortar off price retailer, that's able to take brands fashion and quality and put it all together in a differentiated treasure hunt shopping experience for consumers across a wide demographic.

Ernie Herrman: We are laser focused on teaching and training to develop the next generation of leaders.

Ernie Herrman: Finally, I am so proud of our company culture, which I believe.

Ernie Herrman: As a strong contributor to our success and a major differentiator.

We also offer a wide fashion assortment, which we believe will appeal to a broad range of shoppers.

Ernie Herrman: Now moving to our investment in branch for less which we detailed in our press release as we continue to pursue our global growth vision.

Third all aspects of our business model are driven by flexibility, which allows us to constantly pivot to take advantage of market trends.

Ernie Herrman: We are excited for our plans to have a minority ownership position in a profitable off price retailer baked in Dubai.

Next we see the opportunity to grow our store base to nearly 6300 stores with our current retail banners in just our current geographies.

Ernie Herrman: As with our planned joint venture in Mexico, which we announced last quarter.

Ernie Herrman: This investment represents another opportunity for our company to expand our global reach with an established off price retailer.

Again, I am extremely confident there will always be plenty of quality merchandise available to us to meet our store growth plans.

Ernie Herrman: In addition to <unk> strong financial profile I have personally met with their management team and feel really good about our investment and the strong business. They have built to date.

Lastly, I truly believe the depth of off price knowledge and expertise with N T. J X is unmatched.

Operator: Marmaxx's apparel and home categories both saw strong comp sales growth, and we saw comp strength across all regions. We were also happy with the strong sales performance of our US e-commerce sites and Sierra stores, which we report as part of this division. We're very pleased with the momentum at Marmaxx and continue to see numerous opportunities to keep growing our largest division. HomeGoods comp store sales increased 2%. Segment profit margin grew to 9.1%, up 40 basis points versus last year. We see HomeGoods and HomeSense as highly differentiated from other retailers in the home fashions space. We focus every day on bringing customers eclectic assortments sourced around the world at exciting values. We continue to see significant opportunity to open new stores and capture additional share of the US home market. Moving to our international divisions.

We are laser focused on teaching and training to develop the next generation of leaders.

Speaker Change: We are always looking for ways to increase value for <unk> shareholders and we see this transaction as a good use of cash that we expect to be slightly accretive to earnings per share beginning in fiscal 'twenty six.

Finally, I am so proud of our company culture, which I believe.

As a strong contributor to our success and a major differentiator.

Speaker Change: Moving to corporate responsibility, we are looking forward to the annual release of our global corporate responsibility report this fall.

Now moving to our investment in branch for less which we detailed in our press release as we continue to pursue our global growth vision.

Speaker Change: Our teams have been hard at work on our corporate responsibility initiatives. For example in fiscal 2024, we helped to provide more than 2 million young people in our communities with access to educational opportunities.

We are excited for our plans to have a minority ownership position in a profitable off price retailer based in Dubai.

As with our planned joint venture in Mexico, which we announced last quarter.

This investment represents another opportunity for our company to expand our global reach with an established off price retailer.

Speaker Change: Additionally, and supportive career development, we continue to create learning opportunities for our associates, including formal training classes online in person learning opportunities and formal mentoring and direct training.

In addition to <unk> strong financial profile I have personally met with their management team and feel really good about our investment and the strong business. They have built to date.

Speaker Change: We are also continuing to make progress against our global environmental sustainability goals.

Operator: At TJX Canada, comp store sales were up 2%. Segment profit margin on a constant currency basis was 15%, down 70 basis points versus last year. At TJX International, comp store sales increased 1% and were up in both Europe and Australia. Segment profit margin on a constant currency basis was 4.3%, up 230 basis points versus last year. With our leadership position and decades of international operating experience, we are confident we will continue to be an attractive shopping destination for value-seeking customers around the world. Moving to inventory. Balance sheet inventory and inventory on a per-store basis were both down 2% and driven by lower inventory at our distribution centers. We feel great about our inventory levels and believe we are well-positioned to take advantage of the outstanding availability we're seeing in the marketplace and flow fresh assortments to our stores and online this fall and holiday season.

At TJX Canada, comp store sales were up 2%. Segment profit margin on a constant currency basis was 15%, down 70 basis points versus last year. At TJX International, comp store sales increased 1% and were up in both Europe and Australia. Segment profit margin on a constant currency basis was 4.3%, up 230 basis points versus last year. With our leadership position and decades of international operating experience, we are confident we will continue to be an attractive shopping destination for value-seeking customers around the world. Moving to inventory. Balance sheet inventory and inventory on a per-store basis were both down 2% and driven by lower inventory at our distribution centers. We feel great about our inventory levels and believe we are well-positioned to take advantage of the outstanding availability we're seeing in the marketplace and flow fresh assortments to our stores and online this fall and holiday season.

We are always looking for ways to increase value for T. J access shareholders and we see this transaction as a good use of cash that we expect to be slightly accretive to earnings per share beginning in fiscal 'twenty six.

Speaker Change: Further we remain focused on our social compliance program and operating responsibly as a business.

Speaker Change: You can read about our progress in our upcoming report.

Speaker Change: I am proud of the work our teams across the globe continue to do on corporate responsibility and I Hope you will take some time to learn more about what we are doing in this area.

Moving to corporate responsibility, we are looking forward to the annual release of our global corporate responsibility report this fall.

Our teams have been hard at work on our corporate responsibility initiatives. For example in fiscal 2024, we help to provide more than 2 million young people in our communities with access to educational opportunities.

Speaker Change: Summing up.

Speaker Change: We are extremely pleased with our sales and profitability performance in the second quarter.

Speaker Change: The third quarter is off to a strong start and we are excited about the initiatives. We have planned during the second half of the year.

Additionally, and supportive career development, we continue to create learning opportunities for our associates, including formal training classes online in.

Speaker Change: As an off price leader in every country. We operate in we believe we are in an excellent position to take advantage of the market share opportunities, we see over the long term in those geographies.

In person learning opportunities and formal mentoring.

Speaker Change: Additionally.

And direct training.

Speaker Change: Want to reiterate that we will not be complacent and we remain laser focused on increasing the overall profitability of T. J Maxx.

We are also continuing to make progress against our global environmental sustainability goals.

Speaker Change: I truly believe we have one of the best retail models in the world with the best Associates in retail.

Further we remain focused on our social compliance program and operating responsibly as a business.

Operator: As to our capital allocation, we were pleased to generate another quarter of strong cash flow while also reinvesting in the growth of our business and returning cash to shareholders through our buyback and dividend programs. Now, I'll turn it back to Ernie.

As to our capital allocation, we were pleased to generate another quarter of strong cash flow while also reinvesting in the growth of our business and returning cash to shareholders through our buyback and dividend programs. Now, I'll turn it back to Ernie.

You can read about our progress in our upcoming report.

Going forward I have confidence that the flexibility of our business the talent of our associates and our relentless focus on value. We will continue to serve us well and allow us to navigate through the ever changing retail and economic landscapes.

I am proud of the work our teams across the globe continue to do on corporate responsibility.

And I Hope you will take some time to learn more about what we are doing in this area.

Ernie Herrman: Thanks, John. Now, I'll highlight the opportunities we see that give us confidence that we can continue to drive sales and customer transactions in the second half of the year. First, we're convinced that consumers will keep seeking value. We believe our strategy of trading across a broad range of income and age demographics differentiates us from other retailers and remains a tremendous advantage. I am confident that our value proposition will continue to resonate with shoppers when they visit any one of our retail banners. Second, we feel great about our product category plans and have exciting initiatives planned for the fall and holiday selling seasons. Further, we have made our stores a year-round shopping destination for gifts and believe we are becoming more top of mind with shoppers with our consumable offerings.

Summing up.

Speaker Change: Now I'll turn the call back to John to cover our full year and third quarter guidance and then we'll open it up for questions.

We are extremely pleased with our sales and profitability performance in the second quarter.

Third quarter is off to a strong start and we are excited about the initiatives. We have planned during the second half of the year.

John: Jeremy Thanks again Ernie.

John: I'll start with our full year fiscal 'twenty five guidance, we now expect overall comp store sales to increase approximately 3%.

As an off price leader in every country. We operate in we believe we are in an excellent position to take advantage of the market share opportunities, we see over the long term in those geographies.

Speaker Change: We are increasing our consolidated sales guidance to a range of 55 eight to $56 1 billion.

Additionally, I want to reiterate that we will not be complacent and we remain laser focused on increasing the overall profitability of T. J Maxx.

Speaker Change: This change reflects the flow through of the stronger sales in Q2.

Speaker Change: We're increasing our pre tax profit margin guidance to be approximately 11, 2%.

I truly believe we are one of the best retail models in the world with the best Associates in retail.

Speaker Change: This would be up 30 basis points versus last year's adjusted 10, 9%.

Going forward I have confidence that the flexibility of our business the talent of our associates.

Speaker Change: We now expect gross margin to be approximately 32%, a 30 basis point increase versus last year's adjusted 29, 9%.

And our relentless focus on value will continue to serve us well and allow us to navigate through the ever changing retail and economic landscapes.

Speaker Change: We expect this increase to be driven by a higher merchandise margin, which includes favorable mark on as well as a benefit from lower freight costs, partially offset by higher supply chain costs. We continue to plan shrink to be flat versus last year.

Ernie Herrman: We believe that all of this will create an even more exciting shopping experience and encourage consumers to visit our stores more frequently. Third, as I said earlier, availability of quality branded merchandise is outstanding. I want to emphasize that we consistently have access to more goods than we could ever buy. Overall, I believe our vendor relationships are as good as ever. Some have been getting even stronger as vendors see us as an attractive way to grow their business. This gives me great confidence that we can bring shoppers the right assortment at the right values throughout the remainder of the year and for many years to come. Next, the flexibility of our buying, planning, and allocation teams allows us to go after the hottest categories and trends that drive customer excitement.

We believe that all of this will create an even more exciting shopping experience and encourage consumers to visit our stores more frequently. Third, as I said earlier, availability of quality branded merchandise is outstanding. I want to emphasize that we consistently have access to more goods than we could ever buy. Overall, I believe our vendor relationships are as good as ever. Some have been getting even stronger as vendors see us as an attractive way to grow their business. This gives me great confidence that we can bring shoppers the right assortment at the right values throughout the remainder of the year and for many years to come. Next, the flexibility of our buying, planning, and allocation teams allows us to go after the hottest categories and trends that drive customer excitement.

Now I'll turn the call back to John to cover our full year and third quarter guidance and then we'll open it up for questions John.

John Thanks again Ernie.

I'll start with our full year fiscal 'twenty five guidance, we now expect overall comp store sales to increase approximately 3%.

We continue to expect SG&A to be approximately 19, 3% flat versus last year's 19, 3%.

We are increasing our consolidated sales guidance to a range of 55 eight to $56 1 billion.

We're planning incremental store wage and payroll costs to be offset by lower incentive compensation costs and a benefit from items that negatively impacted us last year.

This change reflects the flow through of the stronger sales in Q2.

We're increasing our pre tax profit margin guidance to be approximately 11, 2%.

Speaker Change: We're now assuming net interest income of about $160 million, which would have a neutral impact on our year over year pre tax profit margin.

This would be up 30 basis points versus last year's adjusted 10, 9%.

We now expect gross margin to be approximately 32%, a 30 basis point increase versus last year's adjusted 29, 9%.

Speaker Change: Our full year, our full year guidance assumes a tax rate of 25, 2%.

Speaker Change: Our weighted average share count of approximately 114 billion shares.

Ernie Herrman: With the flexibility of our supply chain, I am confident that we can merchandise each of our stores with a curated assortment of good, better, and best brands that will excite and inspire our shoppers. Lastly, we feel great about our marketing plans. Our campaigns will reinforce our value leadership and focus on capturing additional visits from our existing customers, attracting new shoppers, and encouraging cross-shopping of our retail banners. Additionally, we plan to showcase a wide selection of products to highlight that there is something for everyone and demonstrate that our great values are available to every shopper every day. Further, we plan to continue to represent a broad range of shoppers in our advertising and leverage a wide variety of media channels to target a wide customer base.

With the flexibility of our supply chain, I am confident that we can merchandise each of our stores with a curated assortment of good, better, and best brands that will excite and inspire our shoppers. Lastly, we feel great about our marketing plans. Our campaigns will reinforce our value leadership and focus on capturing additional visits from our existing customers, attracting new shoppers, and encouraging cross-shopping of our retail banners. Additionally, we plan to showcase a wide selection of products to highlight that there is something for everyone and demonstrate that our great values are available to every shopper every day. Further, we plan to continue to represent a broad range of shoppers in our advertising and leverage a wide variety of media channels to target a wide customer base.

We expect this increase to be to be driven by a higher merchandise margin, which includes favorable mark on as well as a benefit from lower freight costs, partially offset by higher supply chain costs.

Speaker Change: As a result of these assumptions, we now expect full year diluted earnings per share to be in the range of $4 nine to $4 13.

Speaker Change: This would represent an increase of 9% to 10% versus last year's adjusted diluted earnings per share of $3 76.

We continue to plan to shrink to be flat versus last year.

We continue to expect SG&A to be approximately 19, 3%.

Speaker Change: It is important to note that we are not flowing through the entire second quarter earnings per share beat of <unk> <unk> to the full year, because we're now planning higher incentive compensation accruals and higher freight expenses for the second half of the year versus our previous guidance.

Versus last year is 19, 3%.

Speaker Change: We're planning incremental store wage and payroll costs to be offset by lower incentive compensation costs and a benefit from items that negatively impacted us last year.

Speaker Change: We're now assuming net interest income of about $160 million, which would have a neutral impact on our year over year pre tax profit margin.

Speaker Change: Moving to our third quarter guidance, we are expecting overall comp store sales growth to be up 2% to 3% consolidated sales to be in the range of 13, 9% to $14 billion.

Speaker Change: Our full year.

Our full year guidance assumes a tax rate of 25, 2%.

Speaker Change: Pre tax profit margin to be in the range of 11, 8% to 11, 9% down 10 to 20 basis points versus last year's 12%.

Speaker Change: Weighted average share count of approximately 114 billion shares.

Ernie Herrman: Also giving us confidence is that our customer surveys continue to tell us that our value perception and overall satisfaction scores remain strong. Further, each of our divisions continues to attract an outsized number of younger customers to its stores, which we believe bodes well for the future. Beyond this year, I am confident that TJX has significant opportunities to capture additional market share over the long term. Let me quickly reiterate why we believe we are so well-positioned. First is our reputation as a value leader in the United States, Canada, Europe, and Australia. Second, we believe we are the only global brick-and-mortar off-price retailer that's able to take brand, fashion, and quality and put it all together in a differentiated treasure hunt shopping experience for consumers across a wide demographic. We also offer a wide fashion assortment, which we believe will appeal to a broad range of shoppers.

Also giving us confidence is that our customer surveys continue to tell us that our value perception and overall satisfaction scores remain strong. Further, each of our divisions continues to attract an outsized number of younger customers to its stores, which we believe bodes well for the future. Beyond this year, I am confident that TJX has significant opportunities to capture additional market share over the long term. Let me quickly reiterate why we believe we are so well-positioned. First is our reputation as a value leader in the United States, Canada, Europe, and Australia. Second, we believe we are the only global brick-and-mortar off-price retailer that's able to take brand, fashion, and quality and put it all together in a differentiated treasure hunt shopping experience for consumers across a wide demographic. We also offer a wide fashion assortment, which we believe will appeal to a broad range of shoppers.

Speaker Change: As a result of these assumptions, we now expect full year diluted earnings per share to be in the range of $4 nine to $4 13.

Speaker Change: Gross margin to be in the range of 31, 1% to 31, 2%.

Speaker Change: This would be flat to up 10 basis points versus last year.

Speaker Change: This would represent an increase of 9% to 10% versus last year's adjusted diluted earnings per share of $3 76.

Speaker Change: G&A to be approximately 19, 5% an increase of 10 basis points versus last year.

Speaker Change: Net interest income of about $34 million, which would delever third quarter fiscal 2025 pre tax profit margin by approximately 10 basis points.

Speaker Change: Our third quarter guidance also assumes a tax rate of 26% and a weighted average share count of approximately 114 billion shares.

Speaker Change: Moving to our third quarter guidance, we're expecting overall comp store sales growth to be up 2% to 3% consolidated.

Speaker Change: Based on these assumptions, we expect third quarter diluted earnings per share to be in the range of $1 six to $1 eight up 3% to 5% versus last year's $1 three.

Speaker Change: Consolidated sales to be in the range of 13, 9% to $14 billion.

Speaker Change: Pre tax profit margin to be in the range of 11, eight to 11, 9% down 10 to 20 basis points versus last year's 12%.

Speaker Change: Lastly, our implied guidance for the fourth quarter assumes that overall comp store sales would be up 2% to 3% pretax profit margin will be in the range of 11% to 11, 1%.

Speaker Change: Gross margin to be in the range of 31, 1% to 31, 2%.

Speaker Change: This would be flat to up 10 basis points versus last year SG&A to be approximately 19, 5% an increase of 10 basis points versus last year.

Speaker Change: And earnings per share will be in the range of $1 14 to $1 16 per share.

Ernie Herrman: Third, all aspects of our business model are driven by flexibility, which allows us to constantly pivot to take advantage of market trends. Next, we see the opportunity to grow our store base to nearly 6,300 stores with our current retail banners and just our current geographies. Again, I am extremely confident there will always be plenty of quality merchandise available to us to meet our store growth plans. Lastly, I truly believe the depth of off-price knowledge and expertise within TJX is unmatched. We are laser-focused on teaching and training to develop the next generation of leaders. Finally, I am so proud of our company culture, which I believe is a strong contributor to our success and a major differentiator. Now, moving to our investment in Brands for Less, which we detailed in our press release.

Third, all aspects of our business model are driven by flexibility, which allows us to constantly pivot to take advantage of market trends. Next, we see the opportunity to grow our store base to nearly 6,300 stores with our current retail banners and just our current geographies. Again, I am extremely confident there will always be plenty of quality merchandise available to us to meet our store growth plans. Lastly, I truly believe the depth of off-price knowledge and expertise within TJX is unmatched. We are laser-focused on teaching and training to develop the next generation of leaders. Finally, I am so proud of our company culture, which I believe is a strong contributor to our success and a major differentiator. Now, moving to our investment in Brands for Less, which we detailed in our press release.

Speaker Change: When comparing this implied guidance to last year's results. It is important to remember that last year, we had an extra week in the fiscal fourth quarter that benefited pre tax margin by 30 basis points and earnings per share by <unk> 10 cents.

Speaker Change: Net interest income of about $34 million, which would delever third quarter fiscal 2025 pre tax profit margin by approximately 10 basis points.

Speaker Change: Our third quarter guidance also assumes a tax rate of 26% and a weighted average share count of approximately 114 billion shares.

We plan to provide more detailed guidance for the fourth quarter on our third quarter earnings call.

Speaker Change: In closing we are confident in our full year plans and as always we will strive to beat them. We have a very strong balance sheet and continue that continues to allow us to invest in the growth of <unk>, while simultaneously returning significant cash to our shareholders now.

Speaker Change: Based on these assumptions, we expect third quarter diluted earnings per share to be in the range of $1 six to $1 eight up 3% to 5% versus last year's dollar three.

Speaker Change: Lastly, our implied guidance for the fourth quarter assumes that overall comp store sales would be up 2% to 3% pretax profit margin would be in the range of 11% to 11, 1% and earnings per share will be in the range of $1 14 to $1 16 per.

Speaker Change: Now we're happy to take your questions. As a reminder, please limit your questions to one per person. So we can answer as many questions as we can.

Speaker Change: Thanks, and now we'll open it up for questions.

Speaker Change: Thank you. Thank you I would like to ask a question. Please press star one.

Ernie Herrman: As we continue to pursue our global growth vision, we are excited for our plans to have a minority ownership position in a profitable off-price retailer based in Dubai. As with our planned joint venture in Mexico, which we announced last quarter, this investment represents another opportunity for our company to expand our global reach with an established off-price retailer. In addition to BFL's strong financial profile, I have personally met with their management team and feel really good about our investment and the strong business they have built to date. We are always looking for ways to increase value for TJX's shareholders, and we see this transaction as a good use of cash that we expect to be slightly accretive to earnings per share beginning in fiscal 2026. Moving to corporate responsibility, we are looking forward to the annual release of our global corporate responsibility report this fall.

As we continue to pursue our global growth vision, we are excited for our plans to have a minority ownership position in a profitable off-price retailer based in Dubai. As with our planned joint venture in Mexico, which we announced last quarter, this investment represents another opportunity for our company to expand our global reach with an established off-price retailer. In addition to BFL's strong financial profile, I have personally met with their management team and feel really good about our investment and the strong business they have built to date. We are always looking for ways to increase value for TJX's shareholders, and we see this transaction as a good use of cash that we expect to be slightly accretive to earnings per share beginning in fiscal 2026. Moving to corporate responsibility, we are looking forward to the annual release of our global corporate responsibility report this fall.

Speaker Change: Sure.

Speaker Change: Yeah.

Speaker Change: First question comes from Lorraine Hutchinson with Bank of America. Your line is open.

Speaker Change: When comparing this implied guidance to last year's results. It's important to remember that last year, we had an extra week in the fiscal fourth quarter that benefited pre tax margin by 30 basis points and earnings per share by <unk> 10.

Lorraine Hutchinson: Thank you. Good morning can you talk about AUR in the quarter the balance between categories.

Speaker Change: Like for like price increases and then also any changes you might be seeing in customer behavior around value.

Speaker Change: We plan to provide more detailed guidance for the fourth quarter on our third quarter earnings call.

Speaker Change: Yes, so lorraine.

Speaker Change: In closing we are confident in our full year plans and as always we will strive to beat them. We have a very strong balance sheet and continue that continues to allow us to invest in the growth at T. J X, while simultaneously returning significant cash to our shareholders.

Good talking to you AUR is Ben.

Speaker Change: Pretty pretty consistent right John through the it has been yes, it didn't move much.

Speaker Change: I think.

John: Went up a little slight it's slightly up yes.

Speaker Change: Now we're happy to take your questions. As a reminder, please limit your questions to one per person. So we can answer as many questions as we can thanks.

Speaker Change: And obviously the comp was driven mostly by transactions right, because it's not up as much as the comp.

Speaker Change: Thanks, and now we'll open it up for questions.

Speaker Change: The balance in like for like goods, we're still continuing Lorraine youre getting at what are we doing as far as pricing on goods.

Thank you if you would like to ask a question. Please press star one our first question comes from Lorraine Hutchinson with Bank of America. Your line is open.

Ernie Herrman: Our teams have been hard at work on our corporate responsibility initiatives. For example, in fiscal 2024, we helped provide more than two million young people in our communities with access to educational opportunities. Additionally, in support of career development, we continue to create learning opportunities for our associates, including formal training classes online, in-person learning opportunities, informal mentoring, and direct training. We have also continued to make progress against our global environmental sustainability goals. Further, we remain focused on our social compliance program and operating responsibly as a business. You can read about our progress in our upcoming report. I am proud of the work our teams across the globe continue to do on corporate responsibility, and I hope you'll take some time to learn more about what we are doing in this area.

Our teams have been hard at work on our corporate responsibility initiatives. For example, in fiscal 2024, we helped provide more than two million young people in our communities with access to educational opportunities. Additionally, in support of career development, we continue to create learning opportunities for our associates, including formal training classes online, in-person learning opportunities, informal mentoring, and direct training. We have also continued to make progress against our global environmental sustainability goals. Further, we remain focused on our social compliance program and operating responsibly as a business. You can read about our progress in our upcoming report. I am proud of the work our teams across the globe continue to do on corporate responsibility, and I hope you'll take some time to learn more about what we are doing in this area.

Lorraine Hutchinson: We still have been selectively throughout the business again bottom up we do not manage this top down.

Lorraine Hutchinson: Thank you good morning.

Lorraine Hutchinson: You talk about AUR in the quarter the balance between category mix shifts and like for like price increases and then also any changes you might be seeing in customer behavior around value.

Lorraine Hutchinson: We have been bottom up still.

Speaker Change: Adjusting retails, where appropriate I think if you look at our merchandize margin, though the story is becoming more and more about the buying back.

Speaker Change: [noise], yeah, so Lorraine.

Speaker Change: Not not just the retailers and I think that's more of a combination of those things as well.

Speaker Change: Good talking to you AUR is Ben.

Speaker Change: Even though I'm sure you've been seeing all the time.

Speaker Change: Pretty pretty consistent right John through the.

Speaker Change: As inflation subsides.

John: It has been yes, it didn't move much.

Speaker Change: We'll be and I'll get right to it I'm sure there'll be a question going with that in terms of AUR and the balance on the line items.

Speaker Change: I think.

Speaker Change: Went up a little slight it's slightly up.

What could happen in the market, if if retails come down on certain categories et cetera, we always and our merchants are excellent at this our retails are dictated by whats happening around us.

Speaker Change: And obviously the comp was driven mostly by transactions right, because it's not up as much as the comp.

Speaker Change: The balance in like for like goods, we're still continuing to if Lorraine you're getting at what are we doing as far as pricing on goods.

Speaker Change: That's in the current and in the future what we predict so we're always retailing the goods.

Speaker Change: We still have been selectively throughout the business again bottom up we do not manage this top down.

Ernie Herrman: Summing up, we are extremely pleased with our sales and profitability performance in the second quarter. The third quarter is off to a strong start, and we are excited about the initiatives we have planned during the second half of the year. As an off-price leader in every country we operate in, we believe we are in an excellent position to take advantage of the market share opportunities we see over the long term in those geographies. Additionally, I want to reiterate that we will not be complacent, and we remain laser-focused on increasing the overall profitability of TJX. I truly believe we have one of the best retail models in the world with the best associates in retail.

Speaker Change: Based on the out the door a retailer that we see out the competition. So we feel as though we will have that coverage could that have retail come down too soon to say on which categories. A lot of those discussions by the way have been kind of grocery oriented and not necessarily marrying up with our business. So right now we haven't been seeing.

Speaker Change: We have been bottom up still.

Speaker Change: Adjusting retails, where appropriate I think if you look at our merchandize margin, though the story is becoming more and more about the buying better.

Not not just the retailers and I think that's more of a combination of those things as well.

Speaker Change: Anything significant like that at all which is why our AUR is where John had just said slightly up.

Speaker Change: Even though I am.

Speaker Change: <unk> been seeing all the talk about as inflation subsides.

John: So I think theres still exists opportunity as we move forward to address retail's internally based on more of a significant.

Speaker Change: It will be and I'll get right to it I'm sure there'll be a question going with that in terms of AUR and the balance on the line items.

John: Between our retail and the out the door, which is still going to create opportunities. There having said that we're always extremely aware of what's going on around us we don't know the timing of when.

Speaker Change: What could happen in the market.

Speaker Change: If retails come down on certain categories et cetera, we always and our merchants are excellent at this our retails are dictated by whats happening around us.

Ernie Herrman: Going forward, I have confidence that the flexibility of our business, the talent of our associates, and our relentless focus on value will continue to serve us well and allow us to navigate through the ever-changing retail and economic landscapes. Now, I'll turn the call back to John to cover our full year and third quarter guidance, and then we'll open it up for questions.

Going forward, I have confidence that the flexibility of our business, the talent of our associates, and our relentless focus on value will continue to serve us well and allow us to navigate through the ever-changing retail and economic landscapes. Now, I'll turn the call back to John to cover our full year and third quarter guidance, and then we'll open it up for questions.

John: That could start to moderate a little but.

John: I think we're in a really healthy position, especially when you go to point number three is the availability of goods is creating an unusual ability to buy goods.

Speaker Change: That's in the current and in the future what we predict so we're always retailing the goods.

Speaker Change: Based on the out the door retailer that we see out the competition. So we feel as though we will have that covered could that have retails come down to too soon to say on which categories. A lot of those discussions by the way have been kind of grocery oriented and not necessarily marrying up with our business. So right now we haven't been seeing.

John: And retail goods extremely profitably.

John: As you can see from this quarter.

Debra McConnell: Thanks, John.

Thanks, John.

Ernie Herrman: Thanks again, Ernie. I'll start with our full year fiscal 2025 guidance. We now expect overall comp store sales to increase approximately 3%. We are increasing our consolidated sales guidance to a range of $55.8 to 56.1 billion. This change reflects the flow-through of the stronger sales in Q2. We're increasing our pre-tax profit margin guidance to be approximately 11.2%. This would be up 30 basis points versus last year's adjusted 10.9%. We now expect gross margin to be approximately 30.2%, a 30 basis point increase versus last year's adjusted 29.9%. We expect this increase to be driven by a higher merchandise margin, which includes favorable mark-on, as well as a benefit from lower freight costs partially offset by higher supply chain costs. We continue to plan shrink to be flat versus last year. We continue to expect SG&A to be approximately 19.3%, flat versus last year's 19.3%.

John Klinger: Thanks again, Ernie. I'll start with our full year fiscal 2025 guidance. We now expect overall comp store sales to increase approximately 3%. We are increasing our consolidated sales guidance to a range of $55.8 to 56.1 billion. This change reflects the flow-through of the stronger sales in Q2. We're increasing our pre-tax profit margin guidance to be approximately 11.2%. This would be up 30 basis points versus last year's adjusted 10.9%. We now expect gross margin to be approximately 30.2%, a 30 basis point increase versus last year's adjusted 29.9%. We expect this increase to be driven by a higher merchandise margin, which includes favorable mark-on, as well as a benefit from lower freight costs partially offset by higher supply chain costs. We continue to plan shrink to be flat versus last year. We continue to expect SG&A to be approximately 19.3%, flat versus last year's 19.3%.

John: Then as far as the customer.

John: We.

John: We see we see positive.

John: Positive results from all of the income demographics, we look at and again that speaks to the good better best.

Anything significant like that at all which is why our AUR is where John had just said slightly up.

Product mix buying close to need so if if a certain customer category as is.

John: So I think theres still exists opportunity as we move forward to address retail's internally based on more of a significant.

John: As is driving the comp we can easily go back and repurchase those goods and get them back into the store quickly so for us.

John: GAAP between our retail and the out the door, which is still going to create opportunities. There having said that we're always extremely aware of what's going on around us we don't know the timing of when.

John: It's about making sure that we're appealing to all customer demographics, which this quarter. It appears we have.

John: That could start to moderate a little but I.

John: One thing Lorraine and I know we have a.

John: I think we're in a really healthy position, especially when you go to point number three is the availability of goods is creating an unusual ability to buy goods.

Lorraine Hutchinson: A lot of questions, we need to get to <unk>.

Speaker Change: You're asking one that touches on so much.

Speaker Change: The marketing if you noticed in my script I talked about our marketing how.

John: And retail goods extremely profitably.

Speaker Change: Aligning up with what John just said as far as how we treat the merchandise mix, which we've talked about for years I don't think ive given as much airtime. The fact that we market so appropriately to the good better best spectrum, ensuring that and I mentioned it in the script is that.

John: As you can see from this quarter.

Speaker Change: And then as far as the customer.

Speaker Change: We.

Speaker Change: We see we see positive.

Speaker Change: Positive results from all the income demographics, we look at and again that speaks to the good better best.

Speaker Change: We are if you look at who we use in our marketing.

Speaker Change: We're trying to more channels to apply to all again all age groups.

Speaker Change: Product mix buying close to need so if if a certain customer category as is.

Ernie Herrman: We're planning incremental store wage and payroll costs to be offset by lower incentive compensation costs and a benefit from items that negatively impacted us last year. We're now assuming net interest income of about $160 million, which would have a neutral impact on our year-over-year pre-tax profit margin. Our full year guidance assumes a tax rate of 25.2% and a weighted average share count of approximately 1.14 billion shares. As a result of these assumptions, we now expect full year diluted earnings per share to be in the range of $4.09 to $4.13. This would represent an increase of 9% to 10% versus last year's adjusted diluted earnings per share of $3.76.

We're planning incremental store wage and payroll costs to be offset by lower incentive compensation costs and a benefit from items that negatively impacted us last year. We're now assuming net interest income of about $160 million, which would have a neutral impact on our year-over-year pre-tax profit margin. Our full year guidance assumes a tax rate of 25.2% and a weighted average share count of approximately 1.14 billion shares. As a result of these assumptions, we now expect full year diluted earnings per share to be in the range of $4.09 to $4.13. This would represent an increase of 9% to 10% versus last year's adjusted diluted earnings per share of $3.76.

Speaker Change: We try to go to all the different channels to evolve with where the consumer is going.

Speaker Change: It's driving the comp we can easily go back and repurchase those goods and get them back into the store quickly so for us.

Speaker Change: We have different media channels.

Each brand's campaign has a differentiated in a broad broad invitational message really that expresses the benefits of our business model to every customer. So also in my script you heard <unk> heard me, saying, we want to sell everybody.

Speaker Change: It's about making sure that we're appealing to all customer demographics, which this quarter. It appears we have.

One thing Lorraine and I know, we have a lot of questions, we need to get to budget, you're asking a one that touches on so much.

Speaker Change: Every day and our marketing is lined up with that same is consistent with that strategy. So I'll just say, we haven't talked about the marketing as much but when you watch our spots, whether it's homegoods marshalls or Max or Crs is aimed at not being narrow. It is it is a wide wide audience that we're going after.

Speaker Change: The marketing if you noticed in my script I talked about our marketing how are lining up with what John just said as far as how we treat the merchandize mix, which we've talked about for years I don't think ive given as much airtime. The fact that we market so appropriately to the good better best spectrum, ensuring that and I mentioned it in the script is that we are.

Speaker Change: Thanks, so much.

Speaker Change: Thank you.

Speaker Change: If you look at who we use in our marketing.

Alex <unk>: Thank you. Our next question comes from Alex <unk> with Morgan Stanley. Your line is open.

Ernie Herrman: It's important to note that we are not flowing through the entire second quarter earnings per share beat of $0.06 to the full year because we're now planning higher incentive compensation accruals and higher freight expenses for the second half of the year versus our previous guidance. Moving to our third quarter guidance, we're expecting overall comp store sales growth to be up 2% to 3%, consolidated sales to be in the range of $13.9 to 14 billion, pre-tax profit margin to be in the range of 11.8% to 11.9%, down 10 to 20 basis points versus last year's 12%. Gross margin to be in the range of 31.1% to 31.2%. This would be flat to up 10 basis points versus last year. SG&A to be approximately 19.5%, an increase of 10 basis points versus last year.

It's important to note that we are not flowing through the entire second quarter earnings per share beat of $0.06 to the full year because we're now planning higher incentive compensation accruals and higher freight expenses for the second half of the year versus our previous guidance. Moving to our third quarter guidance, we're expecting overall comp store sales growth to be up 2% to 3%, consolidated sales to be in the range of $13.9 to 14 billion, pre-tax profit margin to be in the range of 11.8% to 11.9%, down 10 to 20 basis points versus last year's 12%. Gross margin to be in the range of 31.1% to 31.2%. This would be flat to up 10 basis points versus last year. SG&A to be approximately 19.5%, an increase of 10 basis points versus last year.

Speaker Change: We're trying to catch more channels to apply to all again all age groups.

Alex <unk>: Perfect.

Speaker Change: <unk> for me just first on the Grupo OXXO.

Speaker Change: We try to go to all the different channels to evolve with where the consumer is going.

Alex <unk>: And then now that that's in our brands for line can you just elaborate a little bit more on the strategic rationale between those two and what that uniquely.

Speaker Change: We have different media channels.

Speaker Change: Each brand's campaign has a differentiated and broad broad invitational message really that expresses the benefits of our business model to every customer. So also in my script you heard heard me, saying, we want to sell everybody.

Speaker Change: And then just just honing in on the international business came in a little bit.

Speaker Change: And then consensus is expecting even though more of axiom capital.

Speaker Change: Tom.

Tom: I was wondering if you can talk about what youre seeing in the international business any additional color there would be super helpful. Thanks, a lot.

Speaker Change: Every day and our marketing is lined up with that same as consistent with that strategy. So just say no. We haven't talked about the marketing as much but when you watch our spots, whether it's homegoods marshalls or Max or Cri is aimed at not being narrow. It is it is a wide wide audience that we're going after.

Alex <unk>: Yes, very much Alex.

Speaker Change: Again, good questions group so.

Speaker Change: These two opportunities here.

Speaker Change: Here's the big strategic.

Speaker Change: Thing that we're trying to do here. So we have this great at a high level you can picture. This happening we have this great business model.

Speaker Change: Thanks, so much.

And as I've also emphasized and everyone on the team knows that we have long tenured some of the best certainly in off price.

Speaker Change: Thank you.

Speaker Change: Thank you. Our next question comes from Alex Stratton with Morgan Stanley. Your line is open.

Ernie Herrman: Net interest income of about $34 million, which would delever third quarter fiscal 2025 pre-tax profit margin by approximately 10 basis points. Our third quarter guidance also assumes a tax rate of 26% and a weighted average share count of approximately 1.14 billion shares. Based on these assumptions, we expect third quarter diluted earnings per share to be in the range of $1.06 to $1.08, up 3% to 5% versus last year's $1.03. Lastly, our implied guidance for the fourth quarter assumes that overall comp store sales would be up 2% to 3%, pre-tax profit margin would be in the range of 11% to 11.1%, and earnings per share will be in the range of $1.14 to $1.16 per share.

Net interest income of about $34 million, which would delever third quarter fiscal 2025 pre-tax profit margin by approximately 10 basis points. Our third quarter guidance also assumes a tax rate of 26% and a weighted average share count of approximately 1.14 billion shares. Based on these assumptions, we expect third quarter diluted earnings per share to be in the range of $1.06 to $1.08, up 3% to 5% versus last year's $1.03. Lastly, our implied guidance for the fourth quarter assumes that overall comp store sales would be up 2% to 3%, pre-tax profit margin would be in the range of 11% to 11.1%, and earnings per share will be in the range of $1.14 to $1.16 per share.

Speaker Change: Of course, I'm not objective, but I would say the best talent.

Alex Stratton: Perfect. There's a couple from me just first on the <unk> JV and then now that <unk> gotten in brands for line can you just elaborate a little bit more on the strategic rationale between those two and what that uniquely add and then just just honing in on the international business came in a little bit weaker than.

Speaker Change: In retail and certainly in off price and what happens is we have a seasoned very seasoned management group that you get to a point we have some bench strength. So we're able to now more readily than we would have a number of years ago, where I would've been reticent to pull from the core business, we are able to take advantage.

Speaker Change: <unk> is expecting even though mom axiom completely end up at the top that in I was wondering if you can talk about what youre seeing in international business any additional color there would be super helpful. Thanks, a lot.

Speaker Change: <unk> of expanding globally.

Speaker Change: In EMEA that has really no risk.

Speaker Change: To the core and at the same time takes advantage of additional geographies. So thats why youre seeing.

Alex Stratton: Yes, very much Alex.

Speaker Change: Again, good questions group.

Speaker Change: No.

Speaker Change: These two opportunities here.

Speaker Change: We really are realized and we're able to orchestrate. These from a couple of years ago. We started to say this is a good mission for us to take advantage of a great business model now that we have the talent where and John does this in his role in the finance World. We do it in every whether it's operations or merchandize, we want to make sure.

Speaker Change: Here's the big strategic.

Speaker Change: Thing that we're trying to do here. So we have this great at a high level you can picture of this happening we have this great business model.

Speaker Change: And as I've also emphasized and everyone on the team knows that we have long tenured some of the best <unk> certainly in off price.

Ernie Herrman: When comparing this implied guidance to last year's results, it's important to remember that last year we had an extra week in the fiscal fourth quarter that benefited pre-tax margin by 30 basis points and earnings per share by $0.10. We plan to provide more detailed guidance for the fourth quarter on our third quarter earnings call. In closing, we are confident in our full year plans and, as always, we will strive to beat them. We have a very strong balance sheet that continues to allow us to invest in the growth of TJX while simultaneously returning significant cash to our shareholders. Now we're happy to take your questions. As a reminder, please limit your questions to one per person so we can answer as many questions as we can. Thanks, and now we'll open it up for questions.

When comparing this implied guidance to last year's results, it's important to remember that last year we had an extra week in the fiscal fourth quarter that benefited pre-tax margin by 30 basis points and earnings per share by $0.10. We plan to provide more detailed guidance for the fourth quarter on our third quarter earnings call. In closing, we are confident in our full year plans and, as always, we will strive to beat them. We have a very strong balance sheet that continues to allow us to invest in the growth of TJX while simultaneously returning significant cash to our shareholders. Now we're happy to take your questions. As a reminder, please limit your questions to one per person so we can answer as many questions as we can. Thanks, and now we'll open it up for questions.

Of course, I'm not objective, but I would say the best talent.

Speaker Change: If we're going to give up a few people that we have the right replacement, So Mexico, obviously as a market.

Speaker Change: In retail and shortly in off price.

Speaker Change: And what happens is we have a seasoned very seasoned management group that you get to a point we have some bench strength. So we're able to now more readily than we would have a number of years ago, where I would've been reticent to pull from the core business, we are able to take advantage of expanding globally.

Speaker Change: We've looked at for a while and we know this business to be done there. We felt that was right to do it as a private.

Speaker Change: As I'm, sorry, as a joint venture and that we also now have the talent to.

Speaker Change: We have people get involved to do that.

Speaker Change: It's a very appropriate one we own almost half the business.

Speaker Change: And in a manner that has really no risk to.

Speaker Change: <unk> did a little different but same idea where we can.

Speaker Change: To the core and at the same time takes advantage of additional geographies. So thats why youre seeing.

Speaker Change: Terrific by the way, we have really enjoyed our meetings with them. They are culturally very similar.

Speaker Change: We really are realized and we're able to orchestrate. These from a couple of years ago. We started to say this is a good mission for us to take advantage of a great business model and now that we have the talent where and John does this in his role in the finance World. We do it in every whether it's operations or merchandize, we want to make sure.

Speaker Change: They are also.

Speaker Change: They have a lot of retail experience a little younger in the off price side, but we have that secret sauce merchandising talent that now again back to the original point, we can afford to have people be involved to help them, which helps them and it helps our investment and so we're excited because.

Operator: Thank you. If you would like to ask a question, please press star one. Our first question comes from Lorraine Hutchinson with Bank of America. Your line is open.

Speaker Change: If we're going to give up a few people that we have the right replacement. So Mexico, obviously is a market we.

Lorraine Hutchinson: Thank you. Good morning. Can you talk about AUR in the quarter, the balance between category mix shifts and like-for-like price increases, and then also any changes you might be seeing in customer behavior around value?

Speaker Change: In terms of going to new geographies and new markets with a model we have the talent now to do that under the big picture of the growth growing continuing to grow T. J X does that make sense or.

Speaker Change: We've looked at for a while and we know this business to be done there. We felt that was right to do it as a private.

Speaker Change: As I'm, sorry, as a joint venture and we also now have the talent to have people get involved to do that that's a very appropriate one we own almost half the business.

Speaker Change: Yeah, that's great. Thank you.

Speaker Change: And then the other question was on the international.

Ernie Herrman: Yeah. So, Lorraine, good talking to you. AUR has been pretty consistent, right, John, through the?

John: Sergeant International do you want to say is I'm, John I'll jump in or enrolment.

Speaker Change: <unk> did a little different but same idea, where we can and they're terrific by the way we have really enjoyed our meetings with them. They are culturally very similar.

Speaker Change: So let me explain what we're seeing here so.

Debra McConnell: It has been, yes. It didn't move much. I think it went up a little, right?

John Klinger: It has been, yes. It didn't move much. I think it went up a little, right?

Speaker Change: Obviously, you had a we're lapping the the German write off.

Speaker Change: The receivable write off that we had last year.

Ernie Herrman: Yeah. It's slightly up. Obviously, the comp was driven mostly by transactions.

Speaker Change: They are also.

Speaker Change: But the other thing that's affecting us the other way is that last year. We also had a transactional FX gain that we're up against so.

Debra McConnell: Right, because it's not up as much as the comp. The balance and like-for-like goods, we're still continuing. If, Lorraine, you're getting at what are we doing as far as pricing on goods, we still have been selectively throughout the business. Again, bottom-up. We do not manage this top-down. We have been bottom-up, still adjusting retails where appropriate. I think if you look at our merchandise margin, though, the story is becoming more and more about the buying better and not just the retails. And I think it's more of a combination of those things as well. Even though I'm sure you've been seeing all the talk about as inflation subsides, there will be, and I'll get right to it, I'm sure there'll be a question going with that in terms of AUR and the balance on the like items.

Right, because it's not up as much as the comp. The balance and like-for-like goods, we're still continuing. If, Lorraine, you're getting at what are we doing as far as pricing on goods, we still have been selectively throughout the business. Again, bottom-up. We do not manage this top-down. We have been bottom-up, still adjusting retails where appropriate. I think if you look at our merchandise margin, though, the story is becoming more and more about the buying better and not just the retails. And I think it's more of a combination of those things as well. Even though I'm sure you've been seeing all the talk about as inflation subsides, there will be, and I'll get right to it, I'm sure there'll be a question going with that in terms of AUR and the balance on the like items.

Speaker Change: That's what's driving the margin it's up.

Speaker Change: It's up to 230 basis points versus last year, which we're we're pleased with given those two those two things.

Speaker Change: In terms of going to new geographies and new markets with a model we have the talent now to do that under the big picture of the graph are growing continuing to grow T. J apps does that make sense or.

Speaker Change: From a Alex from a sales perspective, we were a little disappointing.

Speaker Change: <unk>.

Alex <unk>: In our Europe business, specifically on the international piece and that was more from.

Speaker Change: Yeah, that's great. Thank you.

Speaker Change: And then the other question was on the international.

Alex <unk>: A combination of the environment, a little bit of weather, but I would tell you. There was a decent size of that's our own execution and what's good with this company culturally in every division and we're in that team has really done a good job. We started talking about this two or three months ago.

Speaker Change: So large in the international you want says I'm, John I'll jump in or you want me to that Doug.

Doug: So let me explain what we're seeing here so.

Doug: We obviously had a we're lapping the German write off.

Doug: The receivable write off that we had last year.

Alex <unk>: And we are already seeing the benefit.

Doug: But the other thing that's that's.

Debra McConnell: What could happen in the market if retails come down on certain categories, etc.? We always, and our merchants are excellent at this, our retails are dictated by what's happening around us. That's in the current and in the future what we predict. So we're always retailing the goods based on the out-the-door retailer that we see at the competition. So we feel as though we will have that covered. Could that have retails come down? Too soon to say on which categories. A lot of those discussions, by the way, have been kind of grocery-oriented and not necessarily marrying up with our business. So right now, we haven't been seeing anything significant like that at all, which is why our AUR is where John had just said slightly up.

What could happen in the market if retails come down on certain categories, etc.? We always, and our merchants are excellent at this, our retails are dictated by what's happening around us. That's in the current and in the future what we predict. So we're always retailing the goods based on the out-the-door retailer that we see at the competition. So we feel as though we will have that covered. Could that have retails come down? Too soon to say on which categories. A lot of those discussions, by the way, have been kind of grocery-oriented and not necessarily marrying up with our business. So right now, we haven't been seeing anything significant like that at all, which is why our AUR is where John had just said slightly up.

Alex <unk>: And the numbers over there.

Doug: <unk> us the other way is that last year. We also had a transactional FX gain that we're up against so.

Alex <unk>: Over the last few weeks of the adjustments we've made in some of the merchandise mix and the way we have shipped the stores specifically in the UK I would tell you it was not really a Germany.

Doug: That's that's what's driving the margin it's up.

Doug: It's up to 230 basis points versus last year, which we're we're pleased with given those two those two things.

Alex <unk>: The issue is more of a U K issue and so we would we would tell you we were disappointed in the performance in Europe and Thats what was.

Doug: From a Alex from a sales perspective, we were a little disappointed.

Alex <unk>: Affecting that international number and specifically the U K, but we believe we're on the right path going forward.

Alex Stratton: In our Europe business, specifically on the international piece and that was more from a.

Speaker Change: Thanks, a lot good luck.

Alex Stratton: A combination of the environment, a little bit of weather, but I would tell you. There was a decent size of that's our own execution and what's good with this company culturally in every division. We are in that team has really done a good job. We started talking about this two or three months ago.

Speaker Change: Thank you.

Speaker Change: Thank you. Our next question comes from Matthew Boss with Jpmorgan. Your line is open.

Matthew Boss: Thanks, and congrats on another nice quarter.

Debra McConnell: So I think there still exists opportunity as we move forward to address retail internally based on more of a significant gap between our retail and the out-the-door, which is still going to create opportunities there. Having said that, we're always extremely aware of what's going on around us. We don't know the timing of when that could start to moderate a little, but I think we're in a really healthy position, especially when you go to point number three, the availability of goods is creating an unusual ability to buy goods and retail goods extremely profitably, as you can see from this quarter. Then as far as the customer, we see positive results from all the income demographics we look at. Again, that speaks to the good, better, best product mix, buying close to need.

So I think there still exists opportunity as we move forward to address retail internally based on more of a significant gap between our retail and the out-the-door, which is still going to create opportunities there. Having said that, we're always extremely aware of what's going on around us. We don't know the timing of when that could start to moderate a little, but I think we're in a really healthy position, especially when you go to point number three, the availability of goods is creating an unusual ability to buy goods and retail goods extremely profitably, as you can see from this quarter. Then as far as the customer, we see positive results from all the income demographics we look at. Again, that speaks to the good, better, best product mix, buying close to need.

Matthew Boss: Thank you. Thank you.

Matthew Boss: So Ernie could you speak to the cadence of same store sales that you saw during the second quarter.

Alex Stratton: And we are already seeing the benefit.

Speaker Change: Maybe elaborate on recent trends supporting the strong start that you cited for the third quarter and just maybe what youre seeing across categories or divisions, and if you see this as a positive lead indicator for holiday.

Alex Stratton: And the numbers over there.

Alex Stratton: Over the last few weeks of the adjustments we've made in some of the merchandise mix and the way we have shipped the stores specifically in the UK I would tell you it was not really a Germany.

Ernie Herrman: Yes, great.

Alex Stratton: Issue is more of a U K issue and so we would we would tell you we were disappointed in the performance in Europe and Thats what was.

Ernie Herrman: Great.

Ernie Herrman: Part three.

Ernie Herrman: Nancy.

Matt: Sorry, good Matt.

Matt: Yes, Matt I should start off John we'll start with the case, obviously, we saw positive comps across all of our divisions. The other important thing to note is that on a two year stack basis, we did see an improvement each month of the quarter.

Alex Stratton: Affecting that international number and specifically the U K, but we believe we're on the right path going forward.

Speaker Change: Thanks, a lot good luck.

Speaker Change: Thank you.

Matt: Which is also important to note.

Thank you. Our next question comes from Matthew Boss with Jpmorgan. Your line is open.

And and and then dovetailing into that Youre asking about the strong start to Q2 with whats been nice about that is we're happy.

Matthew Boss: Thanks, and congrats on another nice quarter.

Debra McConnell: So if a certain customer category is driving the comp, we can easily go back and repurchase those goods and get them back into the store quickly. So for us, it's about making sure that we're appealing to all customer demographics, which this quarter appears we have. One thing, Lorraine, and I know we have a lot of questions we need to get to, but you're asking one that touches on so much. The marketing, if you noticed in my script, I talked about our marketing, how lining up with what John just said as far as how we treat the merchandise mix, which we've talked about for years.

So if a certain customer category is driving the comp, we can easily go back and repurchase those goods and get them back into the store quickly. So for us, it's about making sure that we're appealing to all customer demographics, which this quarter appears we have. One thing, Lorraine, and I know we have a lot of questions we need to get to, but you're asking one that touches on so much. The marketing, if you noticed in my script, I talked about our marketing, how lining up with what John just said as far as how we treat the merchandise mix, which we've talked about for years.

Matthew Boss: Thank you. Thank you.

Ernie: Ernie could you speak to the cadence of same store sales that you saw during the second corner, maybe elaborate on recent trends supporting the strong start that you cited for the third quarter and just maybe what youre seeing across categories or divisions, and and if you see this as a positive lead indicator for holiday.

Matt: With our strong start to Q2 on the sales line and it seems to be.

Matt: Healthy across the board so that is something that we're feeling good about and do we think that is.

Of course first of all Q3 is for many retailers that have an apparel.

Ernie: Yes, no great.

Matt: Component to their business can often be with the transition of <unk>.

Ernie: Great.

Kind of parts three.

D&C.

Matt: Coming out of spring summer goods and going into the fall goods can be a little treacherous.

Matt: Sorry, good Matt.

Matt: You have weather dependency et cetera, we have strategies, we try to mitigate that as well as the way we plan and shipped by regions within the United States.

Debra McConnell: I don't think I've given as much airtime to the fact that we market so appropriately to the good, better, best spectrum, ensuring that, and I mentioned it in the script, is that we are, if you look at who we use in our marketing, we're trying to test more channels to apply to, again, all age groups. We try to go to all the different channels to evolve with where the consumer's going. We have different media channels. Each brand's campaign has a differentiated and broad invitational message, really, that expresses the benefits of our business model to every customer. So also in my script, you heard me saying we want to sell everybody every day, and our marketing is lined up with that same, is consistent with that strategy.

I don't think I've given as much airtime to the fact that we market so appropriately to the good, better, best spectrum, ensuring that, and I mentioned it in the script, is that we are, if you look at who we use in our marketing, we're trying to test more channels to apply to, again, all age groups. We try to go to all the different channels to evolve with where the consumer's going. We have different media channels. Each brand's campaign has a differentiated and broad invitational message, really, that expresses the benefits of our business model to every customer. So also in my script, you heard me saying we want to sell everybody every day, and our marketing is lined up with that same, is consistent with that strategy.

Matt: Not as much of an issue in Canada and Europe.

Matt: It is also important to note yes.

But our team's planning and allocation and buying have done a great job I think on buying in the right transitional goods. So we feel really this is another indicator on mentioning that makes us feel good about where we're heading in <unk> and in the apparel lines of the business.

Matt: Yeah.

And and then dovetailing into that you're asking about the strong start to Q2 with whats been nice about that is we're happy.

Matt: With our strong start to Q2.

Speaker Change: On the sales line and it seems to be.

As we head into Q3 in addition to what we've been seeing in sales for the last couple of weeks.

Speaker Change: Healthy across the board so that is something that we're feeling good about and do we think that is a.

Matt: We started the quarter.

And then last thing I'll say, which I did mentioned in the script.

Speaker Change: Of course first of all Q3 is for many retailers that have an apparel.

Matt: Also John and I talk about this all the time is since we have year after year, our store experience as you know has gotten better and better with that our merchandise mix good better best but a lot of more giftable brands that we carry.

Speaker Change: Component to their business can often be with the transition of <unk>.

Speaker Change: Coming out of spring summer goods and going into the fall goods can be a little treacherous.

Debra McConnell: So just so you know, we haven't talked about the marketing as much, but when you watch our spots, whether it's HomeGoods or Marshalls or Max or Sierra, it is aimed at not being narrow. It is a wide audience that we're going after.

So just so you know, we haven't talked about the marketing as much, but when you watch our spots, whether it's HomeGoods or Marshalls or Max or Sierra, it is aimed at not being narrow. It is a wide audience that we're going after.

Speaker Change: You have weather dependency et cetera, we have strategy as we try to mitigate that as well as the way we plan and shipped by regions within the United States.

Matt: Think bodes well because we're always more gift to.

Matt: To a wider range of customers year after year I feel as though we improve on that year after year and so I am bullish on Q4 upside.

Speaker Change: Not as much of an issue in Canada and Europe.

Speaker Change: But our team's planning and allocation and buying have done a great job I think on buying in the right transitional goods. So we feel really this is another indicator on mentioning that makes us feel good about where we're heading and more IMAX and <unk> and the apparel lines of the business.

Lorraine Hutchinson: Thanks so much.

Debra McConnell: Thank you.

Ernie Herrman: Thank you.

Matt: Because my first comments were really oriented to the Q3 Q4, I believe we're going to be well positioned for gift, giving across many of the families of business in the store.

Operator: Thank you. Our next question comes from Alex Stratton with Morgan Stanley. Your line is open.

Alex Stratton: Perfect. Just a couple from me. Just first on the Grupo Axo JV, and then now this investment in Brands for Less. Can you just elaborate a little bit more on the strategic rationale between those two and what they uniquely add? And then just honing in on the international business, came in a little bit weaker than consensus was expecting, even though Marmaxx was completely enough to offset it. I'm just wondering if you talk about what you're seeing in the international business; any additional color there would be super helpful. Thanks a lot.

Alexandra Stratton: Perfect. Just a couple from me. Just first on the Grupo Axo JV, and then now this investment in Brands for Less. Can you just elaborate a little bit more on the strategic rationale between those two and what they uniquely add? And then just honing in on the international business, came in a little bit weaker than consensus was expecting, even though Marmaxx was completely enough to offset it. I'm just wondering if you talk about what you're seeing in the international business; any additional color there would be super helpful. Thanks a lot.

Matt: Just to add onto that.

Speaker Change: As we head into Q3 in addition to what we've been seeing in sales for the last couple of weeks as we started the quarter.

Speaker Change: Our strategy with consumables in the stores.

Speaker Change: Definitely it gives customers a reason to shop, if the weather is not compliant.

Speaker Change: Yes, and then the last thing I'll say, which I did mentioned in the script.

Speaker Change: And that goes both with the apparel businesses in the home businesses.

Speaker Change: Also John and I talk about this all the time is since we have year after year, our store experience as you know has gotten better and better.

Speaker Change: That's great color best of luck.

Speaker Change: Thank you.

Paul <unk>: Thank you. Our next question comes from Paul <unk> with Citigroup. Your line is open.

John: With that our merchandise mix, good better best but a lot of more giftable brands that we carry.

Ernie Herrman: Yep. Yeah, very much, Alex. Again, good questions. So these two opportunities, here's the big strategic thing that we're trying to do here. So we have this great, at a high level, you can picture this happening. We have this great business model. And as I've also emphasized, and everyone on the team knows it here, we have long tenure, some of the best, certainly in off-price. Of course, I'm not objective, but I would say the best talent in retail and certainly in off-price. And what happens is we have a very seasoned management group that you get to a point we have some bench strength.

Paul <unk>: Thanks, guys.

Speaker Change: Talk a little bit more about.

John: I think bodes well because we're always more gift D to a wider range of customers year after year I feel as though we improve on that year after year and so I am bullish on Q4 upside.

Paul <unk>: Whom within the <unk> business I think you said boat, where we're up but I'm curious how the home business within more mass perform relative to home goods and the drivers a little bit.

John: Because my first comments were really oriented to the Q3 Q4, I believe we're going to be well positioned for gift, giving across many families of business in the store.

Speaker Change: Yes.

Speaker Change: Different at all and then just.

Speaker Change: Or is it very high level.

Speaker Change: What surprised you the most.

Speaker Change: First half of the year and how that might influence how you are thinking about the second half.

John: Just to add onto that.

Speaker Change: Our strategy with consumables in the stores definitely gives customers a reason to shop. It if the weather is not compliant.

Speaker Change: Okay.

Speaker Change: Ill, let some so on the part about the home versus the apparel.

Speaker Change: And that goes both with the apparel businesses in the home businesses.

Ernie Herrman: So we're able to now, more readily than we would have a number of years ago, where I would have been reticent to pull from the core business. We are able to take advantage of expanding globally in a manner that has really no risk to the core and at the same time takes advantage of additional geographies. So that's why you're seeing we really realized and were able to orchestrate these from a couple of years ago. We started to say this is a good mission for us to take advantage of a great business model. And now that we have the talent where, and John does this in his world, in the finance world, we do it in every, whether it's operations or merchandise. We want to make sure, if we're going to give up a few people, that we have the right replacement.

So we're able to now, more readily than we would have a number of years ago, where I would have been reticent to pull from the core business. We are able to take advantage of expanding globally in a manner that has really no risk to the core and at the same time takes advantage of additional geographies. So that's why you're seeing we really realized and were able to orchestrate these from a couple of years ago. We started to say this is a good mission for us to take advantage of a great business model. And now that we have the talent where, and John does this in his world, in the finance world, we do it in every, whether it's operations or merchandise. We want to make sure, if we're going to give up a few people, that we have the right replacement.

This won't be really a surprise when you think about it so the <unk> home really outpace I'm not going to give you the exact numbers, but outpaced the homegoods home.

Speaker Change: That's great color best of luck.

Thank you.

Paul <unk>: Thank you. Our next question comes from Paul <unk> with Citigroup. Your line is open.

Speaker Change: Large really what he is somewhat up to I would sum it up to like Big Big ticket that we stand for at Homegoods as an industry as you know furniture.

Paul <unk>: Thanks, guys.

Paul <unk>: Talk a little bit more about apparel versus home within the <unk> business. I think you said, both where we're up but I'm curious how the home business within more mass perform relative to home goods and the driver.

And that business industry wide is slower and also that would apply and home goods.

So their business, even though the <unk> slightly outpaced it wasn't by a lot.

Speaker Change: And but that was the driver of the difference.

Speaker Change: The home business in each.

Speaker Change: Were different at all and then just curious at a very high level.

Speaker Change: Happy with.

Speaker Change: The way I can specifically say very happy with.

Speaker Change: What surprised you the most.

Speaker Change: First half of the year and how that might influence how you're thinking about the second half.

The continued improvement in home goods across the store and where we're seeing homegoods going.

Ernie Herrman: So Mexico, obviously, is a market we've looked at for a while, and we know there's business to be done there. We felt it was right to do it as a private, I'm sorry, as a joint venture. We also now have the talent to have people get involved to do that. That's a very appropriate one. We own almost half the business. BFL, a little different, same idea where we can, and they're terrific, by the way. We have really enjoyed our meetings with them. They are culturally very similar. They also have a lot of retail experience, a little younger on the off-price side, but we have that secret sauce merchandising talent that now, again, back to the original point, we can afford to have people be involved to help them, which helps them and it helps our investment.

So Mexico, obviously, is a market we've looked at for a while, and we know there's business to be done there. We felt it was right to do it as a private, I'm sorry, as a joint venture. We also now have the talent to have people get involved to do that. That's a very appropriate one. We own almost half the business. BFL, a little different, same idea where we can, and they're terrific, by the way. We have really enjoyed our meetings with them. They are culturally very similar. They also have a lot of retail experience, a little younger on the off-price side, but we have that secret sauce merchandising talent that now, again, back to the original point, we can afford to have people be involved to help them, which helps them and it helps our investment.

Speaker Change: Okay.

Speaker Change: Well, let's see.

Speaker Change: For the start of Q3.

Speaker Change: On the part about the home versus the apparel. This this won't be a really a surprise when you think about it so the <unk> home really outpaced I'm not going to give you the exact numbers, but outpaced the homegoods home large really worthy of summit up too I would sum it up to like Big Big ticket that we stack.

Speaker Change: John did you have yes, I would just add that we see departments that line up between <unk> and home goods, we saw similar very similar trends.

Speaker Change: <unk>.

John: That's a good point it was really when you get to the big ticket that made the difference.

Paul <unk>: Your other question Paul is about that I want to make sure I got this right was that on the <unk> any surprises in the first half.

Speaker Change: Four at Homegoods as an industry as you know furniture and.

And that business industry wide is slower and also that would apply in homegoods.

Speaker Change: Is that way.

Speaker Change: Yes.

Speaker Change: So their business, even though the <unk> slightly outpaced it wasn't by a lot.

Paul <unk>: How does that impact the way, we look at the back half.

Paul <unk>: Yes, yes.

Speaker Change: And but that was the driver of the difference.

Paul <unk>: And how does that improve back thank you.

Speaker Change: Happy with.

Speaker Change: The way I can specifically say very happy with.

Speaker Change: Yeah, I guess the only.

Speaker Change: The surprise a little bit of a surprise to us as we know there is always going to be a lot of availability of goods and.

Speaker Change: That continued improvement in home goods across the store and where we're seeing homegoods going.

Ernie Herrman: And so we're excited because in terms of going to new geographies and new markets with a model, we have the talent now to do that under the big picture of the growth, growing, continuing to grow TJX. Does that make sense, or?

And so we're excited because in terms of going to new geographies and new markets with a model, we have the talent now to do that under the big picture of the growth, growing, continuing to grow TJX. Does that make sense, or?

Speaker Change: The amount of tough environment surprised us is even a little and I think I alluded to this.

Speaker Change: For the start of Q3.

Speaker Change: John did you have yeah, I would just add that we see departments that line up between <unk> and home goods, we saw similar very similar trends yet so.

Speaker Change: Theres, even more we're a little surprised by the amount of goods that is off the charts, even a little bit more than we would've.

Alex Stratton: Yeah, that's great. Thank you.

Alexandra Stratton: Yeah, that's great. Thank you.

John Klinger: The other question was on the international margin.

Speaker Change: Thought so that's caught us so how does that affect your back half. So what we do is we look at what categories is there even a.

John Klinger: The other question was on the international margin.

John: That's a good point it was really when you get to the big ticket them that made the difference.

Ernie Herrman: So yep, the international. Do you want to say something, John, and I'll jump in, or do you want me to?

John: Your other question Paul is about that I want to make sure I got this right.

John Klinger: Yeah, no. So let me explain what we're seeing here. So we obviously had a, we're lapping the German write-off, the receivable write-off that we had last year. But the other thing that's affecting us the other way is that last year we also had a transactional FX gain that we're up against. So that's what's driving the margin. It's up to 230 basis points versus last year, which we're pleased with given those two things.

Speaker Change: Beyond the normal phenomenon all about whatever the word we always use different words about of availability and we actually what that effects how we.

Speaker Change: Thus any surprises in the first half.

Speaker Change: Is that what are you.

Speaker Change: Yeah.

Paul <unk>: How does that impact the way, we look at the back half.

Speaker Change: How much we leave open in those categories core and more of the closeout hand to mouth buying in the back half and so as you can imagine it had us for the back half and even through Q1 to leave more liquidity because clearly.

Paul <unk>: Yeah Yeah.

Speaker Change: <unk> heard of that.

Speaker Change: And how does that influence kind of thinking.

Speaker Change: Yeah, I guess the only.

Speaker Change: Surprise, a little bit of a surprise to us as we know there is always going to be a lot of availability of goods.

Speaker Change: <unk>.

Speaker Change: There is no lack of availability if anything it surprised us on the amount of increased availability.

Speaker Change: And.

Speaker Change: The amount of harp environment surprised us is even a little and I think I alluded to this where we there is even more we're a little surprised by the amount of goods that is off the charts, even a little bit more than we would have.

Debra McConnell: Alex, from a sales perspective, we were a little disappointed in our Europe business, specifically on the international piece. That was more from a combination of the environment, a little bit of weather. But I would tell you there is a decent size of that's our own execution. What's good with this company, culturally, in every division we're in, that team has really done a good job. We started talking about this two or three months ago, and we are already seeing the benefit in the numbers over there over the last few weeks of the adjustments we've made in some of the merchandise mix and the way we have shipped the store, specifically in the UK, I would tell you. It was not really a Germany issue. It was more of a UK issue.

Ernie Herrman: Alex, from a sales perspective, we were a little disappointed in our Europe business, specifically on the international piece. That was more from a combination of the environment, a little bit of weather. But I would tell you there is a decent size of that's our own execution. What's good with this company, culturally, in every division we're in, that team has really done a good job. We started talking about this two or three months ago, and we are already seeing the benefit in the numbers over there over the last few weeks of the adjustments we've made in some of the merchandise mix and the way we have shipped the store, specifically in the UK, I would tell you. It was not really a Germany issue. It was more of a UK issue.

Speaker Change: So.

Speaker Change: That's probably the biggest.

Speaker Change: Surprise.

Speaker Change: Thank you good luck.

Speaker Change: Thank you.

Speaker Change: So that's caught us so how does that affect your back half. So what we do is we look at what categories is there even a.

Speaker Change: Thank you. Our next question comes from Brooke Roach with Goldman Sachs. Your line is open.

Hi, Good morning. Thank you for taking my question My question's on margin can you elaborate on your view for further margin expansion opportunity on a multiyear basis and then on near term trends can you speak to what's changed in your freight forecast versus your prior thinking and any other puts and takes that we should be thinking through on supply chain.

Speaker Change: Beyond the normal phenomenon, although about whatever the word we always use different words about of availability and we actually without effects is how we are.

Speaker Change: In merchandize margin into the back half of the year.

Speaker Change: Yes.

Speaker Change: Sure to start or you want me to start with I can start with the <unk>, yes, yes.

Speaker Change: <unk>.

Speaker Change: There's no lack of availability if anything it surprised us on the amount of increased availability.

Speaker Change: The freight forecast that we're seeing so.

Speaker Change: We did add some expense to our forecast in the back half of the year or two.

Debra McConnell: We would tell you we were disappointed in the performance in Europe, and that's what was affecting that international number, and specifically the UK. We believe we're on the right path going forward.

We would tell you we were disappointed in the performance in Europe, and that's what was affecting that international number, and specifically the UK. We believe we're on the right path going forward.

Speaker Change: So.

Speaker Change: That's probably the biggest.

Speaker Change: Surprise.

Speaker Change: Two.

Speaker Change: Thank you good luck.

Speaker Change: Take care of some additional ocean freight increases that we're seeing we're seeing ocean freight.

Speaker Change: Thank you.

Speaker Change: Thank you. Our next question comes from Brett <unk> with Goldman Sachs. Your line is open.

Alex Stratton: Thanks, all. Good luck.

Alexandra Stratton: Thanks, all. Good luck.

Speaker Change: Per container arise. So we did we did take that step to add something in our forecast there.

Ernie Herrman: Thank you.

Operator: Thank you. Our next question comes from Matthew Boss with JPMorgan. Your line is open.

Brett: Hi, Good morning. Thank you for taking my question My question's on margin can you elaborate on your view for further margin expansion opportunity on a multiyear basis and then on near term trends can you speak to what's changed in your freight forecast versus your prior thinking and any other puts and takes that we should be thinking through on supply chain.

Speaker Change: On.

Speaker Change: Brooklyn, looking looking forward to it.

Matthew Boss: Thanks. Congrats on another nice quarter.

Speaker Change: I think you are asking.

Speaker Change: Mark do we see margin opportunities is at it.

Ernie Herrman: Thank you.

John Klinger: Thank you.

Matthew Boss: So Ernie, could you speak to the cadence of same-store sales that you saw during Q2? Maybe elaborate on recent trends supporting the strong start that you cited for Q3 and just maybe what you're seeing across categories or divisions, and if you see this as a positive lead indicator for holiday.

Speaker Change: As we look out yes.

Speaker Change: Yes.

Speaker Change: Sure.

Speaker Change: Yeah, Okay. So.

Speaker Change: Well that's.

Speaker Change: When you say are you talking merchandize margin.

Speaker Change: And merchandize margin into the back half of the year.

Speaker Change: [laughter] Joy to start let me just start with I can start with a brief word yes, yes, yes.

Speaker Change: Sure we can talk merchandize margin.

Speaker Change: Okay.

Speaker Change: I mean, the bottom bottom line margin.

Speaker Change: The freight forecast that we're seeing so.

Speaker Change: With what we've said in the fall right at the bottom line.

Ernie Herrman: Yep. No, great. Great. Well, kind of parts three, A, B, and C. It's very good, Matt.

Speaker Change: We did add some expense to our forecast in the back half of the year or two.

Speaker Change: On a on a three to four comp we could be flat to up 10 basis points again, assuming no outsized expense headwinds.

John Klinger: Yeah, Matt, I can start off.

Speaker Change: Two.

Two.

Ernie Herrman: We'll start, John. We'll start with the cadence.

Speaker Change: Take care of some additional ocean freight increases that we're seeing we're seeing ocean freight.

John Klinger: Obviously, we saw positive comps across all of our divisions. The other important thing to note is that on a two-year stack basis, we did see an improvement each month of the quarter, which is also important to note.

Speaker Change: That message is still consistent.

Speaker Change: Obviously this year, we have raised that now where our margin for the year is going up.

Speaker Change: Her container rise. So we did we did take that step to add something in our forecast there.

Speaker Change: From where we plan for a lot of reasons, but one of the reasons I think if I go to the merchandize margin, which.

Speaker Change: On.

Debra McConnell: Yep. And then dovetailing into that, you're asking about the strong start to Q2. What's been nice about that is we're happy with our strong start to Q2 on the sales line, and it seems to be healthy across the board. So that is something that we're feeling good about. And do we think that is a signal? Of course, first of all, Q3 is, for many retailers that have an apparel component to their business, can often be transitioning, coming out of spring-summer goods and going into the fall goods, can be a little treacherous. You have weather dependency, etc. We have strategies we try to mitigate that, as well as the way we plan and ship by regions within the United States. Not as much of an issue in Canada and Europe.

Speaker Change: Brooklyn, looking looking Florida.

Speaker Change: We are starting to talk about is the situation of all these the stars keep aligning with our opportunities and gaining market share, we mean more to vendors than ever before our relationships.

Mark: I think you're asking about Mark do we see margin opportunities is at it kind of as we look out yes.

Speaker Change: That's cool.

Speaker Change: Yeah, Okay. So.

Speaker Change: Well that's that's.

Speaker Change: And when you say are you talking merchandize margin.

Speaker Change: Should continue to bode well in terms of us continuing to buy goods.

Sure, we can talk to merchandise margin.

More favorably as we move forward.

Speaker Change: Okay.

The bottom bottom line margin.

Speaker Change: Another place, where I think our merchandize margins have upside as we are the way we manage our flow every division has gotten continues to get even better. This is why in the last couple of which helps our markdowns and our merchandize margin directly when you put the right goods into the right.

Speaker Change: With what we've said in the past right the bottom line.

Speaker Change: On a on a three to four comp we could be flat to up 10 basis points again, assuming no outsized expense headwinds.

Speaker Change: That that message is still consistent.

Speaker Change: Obviously this year, we have raised that now where our margin for the year is going up.

Speaker Change: Clusters of stores, you, obviously end up with a reduced markdown rate in an increased sales because youre are planning systems over the last couple of years and are planning our associates are getting better and better at this and other place in <unk>, specifically and in home goods domestically.

Speaker Change: He plans.

Debra McConnell: But our teams planning, allocation, and buying have done a great job, I think, of buying the right transitional goods. So we feel really this is another indicator I'm mentioning that makes us feel good about where we're heading in Marmaxx and the apparel ends of the business as we head into Q3, in addition to what we've been seeing in sales for the last couple of weeks as we started the quarter.

But our teams planning, allocation, and buying have done a great job, I think, of buying the right transitional goods. So we feel really this is another indicator I'm mentioning that makes us feel good about where we're heading in Marmaxx and the apparel ends of the business as we head into Q3, in addition to what we've been seeing in sales for the last couple of weeks as we started the quarter.

Speaker Change: The merchandize margin, which.

Speaker Change: We are starting to talk about is the the situation of all these the stars keep aligning with our opportunities and gaining market share, we mean more to vendors than ever before our relationships.

Speaker Change: We are able to now tailor the mix and we've done a better job at putting together sunbelt strategies in different regions strategies across the different climate zones in the United States, which also has a huge benefit to our merchandize margin.

Speaker Change: Should continue to bode well in terms of us continuing to buy goods.

Speaker Change: More favorably as we move forward.

John Klinger: And I would.

Debra McConnell: Yep. And then the last thing I'll say, which I did mention in the script, also John and I talk about this all the time, is since we have year after year, our store experience, as you know, has gotten better and better. With that, our merchandise mix, good, better, best, but a lot more giftable brands that we carry, I think bodes well because we're always more gifty to a wider range of customers year after year. I feel as though we improve on that year after year. And so I am bullish on Q4 upside because my first comments were really oriented to Q3. Q4, I believe we're going to be well-positioned for gift-giving across many families of business in the store.

Ernie Herrman: Yep. And then the last thing I'll say, which I did mention in the script, also John and I talk about this all the time, is since we have year after year, our store experience, as you know, has gotten better and better. With that, our merchandise mix, good, better, best, but a lot more giftable brands that we carry, I think bodes well because we're always more gifty to a wider range of customers year after year. I feel as though we improve on that year after year. And so I am bullish on Q4 upside because my first comments were really oriented to Q3. Q4, I believe we're going to be well-positioned for gift-giving across many families of business in the store.

Speaker Change: I think what we're going to also see is when you. When you look at total margin we've talked about this before is our Europe business.

Speaker Change: John and I have talked about this for a few years now we're seeing that.

John: Our goal layers to get to an 8% bottom line versus where we were and we're doing that in pretty short order over a few years and I think that is also going to bode well for the obviously that's going to help our total T J X margin.

Speaker Change: Clusters of stores, you, obviously end up with a reduced markdown rate and an increased sales because your are planning systems over the last couple of years and are planning our associates are getting better and better at this another place in <unk>, specifically and in Homegoods domestically.

John: And then we still see in different markets.

John: Canada is obviously continuing to be very profitable, but I think we're going to see our home business, specifically, which is big throughout T. J X.

John: We're feeling good about the margin opportunities there beyond just the freight savings because of our fashion component, where we are able to still provide great value. Our sourcing is excellent and we can still value and make good margins at our business. So as that business continues to grow.

John Klinger: I mean, I'd just add on to that that our strategy with consumables in the stores definitely gives customers a reason to shop if the weather is not compliant. And that goes both with the apparel businesses and the home businesses.

Speaker Change: I think what we're going to also see is when you. When you look at total margin we've talked about this before is our Europe business.

Matthew Boss: It's a great color. Best of luck.

John: Just failing big upside and excited about the opportunities for year after year on the margin side great questions.

Ernie Herrman: Thank you.

John and I have talked about this for a few years now we're seeing that.

Operator: Thank you. Our next question comes from Paul Lejuez with Citigroup. Your line is open.

Speaker Change: Thanks, So much I'll pass it on.

Speaker Change: Thank you.

Paul Lejuez: Hey, thanks, guys. Can you talk a little bit more about apparel versus home within the Marmaxx business? I think you said both were up, but I'm curious how the home business within Marmaxx performed relative to HomeGoods and the drivers of the home business in each, if they were different at all. And then just curious, at a very high level, Ernie, I'm curious what surprised you the most in the first half of the year and how that might have influenced how you're thinking about the second half. Thanks.

Adrian <unk>: Thank you. Our next question comes from Adrian <unk> with Barclays. Your line is open.

Adrian <unk>: Great. Thank you very much and let me add my congratulations well done.

John: And we still see in different markets.

Adrian <unk>: Arnie. Thank you Adrian question.

John: Canada is obviously.

Speaker Change: Youre welcome.

John: To be very profitable, but I think we're going to see our home business, specifically, which is big throughout T. J X.

Speaker Change: The first question is can you talk about for the macro consumer health backdrop today versus when we were at the last quarterly call in both the U S. Canada, and then Europe obviously.

John: We're feeling good about the margin opportunities there beyond just the freight savings because of our fashion component, where we are able to still provide great value. Our sourcing is excellent and we can still value and make good margins out of business. So as that business continues to grow.

Overall sentiment is the consumer backdrop has worsened.

Ernie Herrman: Okay. Well, so on the part about the home versus the apparel, this won't be really a surprise when you think about it. So the Marmaxx home really outpaced. I'm not going to give you the exact numbers, but outpaced the HomeGoods home. Really, what do you sum it up to? I would sum it up to big ticket that we stand for at HomeGoods is an industry, as you know, furniture. And that business, industry-wide, is slower. And also that would apply in HomeGoods. So even though the Marmaxx slightly outpaced, it wasn't by a lot. But that was the driver of the difference. We're very happy with the way, and I can specifically say very happy with the continued improvement in HomeGoods across the store and where we're seeing HomeGoods going for the start of Q3. John, did you have?

Speaker Change: Obviously your model is prepared for that.

John: Number one and then John can you just talk about where are those store payroll investments Sterling when do you expect to get in terms of the return in the hours.

John: Just failing big upside and excited about the opportunities for year after year on the margin side great question.

Speaker Change: Thank you so much.

Adrian <unk>: Adrian Great.

Speaker Change: Thanks, So much I'll pass it on.

Speaker Change: Quick question on the landscape and what's happening to kind of get at where the trends could be going the macro health situations. It does vary I think by country also a little bit we see.

Speaker Change: Thank you.

Adrienne <unk>: Thank you. Our next question comes from Adrienne <unk> with Barclays. Your line is open.

Adrienne <unk>: Okay. Thank you very much and let me add my congratulations well done.

Speaker Change: I would say the U S versus in the first quarter as similar macro environment lease for us for our experience.

Adrienne <unk>: Ernie Thank you Adrian questions Youre very welcome.

Adrienne <unk>: The first question is can you talk about for the macro consumer health backdrop today versus when we were at the last quarterly call in the U S. Canada, and then Europe obviously.

I know everything you read is we always wait we have some of the same information that you have so we wait for a lot of reports that come out to kind of adjust all all I know is the availability.

Overall sentiment at the consumer backdrop has worsened, but your obviously your model is preparing for that.

Speaker Change: It seems to keep growing which makes me wonder if certainly at our supply of the brands that we deal with are they running into a little tougher.

John: That's number one and then John can you just talk about where are those store payroll investments, telling what do you expect to get in terms of the return and the hours is it unemployment. Thank you so much.

John Klinger: Yeah. I would just add that where we see departments that line up between Marmaxx and HomeGoods, we saw similar trends.

Speaker Change: Situations, so that could be again tough for me to answer that versus just a quarter ago. We also don't tend to see the movement by quarter. It teams seems to be over six months or 12 months.

Ernie Herrman: Very similar trends. Yep.

John Klinger: So.

Ernie Herrman: No, that's a good point. It was really when you get to the big ticket that made the difference. Your other question, Paul, is about the, I want to make sure I got this right. Was it on any surprises in the first half? Is that what you, and how does that impact the way we look at the back half?

Adrienne Graves: Hey, Adrienne graves.

Speaker Change: Quick question on the landscape and what's happened to kind of get at where the trends could be going the macro health situation does vary I think by country also a little bit we see.

Speaker Change: Canada pretty challenging out there Europe more challenging I would say both are challenging environments from maybe six months ago.

Speaker Change: The difference in our on our comps there.

Speaker Change: I would say the U S versus in the first quarter as similar macro environment lease for us for our experience.

Speaker Change: As we've had we've had weather in both those areas, Canada was hit with some weather situations can do a little better than Europe and is up against tougher numbers Europe I would say again.

John Klinger: Yeah. What surprises the first half, and how does that influence back half thinking?

Speaker Change: I know everything you read is we always wait we have some of the same information that you have so we wait for a lot of reports that come out to kind of adjust all all I know is the availability.

Ernie Herrman: Yeah. I guess the surprise, a little bit of a surprise to us, is we know there's always going to be a lot of availability of goods. The amount of tough environment surprised us even a little. I think I alluded to this where there's even more, we're a little surprised by the amount of goods that is off the charts even a little bit more than we would have thought. So that's caught us. So how does that affect your back half? What we do is we look at what categories is there even beyond the normal phenomenal about, whatever the word, we always use different words, about availability. What that affects is how much we leave open in those categories for more of the close-out hand-to-mouth buying in the back half.

Speaker Change: Our performance probably had half of that was due to our own execution, which.

Not that we like it but we like it because we can we can adjust that and we know what to do in a you've followed us for years, you know that whenever we identify execution issues, we address it and that team has been great and they already have.

Speaker Change: It seems to keep growing which makes me wonder if that's certainly at our supply of the brands that we deal with are they running into a little tougher.

Speaker Change: Situations, so that could be again tough for me to answer that versus just a quarter ago. We also don't tend to see the movement by quarter. It seems seems to be over six months or 12 months.

Speaker Change: Really addressed a lot of the things that we think we could improve on which is why we're already seeing that improvement as we start.

Speaker Change: Q3, I would say the environment there is challenging though.

Speaker Change: Canada pretty challenging up there Europe more challenging I would say both are challenging environments from maybe six months ago.

Speaker Change: Economically and.

Speaker Change: In Europe. So I can understand why you would ask the question and probably a little bit more. So then again six months ago. John did you want to talk about so on the wage we continue to see wage.

The difference in our on our comps there I I think as we've had we've had weather in both those areas Canada was hit with some weather situations can do a little better than Europe and is up against tougher numbers Europe I would say again.

John: Increases across all of our geographies.

Ernie Herrman: And so as you can imagine, it had us for the back half and even through Q1 to leave more liquidity because clearly there's no lack of availability. If anything, it surprised us on the amount of increased availability. So that's probably the biggest surprise.

And so as you can imagine, it had us for the back half and even through Q1 to leave more liquidity because clearly there's no lack of availability. If anything, it surprised us on the amount of increased availability. So that's probably the biggest surprise.

John: Youll remember, we talked I think on the first quarter call.

Speaker Change: Our performance probably had half of that was due to our own execution, which.

John: Europe announced a or excuse me.

UK announced a 10% increase in wage we've seen.

Speaker Change: Not that we like it but we like it because we can we can adjust that and we know what to do in a you've followed us for years, you know that whenever we identify execution issues, we address it and that team has been great and they already have.

John: Some of the provinces I think most recently, Ontario announced a minimum wage increase and of course.

John: We've seen that as well in the U S.

John: Our strategy is still holds that.

Paul Lejuez: Got it. Thank you. Good luck.

Speaker Change: Really addressed a lot of the things that we think we could improve on which is why we're already seeing that improvement as we start.

Ernie Herrman: Thank you.

John: We are increasing obviously, where the legislative increases.

Operator: Thank you. Our next question comes from Brooke Roach with Goldman Sachs. Your line is open. Hi, good morning. Thank you for taking our question. My question's on margin. Can you elaborate on your view for further margin expansion opportunity on a multi-year basis? And then on near-term trends, can you speak to what's changed in your freight forecast versus your prior thinking and any other puts and takes that we should be thinking through on supply chain and merchandise margin into the back half of the year? Thank you.

Operator: Thank you. Our next question comes from Brooke Roach with Goldman Sachs. Your line is open.

Speaker Change: Q3, I would say the environment there is challenging though.

John: Have gone, but also where we have competitive.

Brooke Roach: Hi, good morning. Thank you for taking our question. My question's on margin. Can you elaborate on your view for further margin expansion opportunity on a multi-year basis? And then on near-term trends, can you speak to what's changed in your freight forecast versus your prior thinking and any other puts and takes that we should be thinking through on supply chain and merchandise margin into the back half of the year? Thank you.

Speaker Change: Economically and.

John: Reasons to increase our wage we also keep something in our budget for that as well so if we see.

John: Either higher attrition rates or.

John: Some challenges hiring we have the ability to go in pointedly and increased wages.

John: Increases across all of our geographies.

John: Yes.

John: You'll remember we talked I think on the first quarter call.

Speaker Change: Very helpful Best of luck for back to school holiday.

Speaker Change: About Europe announced a or excuse me the U S.

Adrian <unk>: Thanks, Thank you Adrian.

Adrian <unk>: Thank you. Our next question comes from Michael Binetti with Evercore. Your line is open.

John: UK announced a 10% increase in wage we've seen.

Ernie Herrman: Do you want to start, or do you want me to start with—I can start with the freight forecast if you want?

John Klinger: Yeah. Yeah, the freight forecast that we're seeing. So we did add some expense to our forecast in the back half of the year to take care of some additional ocean freight increases that we're seeing. We're seeing ocean freights per container rise. So we did take that step to add something in our forecast there.

Michael Binetti: Congrats on a great quarter.

John: Some of the provinces I think most recently, Ontario announced a minimum wage increase and of course.

Speaker Change: Thank you you mentioned.

Michael Binetti: You mentioned earlier, the two year stacks accelerating through <unk> I was kind of wondering looking at the model here Homegoods has very tough compares coming up in the third quarter in the back half I guess is there is there a scenario where the 2% to 3% total company comp for third quarter allows for a negative comp in home goods like the stacks might imply just against that big plus nine.

John: We've seen that as well in the U S.

John: Our strategy still holds that.

John: We we are increasing obviously, where the legislative increases.

John: Have gone, but also where we have competitive.

John: Reasons to increase our wage we also keep something in our budget for that as well so we see.

Speaker Change: A year ago, and then on the margins you spoke a little bit about flow through and the normal framework.

Debra McConnell: On Brooke, on looking forward, I think you're asking about do we see margin opportunities? Is that it, kind of, as we look out?

Ernie Herrman: On Brooke, on looking forward, I think you're asking about do we see margin opportunities? Is that it, kind of, as we look out?

Speaker Change: Either higher attrition rates or some some.

Speaker Change: Three to four comp and flat to 10 basis points of.

Speaker Change: Some challenges hiring we have the ability to go in pointedly and increased wages.

Speaker Change: Leverage you've been outpacing that for a while.

Operator: Yes, that's right.

Brooke Roach: Yes, that's right.

Debra McConnell: Okay. So, well, when you say, are you talking merchandise margin?

Speaker Change: Is there anything on the horizon that would cause that to slow back down to the normal framework, we should think about.

Speaker Change: Yeah.

Speaker Change: Very helpful Best of luck for back from holiday.

Adrian: Thanks, Thank you Adrian.

Speaker Change: Well, so two things I'll jump on the Homegoods. So yes, we don't we don't feel Homegoods would run a negative.

Operator: Sure. We can talk merchandise margin. But also.

Speaker Change: Thank you. Our next question comes from Michael Binetti with Evercore. Your line is open.

John Klinger: I mean, the bottom line margin is consistent with what we've said in the past.

Michael Binetti: Congrats on a great quarter.

Speaker Change: I would anticipate we're not anticipating that so good question that is not what we would be planning yes.

Debra McConnell: Right. The bottom line.

Speaker Change: Thank you you mentioned earlier.

John Klinger: On a three to four comp, we could be flat to up 10 basis points, again, assuming no outsized expense headwinds. That message is still consistent.

Michael Binetti: You mentioned earlier, the two year stacks accelerating through <unk> kind of wondering looking at the model here Homegoods has very tough compares coming up in the third quarter in the back half I guess is there is there a scenario where the 2% to 3% total company comp for third quarter allows for a negative comp in home goods like the stacks might imply just against that big plus nine.

Speaker Change: On the margin. So obviously, we've been pretty consistent about the three to four comp being flat to up 10 basis points.

Debra McConnell: Yeah. Obviously, this year we have raised that now where our margin for the year is going up from where we planned for a lot of reasons. But one of the reasons I think, if I go to the merchandise margin, which we were starting to talk about, is the situation of all these, the stars keep aligning with our opportunities and gaining market share. We mean more to vendors than ever before. Our relationships should continue to bode well in terms of us continuing to buy goods more favorably as we move forward. Another place where I think our merchandise margins have upside is the way we manage our flow. Every division has gotten, continues to get even better. This is why in the last couple of, which helps our markdowns and our merchandise margin directly.

Ernie Herrman: Yeah. Obviously, this year we have raised that now where our margin for the year is going up from where we planned for a lot of reasons. But one of the reasons I think, if I go to the merchandise margin, which we were starting to talk about, is the situation of all these, the stars keep aligning with our opportunities and gaining market share. We mean more to vendors than ever before. Our relationships should continue to bode well in terms of us continuing to buy goods more favorably as we move forward. Another place where I think our merchandise margins have upside is the way we manage our flow. Every division has gotten, continues to get even better. This is why in the last couple of, which helps our markdowns and our merchandise margin directly.

Speaker Change: But what we saw in this year is that we had a number of onetime items that allowed us this year to leverage.

Speaker Change: A year ago, and then on the margins you spoke a little bit about flow through and the normal framework.

Speaker Change: On a two to three versus that three to four and Thats really the reason.

Speaker Change: Three to four comp and flat to 10 basis points.

Speaker Change: Okay is it does that change as you look out.

Speaker Change: Leverage you've been outpacing that for a while.

Speaker Change: Next year or is it the same framework.

Speaker Change: Is there anything on the horizon that would cause that to slow back down to the normal framework that we should think about.

Speaker Change: Next year.

Speaker Change: I would place it.

Speaker Change: <unk>.

Speaker Change: Again that model of a three to four comp being flat to up 10 basis points. At this point is what we would be would be consistent with we're not giving F.

Speaker Change: Well, so two things I'll jump on the Homegoods. So yeah, we don't we don't feel Homegoods would run a negative.

Speaker Change: And we're not anticipating that so good question that is not what we would be planning yes.

Speaker Change: FY 'twenty six guidance just yet.

Speaker Change: But that's what.

Speaker Change: On the margin. So obviously, we've been pretty consistent about the three to four comp being flat to up 10 basis points.

Speaker Change: That's what we've said and that's what still holds.

Speaker Change: Okay, guys best of luck into the holidays. Thank you.

Debra McConnell: When you put the right goods into the right clusters of stores, you obviously end up with a reduced markdown rate and an increased sales because our planning systems over the last couple of years and our planning associates are getting better and better at this. Another place, in Marmaxx specifically and in HomeGoods domestically, we are able to now tailor the mix. We've done a better job at putting together Sunbelt strategies and different region strategies across the different climate zones in the United States, which also is a huge benefit to our merchandise margin. I think what we're going to also see is, when you look at total margin, we've talked about this before, is our Europe business. John and I have talked about this for a few years now.

When you put the right goods into the right clusters of stores, you obviously end up with a reduced markdown rate and an increased sales because our planning systems over the last couple of years and our planning associates are getting better and better at this. Another place, in Marmaxx specifically and in HomeGoods domestically, we are able to now tailor the mix. We've done a better job at putting together Sunbelt strategies and different region strategies across the different climate zones in the United States, which also is a huge benefit to our merchandise margin. I think what we're going to also see is, when you look at total margin, we've talked about this before, is our Europe business. John and I have talked about this for a few years now.

Speaker Change: But what we saw it in this year is that we had a number of one time items that allowed us this year to leverage.

Speaker Change: Thank you.

Speaker Change: Okay.

Speaker Change: Thank you. Our next question comes from Mark.

Mark: Mark with Baird. Your line is open.

Speaker Change: On a two to three versus that three to four and Thats really the reason.

Mark Baird: Good morning, Thank you for taking my question.

Mark Baird: Maybe first for Ernie I was hoping to get some perspective on the market share gains mix comps, obviously compare very nicely to what we've seen.

Speaker Change: Okay is it does that change as you look out.

Speaker Change: Next year or is it to think about the same framework.

Speaker Change: The Department store channel and others, thus far but at the same time, we are seeing some of the mass retailers reports.

Speaker Change: I said next year.

Speaker Change: I would place it as that.

Speaker Change: Again that model of a three to four comp being flat to up 10 basis points. At this point is what what we would be what would be consistent with we're not giving FY 'twenty six guidance just yet.

Speaker Change: Results in general merchandise, including some more positive commentary on apparel. So could you just speak to how you're protecting your flank. When it comes to some of the mass discounters that are also competing for that trade down consumer.

Speaker Change #100: Yes, Great question, Mark we've been by the way to your point, we've been looking at the same numbers. We track all of this as we as we continue to monitor our market share gains and by the way we as best we can some some countries that werent don't have but in the U S. As you just.

Speaker Change: But that's what.

Speaker Change: That's what we've said and that's what is still still holds.

Debra McConnell: We're seeing that our goal there is to get to an 8% bottom line versus where we were. And we're doing that in pretty short order over a few years. And I think that is also going to bode well for the, obviously, that's going to help our total TJX margin. And then we still see in different markets, Canada's obviously continuing to be very profitable. But I think we're going to see our home business specifically, which is big throughout TJX, we're feeling good about the margin opportunities there beyond just the freight savings because of our fashion component where we are able to still provide great value. Our sourcing is excellent, and we can still value and make good margins at a business. So as that business continues to grow, just feeling big upside and excited about the opportunities for year after year on the margin side. Great question.

We're seeing that our goal there is to get to an 8% bottom line versus where we were. And we're doing that in pretty short order over a few years. And I think that is also going to bode well for the, obviously, that's going to help our total TJX margin. And then we still see in different markets, Canada's obviously continuing to be very profitable. But I think we're going to see our home business specifically, which is big throughout TJX, we're feeling good about the margin opportunities there beyond just the freight savings because of our fashion component where we are able to still provide great value. Our sourcing is excellent, and we can still value and make good margins at a business. So as that business continues to grow, just feeling big upside and excited about the opportunities for year after year on the margin side. Great question.

Speaker Change: Okay, guys best of luck into the holidays. Thank you.

Speaker Change: Thank you.

Speaker Change: [noise]. Thank you. Our next question comes from.

Speaker Change #101: Stated, there's a lot of good information out there. So we track while when you look at the total so first thing. We do is we look at the <unk> total with new stores and you can see clearly we're gaining market share in total now as to where it is.

Mark: Mark with Baird. Your line is open.

Mark Baird: Good morning, Thank you for taking my question.

Mark Baird: Maybe first for Ernie I was hoping to get some perspective on the market share gains you know <unk> comps, obviously compare very nicely to what we've seen on the department store channel and others, thus far but at the same time, we are seeing some of the mass retailers report some better results in general merchandise, including some more positive commentary on apparel. So could you just speak to how you are.

Speaker Change #101: We have some information that shows in the apparel and home that would say were picking up market share in both.

Speaker Change #102: It depends on how you slice off some of the discounters that have home in it.

Speaker Change #102: Because if they're not if they have general home and you throw all of the families of business in there. It can look at one number but if it's more home furnishings, driven which is what we are.

Speaker Change: Protecting your flank when it comes to some of the mass discounters that are also competing for that trade down consumer.

Ernie: Yes, Great question, Mark we've been by the way to your point, we've been looking at the same numbers. We track all of this as we as we continue to monitor our market share gains and by the way we as best we can some some countries that werent don't have but in the U S.

Speaker Change #102: With some.

Speaker Change #102: Other things that make it a little fuzzy for example, we have a pet business in our home area we have.

Operator: Thanks so much. I'll pass it on.

Brooke Roach: Thanks so much. I'll pass it on.

Speaker Change #102: A lot of consumables that John talked about like the gourmet food that we carry where does not thats in our home business, writing cards reading cards wearing paper wrap.

Ernie Herrman: Thank you.

Operator: Thank you. Our next question comes from Adrienne Yih with Barclays. Your line is open.

Speaker Change: Yeah.

Speaker Change: Stated, there's a lot of good information out there. So we track while when you look at the total so first thing. We do is we look at the <unk> total with new stores and you can see clearly we're gaining market share in total now as to where it is.

Adrienne Yih: Okay. Thank you very much. Let me add my congratulations. Super well done, Ernie.

John: Rap, whereas that in those businesses, so that's where it gets really funky.

Ernie Herrman: Thank you, Adrienne.

Adrienne Yih: First question. You're very welcome. The first question is, can you talk about for the macro consumer health backdrop today versus when we were at the last quarterly call in both the US, Canada, and then Europe? Obviously, the overall sentiment is the consumer backdrop has worsened, but obviously, your model is prepared for that. So that's number one. And then John, can you just talk about where are those store apparel investments going? What do you expect to get in terms of the return? Is it hours? Is it employees? Thank you so much.

Speaker Change #103: So as best we can in some of the reports that are written in your industry.

Speaker Change: We have some information that shows in the apparel and home that would say were picking up market share in both.

Speaker Change #104: On the sell side will show us that where it will show that we're picking up home business clearly against the direct competition.

Speaker Change: It depends on how you slice out some of the discounters that have home in it.

Speaker Change #105: But I do like your wording on protecting your flank because what we look for is any sign of in total on those groups that we look at for competition are they getting close are there promotional retails are we feeling.

Speaker Change:

Speaker Change: Because if they're not if they have general home and you throw all of the families of business in there. It can look at one number but if it's more home furnishings, driven which is what we are.

Speaker Change: With some.

Speaker Change #105: That their sales comp sales are any healthier than ours, where right now we haven't seen it and we're clearly gaining market share in home as well.

Other things that make it a little fuzzy for example, we have a pet business in our home area. We have a lot of consumables that John talked about like the gourmet food that we carry where does not that's in our home business writing cards reading cards are raring paper, yeah, yeah, yeah rap, whereas that in those businesses. So that's where it gets really.

Ernie Herrman: Hey, Adrienne. Great question on the landscape and what's happening to kind of get at where the trends could be going. The macro health situation does vary, I think, by country also a little bit. We see, I would say the US versus in Q1 is similar macro and by at least for our experience. I know everything you read is we always wait. We have some of the same information that you have. So we wait for a lot of reports to come out to kind of adjust. All I know is the availability seems to keep growing, which makes me wonder if certainly at our supply, the brands that we deal with, are they running into a little tougher situation? So that could be, again, tough for me to answer that versus just a quarter ago. We also don't tend to see the movement by quarter.

Speaker Change #106: But to your point, we're always trying to protect our flank by being aware of where they are and then one of the things our merchants do is who average doing better business when their business, we shop them very aggressively to look at our values and the categories from a fashion perspective that they carry.

Speaker Change: Bunkie.

Speaker Change: So as best we can in some of the reports that are written in <unk>.

Speaker Change: <unk> industry on the sell side will show us where it will show that we're picking up home business clearly against the direct competition.

Speaker Change #107: <unk> <unk> should we have more of it are we selling it shall we be retailing it differently because again, our first priority has to offer.

Speaker Change: But I do like your wording on protecting your flank because what we look for is any sign of in total on those groups that we look out for competition are they getting close are there promotional retails are we feeling.

Speaker Change #107: Value thats better than everyone else around us.

Speaker Change #107: So that's kind of all of that goes into kind of protecting the flag so to speak.

Speaker Change #108: Love the terminology we use.

Speaker Change #108: I guess just being on top of it every day.

Speaker Change #109: Thank you.

Speaker Change #108: Yes. Thank you.

Speaker Change: That their sales comp sales are any healthier than ours, where right now we haven't seen it and we're clearly gaining market share in home as well.

Speaker Change #110: Thank you. Our next question comes from Cory <unk> with Jefferies. Your line is open.

Ernie Herrman: It seems to be over six months or 12 months. Canada, pretty challenging up there. Europe, more challenging. I would say both are challenging environments from maybe six months ago. The difference in our comps there, I think, is we've had weather in both those areas. Canada was hit with some weather situations. Canada a little better than Europe and is up against tougher numbers. Europe, I would say, again, our performance probably had half of it was due to our own execution, which not that we like it, but we like it because we can adjust that and we know what to do. And you've followed us for years. You know that whenever we identify execution issues, we address it. And that team has been great.

It seems to be over six months or 12 months. Canada, pretty challenging up there. Europe, more challenging. I would say both are challenging environments from maybe six months ago. The difference in our comps there, I think, is we've had weather in both those areas. Canada was hit with some weather situations. Canada a little better than Europe and is up against tougher numbers. Europe, I would say, again, our performance probably had half of it was due to our own execution, which not that we like it, but we like it because we can adjust that and we know what to do. And you've followed us for years. You know that whenever we identify execution issues, we address it. And that team has been great.

Cory: Great. Thanks, Good morning, Ernie I was wondering if I could one perspective on opening price point. So other retailers have talked about cutting prices.

Speaker Change: But to your point, we're always trying to protect our flank bike being aware of where they are and then one of the things our merchants do is who average doing better business when their business, we shop them very aggressively to look at our values and the categories from a fashion perspective that they carry that should we have more of it are we.

Also highlighted more promotions.

Speaker Change #112: And you also I think mentioned in your prepared remarks that.

Speaker Change #113: Youre seeing I think flattish ticket, maybe it has a little bit of a plus sign on it how do you think about the trajectory for AUR and opening price points going forward within the context of the.

Speaker Change: Selling it shall we be retailing it differently because again, our first priority has to offer.

Speaker Change: <unk> value, that's better than everyone else around us.

Speaker Change #112: A broader environment.

Speaker Change #114: Yes, great Great question Corey.

Speaker Change: So that's kind of all of that goes into kind of protecting the plant so to speak.

Speaker Change #115: Start with that we won't top down manage it so which is why were always reluctant on a top down average ticket.

Speaker Change: Loved the terminology you used.

Speaker Change: I guess just being on top of it every day.

Ernie Herrman: And they already have really addressed a lot of the things that we think we could improve on, which is why we're already seeing that improvement as we start Q3. I'd say the environment there is challenging though, economically in Europe. So I can understand why you would ask the question and probably a little bit more so than, again, six months ago. John, did you want to talk about that?

And they already have really addressed a lot of the things that we think we could improve on, which is why we're already seeing that improvement as we start Q3. I'd say the environment there is challenging though, economically in Europe. So I can understand why you would ask the question and probably a little bit more so than, again, six months ago. John, did you want to talk about that?

Thank you.

Speaker Change #115: Average unit retail, giving a projection too far out because we can.

Speaker Change: Yes. Thank you.

Speaker Change: Thank you. Our next question comes from Corey Tyler with Jefferies. Your line is open.

Speaker Change #115: Sometimes the market moves fast we go after oftentimes and John off it talks about this it's the mix of our departments. So we could have.

Speaker Change: Great.

Corey Tyler: Morning, Ernie I was wondering if I could one perspective on opening price points. So other retailers have talked about.

John: In accessories area, our gourmet food area, that's at a low ticket, but we're driving sales are hot there.

<unk> prices.

John: Just by the fact that we're going to drive that a little disproportionately than something else that could lower our ticket temporarily normally see units go up when we see right. We see the units in the basket go out right right. So.

Corey Tyler: We've also highlighted more promotions.

John Klinger: Yeah. So on the wage, we continue to see wage increases across all of our geographies. You'll remember we talked, I think, on the first quarter call about Europe announced a—or excuse me, the UK announced a 10% increase in wage. We've seen some of the provinces, I think most recently, Ontario announced a minimum wage increase. And of course, we've seen that as well in the US. Our strategy still holds that we are increasing, obviously, where the legislative increases have gone, but also where we have competitive reasons to increase our wage. We also keep something in our budget for that as well. So if we see either higher attrition rates or some challenges hiring, we have the ability to go in pointedly and increase wages.

Speaker Change #101: And you also I think mentioned in your prepared remarks that.

Speaker Change #102: Youre seeing I think flattish ticket, maybe it has a little bit of a plus sign on it how do you think about the trajectory for AUR and opening price points going forward within the context of the broader environment.

John: But on opening price point, specifically, which is at the beginning we.

John: So.

Speaker Change #102: Yeah, Great Great question Corey.

Speaker Change #116: And if you look at what we've talked about really more in depth. The last few calls and meetings. We've had is we believe strongly in having opening price point goods, ensuring they're at the right value. But this is why we are all over having a balanced good better best.

Speaker Change #103: I'll start with that we won't top down manage it so which is why were always reluctant on a top down average ticket.

Speaker Change #103: Average unit retail, giving a projection too far out because we can.

Speaker Change #103: Sometimes the market moves fast we go after oftentimes it and John often talks about visits the mix of our departments. So we could have.

Speaker Change #116: Mix throughout all of our brands and banners in all of our markets. So we are always passionate about opening price point.

Speaker Change #117: Goods in balance, though and we're always up against there being balanced which is why youre not seeing our ticket move around that much because as much as we're passionate about we have it in ratio to our better brands and better retails and our best brands and that Hasnt moved a lot.

John: In accessories area, our gourmet food area, that's at a low ticket, but we're driving sales or hot there.

John: Just by the fact that we're going to drive that a little disproportionately than something else that could lower our ticket tempura really normally see units go up when we see right. We have units in the basket go out right right. So.

Adrienne Yih: Very helpful. Best of luck for back-to-school holidays.

Speaker Change #116: <unk>.

Speaker Change #118: Again, we don't top down tell the merchants that we let nature take its course level. The only thing we insist on is that every merchant have a balanced mix of good better best and we let that fluctuate a little bit, but we never get away from it. So I hope that answers that opening price point question.

Ernie Herrman: Thank you.

John Klinger: Thank you, Adrienne.

John: But on opening price point, specifically, which is at the beginning we.

Operator: Thank you. Our next question comes from Michael Binetti with Evercore. Your line is open.

John: So.

Speaker Change #104: And if you look at what we've talked about really more in depth. The last few calls and meetings. We've had is we believe strongly in having opening price point goods, ensuring they're at the right value. But this is why we are all over having a balance good better best.

Michael Binetti: Hey, guys. Congrats on a great quarter.

Ernie Herrman: Thank you, Michael.

Michael Binetti: Thanks for, you mentioned earlier the two-year stacks accelerating through Q2. I was kind of wondering, looking at the model here, HomeGoods has very tough compares coming up in Q3 in the back half, I guess. Is there a scenario where the 2% to 3% total company comp for Q3 allows for a negative comp in HomeGoods like the stacks might imply just against that big +9% a year ago? And then on the margins, since you spoke a little bit about flow-through in the normal framework, the 3 to 4 comp and flat 10 basis points of leverage, you've been outpacing that for a while. Is there anything on the horizon that would cause that to slow back down to the normal framework that we should think about?

Speaker Change #118: Cutting prices.

Speaker Change #119: Again that back to the original thing at the beginning of this call is we don't we don't cut.

Speaker Change #104: Mix throughout all of our brands and banners in all of our markets. So we are always passionate about opening price point.

Speaker Change #120: We did cut prices when we see the price on an item is coming down around us because we're going to ensure that our value was proportionately significantly better going out the door than their out the door.

Speaker Change #104: Goods in balance, though and we're always up against there being balanced which is why youre not seeing our ticket move around that much because as much as we're passionate about we have it in ratio to our better brands and better retails and our best brands and that Hasnt moved a lot.

Speaker Change #120: But that's when we would cut the price or we cut the price if we're not selling something.

Speaker Change #120: As well, regardless of what's happening around because that happens as well and we do that through the markdown process right.

Speaker Change #120: Which is very.

Speaker Change #120: Automated and the merchants initiate and we.

Speaker Change #104: Again, we don't top down tell the merchants that we let nature take its course level. The only thing we insist on is that every merchant Abbott bounce mix of good better best and we let that fluctuate a little bit, but we never get away from it. So I hope that answers that opening price point question and I know that.

Speaker Change #121: We continue to slash, we can take a markdown we can take a price adjustment, where we just adjusted to what we think is the new REIT retail.

Ernie Herrman: Well, so two things. I'll jump on the HomeGoods. So yeah, we don't feel HomeGoods would run a negative.

John Klinger: We're not anticipating that.

Ernie Herrman: We're not anticipating that. Good question. That is not what we would be planning.

Speaker Change #121: Again, remember, we will never ever be undersold. So.

John Klinger: Yeah. On the margin, so obviously, we've been pretty consistent about the 3 to 4 comp being flat to up 10 basis points. But what we saw in this year is that we had a number of one-time items that allowed us this year to leverage on a 2 to 3 versus that 3 to 4. And that's really the reason.

Speaker Change #121: But that's what drives us cutting prices one when we do cut prices.

Cutting prices.

Speaker Change #104: Again that back to the original thing at the beginning of this call is we don't we don't cut we do cut prices when we see a price on an item is coming down around us because we're going to ensure there are value, which is proportionately significantly better going out the door than their out the door.

Speaker Change #121: Hope that answers that.

Speaker Change #121: Yes welcome.

Speaker Change #122: Thank you. Our final question comes from Jay sole with UBS you May proceed.

Speaker Change #123: Great. Thank you so much I just wanted to ask another one more question about brands with us or are you talking about the strategic rationale can you just help us understand sort of the financial rationale why to get 35% stake why not more why not less.

Speaker Change #104: But that's when we would cut the price or we cut the price if we're not selling something.

Michael Binetti: Okay. Does that change as you look out next year, or do you think about the same framework?

As well, regardless of what's happening around because that happens as well and we do that through the markdown process right.

Speaker Change #123: Very good.

Speaker Change #123: <unk>.

Speaker Change #123: Yes.

John Klinger: Like I said, next year, I would place it that, again, that model of a three to four comp being flat to up 10 basis points at this point is what we would be consistent with. We're not giving FY26 guidance just yet, but that's what we've said, and that's what still holds.

Speaker Change #124: Well some of that John and I will both jump in on this but.

Speaker Change #104: Which is very automated and the merchants initiate and.

Speaker Change #125: So these that goes yes, I wont get into specifics, but sometimes when you start with these negotiations one site.

Speaker Change #104: We continue to slash and then we can take a markdown we can take a price adjustment, where we just adjusted to what we think is the new REIT retail.

Speaker Change #124: One.

Speaker Change #126: One site could be looking for a couple of investors and they actually might be looking for us to be less of an investor than 35.

Speaker Change #104: Again, remember, we will never ever be undersold. So.

Speaker Change #127: Sometimes after you start exploring you see a good number sometimes.

Speaker Change #104: But that's what drives us cutting prices one when we do cut prices.

Speaker Change #127: I would say, it's kind of a meeting of the minds to sum it up that we don't always.

Speaker Change #104: Hope that answers that.

Michael Binetti: Okay, guys. Best of luck into the holidays. Thank you.

Yes welcome.

John Klinger: Thanks, Michael.

Debra McConnell: Thank you.

Ernie Herrman: Thank you.

Speaker Change #105: Thank you. Our final question comes from Jay sole with UBS you May proceed.

Speaker Change #128: You have to come out with their proportional amount that the <unk>. The owners that are great and us where we all feel we're at the right level and there isn't there isn't as much I mean, there is some science, but then there is a bit of the.

Operator: Thank you. Our next question comes from Mark with Baird. Your line is open.

Jay Sole: Great. Thank you so much I just wanted to ask another one more question about brands with us.

Ernie Herrman: Good morning. Thank you for taking my question. Maybe first for Ernie, I was hoping to get some perspective on the market share gains. Marmaxx comps obviously compare very nicely to what we've seen out of the department store channel and others thus far. But at the same time, we are seeing some of the mass retailers report some better results in general merchandise, including some more positive commentary on apparel. So could you speak to how you're protecting your flank when it comes to some of the mass discounters that are also competing for that trade-down consumer?

Mark Altschwager: Good morning. Thank you for taking my question. Maybe first for Ernie, I was hoping to get some perspective on the market share gains. Marmaxx comps obviously compare very nicely to what we've seen out of the department store channel and others thus far. But at the same time, we are seeing some of the mass retailers report some better results in general merchandise, including some more positive commentary on apparel. So could you speak to how you're protecting your flank when it comes to some of the mass discounters that are also competing for that trade-down consumer?

Jay Sole: About the strategic rationale can you just help us understand sort of the financial rationale why to get 35% stake why not more why not less.

Jay Sole: Yeah.

Speaker Change #129: Qualitative discussion about how much we think they want us to own how much. We think we should note and we ended up in what we thought was a sweet spot given their feelings at our failings, John they weren't looking for a complete buyout right.

Jay Sole: Jack.

Jack: Well some of that John and I will both jump in on this but.

Jack: So these that goes yeah, I won't get into specifics, but sometimes when you start with these negotiations 111.

Speaker Change #108: One side could be looking for a couple of investors and they actually might be looking for us to be less of an investor then 35%.

Speaker Change #130: They were looking for a minority investor they weren't looking for a 50% rate Ethernet that are 35%. It gives us enough skin in the game that it makes us it makes it worthwhile.

Ernie Herrman: Yeah. Great question, Mark. By the way, to your point, we've been looking at the same numbers. We track all of this as we continue to monitor our market share gains. And by the way, as best we can, some countries that we're in don't have. But in the US, as you just stated, there's a lot of good information out there. So we track, well, when you look at the total, so first thing we do is we look at the Marmaxx total with new stores, and you can see clearly we're gaining market share in total. Now, as to where it is, we have some information that shows in the apparel and in home. That would say we're picking up market share in both.

John: Sometimes after you start exploring you see a good number sometimes.

Speaker Change #129: Yup.

John: I would say, it's kind of a meeting of the minds to sum it up that we don't always.

Speaker Change #129: And Jay what is need about it though at the same time, the 35% the way it works with us it stays a very it's a healthy investment as you can see based on the number that we put in.

John: You have to come out with a with their proportional amount that are the <unk>. The owners that are great and us where we feel we are at the right level and there is no there isn't as much I mean, there is some science, but then there's a bit of the.

Speaker Change #131: We believe it's accretive in a couple of years.

Speaker Change #132: Next last year next year, and if we plan to add the value that we think we can we still have a DC we own 35%. So if it grows like we think it can.

John: Qualitative discussion about how much we think they want us to own how much we think we should own and we ended up in what we thought was a.

Speaker Change #133: And we at our secret sauce, so to speak in terms of the buying in.

John: Sweet spot given there.

Ernie Herrman: It depends on how you slice out some of the discounters that have home in it because if they have general home and you throw all the families of business in there, it can look at one number. But if it's more home furnishings driven, which is what we are with some other things that make it a little fuzzy, for example, we have a pet business in our home area. We have a lot of consumables that John talked about, like the gourmet food that we carry. Where does that—that's in our home business.

It depends on how you slice out some of the discounters that have home in it because if they have general home and you throw all the families of business in there, it can look at one number. But if it's more home furnishings driven, which is what we are with some other things that make it a little fuzzy, for example, we have a pet business in our home area. We have a lot of consumables that John talked about, like the gourmet food that we carry. Where does that—that's in our home business.

John: Tailings at our failings John today, they weren't looking for a complete buy out right.

Speaker Change #134: And they are excellent at they really want to collaborate and we're very impressed with what they've done I think it's a great marriage.

John: They were looking for a minority investor and they weren't looking for a 50% rate in.

At a 35% it gives us enough skin in the game that it makes us it makes it worthwhile.

Speaker Change #135: Yet they didn't they didn't want a buyout and we wanted to own a decent chunk. So you end up kind of in that Middle zone.

John: Yeah.

Speaker Change #109: Bob and Jay what is need about it though at the same time, the 35% the way it works with us it stays a very it's a healthy investment as you can see based on the number that we put in.

Speaker Change #135: Makes sense all right. Thank you so much.

Speaker Change #136: You're welcome Jay that.

Speaker Change #137: That was our last call.

Speaker Change #138: I would like to thank you all for joining US today, we look forward to updating you again on our third quarter earnings call in November.

John Klinger: Greeting cards.

Ernie Herrman: Greeting cards.

John Klinger: Wrapping paper.

Ernie Herrman: Yeah, yeah, yeah. Wrap. Where is that in those businesses? So that's where it gets really funky. So as best we can, and some of the reports that are written in your industry on the sell side will show us that we're picking up home business clearly against the direct competition. But I do like your wording on protecting your flank because what we look for is any sign of in total on those groups that we look at for competition. Are they getting close? Are their promotional retails, are we feeling that their comp sales are any healthier than ours were? Right now, we haven't seen it. And we're clearly gaining market share in home as well. But to your point, we're always trying to protect our flank by being aware of where they are.

Speaker Change #110: We believe it's accretive in a couple of years.

Speaker Change #139: Take care everybody.

Speaker Change #110: Next next year next year, and if we plan to add the value that we think we can we still have a decent you know we own 35%. So that grows like we think it can.

Speaker Change #140: Ladies and gentlemen that concludes your conference call for today you may all disconnect. Thank you for participating.

Speaker Change #110: And we at our secret sauce, so to speak in terms of the buying in.

Speaker Change #111: And they are excellent at they really want to collaborate and we're very impressed with what they've done I think it's a great marriage.

Yet they didn't they didn't want a buyout and we wanted to own a decent chunk. So you end up with kind of in that Middle zone.

Speaker Change #112: Makes sense.

Speaker Change #113: Thank you so much.

Jay Sole: You're welcome Jay.

Jay Sole: That was our last call I.

Speaker Change #114: I would like to thank you all for joining US today, we look forward to updating you again on our third quarter earnings call in November.

Ernie Herrman: Then one of the things our merchants do is whoever's doing better business, when their business, we shop them very aggressively to look at our values and the categories from a fashion perspective that they carry, that, a, should we have more of it? Are we selling it? Should we be retailing it differently? Because, again, our first priority is to offer value that's better than everyone else around us. So that's kind of all that goes into kind of protecting the flank, so to speak. I love the terminology you used.

Then one of the things our merchants do is whoever's doing better business, when their business, we shop them very aggressively to look at our values and the categories from a fashion perspective that they carry, that, a, should we have more of it? Are we selling it? Should we be retailing it differently? Because, again, our first priority is to offer value that's better than everyone else around us. So that's kind of all that goes into kind of protecting the flank, so to speak. I love the terminology you used.

Take care everybody.

Speaker Change #115: Ladies and gentlemen that concludes your conference call for today you may all disconnect. Thank you for participating.

Speaker Change #114: Hi.

John Klinger: It's just being on top of it every day.

Michael Binetti: Thank you.

Mark Altschwager: Thank you.

Ernie Herrman: Yeah. Thank you.

Operator: Thank you. Our next question comes from Corey Tarlowe with Jefferies. Your line is open.

Ernie Herrman: Great. Thanks. Good morning. Ernie, I was wondering if I could get your perspective on opening price points. So other retailers have talked about cutting prices. They've also highlighted more promotions. And you also, I think, mentioned in your prepared remarks that you're seeing, I think, flatish ticket. Maybe it has a little bit of a plus sign on it. How do you think about the trajectory for AUR and opening price points going forward within the context of the broader environment?

Corey Tarlowe: Great. Thanks. Good morning. Ernie, I was wondering if I could get your perspective on opening price points. So other retailers have talked about cutting prices. They've also highlighted more promotions. And you also, I think, mentioned in your prepared remarks that you're seeing, I think, flatish ticket. Maybe it has a little bit of a plus sign on it. How do you think about the trajectory for AUR and opening price points going forward within the context of the broader environment?

Ernie Herrman: Yeah. Great, great question, Corey. So, start with that we won't top-down manage it, which is why we're always reluctant on a top-down average ticket, average unit retail, giving a projection too far out because sometimes the market moves fast. We go after, oftentimes, and John often talks about this, it's the mix of our departments. So we could have an accessories area or a gourmet food area that's at a low ticket, but we're driving; sales are hot there. Just by the fact that we're going to drive that a little disproportionately than something else, that could lower our ticket temporarily.

John Klinger: We normally see units go up when we see it.

Ernie Herrman: Right. We see the units in the basket go up.

John Klinger: Right.

Ernie Herrman: Right. But on opening price points specifically, which is at the beginning, we, and if you look at what we've talked about really more in depth, the last few calls and meetings we've had, is we believe strongly in having opening price point goods, ensuring they're at the right value. But this is why we are all over having a balanced good, better, best mix throughout all of our brands and banners in all of our markets. So we are always passionate about opening price point goods in balance, though. We're always up against it being balanced, which is why you're not seeing our ticket move around that much because as much as we're passionate about, we have it in ratio to our better brands, better retails, and our best brands. That hasn't moved a lot.

Ernie Herrman: Again, we don't top-down tell the merchants that we let nature take its course a little. The only thing we insist on is that every merchant have a balanced mix of good, better, best. And we let that fluctuate a little bit, but we never get away from it. So I hope that answers that opening price point question. And on the cutting prices, again, that back to the original thing at the beginning of this call is we don't cut, we do cut prices when we see a price on an item is coming down around us because we're going to ensure that our value is proportionally significantly better going out the door than they're out the door. But that's when we would cut the price. Or we cut the price if we're not selling something as well, regardless of what's happening around because that happens as well.

Again, we don't top-down tell the merchants that we let nature take its course a little. The only thing we insist on is that every merchant have a balanced mix of good, better, best. And we let that fluctuate a little bit, but we never get away from it. So I hope that answers that opening price point question. And on the cutting prices, again, that back to the original thing at the beginning of this call is we don't cut, we do cut prices when we see a price on an item is coming down around us because we're going to ensure that our value is proportionally significantly better going out the door than they're out the door. But that's when we would cut the price. Or we cut the price if we're not selling something as well, regardless of what's happening around because that happens as well.

John Klinger: And we do that through the markdown process.

Ernie Herrman: Right. Which is very automated, and the merchants initiate, and we continue to slash, and we can take a markdown. We can take a price adjustment where we just adjust it to what we think is the new right retail. Again, remember, we will never, ever be undersold, so. But that's what drives us cutting prices when we do cut prices. Hope that answers it.

John Klinger: Thank you so much.

Corey Tarlowe: Thank you so much.

Ernie Herrman: Yes. Welcome.

Operator: Thank you. Our final question comes from Jay Sole with UBS. You may proceed.

Ernie Herrman: Great. Thank you so much. I just want to ask one more question about Brands for Less. Ernie, you talked about the strategic rationale. Can you just help us understand sort of the financial rationale? Why take a 35% stake? Why not more? Why not less? And how do you—

Jay Sole: Great. Thank you so much. I just want to ask one more question about Brands for Less. Ernie, you talked about the strategic rationale. Can you just help us understand sort of the financial rationale? Why take a 35% stake? Why not more? Why not less? And how do you—

Ernie Herrman: That's very good, Jay. Well, some of that, John and I will both jump in on this. So these negotiations, I won't get into the specifics, but sometimes when you start with these negotiations, one side could be looking for a couple of investors, and they actually might be looking for us to be less of an investor than 35. Sometimes after you start exploring, you see a good number. Sometimes I would say it's kind of a meeting of the minds, to sum it up, that we don't always, you have to come out with a proportional amount that the founders, the owners there that are great, and us where we all feel we're at the right level.

Ernie Herrman: And there isn't as much, I mean, there's some science, but then there's a bit of the qualitative discussion about how much we think they want us to own, how much we think we should own. And we ended up in what we thought was a sweet spot given their feelings and our feelings. John, did you?

And there isn't as much, I mean, there's some science, but then there's a bit of the qualitative discussion about how much we think they want us to own, how much we think we should own. And we ended up in what we thought was a sweet spot given their feelings and our feelings. John, did you?

John Klinger: They weren't looking for a complete buyout. They were looking for a minority investor, and.

Ernie Herrman: They weren't looking for a 50% buy either.

John Klinger: Right. At a 35%, it gives us enough skin in the game that it makes it worthwhile.

Ernie Herrman: Jay, what is neat about it, though, at the same time, the 35%, the way it works with us, it stays a very, it's a healthy investment, as you can see based on the number that we put in. We believe it's accretive in a couple of years.

John Klinger: Next year.

Ernie Herrman: Next year. And if we plan to add the value that we think we can, we still have a decent, we own 35%. So if it grows like we think it can, and we add our secret sauce, so to speak, in terms of the buying, and, and they're excellent at, they really want to collaborate, and we're very impressed with what they've done. I think it's a great marriage. Yet they didn't want to buy out, and we wanted to own a decent stake. So you end up kind of in that middle zone.

Michael Binetti: Makes sense. Ernie, thank you so much.

Jay Sole: Makes sense. Ernie, thank you so much.

Ernie Herrman: You're welcome, Jay. That was our last call. I would like to thank you all for joining us today. We look forward to updating you again on our third quarter earnings call in November. Take care, everybody. Thank you.

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

Speaker Change #114: [music].

[music].

Speaker Change #116: Ladies and gentlemen, thank you for standing by welcome to the T. J X companies second quarter fiscal 2025 financial results Conference call. At this time all participants are in a listen only mode. Later, we will conduct a question and answer session at that time. If you have a question you will need to press star one.

As a reminder, this conference call is being recorded August 21st 2024, I would like to turn the conference call over to Mr. Ernie Herrman, Chief Executive Officer, and President of the T. J X companies incorporated. Please go ahead Sir.

Speaker Change #116: Thanks, Amanda before we begin Deb has some opening comments.

Deb: 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.

Deb: Lease for a cautionary statement regarding forward looking statements as well as the full safe Harbor statements included in the investors section of our website T J X dot com.

Deb: So 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 T. J S Dot com along with reconciliations to non-GAAP measures we discuss.

Deb: And now I'll turn it back over to Ernie.

Ernie: Good morning.

Ernie: Joining me and Deb on the call is John.

Ernie: I want to start by thanking all of our global associates for their ongoing commitment to T J X.

Ernie: Thanks to their hard work and collective efforts, we continue to deliver an excellent shopping experience and outstanding value to our shoppers every day.

Ernie: Now to our business update and second quarter results I'm.

Ernie: I am extremely pleased with our second quarter performance and the terrific execution of our flexible off price business model by our teams.

Ernie: Sales profitability and earnings per share all exceeded our plans.

Ernie: I am, particularly pleased that our comp sales increases across all of our divisions, where once again entirely driven by an increase in customer transactions.

Ernie: We believe this is an excellent indicator of the strength of our business as our exciting merchandize assortment great brands at outstanding values.

Ernie: To resonate with consumers across our geographies.

Ernie: I also wanted to highlight the strong performance of our largest division Mara Max which drove mid single digit increases in both comp sales and customer transactions.

Ernie: As to profitability with our second quarter outperformance, we are once again, raising our full year guidance for both pre tax profit margin and earnings per share.

Ernie: John will talk to our profitability performance and guidance in more detail in a moment.

Ernie: Also during the second quarter, we were thrilled to open our 5000th store.

John: Another milestone for our company.

John: This is a terrific achievement for T J X.

We see plenty of additional store growth opportunities for our current retail banners in our existing geographies over the long term.

John: Additionally, with our recent announcements with Grupo <unk> and branch for less we expect to participate in the growth of off price.

John: Several additional countries around the world.

John: Yeah.

John: As we look at the remainder of the year I am excited about the opportunities we see for this business.

John: The third quarter is off to a strong start.

John: And we have numerous plans underway to drive traffic and sales.

John: I'll talk more about our second half opportunities in a moment, but first I will turn the call over to John to cover our second quarter results in more detail.

John: John.

John: Thanks, Ernie I just wanted to add my gratitude to all of our global associates for their continued hard work.

Speaker Change #118: The tax profit margin of 10, 9% was up 50 basis points versus last year pre.

Ernie: Pre tax profit margin was 40 basis points above our plan.

Ernie: This was primarily due to lower freight costs, which includes a benefit from a true up of our freight accrual and lower operational freight costs as well as stronger sales.

These benefits were partially offset by higher incentive compensation accruals and a contribution to the TGF Foundation.

Ernie: Gross margin was up 20 basis points versus last year. This increase was driven by strong mark on and a benefit from freight partially offset by higher supply chain costs.

Ernie: SG&A decreased 30 basis points versus last year. This decrease was primarily due to a benefit this year from lapping a reserve related to a German government Covid program receivable last year as well as expense favorability. These.

Ernie: These benefits were partially offset by incremental store wage and payroll costs.

Ernie: Lastly, we were very pleased that diluted earnings per share of 96 cents were up 13% versus last year and also well above our plan.

Ernie: Now to our second quarter divisional performance again this quarter across all of our divisions. The comp increases were entirely driven by customer transactions, which we see as a good indicator of the strength of the business.

Ernie: Mara Max comp store sales increased 5% and segment profit margin was 14, 1% up 40 basis points versus last year.

Ernie: <unk> is apparel and home categories. Both saw strong strong comp sales growth and we saw comp strength across all regions.

Ernie: We were also happy with the strong sales performance of our U S e-commerce sites and Sierra stores, which we report as part of this division.

Ernie: We're very pleased with the momentum at <unk> and continue to see numerous opportunities to keep growing our largest division.

Ernie: Oh goods comp store sales increased 2% segment profit margin grew to nine 1% up 40 basis points versus last year, we see home goods and home center.

Speaker Change #119: Highly differentiated from other retailers in the home fashion space, we focus everyday on bringing customers eclectic assortments.

Speaker Change #119: Around the world at exciting values, we continue to see significant opportunity to open new stores and capture additional additional share of the U S home market.

Speaker Change #119: Moving to our international divisions.

At <unk>, Canada comp store sales were up <unk> <unk>.

2% segment profit margin on a constant currency basis was 15% down 70 basis points versus last year.

Speaker Change #119: At <unk> International comp store sales increased 1% and were up in both Europe and Australia.

Speaker Change #119: <unk> profit margin on a constant currency basis was four 3% up 230 basis points versus last year.

Speaker Change #119: With our leadership position in decades of international operating experience. We are confident we will continue to be an attractive shopping destination for value seeking customers around the world.

Speaker Change #120: Moving to inventory balance sheet inventory and inventory on a per store basis were both down 2% and driven by lower inventory at our distribution centers, we feel great about our inventory levels and believe we are well positioned to take advantage of the outstanding availability we're seeing.

Speaker Change #120: In the marketplace and flow fresh assortments to our stores and online this fall and holiday season.

Speaker Change #120: As to our capital allocation, we were pleased to generate another quarter of strong cash flow. While also reinvesting in the growth of our business and returning cash to shareholders through our buyback and dividend programs now ill turn it back to Ernie.

Ernie: Thanks, John.

Ernie: Now I'll highlight the opportunities we see that give us confidence that we can continue to drive sales and customer transactions in the second half of the year.

Ernie: First we are convinced that consumers will keep seeking value.

Ernie: We believe our strategy of trading across a broad range of income age demographics differentiates us from other retailers and remains a tremendous advantage I am confident that our value proposition will continue to resonate with shoppers when they visit any one of our retail banners.

Ernie: Second.

Ernie: We feel great about our product category plans and have exciting initiatives planned for the fall and holiday selling seasons.

Ernie: Further we have made our stores a year round shopping destination for guests and believe we are becoming more top of mind with shoppers with our consumable offerings.

Ernie: We believe that all of this will create an even more exciting shopping experience and encourage consumers to visit our stores more frequently.

Ernie: Third as I said earlier availability of quality branded merchandise is outstanding.

Ernie: I want to emphasize that we consistently have access to more goods than we could ever buy.

Ernie: Overall, I believe our vendor relationships are as good as ever.

Ernie: Some have been getting even stronger as vendors see us as an attractive way to grow their business.

Ernie: It gives me great confidence that we can bring shoppers the right assortment at the right values throughout the remainder of the year and for many years to come.

Ernie: Next the flexibility of our buying and planning and allocation teams.

Ernie: Allows us to go after the hottest categories and trends that drive customer excitement.

Ernie: With the flexibility of our supply chain.

Ernie: Confident that we can merchandise each of our stores with a curated assortment of good better and best brands that will excite and inspire our shoppers.

Ernie: Yeah.

Lastly, we feel great about our marketing plans.

Ernie: Our campaigns will reinforce our value leadership and focus on capturing additional visits from our existing customers.

Speaker Change #121: Tracking new shoppers learned encouraging cross shopping of our retail banners.

Speaker Change #121: Additionally, we plan to showcase a wide selection of products to highlight that there is something for everyone.

Speaker Change #121: And demonstrate that our great values are available or available to every shopper every day.

Speaker Change #121: Further we plan to continue to represent a broad range of shoppers in our advertising and leverage a wide variety of media channels to target a wide customer base.

Speaker Change #121: Also giving us confidence is that our customer surveys continue to tell us that our value perception and overall satisfaction scores remained strong.

Speaker Change #121: Further each of our divisions continue to attract an outsized number of younger customers to which stores.

Speaker Change #121: Which we believe bodes well for the future.

Speaker Change #121: Okay.

Speaker Change #121: Beyond this year I am confident that T. J X has significant opportunities to capture additional market share over the long term.

Let me quickly reiterate why we believe we are so well positioned.

Speaker Change #121: First is our reputation as a value leader in the United States, Canada, Europe and Australia.

Speaker Change #121: Second we believe we are the only global brick and mortar off price retailer, that's able to take brands fashion and quality and put it all together in a differentiated treasure hunt shopping experience for consumers across a wide demographic.

Speaker Change #121: We also offer a wide fashion assortment, which we believe will appeal to a broad range of shoppers.

Speaker Change #121: Third all aspects of our business model are driven by flexibility, which allows us to constantly pivot to take advantage of market trends.

Next we see the opportunity to grow our store base to nearly 6300 stores with our current retail banners and just our current geographies.

Speaker Change #121: Again, I am extremely confident there will always be plenty of quality merchandise available to us to meet our store growth plans.

Speaker Change #122: Lastly, I truly believe the depth of off price knowledge and expertise with N T. J X is unmatched.

Speaker Change #122: We are laser focused on teaching and training to develop the next generation of leaders.

Speaker Change #122: Finally, I am so proud of our company culture, which I believe.

Speaker Change #122: As a strong contributor to our success and a major differentiator.

Speaker Change #122: Now moving to our investment in branch for less which we detailed in our press release as we continue to pursue our global growth vision. We are excited for our plans to have a minority ownership position in a profitable off price retailer based in Dubai.

Speaker Change #122: As with our planned joint venture in Mexico, which we announced last quarter.

Speaker Change #122: This investment represents another opportunity for our company to expand our global reach with an established off price retailer.

Speaker Change #122: In addition to <unk> strong financial profile I have personally met with their management team and feel really good about our investment and the strong business. They have built to date.

Speaker Change #123: We are always looking for ways to increase value for T. J access shareholders and we see this transaction as a good use of cash that we expect to be slightly accretive to earnings per share beginning in fiscal 'twenty six.

Speaker Change #124: Moving to corporate responsibility, we are looking forward to the annual release of our global corporate responsibility report this fall.

Speaker Change #124: Our teams have been hard at work on our corporate responsibility initiatives. For example in fiscal 2024, we helped to provide more than 2 million young people in our communities with access to educational opportunities.

Speaker Change #124: Additionally, and supportive career development, we continue to create learning opportunities for our associates, including formal training classes online in person learning opportunities and formal mentoring and direct training.

Speaker Change #124: We are also continuing to make progress against our global environmental sustainability goals.

Speaker Change #124: Further we remain focused on our social compliance program and operating responsibly as a business.

Speaker Change #124: You can read about our progress in our upcoming report.

Speaker Change #124: I am proud of the work our teams across the globe continue to do on corporate responsibility.

Speaker Change #124: I Hope you will take some time to learn more about what we are doing in this area.

Speaker Change #124: Okay.

Speaker Change #124: Summing up.

Speaker Change #124: We are extremely pleased with our sales and profitability performance in the second quarter.

Speaker Change #124: Third quarter is off to a strong start and we are excited about the initiatives. We have planned during the second half of the year.

As an off price leader in every country. We operate in we believe we are in an excellent position to take advantage of the market share opportunities, we see over the long term in those geographies.

Speaker Change #125: Additionally, I want to reiterate that we will not be complacent and we remain laser focused on increasing the overall profitability of T. J Maxx.

Speaker Change #125: I truly believe we are one of the best retail models in the world with the best Associates in retail.

Speaker Change #125: Going forward I have confidence that the flexibility of our business the talent of our associates.

Speaker Change #125: And our relentless focus on value will continue to serve us well and allow us to navigate through the average changing retail and economic landscapes.

Speaker Change #125: Now I'll turn the call back to John to cover our full year and third quarter guidance and then we'll open it up for questions.

Jonathan: Jonathan Thanks again Ernie.

Jonathan: I'll start with our full year fiscal 'twenty five guidance, we now expect overall comp store sales to increase approximately 3%.

Speaker Change #127: We are increasing our consolidated sales guidance to a range of 55 eight to $56 $1 billion.

Speaker Change #127: This change reflects the flow through of the stronger sales in Q2.

Speaker Change #127: We're increasing our pretax profit margin guidance to be approximately 11, 2%.

Speaker Change #127: This would be up 30 basis points versus last year's adjusted 10, 9%.

Speaker Change #127: We now expect gross margin to be approximately 32%, a 30 basis point increase versus last year's adjusted 29, 9%.

Speaker Change #127: We expect this increase to be driven by a higher merchandise margin, which includes favorable mark on as well as a benefit from lower freight costs, partially offset by higher supply chain costs.

Speaker Change #127: We continue to plan shrink to be flat versus last year.

Speaker Change #127: We continue to expect SG&A to be approximately 19, 3%.

Speaker Change #127: That versus last year's 19, 3%.

Speaker Change #127: We're planning incremental store wage and payroll costs to be offset by lower incentive compensation costs and a benefit from items that negatively impacted us last year.

Speaker Change #127: We're now assuming net interest income of about $160 million, which would have a neutral impact on our year over year pre tax profit margin.

Speaker Change #127: Our full year.

Speaker Change #127: Our full year guidance assumes a tax rate of 25, 2%.

Speaker Change #127: Weighted average share count of approximately 114 billion shares.

Speaker Change #127: As a result of these assumptions, we now expect full year diluted earnings per share to be in the range of $4 nine to $4 13.

Speaker Change #127: This would represent an increase of 9% to 10% versus last year's adjusted diluted earnings per share of $3 76.

Speaker Change #127: It's important to note that we are not flowing through the entire second quarter earnings per share beat of <unk> <unk> to the full year, because we are now planning higher incentive compensation accruals and higher freight expenses for the second half of the year versus our previous guidance.

Speaker Change #127: Moving to our third quarter guidance, we are expecting overall comp store sales growth to be up 2% to 3%.

Speaker Change #127: Consolidated sales to be in the range of 13, 9% to $14 billion.

Speaker Change #127: Pre tax profit margin to be in the range of 11, 8% to 11, 9% down 10 to 20 basis points versus last year's 12%.

Speaker Change #127: Gross margin to be in the range of 31, 1% to 31, 2%.

Speaker Change #127: This would be flat to up 10 basis points versus last year.

Speaker Change #127: G&A to be approximately 19, 5% an increase of 10 basis points versus last year.

Net interest income of about $34 million, which would delever third quarter fiscal 2025 pre tax profit margin by approximately 10 basis points.

Speaker Change #127: Our third quarter guidance also assumes a tax rate of 26% and a weighted average share count of approximately $1 4 billion shares.

Speaker Change #127: Based on these assumptions, we expect third quarter diluted earnings per share to be in the range of $1 six to $1 eight up 3% to 5% versus last year's dollar three.

Speaker Change #127: Lastly, our implied guidance for the fourth quarter assumes that overall comp store sales would be up 2% to 3% pretax profit margin would be in the range of 11% to 11, 1% and earnings per share will be in the range of $1 14 to $1 16 per.

Speaker Change #127: Sure.

Speaker Change #127: <unk>.

When comparing this implied guidance to last year's results. It is important to remember that last year, we had an extra week in the fiscal fourth quarter that benefited pre tax margin by 30 basis points and earnings per share by <unk> 10.

We plan to provide more detailed guidance for the fourth quarter on our third quarter earnings call.

Speaker Change #127: In closing we are confident in our full year plans and as always we will strive to beat them. We have a very strong balance sheet and continue that continues to allow us to invest in the growth at T. J X, while simultaneously returning significant cash to our shareholders.

Speaker Change #128: Now we're happy to take your questions. As a reminder, please limit your questions to one per person. So we can answer as many questions as we can thanks.

Speaker Change #128: Thanks, and now we'll open it up for questions.

Speaker Change #128: Thank you if you would like to ask a question. Please press star one our first question comes from Lorraine Hutchinson with Bank of America. Your line is open.

Lorraine Hutchinson: Thank you. Good morning can you talk about AUR in the quarter the balance between category mix shifts and like for like price increases and then also any changes you might be seeing in customer behavior around value.

Lorraine Hutchinson: Okay.

Speaker Change #129: Yes, so lorraine.

Speaker Change #130: Good talking to you AUR is Ben.

Speaker Change #131: Pretty pretty consistent right John through the.

Speaker Change #132: It has been yes, it didn't move much I think.

John: It went up a little a slight it's slightly up yes.

Speaker Change #133: And obviously the comp was driven mostly by transactions right, because it's not up as much as the comp.

Speaker Change #133: The balance in like for like goods, we're still continuing Lorraine you're getting at what are we doing as far as pricing on goods.

Lorraine Hutchinson: We still have been selectively throughout the business again bottom up we do not manage this top down.

Lorraine Hutchinson: We have been bottom up still.

Speaker Change #134: Adjusting retails, where appropriate I think if you look at our merchandize margin, though the story is becoming more and more about the buying better and not not just the retailers and I think thats more of a combination of those things as well.

Even though.

Speaker Change #135: I'm sure you've been seeing all the talk about as inflation subsides.

Speaker Change #136: It will be and I'll get right to it I'm sure there'll be a question going with that in terms of AUR and the balance on the line items.

Speaker Change #137: That happened in the market.

Speaker Change #137: If retails come down on certain categories et cetera, we always would.

Speaker Change #137: And our merchants are excellent at this our retails are dictated by whats happening around us.

Speaker Change #137: In the current and in the future what we predict so we're always retailing the goods.

Speaker Change #137: Based on the out the door retailer that we see out the competition. So we feel as though we will have that cobre could that have retails come down too soon to say on which categories. A lot of those discussions by the way have been kind of grocery oriented and not necessarily marrying up with our business. So right now we haven't been seeing any.

Speaker Change #137: Significant like that at all which is why our AUR is where John had just said slightly up.

John: So I think theres still exists the opportunity as we move forward to address Retail's internally based on more of a significant.

John: The gap between our retail and the out the door, which is still going to create opportunities. There having said that we're always extremely aware of what's going on around us we don't know the timing of when.

John: That could start to moderate a little but.

John: I think we're in a really healthy position, especially when you go to point number three is the availability of goods is creating an unusual ability to buy goods.

John: And retail goods extremely profitably.

John: As you can see from this quarter and then as far as the customer.

John: We.

John: We see we see positive.

Positive results from all of the income demographics, we look at and again that speaks to the good better best.

John: Product mix buying close to need so if if a certain customer category as is.

John: It's driving the comp we can easily go back and repurchase those goods and get them back into the store quickly so for us.

John: It's about making sure that we're appealing to all customer demographics, which this quarter. It appears we have.

One thing Lorraine and I know, we have a lot of questions, we need to get to but you're asking a one that touches on so much.

Lorraine Hutchinson: The marketing if you noticed in my script I talked about our marketing how are lining up with what John just said as far as how we treat the merchandize mix, which we've talked about for years I don't think I've given as much airtime. The fact that we market so appropriately to the good better best spectrum and sharing that and I mentioned it in the script is that we have.

Lorraine Hutchinson: If you look at who we use in our marketing.

Speaker Change #138: We're trying to catch more channels to apply to all again all age groups.

Speaker Change #138: We try to go to all the different channels to evolve with where the consumer is going.

Speaker Change #138: We have different media channels.

Speaker Change #139: Each brand's campaign has a differentiated in a broad broad invitational message really that expresses the benefits of our business model to every customer. So also in my script you heard heard me, saying, we want to sell everybody.

Speaker Change #139: Every day and our marketing is lined up with that same as consistent with that strategy. So I'll just say, we haven't talked about the marketing as much but when you watch our spots, whether it's homegoods marshalls or Max or Crs is aimed at not being narrow. It is it is a wide wide audience that we're going after.

Speaker Change #139: Okay.

Speaker Change #140: Thanks, so much.

Speaker Change #141: Thank you.

Alex <unk>: Thank you. Our next question comes from Alex <unk> with Morgan Stanley. Your line is open.

Alex <unk>: Perfect because theres a couple from me just first on the <unk> JV and then now that the investment in brands for Leigh can you just elaborate a little bit more on the strategic rationale between those two and what they are uniquely add and then just just honing in on the international business came in a little bit weaker than expense.

Speaker Change #143: I was expecting even though more Max completely end up at the top that Ed I was wondering if you talk about what youre seeing in the international business any additional color there would be super helpful. Thanks, a lot.

Speaker Change #143: Yes, very much Alex.

Again, good questions <unk>.

Speaker Change #143: No.

Speaker Change #145: These two opportunities here.

Speaker Change #145: Here's the big strategic.

Speaker Change #145: Thing that we're trying to do here. So we have this great at a high level you can picture of this happening we have this great business model.

Speaker Change #145: And as I've also emphasized and everyone on the team knows that we have long tenured some of the best X, but certainly in off price.

Speaker Change #145: Of course, I'm not objective, but I would say the best talent.

Speaker Change #145: In retail and shortly in off price.

Speaker Change #145: And what happens is we have a seasoned very seasoned management group that you get to a point we have some bench strength. So we're able to now more readily than we would have a number of years ago, where I would've been reticent to pull from the core business, we are able to take advantage of expanding globally.

Speaker Change #145: And in a manner that has really no risk to.

Speaker Change #145: To the core and at the same time takes advantage of additional geographies. So thats why youre seeing.

Speaker Change #145: We really are realized and we're able to orchestrate. These from a couple of years ago. We started to say this is a good mission for us to take advantage of a great business model and now that we have the talent where and John does this in his role in the finance World. We do it in every whether it's operations or merchandize, we want to make sure.

Speaker Change #145: If we're going to give up a few people that we have the right replacement, So Mexico, obviously as a market.

Speaker Change #145: We've looked at for a while and we know this business to be done there. We felt that was right to do it as a private.

Speaker Change #145: As I'm, sorry, as a joint venture and that we also now have the talent to have people get involved to do that that's a very appropriate one we own almost half the business.

Now, they're a little different but same idea, where we can and they are terrific by the way we have really enjoyed our meetings with them. They are culturally very similar.

Speaker Change #145: They are also.

Speaker Change #145: They have a lot of retail experience a little younger in the off price side, but we have that secret sauce merchandising talent that now again back to the original point, we can afford to have people be involved to help them, which helps them and helps our investment and so we're excited because.

Speaker Change #145: In terms of going to new geographies and new markets with a model we have the talent now to do that under the big picture of the graph are growing continuing to grow T. J apps does that make sense or.

Speaker Change #147: Uh huh.

Speaker Change #145: Yeah, that's great. Thank you.

Speaker Change #145: And then the other question was on the international.

Speaker Change #145: Yeah. The international I mean, do you want to say something John I'll jump in or you want me to.

So let me explain what we're seeing here so.

John: We obviously had a we're lapping the the German write off.

John: The receivable write off that we had last year.

But the other thing that's that's.

<unk> us the other way is that last year. We also had a transactional FX gain that we're up against so.

John: That's what's driving the margin it's up.

John: It's up to 230 basis points versus last year, which we're we're pleased with given those two those two things.

John: From a Alex from a sales perspective, we were a little disappointed.

Alex: In our Europe business, specifically on the international piece and that was more from <unk>.

Alex: A combination of the environment, a little bit of weather, but I would tell you. There was a decent size of that's our own execution and what's good with this company culturally in every division were and that team has really done a good job. We started talking about this two or three months ago.

And we are already seeing the benefit.

Alex: And the numbers over there.

Alex: Over the last few weeks of the adjustments we've made in some of the merchandise mix and the way we have shipped the stores specifically in the UK I would tell you it was not really a Germany.

Alex: Issue is more of a U K issue and so we would we would tell you we were disappointed in the performance in Europe and Thats what was.

Alex: Affecting that international number and specifically the U K, but we believe we're on the right path going forward.

Speaker Change #149: Thanks, a lot good luck.

Speaker Change #150: Thank you.

Speaker Change #151: Thank you. Our next question comes from Matthew Boss with Jpmorgan. Your line is open.

Matthew Boss: Thanks, and congrats on another nice quarter.

Matthew Boss: Thank you. Thank you.

Ernie: Ernie could you speak to the cadence of same store sales that you saw during the second quarter, maybe elaborate on recent trends supporting the strong start that you cited for the third quarter and just maybe what youre seeing across categories their divisions and and if you see this as a positive lead indicator for holiday.

Ernie: Yes, no great.

Ernie: Great.

Speaker Change #152: Part three.

Speaker Change #152: <unk>.

Speaker Change #153: Sorry, good math.

Matt: Yes, Matt I should start off let's start John we'll start with Takeda, obviously, we saw positive comps across all of our divisions. The other important thing to note is that on a two year stack basis, we did see an improvement each each month of the quarter.

Matt: It is also important to note yes.

Matt: Yes.

Speaker Change #154: And and and then dovetailing into that Youre asking about the strong start to Q2 with whats been nice about that is we're happy.

Speaker Change #154: With our strong start to Q2.

Speaker Change #155: On the sales line and it seems to be.

Speaker Change #155: Healthy across the board so that is something that we're feeling good about and do we think that is a.

Of course.

First of all Q3 is for many retailers that have an apparel.

Speaker Change #155: Component to their business can often be with the transition of <unk>.

Speaker Change #155: Coming out of spring summer goods and going into the fall goods can be a little treacherous.

Speaker Change #155: You have weather dependency et cetera, we have strategies, we try to mitigate that as well.

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