Q2 2026 The TJX Companies Inc Earnings Call

Quarter of fiscal 2026 financial results conference call at this time, all participants are in a listen only mode.

We will conduct a question and answer session at that time. If you have a question you will press star one as a reminder, this conference is being recorded August 20th 2025, I would like to turn the conference over to Mr. Ernie Herrman, Chief Executive Officer, and President of T. G X companies Inc. Please go ahead Sir.

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

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

Speaker #1: Ladies and gentlemen, thank you for standing by. Welcome to the TJX Companies second quarter fiscal 2026 financial results conference call. At this time, all participants are in a listen-only mode.

Ernie Herrman: Ladies and gentlemen, thank you for standing by. Welcome to the TJX Companies Inc. Q1 Fiscal 2026 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 press *1. As a reminder, this conference is being recorded, August 20, 2025. I would like to turn the conference over to Mr. Ernie Herrman, Chief Executive Officer and President of TJX Companies Inc. Please go ahead, sir.

Statements are subject to risks and uncertainties that could cause the actual results to vary materially from these statements.

<unk> 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 T J S Dot com.

Speaker #1: Later, we will conduct a question-and-answer session. At that time, if you have a question, you will press *1 as a reminder. This conference is being recorded.

Speaker #1: August 20, 2025. I would like to turn the conference over to Mr. Ernie Herrman, Chief Executive Officer and President of TJX Companies Inc. Please go ahead, sir.

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 <unk> Dot com, along with reconciliations to non-GAAP measures we discuss.

Speaker #2: Thanks, Courtney. Before we begin, Deb has some opening comments.

Ernie Herrman: Thanks, Courtney. Before we begin, Debra McConnell has some opening comments.

Speaker #3: 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.

Debra McConnell: Thank you, Ernie, and good morning. Today's call is being recorded and includes forward-looking statements about our results and plan. These statements are subject to risks and uncertainties that could cause the actual results to vary materially from these statements, including, among others, the factors identified in our filings with the SEC. Please review our press release for a cautionary statement regarding forward-looking statements, as well as the full safe harbor statements included in the Investors section of our 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 Investors section of TJX.com, along with reconciliation to non-GAAP measures we discussed. Thank you, and now I'll turn it back over to Ernie.

And now I'll turn it back over to Ernie.

Good morning.

Joining me and Deb on the call is John <unk>.

I'll start today with our second quarter results.

Speaker #3: 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.

I am extremely pleased with what outstanding second quarter performance and our above planned sales profit margin and earnings per share results.

<unk> comp sales for the second quarter exceeded our expectations, increasing 4% and were strong across all of our divisions.

Speaker #3: 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 a reconciliation to non-GAAP measures we discussed.

Customer transactions were up at every division and drove our overall comp sales increase.

As we have seen through so many retail and economic environments consumers were drawn to our excellent values and brands and going forward, we continue to see market share opportunities across each of our U S and international divisions.

Speaker #3: Thank you, and now I'll turn it back over to Ernie.

Speaker #2: Good morning. Joining me and Debra McConnell on the call is John Klinger. I'll start today with our second quarter results. I am extremely pleased with our outstanding second quarter performance and our above-planned sales, profit margin, and earnings per share results.

Ernie Herrman: Good morning. Joining me and Deb on the call is John. I will start today with our second quarter results. I am extremely pleased with our outstanding second quarter performance and our above-planned sales, profit margin, and earnings per share results. Overall, comp sales for the second quarter exceeded our expectations, increasing 4%, and were strong across all of our divisions. Customer transactions were up at every division and drove our overall comp sales increase. As we have seen through so many retail and economic environments, consumers were drawn to our excellent values and brands. Going forward, we continue to see market share opportunities across each of our U.S. and international divisions. With our profit results in the second quarter also well exceeding our plan, we are raising our full-year guidance for both pre-tax profit margin and earnings per share.

With our profit results in the second quarter also well exceeding our plan.

We are raising our full year guidance for both pre tax profit margin and earnings per share John.

Speaker #2: Overall, comp sales for the second quarter exceeded our expectations, increasing 4% and were strong across all of our divisions. Customer transactions were up at every division and drove our overall comp sales increase.

John will talk about our results and guidance in more detail in a few minutes.

I want to thank our global associates, who drove these excellent results our teams across the company successfully executed our off price business fundamentals to deliver an exciting assortment of merchandise at great value to our customers every day.

Speaker #2: As we have seen through so many retail and economic environments, consumers were drawn to our excellent values in brands. Going forward, we continue to see market share opportunities across each of our U.S. and international divisions.

This is a testament to the talent of our teams and the depth of their off price expertise.

Across our company, we saw our associates working together as one T J X to deliver on our value mission for consumers.

Speaker #2: With our profit results in the second quarter also well exceeding our plan, we are raising our full-year guidance for both pre-tax profit margin and earnings per share.

As we look to the second half of the year I am very confident in our position of strength in retail.

Speaker #2: John will talk about our results and guidance in more detail in a few minutes. I want to thank our global associates who drove these excellent results. Our teams across the company successfully executed our off-price business fundamentals to deliver an exciting assortment of merchandise at great value to our customers every day.

Ernie Herrman: John will talk about our results and guidance in more detail in a few minutes. I want to thank our global associates who drove these excellent results. Our teams across the company successfully executed our off-price business fundamentals to deliver an exciting assortment of merchandise at great value to our customers every day. This is a testament to the talent of our teams and the depth of their off-price expertise. Across our company, we saw our associates working together as one TJX to deliver on our value mission for consumers. As we look to the second half of the year, I am very confident in our position of strength in retail. Our teams are energized by the opportunities we see to keep attracting shoppers to our retail brands and to build upon our success of prior years in being a gifting destination for consumers.

Our teams are energized by the opportunities, we see to keep attracting shoppers to our retail brands and to build upon our success of prior years and being a gifting destination for consumers.

We see outstanding buying opportunities in the marketplace for quality branded merchandise, which also gives me great confidence in our plans for the fall and holiday selling seasons.

Speaker #2: This is a testament to the talent of our teams and the depth of their off-price expertise. Across our company, we saw our associates working together as one TJX to deliver on our value mission for consumers.

The third quarter is off to a strong start we are confident in our full year sales and profitability plans and as always we will strive to beat them.

Longer term, we believe the strength and resiliency of our flexible off price business model will continue to be a tremendous advantage.

Speaker #2: As we look to the second half of the year, I am very confident in our position of strength in retail. Our teams are energized by the opportunities we see to keep attracting shoppers to our retail brands and to build upon our success of prior years in being a gifting destination for consumers.

We feel great about our core businesses and the opportunities we see for growth with our newer vehicles.

We are convinced we have a long runway ahead to capture additional market share worldwide and continue our successful global growth.

Speaker #2: We see outstanding buying opportunities in the marketplace for quality branded merchandise, which also gives me great confidence in our plans for the fall and holiday selling seasons.

Ernie Herrman: We see outstanding buying opportunities in the marketplace for quality branded merchandise, which also gives me great confidence in our plans for the fall and holiday selling seasons. The third quarter is off to a strong start. We are confident in our full-year sales and profitability plans, and as always, we will strive to beat them. Longer term, we believe the strength and resiliency of our flexible off-price business model will continue to be a tremendous advantage. We feel great about our core businesses and the opportunities we see for growth with our newer vehicles. We are convinced we have a long runway ahead to capture additional market share worldwide and continue our successful global growth. I will talk more about our second half opportunities and key strengths in a moment. First, I will turn the call over to John to cover our second quarter results in more detail.

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

Speaker #2: The third quarter is off to a strong start. We are confident in our full-year sales and profitability plans, and as always, we will strive to beat them.

Thanks, Ernie I also want to add my gratitude to all of our global associates for their continued hard work and commitment to delivering our customers great value every day.

Speaker #2: Longer term, we believe the strength and resiliency of our flexible off-price business model will continue to be a tremendous advantage. We feel great about our core businesses and the opportunities we see for growth with our newer vehicles.

Now I'll share some additional details on the second quarter.

As Ernie mentioned, our consolidated comp sales growth of 4% came in above our plan further we saw comp increases in both our apparel and home categories with home outperforming apparel.

Speaker #2: We are convinced that we have a long runway ahead to capture additional market share worldwide and continue our successful global growth. I'll talk more about our second-half opportunities and key strengths in a moment.

Second quarter pre tax profit margin of 11, 4% was up 50 basis points versus last year and well above our plan.

Gross margin increased 30 basis points versus last year, primarily due to favorable hedges merchandize.

Speaker #2: But first, I'll turn the call over to John to cover our second-quarter results in more detail.

Speaker #4: Thanks, Ernie. I also want to add my gratitude to all of our global associates for their continued hard work and commitment to delivering our customers great value every day.

John Klinger: Thanks, Ernie. I also want to add my gratitude to all of our global associates for their continued hard work and commitment to delivering our customers great value every day. Now I will share some additional details on the second quarter. As Ernie mentioned, our consolidated comp sales growth of 4% came in above our plan. Further, we saw comp increases in both our apparel and home categories, with home outperforming apparel. Second quarter pre-tax profit margin of 11.4% was up 50 basis points versus last year and well above our plan. Gross margin increased 30 basis points versus last year, primarily due to favorable hedges. Merchandise margin was flat despite higher tariff costs versus last year. Importantly, we are very pleased with our mitigation strategies, which allowed us to offset the tariff pressure we saw in the second quarter. SG&A decreased 30 basis points versus last year.

Margin was flat despite higher tariff costs versus last year.

Importantly, we are very pleased with our mitigation strategies, which allowed us to offset the tariff pressure we saw in the second quarter.

Speaker #4: Now I'll share some additional details on the second quarter. As Ernie mentioned, our consolidated comp sales growth of 4% came in above our plan.

SG&A decreased 30 basis points versus last year. This was primarily due to operational efficiencies as well as a benefit from the timing of certain expenses some of which we expect to reverse out in the third quarter.

Speaker #4: Further, we saw comp increases in both our apparel and home categories, with home outperforming apparel. The second quarter pre-tax profit margin of 11.4% was up 50 basis points versus last year and well above our plan.

Net interest income negatively impacted pre tax profit margin by 10 basis points versus last year.

Second quarter diluted earnings per share of $1 10 increased 15% versus last year and was also well above our expectations.

Speaker #4: Gross margin increased 30 basis points versus last year, primarily due to favorable hedges. Merchandise margin was flat, despite higher tariff costs versus last year.

Lastly, we were extremely pleased that our second quarter pre tax profit margin came in at 90 basis points above the high end of our plan.

Speaker #4: Importantly, we are very pleased with our mitigation strategies, which allowed us to offset the tariff pressure we saw in the second quarter. SG&A decreased 30 basis points versus last year; this was primarily due to operational efficiencies as well as a benefit from the timing of certain expenses, some of which we expect to reverse out in the third quarter.

This was due to a combination of items, including lower than expected tariff cost expense leverage on above planned sales and the timing of certain expenses. This was also partially offset by higher incentive compensation accruals and contribution to <unk> charitable foundations.

John Klinger: This was primarily due to operational efficiencies, as well as a benefit from the timing of certain expenses, some of which we expect to reverse out in the third quarter. Net interest income negatively impacted pre-tax profit margin by 10 basis points versus last year. Second quarter diluted earnings per share of $1.10 increased 15% versus last year and was also well above our expectations. Lastly, we were extremely pleased that our second quarter pre-tax profit margin came in 90 basis points above the high end of our plan. This was due to a combination of items including lower than expected tariff costs, expense leverage on above-planned sales, and the timing of certain expenses. This was also partially offset by higher incentive compensation accruals and contribution to TJX's charitable foundations. Now to our second quarter divisional performance. Again, this quarter, customer transactions increased at every division.

Speaker #4: Net interest income negatively impacted pre-tax profit margin by 10 basis points versus last year. In the second quarter, diluted earnings per share of $1.10 increased 15% versus last year and was also well above our expectations.

Now to our second quarter divisional performance again this quarter customer transactions increased at every division we see this as an excellent indicator of the strength of our value proposition across.

Speaker #4: Lastly, we were extremely pleased that our second quarter pre-tax profit margin came in 90 basis points above the high end of our plan. This was due to a combination of items, including lower than expected tariff costs, expense leverage on above-planned sales, and the timing of certain expenses.

Across our retail banners.

At <unk> comp sales grew a strong 3% a combination of a higher average basket and an increase in customer transactions drove the comp increase.

It was great to see strength in our store performance across all income demographics, which speaks to our broad based appeal of our values.

Speaker #4: This was also partially offset by higher incentive compensation accruals and contributions to TJX's charitable foundations. Now, to our second quarter divisional performance. Again, this quarter, customer transactions increased at every division.

<unk> segment profit margin was 14, 2% up 10 basis points versus last year, our Sierra stores and U S E Commerce sites.

Which we report as part of this division also saw strong sales results.

Speaker #4: We see this as an excellent indicator of the strength of our value proposition across our retail banners. At Maramax, comp sales grew a strong 3%.

John Klinger: We see this as an excellent indicator of the strength of our value proposition across our retail banners. At Marmaxx, comp sales grew a strong 3%. A combination of a higher average basket and an increase in customer transactions drove the comp increase. It was great to see strength in our store performance across all income demographics, which speaks to our broad-based appeal of our values. Marmaxx's segment profit margin was 14.2%, up 10 basis points versus last year. Our Sierra stores and U.S. e-commerce sites, which we report as part of this division, also saw strong sales results. We feel great about Marmaxx's performance, the initiatives underway for the second half of the year, and our long-term opportunities that we believe will allow us to drive sales and capture additional market share.

We feel great about <unk> performance the initiatives underway for the second half of the year and our long term opportunities that we believe will allow us to drive sales and capture additional market share.

Speaker #4: A combination of a higher average basket and an increase in customer transactions drove the comp increase. It was great to see strength in our storm performance across all income demographics, which speaks to our broad-based appeal of our values.

At Homegoods comp sales grew a very strong 5% with strength at both our home goods and home since Banner's segment profit margin grew 10% up 90 basis points versus last year, our eclectic assortment of home fashions that we source from around the world are clearly resonating with customers.

Speaker #4: Maramax's segment profit margin was 14.2%, up 10 basis points versus last year. Our Sierra stores and U.S. e-commerce sites, which report as part of this division, also saw strong sales results.

<unk>, we are excited about what's in store for the back half of the year and we're confident our customers will be too.

We remain confident that we can continue to capture additional share of the U S home market.

Speaker #4: We feel great about Maramax's performance, the initiatives underway for the second half of the year, and our long-term opportunities that we believe will allow us to drive sales and capture additional market share.

T J X, Canada comp sales increased an outstanding 9% segue.

Segment profit margin on a constant currency basis grew to a very strong 16% up 100 basis points versus last year.

Speaker #4: At HomeGoods, comp sales grew a very strong 5%, with strength at both our HomeGoods and HomeSense banners. Segment profit margin grew 10%, up 90 basis points versus last year.

John Klinger: At HomeGoods, comp sales grew a very strong 5%, with strength at both our HomeGoods and HomeSense banners. Segment profit margin grew 10%, up 90 basis points versus last year. Our eclectic assortment of home fashions that we source from around the world are clearly resonating with customers. We are excited about what's in store for the back half of the year, and we're confident our customers will be too. We remain confident that we can continue to capture additional share of the U.S. home market. TJX Canada's comp sales increased an outstanding 9%. Segment profit margin on a constant currency basis grew to a very strong 16%, up 100 basis points versus last year. Our retail banners in Canada, which consist of Winners, Marshalls, and HomeSense, have extremely high brand awareness and customer loyalty.

Our retail banners in Canada, which consists of winners Marshalls and homes.

Have extremely high brand awareness and customer loyalty, we see great potential for our Canadian banners for the rest of 2025 and long term and for their continued successful growth across the country.

Speaker #4: Our eclectic assortment of home fashions that we source from around the world is clearly resonating with customers. We are excited about what's in store for the back half of the year, and we're confident our customers will be too.

At <unk> International comp sales increased a very strong 5%.

Speaker #4: We remain confident that we can continue to capture additional share of the U.S. home market. TJX Canada's comp sales increased at an outstanding 9%.

Once again, we're very pleased to see sales strength in Europe and outstanding sales in Australia.

Speaker #4: Segment profit margin on a constant currency basis grew to a very strong 16%, up 100 basis points versus last year. Our retail banners in Canada, which consist of Winners, Marshalls, and HomeSense, have extremely high brand awareness and customer loyalty.

With our leadership position in decades of international operating experience. We are confident we can continue to be an attractive shopping destination for value seeking customers across Europe and Australia.

Moving to inventory balance sheet inventory was up 14% and inventory on a per store basis was up 10% versus last year as we've been buying into the excellent opportunities for quality branded merchandise, we have been seeing in the marketplace.

Speaker #4: We see great potential for our Canadian banners for the rest of 2025 and long term, and for their continued successful growth across the country.

John Klinger: We see great potential for our Canadian banners for the rest of 2025 and long term, and for their continued successful growth across the country. At TJX International, comp sales increased a very strong 5%. Once again, we're very pleased to see sales strength in Europe and outstanding sales in Australia. Segment profit margin on a constant currency basis grew to 5.2%, up 80 basis points versus last year. With our leadership position and decades of international operating experience, we are confident we can continue to be an attractive shopping destination for value-seeking customers across Europe and Australia. Moving to inventory, balance sheet inventory was up 14%, and inventory on a per-store basis was up 10% versus last year, as we've been buying into the excellent opportunities for quality branded merchandise we've been seeing in the marketplace.

Speaker #4: At TJX International, comp sales increased a very strong 5%. Once again, we're very pleased to see sales strength in Europe and outstanding sales in Australia.

We are confident that availability of merchandise will continue to be outstanding and that we are well positioned to flow fresh assortments to our stores and online this fall and holiday season.

Speaker #4: Segment profit margin on a constant currency basis grew to 5.2%, up 80 basis points versus last year. With our leadership position and decades of international operating experience, we are confident we can continue to be an attractive shopping destination for value-seeking customers across Europe and Australia.

As to capital allocation, we continue to reinvest in the growth of our business, while returning $1 billion in the second quarter to shareholders through our buyback and dividend programs now ill turn it back to Ernie.

Thank you John.

Speaker #4: Moving to inventory, balance sheet inventory was up 14%, and inventory on a per-store basis was up 10% versus last year, as we've been buying into the excellent opportunities for quality, branded merchandise we've been seeing in the marketplace.

Now I'd like to take a moment and highlight the opportunities we see to keep driving sales and traffic in the second half of the year.

First I am convinced that the consumers will continue to seek out value.

And that we will remain a very attractive option for consumers seeking great brands fashions and quality merchandise at compelling prices.

Speaker #4: We are confident that the availability of merchandise will continue to be outstanding, and that we are well-positioned to flow fresh assortments to our stores and online this fall and holiday season.

John Klinger: We are confident that availability of merchandise will continue to be outstanding and that we are well positioned to flow fresh assortments to our stores and online this fall and holiday season. As to capital allocation, we continue to reinvest in the growth of our business while returning $1 billion in the second quarter to shareholders through our buyback and dividend programs. Now I'll turn it back to Ernie.

Our customer surveys tell us that our value perception remains strong and we are laser focused on keeping it that way.

Speaker #4: As to capital allocation, we continue to reinvest in the growth of our business while returning $1 billion in the second quarter to shareholders through our buyback and dividend programs.

Again product availability has been outstanding our global World class buying organization of over 1300 buyers source from an ever changing universe of over 21000 vendors across more than 100 countries.

Speaker #4: Now I'll turn it back to Ernie.

Speaker #2: Thank you, John. Now I'd like to take a moment to highlight the opportunities we see to keep driving sales and traffic in the second half of the year.

Ernie Herrman: Thank you, John. Now I'd like to take a moment and highlight the opportunities we see to keep driving sales and traffic in the second half of the year. First, I am convinced that consumers will continue to seek our value and that we will remain a very attractive option for consumers seeking great brands, fashions, and quality merchandise at compelling prices. Our customer surveys tell us that our value perception remains strong, and we are laser-focused on keeping it that way. Again, product availability has been outstanding. Our global, world-class buying organization of over 1,300 buyers sourced from an ever-changing universe of over 21,000 vendors across more than 100 countries. I am extremely confident that our buyers will bring consumers the right assortment at the right values throughout the fall and holiday season.

I am extremely confident that our buyers will bring consumers the right assortment at the right values throughout the fall and holiday season.

Speaker #2: First, I am convinced that consumers will continue to seek out value and that we will remain a very attractive option for consumers seeking great brands, fashions, and quality merchandise at compelling prices.

Next we felt great about the product category initiatives underway for the back to school and holiday shopping season.

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.

Speaker #2: Our customer surveys tell us that our value perception remains strong, and we are laser-focused on keeping it that way. Again, product availability has been outstanding.

We believe that shoppers will be inspired to visit us frequently to see whats new.

Speaker #2: Our global, world-class buying organization of over 1,300 buyers sources from an ever-changing universe of over 21,000 vendors across more than 100 countries. I am extremely confident that our buyers will bring consumers the right assortment at the right values throughout the fall and holiday season.

Lastly, we are planning exciting marketing campaigns that will continue to reinforce our value leadership.

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 believe these campaigns will help us continue to attract new shoppers stay top of mind with our existing customers and encourage cross shopping of our retail banners.

Speaker #2: Next, we feel great about the product category initiatives underway for the back-to-school and holiday shopping season. Further, we have made our stores a year-round shopping destination for gifts, and we believe we are becoming more top of mind with shoppers with our consumable offerings.

Ernie Herrman: Next, we feel great about the product category initiatives underway for the back-to-school and holiday shopping season. 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. We believe that shoppers will be inspired to visit us frequently to see what's new. Lastly, we are planning exciting marketing campaigns that will continue to reinforce our value leadership. 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 believe these campaigns will help us continue to attract new shoppers, stay top of mind with our existing customers, and encourage cross-shopping of our retail banners.

Beyond this year, we have great confidence in our key success factors that have served us so well through our nearly 50 year history. We are convinced that these key characteristics of our business set us up extremely well for continued growth around the world over the long term.

Speaker #2: We believe that shoppers will be inspired to visit us frequently to see what's new. Lastly, we are planning exciting marketing campaigns that will continue to reinforce our value leadership.

First we are convinced that our position as a trusted value leader in the U S, Canada, Europe, and Australia will continue to be a tremendous advantage.

Speaker #2: 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 believe our value proposition of brand fashion price and quality will continue to resonate with consumers.

Speaker #2: We believe these campaigns will help us continue to attract new shoppers, stay top of mind with our existing customers, and encourage cross-shopping of our retail banners.

Our commitment to offer great value on every item every day to every customer will always be a top priority.

Speaker #2: Beyond this year, we have great confidence in our key success factors that have served us so well through our nearly 50-year history. We are convinced that these key characteristics of our business set us up extremely well for continued growth around the world over the long term.

Ernie Herrman: Beyond this year, we have great confidence in our key success factors that have served us so well through our nearly 50-year history. We're convinced that these key characteristics of our business set us up extremely well for continued growth around the world over the long term. First, we are convinced that our position as a trusted value leader in the U.S., Canada, Europe, and Australia will continue to be a tremendous advantage. We believe our value proposition of brand fashion, price, and quality will continue to resonate with consumers. Our commitment to offer great value on every item, every day, to every customer will always be a top priority. Second, we aim to attract shoppers across a very wide customer demographic with our treasure hunt shopping experience.

Second we aim to attract shoppers across a very wide customer demographic with our treasure Hunt shopping experience our extensive assortment of good better and best brands allow us to offer merchandise to a broad range of income and age groups.

Speaker #2: First, we are convinced that our position as a trusted value leader in the U.S., Canada, Europe, and Australia will continue to be a tremendous advantage.

We believe our strategy of trading across a wide customer demographic.

Differentiates us from many other retailers and has a tremendous advantage.

Further we continue to attract younger customers to our stores, which we believe bodes well for the future.

Speaker #2: We believe our value proposition of brand fashion, price, and quality will continue to resonate with consumers. Our commitment to offer great value on every item, every day, to every customer will always be a top priority.

Third we believe the flexibility of our business will continue to be a significant benefit as we operate through the abbott changing macro and retail environments.

Speaker #2: Second, we aim to attract shoppers across a very wide customer demographic with our treasure hunt shopping experience. Our extensive assortments of good, better, and best brands allow us to offer merchandise to a broad range of income and age groups.

The flexibility of our buying store formats systems and supply chain allow us to merchandise stores individually with a rapidly changing curated mix of goods with a wide range of price points.

Ernie Herrman: Our extensive assortments of good, better, and best brands allow us to offer merchandise to a broad range of income and age groups. We believe our strategy of trading across a wide customer demographic differentiates us from many other retailers and is a tremendous advantage. Further, we continue to attract younger customers to our stores, which we believe bodes well for the future. Third, we believe the flexibility of our business will continue to be a significant benefit as we operate through the ever-changing macro and retail environments. The flexibility of our buying store formats, systems, and supply chain allow us to merchandise stores individually with a rapidly changing curated mix of goods with a wide range of price points. Next, we see the long-term potential to open an additional 1,800 plus stores in just our current countries and Spain.

Next we see the long term potential to open an additional 1800 plus stores in just our current countries and Spain.

Speaker #2: We believe our strategy of trading across a wide customer demographic differentiates us from many other retailers and is a tremendous advantage. Further, we continue to attract younger customers to our stores, which we believe bodes well for the future.

We also see great growth potential with our joint venture in Mexico and investment in the Middle East.

Importantly, I am extremely confident that there will be plenty of quality merchandise available to support our store growth plans.

Speaker #2: Third, we believe the flexibility of our business will continue to be a significant benefit as we operate through the ever-changing macro and retail environments.

We believe we can keep delivering the best merchandise values and shopping experience to our customers around the world.

Speaker #2: The flexibility of our buying, store formats, systems, and supply chain allows us to merchandise stores individually, with a rapidly changing curated mix of goods and a wide range of price points.

Lastly, and most importantly is the longevity and knowledge of our talent, which I believe is unmatched.

T J Maxx, our management team's deep decades long off price experience in the U S and internationally.

Speaker #2: Next, we see the long-term potential to open an additional 1,800-plus stores in just our current countries and Spain. We also see great growth potential with our joint venture in Mexico and investment in the Middle East.

We take great pride in our T J X University and other teaching and training programs.

Ernie Herrman: We also see great growth potential with our joint venture in Mexico and investment in the Middle East. Importantly, I am extremely confident that there will be plenty of quality merchandise available to support our store growth plans. We believe we can keep delivering the best merchandise, values, and shopping experience to our customers around the world. Lastly, and most importantly, is the longevity and knowledge of our talent, which I believe is unmatched. Throughout TJX, our management teams have deep, decades-long off-price experience in the U.S. and internationally. We take great pride in our TJX University and other teaching and training programs, and are laser-focused on succession planning to ensure we develop the next generation of leaders for our company. Additionally, our deep bench gives us great flexibility to rotate talent throughout the company to further develop our future leaders.

And are laser focused on succession planning to ensure we develop the next generation of leaders for our company.

Speaker #2: Importantly, I am extremely confident that there will be plenty of quality merchandise available to support our store growth plans. We believe we can keep delivering the best merchandise, values, and shopping experience to our customers around the world.

Additionally, our deep bench gives us great flexibility to rotate talent throughout the company to further develop our future leaders.

I am also very proud of our culture, which I believe is a major differentiator and will continue to be another key component of our success.

Speaker #2: Lastly, and most importantly, is the longevity and knowledge of our talent, which I believe is unmatched. Throughout TJX, our management teams have deep, decades-long off-price experience in the U.S. and internationally.

Summing up we are extremely pleased to deliver another quarter of strong sales and profitability.

We believe our performance and momentum in the first half of the year puts us in an excellent position for continued success for the remainder of the year.

Speaker #2: We take great pride in our TJX University and other teaching and training programs, and we're laser-focused on succession planning to ensure we develop the next generation of leaders for our company.

We feel great about our value positioning in the current environment and are confident that we will have an appealing assortment of merchandise in our stores and online throughout the fall and winter seasons.

Speaker #2: Additionally, our deep bench gives us great flexibility to rotate talent throughout the company to further develop our future leaders. I am also very proud of our culture.

We have a strategic vision for long term success and I am convinced that we are set up well to capitalize on the opportunities we see to grow our company and capture market share around the world for many years to come.

Ernie Herrman: I am also very proud of our culture, which I believe is a major differentiator and will continue to be another key component of our success. Summing up, we are extremely pleased to deliver another quarter of strong sales and profitability. We believe our performance and momentum in the first half of the year puts us in an excellent position for continued success for the remainder of the year. We feel great about our value positioning in the current environment and are confident that we will have an appealing assortment of merchandise in our stores and online throughout the fall and winter seasons. We have a strategic vision for long-term success. I am convinced that we are set up well to capitalize on the opportunities we see to grow our company and capture market share around the world for many years to come.

Speaker #2: Which I believe is a major differentiator and will continue to be another key component of our success. Summing up, we are extremely pleased to deliver another quarter of strong sales and profitability.

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.

Thanks, again, Ernie I'll start with our full year fiscal 'twenty six guidance.

Speaker #2: We believe our performance and momentum in the first half of the year puts us in an excellent position for continued success for the remainder of the year.

We now expect overall comp sales to increase by 3% we.

We are increasing our full year consolidated sales guidance to a range of $59 three to $59 6 billion.

Speaker #2: We feel great about our value position in the current environment and are confident that we will have an appealing assortment of merchandise in our stores and online throughout the fall and winter seasons.

This increase now reflects a significant benefit from favorable foreign exchange rates on the translation of our foreign sales to U S dollars as well as the flow through of our above plan sales in the second quarter.

Speaker #2: We have a strategic vision for long-term success, and I am convinced that we are set up well to capitalize on the opportunities we see to grow our company and capture market share around the world for many years to come.

We're increasing our full year profitability guidance to be in the range of 11 four to 11, 5%.

Speaker #2: Now, I'll turn the call back to John to cover our full year and third quarter guidance. Then, we'll open it up for questions.

Ernie Herrman: Now I will turn the call back to John Klinger to cover our full year and third quarter guidance, and then we will open it up for questions.

This would be flat to down 10 basis points versus last year's 11, 5%.

Speaker #4: Thanks again, Ernie. I'll start with our full-year fiscal 2026 guidance. We now expect overall comp sales to increase by 3%. We are increasing our full-year consolidated sales guidance to a range of $59.3 billion to $59.6 billion. This increase now reflects a significant benefit from favorable foreign exchange rates on the translation of our foreign sales to U.S. dollars, as well as the flow-through of our above-planned sales in the second quarter.

John Klinger: Thanks again, Ernie. I will start with our full year fiscal 2026 guidance. We now expect overall comp sales to increase by 3%. We are increasing our full year consolidated sales guidance to a range of $59.3 billion to $59.6 billion. This increase now reflects a significant benefit from favorable foreign exchange rates on the translation of our foreign sales to U.S. dollars, as well as the flow-through of our above-planned sales in the second quarter. We are increasing our full year profitability guidance to be in the range of 11.4% to 11.5%. This would be flat to down 10 basis points versus last year's 11.5%. Moving to gross margin, we now expect it to be in the range of 30.5% to 30.6%, flat to down 10 basis points versus last year's 30.6%.

Moving to gross margin, we now expect it to be in the range of 35% to 36% flat to down 10 basis points versus last year's 36%.

We now expect full year SG&A to be 19, 4% flat versus last year.

We're now assuming net interest income of about $108 million, which we expect to Delever fiscal 'twenty six pre tax profit margin by 10 basis points.

Our full year guidance assumes a tax rate of 24, 5% and a weighted average share count of approximately one $1 3 billion shares.

Speaker #4: We're increasing our full-year profitability guidance to be in the range of 11.4% to 11.5%. This would be flat to down 10 basis points versus last year's 11.5%.

As a result of these assumptions, we're increasing our full year diluted earnings per share to be in the range of $4 52 to $4 57.

Speaker #4: Moving to gross margin, we now expect it to be in the range of 30.5% to 30.6%, flat to down 10 basis points versus last year's 30.6%.

Up 6% to 7% versus last year's diluted earnings per share of $4 26.

Speaker #4: We now expect full-year SG&A to be 19.4%, flat versus last year. We're now assuming net interest income of about $108 million, which we expect to deliver fiscal '26 pre-tax profit margin by 10 basis points.

John Klinger: We now expect full year SG&A to be 19.4% flat versus last year. We are now assuming net interest income of about $108 million, which we expect to delever fiscal 2026 pre-tax profit margin by 10 basis points. Our full year guidance assumes a tax rate of 24.5% and a weighted average share count of approximately 1.13 billion shares. As a result of these assumptions, we are increasing our full year diluted earnings per share to be in the range of $4.52 to $4.57, up 6% to 7% versus last year's diluted earnings per share of $4.26. This EPS guidance now includes our second quarter above-planned sales and a negative 1% impact to EPS growth due to unfavorable foreign exchange versus a negative 3% impact on our previous guidance.

This EPS guidance now includes our second quarter above planned sales and a negative 1% impact to EPS growth due to unfavorable foreign exchange versus a negative 3% impact on our previous guidance.

Speaker #4: Our full-year guidance assumes a tax rate of 24.5% and a weighted average share count of approximately 1.13 billion shares. As a result of these assumptions, we're increasing our full-year diluted earnings per share to be in the range of $4.52 to $4.57, up 6% to 7% versus last year's diluted earnings per share of $4.26.

Moving to the third quarter.

We expect overall comp sales to increase 2% to 3%.

Solid data sales to be in the range of $14 seven to $14 8 billion.

Pre tax profit to be in the range of 12 to 12, 1% down 20 basis points versus last year's 12, 3%.

Gross margin to be in the range of 31 six to 31, 7%. This would be flat to up 10 basis points versus last year.

Speaker #4: This EPS guidance now includes our second quarter above-planned sales and a negative 1% impact to EPS growth due to unfavorable foreign exchange, versus a negative 3% impact on our previous guidance.

SG&A to be 19, 8% 30 basis points unfavorable to last year.

We're also assuming net interest income of about $25 million, which we expect to Delever third quarter pre tax profit margin by 10 basis points.

Speaker #4: Moving to the third quarter, we expect overall comp sales to increase 2 to 3%, consolidated sales to be in the range of 14.7% to 14.8 billion dollars, pre-tax profit to be in the range of 12% to 12.1%, down 20% to 30 basis points versus last year's 12.3%.

John Klinger: Moving to the third quarter, we expect overall comp sales to increase 2% to 3%, consolidated sales to be in the range of $14.7 billion to $14.8 billion, pre-tax profit to be in the range of 12% to 12.1%, down 20 to 30 basis points versus last year's 12.3%. Gross margin to be in the range of 31.6% to 31.7%. This would be flat to up 10 basis points versus last year. SG&A to be 19.8%, 30 basis points unfavorable to last year. We are also assuming net interest income of about $25 million, which we expect to deliver third quarter pre-tax profit margin by 10 basis points. Our third quarter guidance also assumes a tax rate of 24.7% and weighted average share count of approximately 1.13 billion shares.

Our third quarter guidance also assumes a tax rate of 24, 7% and weighted average share count of approximately $1, one 3 billion shares base.

Based on these assumptions, we expect third quarter diluted earnings per share to be in the range of $1 17 to $1 19 up 3% to 4% versus last year's $1 14.

Speaker #4: Gross margin to be in the range of 31.6% to 31.7%, this would be flat to up 10 basis points versus last year. SG&A to be 19.8%, 30 basis points unfavorable to last year.

Lastly, our implied guidance for the fourth quarter assumes that overall comp sales would be up 2% to 3% pretax profit margin will be in the range of 11, 7% to 11, 8% up 10 to 20 basis points versus last year and diluted earnings per share will be in.

Speaker #4: We're also assuming net interest income of about $25 million, which we expect to deliver third quarter pre-tax profit margin by 10 basis points.

Speaker #4: Our third quarter guidance also assumes a tax rate of 24.7% and a weighted average share count of approximately 1.13 billion shares. Based on these assumptions, we expect third quarter diluted earnings per share to be in the range of $1.17 to $1.19, up 3% to 4% versus last year's $1.14.

The range of $1 33 to $1 36 up 8% to 11% versus last year.

As for tariffs are third quarter fourth quarter and full year guidance assumes that we'll be able to offset the incremental tariff pressure on our business. This year.

John Klinger: Based on these assumptions, we expect third quarter diluted earnings per share to be in the range of $1.17 to $1.19, up 3% to 4% versus last year's $1.14. Lastly, our implied guidance for the fourth quarter assumes that overall comp sales would be up 2% to 3%, pre-tax profit margin would be in the range of 11.7% to 11.8%, up 10 to 20 basis points versus last year, and diluted EPS would be in the range of $1.33 to $1.36, up 8% to 11% versus last year. As for tariffs, our third quarter, fourth quarter, and full year guidance assumes that we will be able to offset the incremental tariff pressure on our business this year. We are making an assumption that the current level of tariffs on imports into the U.S. will stay in place for the remainder of the year.

We're making an assumption that the current level of tariffs on imports into the U S will stay in place for the remainder of the year.

Speaker #4: Lastly, our implied guidance for the fourth quarter assumes that overall comp sales would be up 2% to 3%. Pre-tax profit margin would be in the range of 11.7% to 11.8%, up 10 to 20 basis points versus last year.

In closing I want to reiterate earnings confidence in our plans for the second half of the year and our and our long term opportunities.

I also want to emphasize that we remain in an excellent position to continue to invest in the growth of the company, while simultaneously returning significant cash to our shareholders.

Speaker #4: And diluted earnings per share would be in the range of $1.33 to $1.36, up 8% to 11% versus last year. As for tariffs, our third quarter, fourth quarter, and full-year guidance assumes that we'll be able to offset the incremental tariff pressure on our business this year.

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.

And now now we will open it up for questions.

Thank you our first question comes from Matthew Boss.

Speaker #4: We're making an assumption that the current level of tariffs on imports into the U.S. will stay in place for the remainder of the year.

Thanks, and congrats on another nice quarter.

Thank you.

Ernie could you speak to the consistency of your comps despite the volatile macro backdrop and elaborate on strength that you've seen to start the third quarter and excitement around product availability and then for John just maybe puts and takes on merchandise margins in the back half of the year relative to flat performance in the second quarter.

Speaker #4: In closing, I want to reiterate Ernie's confidence in our plans for the second half of the year and our long-term opportunities. I also want to emphasize that we remain in an excellent position to continue to invest in the growth of the company while simultaneously returning significant cash to our shareholders.

John Klinger: In closing, I want to reiterate Ernie Herrman's confidence in our plans for the second half of the year and our long-term opportunities. I also want to emphasize that we remain in an excellent position to continue to invest in the growth of The TJX Companies Inc. while simultaneously returning significant cash to our shareholders. Now we are 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 will open it up for questions.

<unk>, despite the impact of tariffs that you saw.

Speaker #4: 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.

Okay. It sounds good Matt.

Consistency in a while.

Speaker #4: Thanks, and now we'll open it up for questions.

Give the teams a lot of credit and again, we've talked about the broad range of the customer base that we go after.

Speaker #1: Thank you. Our first question comes from Matthew Boss.

Ernie Herrman: Thank you. Our first question comes from Matthew Boss.

But what I really like the highlight we mentioned it a little bit on the script.

Speaker #5: Thanks, and congrats on another nice quarter.

John Klinger: Thanks, and congrats on another nice quarter.

But our categories of business, we are healthy across all areas, meaning.

Speaker #2: Thank you.

Ernie Herrman: Thank you.

Speaker #5: Ernie, could you speak to the consistency of your comps despite the volatile macro backdrop and elaborate on the strength that you've seen to start the third quarter, as well as the excitement around product availability?

John Klinger: John, Ernie, could you speak to the consistency of your comp sales despite the volatile macro backdrop and elaborate on strength that you've seen to start the third quarter and excitement around product availability? Then for John, just maybe put some takes on merchandise margins in the back half of the year relative to flat performance in the second quarter despite the impact of tariffs that you saw.

Home apparel accessories, all of that was good that.

That combined with our flexible business model.

Allows us to execute on a more consistent fashion on our comp sales because we're able to flex regardless of the and you mentioned availability, yes availability has continued to be <unk>.

Speaker #5: And then for John, just maybe puts and takes on merchandise margins in the back half of the year relative to flat performance in Q2 despite the impact of tariffs that you saw.

Tastic out there.

But again.

Speaker #2: Okay, sounds good, Matt. Yeah, consistency—you know, I give the teams a lot of credit. And again, we've talked about the broad range of the customer base that we go after.

Ernie Herrman: Okay, sounds good, Matt. Yeah, consistency, where I give the teams a lot of credit, and again, we have talked about the broad range of the customer base that we go after. What I really like to highlight, we mentioned it a little bit in the script, but our categories of business were healthy across all areas, meaning home, apparel, accessories, all of that was good. That, combined with our flexible business model, I think allows us to execute in a more consistent fashion on our comp sales because we are able to flex regardless of, and you mentioned availability. Yes, availability has continued to be fantastic out there.

In terms of demand by family of business, whether youre dealing with.

Ladies and men's apparel, our kids apparel or our accessories division of which there are multiple families of business in there and our home business because we're so flexible in the way we buy hand to mouth. We are able to go after the opportunities across all the different families of business, which then results in I think a more consistent comp sales performance.

Speaker #2: But what I really like to highlight—we mentioned it a little bit in the script—but our categories of business were healthy across all areas, meaning home, apparel, accessories, all of that was good.

Speaker #2: That, combined with our flexible business model, I think allows us to execute in a more consistent fashion on our comp sales. Because we're able to flex regardless of— and you mentioned availability— yes, availability has continued to be fantastic out there.

<unk>.

So I believe we're sometimes able to escape map, which I think is what youre getting at is the volatility of.

Having a quarter, where all of a sudden your comps are.

Four points off the prior quarter or whatever which is not uncommon in retail.

For us it is.

Speaker #2: But again, in terms of demand by family of business, whether you're dealing with ladies' or men's apparel, kids' apparel, or our accessories divisions, of which there are multiple families of business in there, and our home business, because we're so flexible in the way we buy hand-to-mouth, we are able to go after the opportunities across all the different families of business, which then results, and I think, in a more consistent comp sales performance.

Ernie Herrman: Again, in terms of demand by family of business, whether you are dealing with ladies or men's apparel or kids' apparel or our accessories divisions, of which there are multiple families of business in there, and our home business, because we are so flexible in the way we buy hand-to-mouth, we are able to go after the opportunities across all the different families of business, which then results, I think, in a more consistent comp sales performance. I believe we are sometimes able to escape, Matt, which I think is what you are getting at, is the volatility of having a quarter where all of a sudden your comps are four points off the prior quarter or whatever, which is not uncommon in retail. For us, it is less common.

Less com and as you can see by the way <unk> Ax.

Got a point better than Q1.

As did.

A lot of our international Division.

So I think the flexibility of the business model and at the same time, we're taking advantage I think of a marketplace out there where <unk> had store closures and.

Perhaps less.

Exciting execution.

Speaker #2: So I believe we're sometimes able to escape Matt, which I think is what you're getting at: the volatility of having a quarter where all of a sudden your comps are four points off the prior quarter or whatever, which is not uncommon in retail.

Across the board in retail brick and mortar specifically and I think that helps us to Bob and weave and take advantage of consistently to keep driving.

To keep driving consistency in our sales by the way your point <unk> first question. When you mentioned availability that yes, and I did mention that back.

Speaker #2: For us, it's less common. As you can see, by the way, Maramax got a point better than Q1, as did a lot of our international division.

Ernie Herrman: As you can see, by the way, Marmaxx got a point better than Q1, as did a lot of our international division. I think the flexibility of the business model, and at the same time, we are taking advantage, I think, of a marketplace out there where you have had store closures and perhaps less exciting execution across the board in retail brick and mortar specifically. I think that helps us to bob and weave and take advantage of consistency to keep thriving, to keep driving consistency in our sales. By the way, your point B of your first question when you mentioned availability, that is, and I did mention that back, as you know, a few months ago, it continues to be super strong availability as we go into Q3. I guess I will hand it over to John now.

As you know a few months ago. It continues to be Super strong availability as we go into Q3.

I guess I'll hand, it over to John them, Yeah, So Matt on the on the merchandize margin.

Speaker #2: So I think the flexibility of the business model and, at the same time, we're taking advantage, I think, of a marketplace out there where you've had store closures and perhaps less exciting execution across the board in retail, brick and mortar specifically.

A tremendous amount.

From what our prepared remark said I mean, we still have <unk>.

Foreign exchange that is negatively impacting us in the third quarter.

And we do feel confident that we can continue to offset the tariff pressures again like we said in the third quarter fourth quarter and back half of the year.

Speaker #2: And I think that helps us to, bob and weave, and take advantage of the consistency to keep driving consistency in our sales. By the way, your point B of your first question, when you mentioned availability, that is, and I did mention that back, as you know, a few months ago, it continues to be super strong availability as we go into Q3.

That's great color best of luck.

Thank you.

Our next question comes from Brook Roche.

Good morning, and thank you for taking our question Ernie is pricing in the industry has begun to increase are you seeing an acceleration of market share gains as consumers look for value at T. J X. What are your latest thoughts on pricing as you move into following holiday are you looking to maintain the percent gaps will you selectively raise prices.

Speaker #2: I guess I'll hand it over to John now.

Speaker #4: Yeah, so, Matt, on the merchandise margin, I mean, there's not a tremendous amount to add from what I prepared in my remarks. We still have foreign exchange that is negatively impacting us in the third quarter.

John Klinger: Yeah, so Matt, on the merchandise margin, not a tremendous amount to add from what a prepared remark said. We still have foreign exchange that is negatively impacting us in the third quarter. We do feel confident that we can continue to offset the tariff pressures, again, like we said, in the third quarter, fourth quarter, and back half of the year.

In this inflationary environment. Thank you.

No.

Great questions broken obviously your time is quite appropriate based on what's going on in the world around us we have.

Speaker #4: And we do feel confident that we can continue to offset the tariff pressures. Again, like we said, in the third quarter, fourth quarter, and back half of the year.

Again this is one of those.

Speaker #5: Great color. Best of luck.

Funky situations, where we don't top down dictate.

Ernie Herrman: Great color. Best of luck.

Speaker #2: Thank you.

John Klinger: Thank you.

Prices. So we don't go on with the strategy that we're going to raise price per se and it back.

Speaker #1: Our next question comes from Brooke Roach.

Ernie Herrman: Our next question comes from Brooke Roach.

Speaker #6: Good morning, and thank you for taking our question. Ernie, as pricing in the industry has begun to increase, are you seeing an acceleration of market share gains as consumers look for value at TJX?

Matthew Boss: Good morning, and thank you for taking our question. Ernie Herrman, as pricing in the industry has begun to increase, are you seeing an acceleration of market share gains as consumers look for value at TJX Companies Inc.? What are your latest thoughts on pricing as you move into fall and holiday? Are you looking to maintain the percent gaps? Will you selectively raise prices in this inflationary environment? Thank you.

And I think I've gone through this a few times we.

We kind of use other.

Other retailers around us about the door, our pricing and our buyers work it backwards. So they look at what the out the door pricing is around.

Speaker #6: What are your latest thoughts on pricing as you move into fall and the holiday season? Are you looking to maintain the percent gaps? Will you selectively raise prices in this inflationary environment?

Around and then we say, yes and by the way. This was part of your question are we going to our pricing percentage gap is that going to change or not so this is where the art form comes in and the secret sauce. So we don't go buy an exact percentage because sometimes on a fence say you have a a.

Speaker #6: Thank you.

Speaker #2: Great. Questions, Brooke. Obviously, your timing is quite appropriate based on what's going on in the world around us. We have, again, this is one of those funky situations where we don't top-down dictate prices.

Ernie Herrman: Great questions, Brooke, and obviously your time is quite appropriate based on what's going on in the world around us. We have, again, this is one of those funky situations where we don't top-down dictate prices. We don't go in with the strategy that we're going to raise price per se. In fact, I think I've gone through this a few times, we kind of use other retailers around us that are out-the-door pricing, and our buyers work it backwards. They look at what the out-the-door pricing is around, and then we say, yes, and by the way, this was part of your question. Are we going to, our pricing percentage gap, is that going to change or not? This is where the art form comes in and the secret sauce.

Womens top for example that we think the right phenomenal value on that is $19 99.

Speaker #2: So we don't go in with a strategy that we're going to raise prices, per se. In fact, I think I've gone through this a few times. We kind of use other retailers around us throughout the door pricing, and our buyers work it backwards.

And that top is being sold that tops retail went up in another store and their out the door sale price is.

$35 and Oh, maybe we could go to 25, we may not because and this is the art form because in our mix. We have possibly have made so many other great buys with all of the availability of that's out there that we have to know that buyer says I have to compete in my own mix now for the customer. So then.

Speaker #2: So, they look at what the out-the-door pricing is around, and then we say, yes. And by the way, this was part of your question: are we going to our pricing percentage gap? Is that going to change or not?

Speaker #2: So this is where the art form comes in and the secret sauce. We don't go by an exact percentage because sometimes on a, say, you have a women's top, for example, that we think the right phenomenal value on that is $19.99.

That's why it's absolutely a deal by deal SKU by SKU brand by brand situation I don't know if that pricing in that case, the pricing percent gap might be higher or if we had to go up on that retail because of we can because the retailers around us went up and maybe the percent gap is back.

Ernie Herrman: We don't go by an exact percentage because sometimes on a, say you have a women's top, for example, that we think the right phenomenal value on that is $19.99, and that top is being sold, or that top retail went up in another store, and their out-the-door sale price is, you know, $35. Maybe we could go to $25. We may not go because, and this is the art form, because in our mix, we have possibly made so many other great buys with all of the availability that's out there that we have to now, that buyer says, I have to compete in my own mix now for the customer. That's why it's absolutely a deal-by-deal, SKU-by-SKU, brand-by-brand situation.

Speaker #2: And that top is being sold, or that top retail went up in another store, and their out-the-door sale price is $35. And, oh, maybe we could go to $25.

To the same as where it was before.

So I never broad brush that we have our strategy overall.

On on that because I know our buyers are doing it deal by deal one of the one of the strengths of our buying teams as they are aggressively comp shopping all of the competition, whether it's online brick and mortar vertical brands department stores specialty stores and so.

Speaker #2: We may not go because, and this is the art form, in our mix, we have possibly made so many other great buys with all of the availability that's out there that we have to now, that buyer says, "I have to compete in my own mix now for the customer."

Speaker #2: So then that's why it's absolutely a deal by deal, skew by skew, brand by brand situation. I don't know if that pricing in that case, the pricing percent gap might be higher.

I give them a lot of credit by the way we've been navigating in the tariff environment by just staying simple and pure to that model. The other thing I'd point out it's easy to forget is that remember 90 give or take.

Ernie Herrman: I don't know if that pricing, in that case, the pricing percent gap might be higher, or if we had to go up on that retail because of, we can, because the retails around us went up, and maybe the percent gap is back to the same as what it was before. I never broad brush that we have a strategy overall on that because I know our buyers are doing it deal-by-deal. One of the strengths of our buying teams is they are aggressively comp shopping all of the competition, whether it's online, brick and mortar, vertical brands, department stores, specialty stores. I give them a lot of credit, by the way. We've been navigating in the tariff environment by just staying simple and pure to that model.

Speaker #2: Or if we had to go up on that retail because of the weekend, because the retails around us went up, and maybe the percent gap is back to the same as where it was before.

We're dealing the bulk vast bulk of.

Maybe 90% of what we buy this third parties and we're not the direct importer.

Speaker #2: So, I never broad brush that we have a strategy overall on that because I know our buyers are doing a deal-by-deal approach. One of the strengths of our buying teams is they are aggressively comp shopping all of the competition, whether it's online, brick and mortar, vertical brands, department stores, or specialty stores. I give them a lot of credit, by the way. We've been navigating in the tariff environment by just staying simple and pure to that model.

No.

Yeah.

That's why our buyers can really pretty much just negotiating off the retail and work backwards because we're not we're not starting with this is what we're paying on those goods arent in other retailers, we have to just mark it up off of what we're paying.

Does that makes sense and brook.

I would add to that is it.

Our customer surveys continue to show that we have.

We're continuing to offering exceptional value to the customer.

Yeah very strong per sub.

Speaker #2: The other thing I'd point out, it's easy to forget, is that, remember, you know, 90, give or take, we're dealing with the vast bulk of maybe 90% of what we buy from third parties, and we're not the direct importer.

Ernie Herrman: The other thing I'd point out, it's easy to forget, is that remember, you know, 90 years, give or take, we're dealing the bulk, vast bulk of maybe 90% of what we buy is third parties, and we're not the direct importer. That's why our buyers can really pretty much just negotiate off the retail and work it backwards because we're not starting with this is what we're paying, and those goods aren't in other retails. We have to just mark it up off of what we're paying. Does that make sense?

If anything our perception on value.

Our customers has improved over the last couple of years.

So I mean, you are asking your sell onto the right question, though because this is this is really motherhood and Apple pie to us in terms of what we concentrate on.

Speaker #2: So that's why our buyers can really pretty much just negotiate off the retail and work it backwards. Because we're not starting with, this is what we're paying, and those goods aren't in other retails; we have to just mark it up off of what we're paying.

Did we answer that broker.

Yes. Thank you so much I'll pass it on.

Okay. Thank you.

Speaker #2: So does that make sense?

Speaker #4: And, Brooke, the other thing I would add to that is that, you know, our customer surveys continue to show that we're offering exceptional value to the customer.

John Klinger: Brooke, the other thing I would add to that is that our customer surveys continue to show that we are continuing to offer exceptional value to the customer.

Our next question comes from Lorraine Hutchinson.

Thanks, Good morning, I wanted to build on Brooks' pricing question.

One pricing a key factor in your tariff mitigation and <unk> in a contract.

Speaker #2: You're very strong. If anything, our perception of the value of our customers has improved over the last couple of years. So, I mean, you're asking, you are so on to the right question though because this is really motherhood and apple pie to us in terms of what we concentrate on.

Ernie Herrman: Yeah, very strong perception. If anything, our perception on value of our customers has improved over the last couple of years. You are so on to the right question, though, because this is really motherhood and apple pie to us in terms of what we concentrate on.

How does the customer reacted to some of these higher price points.

Sure.

Great Great questions also goes hand in hand with that I mean overall for T. J X transactions continued to drive the comp.

For <unk> it was basket.

Speaker #4: Yep.

And transactions.

John Klinger: Yeah.

Speaker #2: Did we answer that, Brooke, or?

Ernie Herrman: Did we answer that, Brooke, or?

I think you are finding that our margins are healthy couple of things one is please.

Speaker #6: Yes, thank you so much. I'll pass it on.

Matthew Boss: Yes, thank you so much. I'll pass it on.

Speaker #2: Okay. Thank you.

Ernie Herrman: Okay. Thank you.

Don't underestimate I want to emphasize that tariff costs were higher and they were a headwind for us.

Speaker #1: Our next question comes from Lorraine Hutchinson.

Ernie Herrman: Our next question comes from Lorraine Hutchinson.

Speaker #7: Thanks, good morning. I wanted to build on Brooke's pricing question. Was pricing a key factor in your tariff mitigation in Q2 and a comp drive?

Matthew Boss: Thanks. Good morning. I wanted to build on Brooke's pricing question. Was pricing a key factor in your tariff mitigation in Q2 and a comp track, and how has the customer reacted to some of these higher price points?

In Q2 and year over year, just adjust in the end a little bit lower than we had expected and so that we had a bit of a bit of a.

Speaker #7: And how has the customer reacted to some of these higher price points?

Savings there.

Also because of this environment I would say the retail adjustments based on what the out the door happened in pockets I don't think there was as much of that is there was our merchants taking advantage of the market opportunities.

Speaker #2: Sure. You know, Lorraine, great questions also. It goes hand in hand with that.

Ernie Herrman: Sure. Yeah, Lorraine, great questions. It also goes hand in hand with that.

Speaker #4: I mean, overall for TJX, transactions continue to drive the comp. For Maramax, it was basket and transactions.

John Klinger: Overall, for TJX, transactions continued to drive the comp. For Marmaxx, it was basket and transactions.

Which allowed us to in many cases by better.

To help offset the tariffs that way on the on the market goods, if that makes sense Lorraine in other words.

Speaker #2: I think you're finding that our margins are healthy. A couple of things: one is just please don't underestimate, I want to emphasize that tariff costs were higher and they were a headwind for us.

Ernie Herrman: I think you are finding that, you know, our margins are healthy. A couple of things. One is please don't underestimate. I want to emphasize that tariff costs were higher, and they were a headwind for us in Q2 and year over year. Just in the end, a little bit lower than we had expected. So that, you know, we had a bit of a savings there. We also, because of this environment, I would say the retail adjustments based on what the out the door happened in pockets, I don't think there was as much of that as there was our merchants taking advantage of the market opportunities, which allowed us to, in many cases, buy better to help offset the tariffs that way on the market goods, if that makes sense, Lorraine.

We were getting more hit on the tariffs directly on our own direct imports, but that's a small portion of our total.

Speaker #2: In Q2 and year-over-year, we were just a little bit lower than we had expected. And so that, you know, we had a bit of a savings there.

So our buyers that are very good job on taking advantage of.

<unk>.

Of the Mark in terms of market excess inventory by category Act to the flexibility there.

Speaker #2: We also, because of this environment, I would say the retail adjustments based on what the out-the-door happened in pockets, I don't think there was as much of that as there was our merchants taking advantage of the market opportunities.

Also we manage were able to manage our markdowns efficiently, which also helps with our merchandise margin in one team I'd like to give a lot of credit to is our planning and allocation teams.

They are sometimes the unsung heroes, because I'm always talking about right rightfully so having the right goods. So we tend to talk I tend to talk about the buyers on the merchandise managers, who are doing a phenomenal job in this environment, but our planning and allocation division is amazing and that applies to every division were in whether its Canada <unk>.

Speaker #2: Which allowed us to, in many cases, buy better to help offset the tariffs that way on the market goods. If that makes sense, Lorraine.

Speaker #2: In other words, you know we were getting more hits on the tariffs directly on our own direct imports, but that's a small portion of our total.

Ernie Herrman: In other words, you know, we were getting more hit on the tariffs directly on our own direct imports, but that's a small portion of our total. So our buyers did a very good job on taking advantage of the market, you know, in terms of market excess inventory by category, back to the flexibility there. We are also, we manage, we are able to manage our markdowns efficiently, which also helps with our merchandise margin. One team I'd like to give a lot of credit to is our planning and allocation teams. They are sometimes the unsung heroes because I am always talking about, right, you know, rightfully so, having the right goods. So we tend to talk, I tend to talk about the buyers and the merchandise managers who are doing a phenomenal job in this environment.

Home goods.

Speaker #2: So our buyers did a very good job of taking advantage of the market in terms of market access inventory by category. Back to the flexibility there.

Cri Europe.

Australia every planning and allocation division is so good at balancing our mixes by category family of business by literally by district by store and so it happens and we keep getting better and better at it. So what happens there we're able to manage our drive our sales that's back to answering the consistency question that I think Matt had asked.

Speaker #2: We're also, we managed, we were able to manage our markdowns efficiently, which also helps with our merchandise margin. And one team I'd like to give a lot of credit to is our Planning and Allocation teams.

Speaker #2: They are sometimes the unsung heroes because I'm always talking about, rightfully so, having the right goods. So we tend to talk—I tend to talk—about the buyers and the merchandise manager.

And at the same time help our merchandise margin by saving on markdowns by flowing the right amount of goods to the right stores. So I think thats been a key component also.

Speaker #2: Who are doing a phenomenal job in this environment. But our Planning and Allocation division is amazing, and that applies to every division we're in, whether it's Canada, Marmaxx, HomeGoods, Sierra, or Europe.

Ernie Herrman: But our planning and allocation division is amazing, and that applies to every division we are in, whether it's TJX Canada, Marmaxx, HomeGoods, Sierra, Europe, Australia. Every planning and allocation division is so good at balancing our mixes by category, family of business, by literally by district, by store. So what happens, and we keep getting better and better at it. So what happens there, we are able to manage our, drive our sales. That's back to answering the consistency question that I think Matt had asked. At the same time, help our merchandise margin by saving on markdowns, by flowing the right amount of goods to the right stores. So I think that's been a key component also.

But taking advantage.

Our market opportunities I think has allowed us to.

To do the bulk of our.

Dealing with the tariffs.

Which are still a headwind no matter what.

Speaker #2: Australia, every planning and allocation division is so good at balancing our mixes by category, family of business, literally by district, by store. And so what happens is we keep getting better and better at it.

They are still there.

Thank you.

Thank you.

Our next question comes from John Kernan.

Hey, good morning, Congrats on a great quarter.

Speaker #2: So what happens there is that we're able to manage and drive our sales. That's back to answering the consistency question that I think Matt had asked.

Thank you.

So some.

Some of the data we look at and other folks look at showed a nice acceleration in traffic is back to school picked up.

Speaker #2: And at the same time, help our merchandise margin by saving on markdowns by flowing the right amount of goods to the right stores. So I think that's been a key component also.

In mid to late July and then through August how would you characterize the comp progression throughout the quarter I got a quick follow up thank you.

Speaker #2: But taking advantage of market opportunities, I think, has allowed us to do the bulk of our dealing with the tariffs, which are still a headwind. No matter what, you know they're still there.

Ernie Herrman: But taking advantage of market opportunities, I think, has allowed us to do the bulk of our dealing with the tariffs, which are still a headwind no matter what, you know, they are still there.

Yes.

John I can take them through that.

We started the quarter strong as we said in our opening remarks last quarter.

June there was a little bit of weather that negatively impacted us, but we came through out of June even stronger in July and.

Speaker #6: Thank you.

Matthew Boss: Thank you.

Speaker #2: Thank you.

Ernie Herrman: Thank you.

Speaker #1: Our next question comes from John Kernan.

Like we said in the remarks today be entered this quarter with strong sales.

Ernie Herrman: Our next question comes from John Kernan.

Speaker #8: Hey, good morning. Congrats on a great quarter.

Ernie Herrman: Hey, good morning. Congrats on a great quarter.

Speaker #2: Thank you.

Yes, so John to your question, we had a little bit of I guess, you would call a little bit of a lull in the middle of the of what about other than that.

John Klinger: Thank you.

Speaker #4: Thanks.

John Klinger: Thanks.

Speaker #8: So, so Ernie, some of the data we look at, and other folks look at, showed a nice acceleration in traffic. You know, it's back to school; it picked up.

Ernie Herrman: Ernie, some of the data we look at and other folks look at showed a nice acceleration in traffic. You know, back to school picked up in mid to late July and then through August. How would you characterize the comp progression throughout the quarter? I got a quick follow-up. Thank you.

Remarkable strong yet.

If I if I leave everyone with nothing else. After this call, it's our balanced and consistency.

Speaker #8: In mid to late July and then through August, how would you characterize the comp progression throughout the quarter? I got a quick follow-up, thank you.

It seems to be the hallmark of this quarter and again the way we try to manage the business.

Speaker #4: Yeah, I mean, I think I can take you through that. You know, we started the quarter strong, as we said in our opening remarks last quarter.

John Klinger: I mean, I can take you through that. We started the quarter strong, as we said in our opening remarks last quarter. June, there was a little bit of weather that negatively impacted us, but we came out of June even stronger in July. Like we said in the remarks today, we entered this quarter with strong sales.

As we try to avoid any.

A major up to that.

This quarter represented that.

Speaker #4: In June, there was a little bit of weather that negatively impacted us, but we came throughout June even stronger in July. And like we said in the remarks today, we entered this quarter with strong sales.

Yeah, John just a quick follow up.

Obviously nice upside to the pre tax margin this quarter on a four comp.

Is there any change to the rule.

After a 100 basis points upside our same store sales can give you 10, 10, or so basis points fall through to the bottom line. It seems like you've taken over the last few years, you've generally outperformed that curious if that business.

Speaker #2: Yeah, so, John, to your question, we had a little bit of, I guess you’d call it a little bit of a lull in the middle of the quarter. But other than that.

Ernie Herrman: Yeah, so John, to your question, we had a little bit of, I guess you would call it a little bit of a lull in the middle of the quarter, but other than that, it was remarkably strong. If I leave everyone with nothing else after this call, it is our balance and consistency seems to be the hallmark of this quarter. Again, the way we try to manage the business is we try to avoid any major ups and downs. Fortunately, this quarter represented that. John, just a quick follow-up. Obviously, nice upside to the pre-tax margin this quarter on a for comp. Is there any change to the rule of every 100 basis points upside of same store sales can give you 10 or so basis points flow through to the bottom line? It seems like over the last few years, you have generally outperformed that.

Speaker #2: Remarkable. Strong. Yeah. If I leave everyone with nothing else after this call, it's that our balance and consistency seem to be the hallmarks of this quarter.

Generally what it is for every point in comp we would expect to get 10 to 20 basis points on the bottom line.

Speaker #2: And again, the way we try to manage the business, as we try to avoid any major ups and downs. Fortunately, this quarter represented that.

We feel that going forward, that's what you should model.

Alright, great. Thank you.

John I want you to know that the John Klinger says that to me all the time.

Speaker #8: Yeah, and then, John, just a quick follow-up. You know, obviously nice upside to the pre-tax margin this quarter on a for comp. Is there any change to the role of every 100 basis points upside of same-store sales can give you 10 or so basis points flow-through to the bottom line?

Yes.

Right.

When I asked similar questions I get the same answer so yes, it's an apple consistency yes.

Because yes, there you go.

Yeah.

Our next question comes from Paul Lewis.

Speaker #8: It seems like you've, you know, over the last few years, you've generally outperformed that. Curious if.

Okay.

Ernie Herrman: Curious if business has become just.

Speaker #4: It's generally what it is for every point in comp; we would expect to get, you know, 10 to 20 basis points on the bottom line, and that's what we feel going forward is what you should model.

Hey, Thanks, guys.

John Klinger: That's generally what it is. For every point in comp, we would expect to get, you know, 10 to 20 basis points on the bottom line. That's we feel that going forward, that's what you should model.

Ernie I think.

Consistent with a couple of times I think we do.

<unk>.

Income demographic.

Performance is there anything else that you can do.

In more detail you could share higher income.

Loans versus lower income and maybe just to build on that also just regional differences.

Speaker #8: All right, great. Thank you.

Ernie Herrman: All right, great. Thank you. John, I want you to know that John Klinger says that to me all the time, just so you know. When I ask similar questions, I get the same answer, so good to know. Consistency. Yes, because there you go.

Speaker #2: John, I want you to know that John Klinger says that to me all the time, just so you know. When I ask similar questions, I get the same answer, so.

A lot of.

A question Mark on the border stores and any comments you can make about how those towards the performance.

Yeah, Yeah, sure John and I, both talked about.

Speaker #8: Good Good to know. Consistency.

Paul I mean, great question.

Speaker #2: Yeah. Yes, there you go.

I'll start off with talking about.

We're very we look at this all the time consistently because.

Speaker #1: Our next question comes from Paul Lewes.

Ernie Herrman: Our next question comes from Paul Lejuez.

Aes consistency imbalance really here that where it is balanced across all the different age groups and income demographic groups.

Speaker #9: Hey, thanks, guys. Ernie, I did get you mentioned consistency a couple of times. I think related to your income demographic, performance, anything else that you can give, any more detail you could share, higher income demos versus lower income?

John Klinger: Hey, thanks, guys. Ernie, I think you mentioned consistency a couple of times. I think related to your income, your demographic performance, anything else that you can give, any more detail you could share, higher income demos versus or lower income, and maybe just to build on that, also just regional differences. You know, there's also a lot of question marks around the border stores. Any comments you can make about how those stores are performing?

Our marketing team. Another team that has really equipped us I think to take a strategic approach even our creative by the way on the marketing humans. We have going right. Now is aimed at a wide age and income demographic group, which not all marketing is does for the different retailers. So we have and as we also remember.

Speaker #9: And maybe just to build on that also, just regional differences. You know, there's also a lot of question marks around the border stores and any comments you can make about how those stores are performing.

Speaker #4: Yeah.

Ernie Herrman: Yeah. Sure. John and I both talked to this, but Paul, great question. I will start off with talking about, we look at this all of the time consistently because of, A, yes, consistency and balance. Really, here the word is balance across all the different age groups and income demographic groups. So our marketing team and other team that has really equipped us, I think, to take a strategic approach, even our creative, by the way, and the marketing team management we have going right now is aimed at a wide age and income demographic group, which not all marketing does for the different retailers. So we have, and also remember, we do always talk about in our merchandise mix going after good, better, best.

We do always talk about in our merchandize, Mexico Ing out the good better best or marketing.

Speaker #2: Yeah, sure. John and I both talked about this, but Paul, I mean, great question. I'll start off by talking about, you know, where we look at this all of the time consistently because of, A, yes, consistency and balance.

We are very good at being balanced across the different age and income groups relative to we won't give you the exact numbers, but relative to the U S. General population, we are very balanced in that respect and if anything our focus has been and you've heard this before from US. We have had a focus I think this is one of your questions.

Speaker #2: Really to hear the word is balance across all the different age groups and income demographic groups. So our marketing team and other teams have really equipped us, I think, to take a strategic approach.

On acquiring the younger age group as we go forward here and we have been doing that for the last.

Speaker #2: Even our creative, by the way, on the marketing team is we have going right now is aimed at a wide age and income demographic group, which not all marketing is does for the different retailers.

Number of years, and even if I look at across our divisions and the new customer base, which again is tends to be a smaller number but our new customer base skews younger.

Speaker #2: So we have, and also remember, we do always talk about in our merchandise mix going after good, better, best. Our marketing; we are very good at being balanced across the different age and income groups. Relative to, we won't give you the exact numbers, but relative to the U.S. general population, we are very balanced in that respect.

Then the current customer base, which is good and our current customer base also skews a little bit younger than the general population.

Ernie Herrman: Our marketing, we are very good at being balanced across the different age and income groups relative to, we will not give you the exact numbers, but relative to the U.S. general population, we are very balanced in that respect. And if anything, our focus has been, and you have heard this before from us, we have had a focus, I think this is one of your questions, on acquiring the younger age group as we go forward here. And we have been doing that for the last number of years. And even if I look at across our divisions in the new customer base, which again tends to be a smaller number, but our new customer base skews younger than the current customer base, which is good. And our current customer base also skews a little bit younger than the general population. So this has been.

So.

This is Ben.

The other thing is I mean, we're giving the customers more reasons to come into our stores.

The consumables that we offer that give a customer a reason to come in and likely find something else in the store that they like and as Ernie talks about all the time as the good better best mix.

Speaker #2: And if anything, our focus has been—and you've heard this before from us—we have had a focus, I think this is one of your questions, on acquiring the younger age group as we go forward here.

Appealing really the reason why we appeal to such abroad.

Speaker #2: And we have been doing that for the last number of years. And even if I looked at across our divisions, in the new customer base, which again tends to be a smaller number, but our new customer base skews younger.

Customer demographic as far as the border stores. So we look at our Canadian border. The nice thing is we've got stores on both sides.

Speaker #2: Then the current customer base, which is good. Our current customer base also skews a little bit younger than the general population. So, this has been, yeah.

We have seen and again, we're not talking about a lot of stores that we have on our borders so it's really hardly any impact.

To the total, but we did see.

John Klinger: Yeah, I mean, the other thing is, we are giving the customers more reasons to come into our stores. The consumables that we offer give a customer a reason to come in and, you know, likely find something else in the store that they like. As Ernie Herrman talks about all the time, it is the good, better, best mix, and, you know, appealing really the reason why we appeal to such a broad customer demographic. As far as the border stores, we look at our Canadian border. The nice thing is we have got stores on both sides. We have seen, and again, we are not talking about a lot of stores that we have on our borders. So it is really hardly any impact to the total. But we did see a little less cross-border shopping.

Speaker #4: I I mean, the other thing is, I mean, we're giving the customers more reasons to come into our stores. The consumables that we offer, that give a customer a reason to come in and you know likely find something else in the store that they like.

A little less cross border shopping.

So more of the Canadians were staying home and shopping winners versus coming over and shopping TJ Maxx.

But again very very small impact.

Speaker #4: And as Ernie talks about all the time, it's the good, better, best mix. And you know, appealing is really the reason why we appeal to such a broad customer demographic.

We do.

<unk> also see a little a little lift on the same side of our Canada stores. Yes, you can write those sales just.

Speaker #4: As far as the border store, we look at our Canadian border. The nice thing is we've got stores on both sides. We have seen, and again, we're not talking about a lot of stores that we have on our borders.

Just transfer they transfer over.

Got it and then on the southern border.

Again, we're not seeing a large impact if you look at our sales across.

Speaker #4: So, it's really hardly any impact to the total, but we did see a little less cross-border shopping. More Canadians were staying home and shopping Winners versus coming over and shopping TJ Maxx.

The different geographies it was pretty consistent across all the geographies in the country. So again, we're not seeing a large impact we see an impact win.

John Klinger: So more of the Canadians were staying home and shopping Winners versus coming over and shopping TJ Maxx. But again, very, very, very small impact.

If there is some natural disasters for example will end the EBIT and the news media gets more viewership in a region and if so.

Speaker #4: But again, very, very small impact.

Speaker #2: We do see a little lift on the same side of our Canada stores, as you can imagine, right?

Ernie Herrman: We do, Paul, also see a little lift on the same side of our TJX Canada stores, as you can imagine, right?

For example, in California, we would see a little depth on that.

When that was going on and that's what John and I typically are seeing we're not seeing anything really radical along the Mexico border at all.

Speaker #4: Yeah, those sales just, you know, they just transferred.

John Klinger: Yeah, those sales just, you know, they just transferred.

Speaker #2: They They transfer over.

Ernie Herrman: They transfer over.

Speaker #4: Got it.

John Klinger: Got it. On the southern border, again, we're not seeing a large impact. If you look at our sales across the different geographies, it was pretty consistent across all the geographies in the country. Again, we're not seeing a large impact.

Speaker #9: And then on the southern border?

And usually the weather like we saw in June.

Speaker #4: Again, we're not seeing a large impact. If you look at our sales across the different geographies, it was pretty consistent across all the geographies in the country.

When the weather subsides, we see things bounce bounce back yet.

Yeah.

Yeah.

Speaker #4: So again, we're not seeing a large impact.

Hi.

Yes, and also Paul to that regional I know youre kind of on the regional.

Speaker #2: You know we see an impact when there's some natural disasters, for example, and even in the news media, it gets more viewership in a region.

Ernie Herrman: We see an impact if there is some natural disasters, for example, and even the news media gets more viewership in a region. For example, in California, we would see a little dip when that was going on. That is what John Klinger and I typically are seeing. We are not seeing anything really radical along the Mexico border at all.

Question is we.

Back to the planning and allocate our planning and allocation Division was there also good at this if we end up in a district and area of say a dozen stores or a region.

Speaker #2: And so, for example, in California, we'd see a little dip when that, you know, when that was going on. And that's what John and I typically are seeing.

Or in a certain geography, where there's something going on with.

Our planning allocation with our store ops.

Speaker #2: We're not seeing anything really radical along the Mexico border at all.

Division they are fantastic at reacting very quickly our field organization.

Speaker #4: Right.

Speaker #2: And And yeah.

Speaker #4: And usually the weather, like we saw in June, I mean, when the weather subsides, we see things bounce back.

John Klinger: Usually, the weather, like we saw in June, when the weather subsides, we see things bounce back.

If theres something on you. This happened so with John and I are talking at a high level, but there is a lot of work that our teams in the field and our planning allocation due to compensate any for any strange regional or local market yes.

Speaker #2: Bounce back, yep. Yep. Yep.

Ernie Herrman: Bounce back, yeah.

John Klinger: Yeah. Yeah.

Speaker #9: Got it. Got it. Good luck.

Ernie Herrman: Got it. You got it. Good luck. Oh, and also, Paul, to that regional, I know you are kind of on the regional question, is we, back to the planning and allocation, our planning and allocation division, they are also good at this. If we end up in a district, an area of, say, a dozen stores or a region or in a certain geography where there is something going on, or it is our planning and allocation with our store ops division, they are fantastic at reacting very quickly. Our field organization, if there is something on you, this happens. So John Klinger and I are talking at a high level, but there is a lot of work that our teams in the field and planning and allocation do to compensate for any strange regional or local market.

Speaker #2: Yeah, oh, and also, Paul, to that regional question, I know you're kind of on the regional question. We back to the planning and our Planning and Allocation division, they're also good at this.

Return our stores roughly once a month right, we do have the ability to react quickly.

Which I think goes back to the consistent that's all of these things help our consistency because we're able to then take goods and say all ship. It to these other areas that are doing better. It helps offset the area that is a little weak, but we've been very happy with the balance of healthy business across the entire.

Speaker #2: If we end up in a district, an area of say a dozen stores or a region, or in a certain geography where there's something going on or it's our planning allocation with our store ops division, they're fantastic at reacting very quickly.

Country and internationally as you can see very pleased with Canada and Europe.

Speaker #2: Our field organization, if there's something on you, this happens. So what John and I are talking about at a high level, but there is a lot of work that our teams in the field and in planning and allocation do to compensate for any strange regional or local market.

Thank you guys. Good luck.

Thank you.

Our next question comes from Dana Telsey.

Hi, good morning, everyone and congratulations on the results as you think about the merchandise.

John Klinger: We turn our stores roughly once a month. We do have the ability to react quickly.

Speaker #4: Return our stores roughly once a month. We

Speaker #2: Right.

Nope.

Speaker #4: We do have the ability to react quickly.

But.

Speaker #2: Which I think goes back to the consistency. All of these things help our consistency because we're able to then take goods and say, "Oh, I'll ship it to these other areas that are doing better."

Ernie Herrman: Which I think goes back to the consistent. That's all of these things help our consistency because we are able to then take goods and say, oh, I will ship it to these other areas that are doing better. It helps offset the area that's a little weak. But we have been very happy with the balance of healthy business across the entire country and internationally, as you can see, very pleased with TJX Canada and Europe.

Hello can you hear me can you hear me Okay, Yes, yes, we can yes great.

Good afternoon. Good morning afternoon, congratulations on the terrific results.

Speaker #2: It helps offset the area that's a little weak, but we've been very happy with the balance of healthy business across the entire country and internationally. As you can see, we are very pleased with Canada and Europe.

Thank you Danielle.

Delivering a flat merchandise margin with test is very impressive and there any as you mentioned the pricing mechanism not only comparing against competitors, but even within the mix.

Speaker #9: Thank you, guys. Good luck.

John Klinger: Thank you, guys. Good luck.

Are you thinking about the merch margin going going forward given the planning a path and just lastly on store openings closings relocations. What are you seeing out there given the continued influx of available boxes. Thank you.

Speaker #2: Thank you.

Ernie Herrman: Thank you.

Speaker #1: Our next question comes from Dana Tulsi.

Ernie Herrman: Our next question comes from Dana Telsey.

Speaker #10: Hi, good morning, everyone, and congratulations on the results. As you think about the merchandise, can...

Matthew Boss: Hi. Good morning, everyone, and congratulations on the results. As you think about the merchandise.

Okay.

So on.

John do you want to yes, I mean as far as merchandise margin goes.

Speaker #2: Hello?

Ernie Herrman: Who's hello?

Speaker #10: Can you hear me okay?

Matthew Boss: Can you hear me okay?

Speaker #2: Yep, yep, sure, we can. Yep.

Ernie Herrman: Yeah, yeah, now we can.

Yes, we were pleased that.

Speaker #10: Oh, great. Good morning, afternoon. Congratulations on the terrific results.

Matthew Boss: Great. Good afternoon. Good morning, afternoon. Congratulations on the terrific results.

In the third quarter that we were flat given the tariff pressures.

Markdowns did come in favorable which we were happy we were happy to see.

Speaker #2: Thank you, Dana.

Ernie Herrman: Thank you, Dana.

Speaker #10: We're delivering a flat merchandise margin with tariffs, which is very impressive. And Ernie, as you mentioned, the pricing mechanism not only compares it against competitors, but also within the mix.

Matthew Boss: Delivering a flat merchandise margin with tariffs is very impressive. Ernie, as you mentioned, the pricing mechanism of not only comparing against competitors, but even within the mix, how are you thinking about the merchandise margin going forward, given the planning of tariffs? Just lastly, on store openings, closings, relocations, what are you seeing out there, given the continued influx of available boxes? Thank you.

Going forward again, we feel confident that we can continue to offset the.

The tariffs that we have out there based on what Ernie said earlier in the call of how our buyers are are executing.

Speaker #10: How are you thinking about the merch margin going forward, given the planning of tariffs? And just lastly, on store openings, closings, and relocations, what are you seeing out there, given the continued influx of available boxes?

And.

And just continue to execute just the overall margin.

Speaker #10: Thank you.

The.

Pre tax profit.

By executing.

Speaker #2: So, so on John, do you want to?

Ernie Herrman: So, John, do you want to?

<unk>.

The cost.

Speaker #4: Yeah, I mean, as far as merchandise margin goes, we were pleased that in the third quarter we were flat, given the tariff pressures.

John Klinger: Yeah, I mean, as far as merchandise margin goes, we were pleased that in the third quarter that we were flat, given the tariff pressures. Markdowns did come in favorable, which we were happy to see. Going forward, again, we feel confident that we can continue to offset the tariffs that we have out there based on what Ernie Herrman said earlier in the call of how our buyers are executing. We just continue to execute the overall margin, the pre-tax profit, just by executing the cost efficiency that we saw in the second quarter, continuing to go after those in the back half of the year as well.

Efficiencies that we saw in the second quarter continuing to go after those in the back half of the year as well.

Speaker #4: Markdowns did come in favorable, which we were happy to see. Going forward, we feel confident that we can continue to offset the tariffs that we have out there based on what Ernie said earlier in the call about how our buyers are executing.

Dana I think a couple of highlights why we are feeling.

Bullish on being able to deal with the tariffs as we go forward is the way, we buy with and combined with the <unk>.

The amount of availability out there right now and right, which is really going to create more buying opportunities for our teams to.

Speaker #4: And just continue to execute on the overall margin that the pre-tax profit. Just by executing the cost efficiency that we saw in Q2, continuing to go after those in the back half of the year as well.

Even if the retail wasn't changing they can buy better.

Than we did before because of the amount of availability.

And and.

And yes of course, the ability to adjust our ticket.

While maintaining though our value gap again back to we look at what the out the door is on the like for like item and then we say if that if that has gone up.

Speaker #2: Yeah, Dana, I think you know a couple of highlights why we're feeling bullish on being able to deal with the tariffs as we go forward: it's the way we buy, combined with the amount of availability out there right now.

Ernie Herrman: Yeah, Dana, I think, you know, a couple of highlights why we are feeling bullish on being able to deal with the tariffs as we go forward is the way we buy with, and combined with the amount of availability out there right now, which is really going to create more buying opportunities for our teams. Even if the retail was not changing, they can buy better than we did before because of the amount of availability. Yes, of course, the ability to adjust our ticket while maintaining our value gap. Again, back to we look at what the out the door is on the like-for-like item, and then we say if that has gone up, you know, we will preserve the gap and maybe we will go up and adjust it accordingly. Again, we do not lead the charge on that, though.

We will preserve the gap and maybe it will go up and adjusted Accordingly, again, we don't lead the charge on that though.

And then our flexibility by the way gives us the ability to diversify our sourcing which I think is another.

Speaker #2: And right, which is really going to create more buying opportunities for our teams. Even if the retail wasn't changing, they can buy better.

We are fortunate that we don't have a contract with the customer, saying we have to have X amount of people know that when they come to us we may not have a category in inventory as much as we did the time before or we might have more of something else versus that time, yes, so that flexibility to diversify in our store just by where the best values are that we are.

Speaker #2: Than we did before because of the amount of availability. And yes, of course, the ability to adjust our ticket while maintaining, though, our value gap.

Opportunistically go after really helps our merchandise margin.

Speaker #2: Again, back to we look at what the out-the-door is on the like-for-like item, and then we say if that has gone up, you know, we will preserve the gap and maybe we'll go up.

Deal with any tariffs because if we run to say this is a category that is highly <unk>.

Driven and we're not happy with the values, we'd be on that weekend downplay that category, whereas maybe other retailers. They are living off of that we're so diverse in our families of business that we're able to do that and we can also the last thing I would leave you with is how we talk about the <unk> thousand 300 buyers. So we are buyers we have all these global buying.

Speaker #2: And adjust it accordingly. Again, we don't lead the charge on that, though. Our flexibility, by the way, gives us the ability to diversify our sourcing, which I think is another advantage. We are fortunate that we don't have a contract with the customer saying we have to have a certain amount of inventory. When they come to us, they may find that we do not have as much in a particular category as we did the time before.

Ernie Herrman: Our flexibility, by the way, gives us the ability to diversify our sourcing, which I think is another. We are fortunate that we do not have a contract with the customer saying we have to have X amount of people know that when they come to us, we may not have a category in inventory as much as we did the time before, or we might have more of something else versus the time. So that flexibility to diversify in our store just by where the best values are that we opportunistically go after really helps our merchandise margin deal with any tariffs. Because if we run into a, say, there is a category that is highly tariff-driven and we are not happy with the values we would be on that, we can just downplay that category.

Offices in different locations over in Europe.

Speaker #2: Or we might have more of something else versus the time, so that flexibility to diversify in our store—just by where the best values are that we opportunistically go after—really helps our merchandise margin deal with any tariffs.

In the far east looking for excess inventories that.

That nobody else has that nobody else has the satellite buying offices.

Like we have in all of these different locations that can source easier flex and faster sourcing and different different countries.

Speaker #2: Because if we run into a, say, there's a category that's highly tariff-driven and we're not happy with the values we'd be on that, we can just downplay that category.

Which can also allow us to flex against the tariff situations. So good question I think thats why we are.

Speaker #2: Whereas maybe other retailers are living off of it, we're so diverse in our families of business that we're able to do that. And the last thing I'd leave you with is, you know how we talk about the 1,300 buyers?

Ernie Herrman: Whereas maybe other retailers, they are living off of it. We are so diverse in our families of business that we are able to do that. We can also, the last thing I would lead you with is, you know how we talk about the 1,300 buyers. We have buyers, we have all these global buying offices in different locations over in Europe and the Far East looking for excess inventories that nobody else has. Nobody else has these satellite buying offices like we have in all of these different locations that can source easier, flex, and faster sourcing in different countries, which can also allow us to flex against the tariff situation. So good question. I think that is why we are feeling okay. I will leave you with it. It is still a challenge, but we feel like we have strategies to kind of deal with the challenge.

Failing, okay and I'll leave you with it's still a challenge, but we feel like we have strategies to kind of deal with that challenge and then getting to your your store question.

Speaker #2: So you know we have buyers; we have all these global buying offices in different locations over in Europe and the Far East looking for excess inventories.

So we're still on track to hit our plan of just over 130 net new stores.

And so we're seeing a lot of great locations available to us going forward.

Speaker #2: That nobody else has. Nobody else has these satellite buying offices like we have in all of these different locations that can source easier, flex, and faster sourcing in different countries.

Gives us optimism to continue a roughly a 3% net unit opening over the next couple of years. The other thing we're seeing a lot of success and again, we continue to see relocations as being a great opportunity for us to.

Speaker #2: Which can also allow us to flex against the tariff situation. So, good question. I think that's why we're feeling okay. And I'll leave you with this: it's still a challenge, but we feel like we have strategies to kind of deal with the challenge.

Relocate stores that.

There is a better shopping environment in the area that we could move to and we're seeing improvement there and then of course.

Close to 500, Remodels that were planning on doing this year and again that makes our stores.

Speaker #4: And then, getting to your store question, we’re still on track to hit our plan of just over 130 net new stores, and we’re seeing a lot of great locations available to us going forward.

John Klinger: Getting to your store question, we are still on track to hit our plan of just over 130 net new stores. We are seeing a lot of great locations available to us going forward. That gives us optimism to continue a roughly 3% net unit opening over the next couple of years. The other thing we are seeing a lot of success in, again, we continue to see relocations as being a great opportunity for us to relocate stores that there is a better shopping environment in the area that we can move to. We are seeing improvement there. Then, of course, close to 500 remodels that we are planning on doing this year.

The older stores be able to compete similar to our younger stores because when the customer comes in they are seeing a consistent shopping experience no matter what store they go into.

Speaker #4: That gives us optimism to continue with roughly a 3% net unit opening over the next couple of years. The other thing we're seeing a lot of success in is that we continue to see relocations as being a great opportunity for us to relocate stores to areas with a better shopping environment that we can move to.

That's one of the things that.

Kind of.

Separates us from some of our competition.

The product mix, just looks better when we maintain our store fit and finish and so.

It all kind of worked walks hand in hand with the merchandise.

Thank you.

Speaker #4: And we're seeing improvement there. And then, of course, close to 500 remodels that we're planning on doing this year. And again, that makes our older stores able to compete similarly to our younger stores because when the customer comes in, they're seeing a consistent shopping experience no matter what store they go into.

Thank you Dennis.

Our next question comes from Alex Stratton.

John Klinger: Again, that makes our stores, the older stores, be able to compete similar to our younger stores because when the customer comes in, they are seeing a consistent shopping experience no matter what store they go into. That is one of the things that kind of separates us from some of our competition, where the product mix just looks better when we maintain our store fit and finish. It all kind of walks hand in hand with the merchandise.

Perfect. Thanks, so much and congrats on another great quarter.

Ernie I had a question on Meramec, specifically I know you spoke to categories being super healthy across the business I'm wondering if you could kind of break that down for us at <unk> and how you think exposure can change over time. It seems like that's been a part of the margin story there.

Speaker #4: And that's one of the things that, you know, kind of separates us from some of our competition. You know, where the product mix just looks better when we maintain our store fit and finish.

And then maybe just one quick one for John It seems like.

That youre embedding more particular gross margin degradation in the fourth quarter I am wondering if there was something specific happening in that quarter or why that's the case. Thanks so much.

Speaker #4: And so it all kind of walks hand in hand with the merchandise.

Speaker #10: Thank you.

Matthew Boss: Thank you.

Speaker #2: Thank you, Dana.

Ernie Herrman: Thank you, Dana.

Yes, Alex so on more Max in terms of the families of as I think as I mentioned.

Speaker #1: Our next question comes from Alex Stratton.

Ernie Herrman: Our next question comes from Alex Stratton.

Our home business was strong.

Speaker #10: Perfect. Thanks so much. Congratulations on another great quarter. Ernie, I had a question on Maramax specifically. I know you spoke to categories being super healthy across the business.

Matthew Boss: Perfect. Thanks so much. Congrats on another great quarter. Ernie, I had a question on Marmaxx specifically. I know you spoke to categories being super healthy across the business, but I am wondering if you could kind of break that down for us at Marmaxx and how you think exposure can change over time. It seems like that has been a part of the margin story there. Then maybe just one quick one for John. It seems like you are embedding more particular gross margin degradation in the fourth quarter. I am wondering if there is something specific happening in that quarter or why that is the case. Thanks so much.

Good there, which is nice to see and then also I'm proud of again, our home goods and home since.

The business is across the corporation and the home business within our.

Full family stores across the Corporation of August So I don't want to leave that out but apparel.

Speaker #10: But I'm wondering if you could kind of break that down for us at Maramax and how you think exposure can change over time. Seems like that's been a part of the margin story there.

Apparel has been very healthy and I think relative to the market specifically in mind Max <unk>.

Speaker #10: And then maybe just one quick one for John. It seems like you're embedding more particular gross margin degradation in the fourth quarter. I'm wondering if there's something specific happening in that quarter or why that's the case.

Relative to the market. My guess is we're gaining market share there just looking at the results of the other apparel players the way they have been trending over the last six months.

Speaker #10: Thanks so much.

And so I'm very proud of in the pure apparel areas and then as you know we have and I can't give you the details by actual department, but I would tell you throughout our accessory areas.

Speaker #2: Yeah, so on Maramax, in terms of the families of business, I think, as I mentioned, our home business was good there, which is nice to see.

Ernie Herrman: Yeah, Alex. So on Marmaxx, in terms of the families, as I think, as I mentioned, our home business was good there, which is nice to see. Also, I am proud of, again, our HomeGoods and HomeSense businesses across the corporation and the home business within our full family stores across the corporation of all goods. So I do not want to leave that out. But apparel, apparel has been very healthy. I think relative to the market, specifically in Marmaxx, relative to the market, my guess is we are gaining market share there, just looking at the results of the other apparel players, the way they have been trending over the last six months. So I am very proud of in the pure apparel areas.

Speaker #2: And also I'm proud of, you know, again, our HomeGoods and HomeSense business across the corporation and the home business within our full family of stores across the corporation of all goods.

Which.

We're an open book if you walk in the store, we have many different areas and accessories that I believe we are outperforming the market and as well so.

Speaker #2: So I don't want to leave that out. But apparel, apparel has been very healthy and I think relative to the market, specifically in Maramax, relative to the market, my guess is we're gaining market share there.

Alex.

What I like about that is we're not just a.

It's not just one story why our business is so healthy it's it's kind of widespread.

And that always allows us I think to feel good about where we're heading in the future because of something slowed up I can still fuel one of the other areas.

Speaker #2: Just looking at the results of the other apparel players, the way they have been trending over the last six months, I am very proud of the performance in the pure apparel areas.

To take advantage of the market opportunities that are out there.

Speaker #2: And then, as you know, we have, and I can't give you the details by actual department, but I would tell you throughout our accessories areas, which you know we're an open book if you walk in the store.

Ernie Herrman: Then, as you know, we have, and I cannot give you the details by actual department, but I would tell you throughout our accessory areas, which, you know, we are an open book. If you walk in the store, we have many different areas and accessories that I believe we are outperforming the market in as well. So, Alex, what I like about that is we are not just, you know, it is not just one story why our business is so healthy. It is kind of widespread. That always allows us, I think, to feel good about where we are heading in the future because if something slowed up, I can still fuel one of the other areas to take advantage of the market opportunities that are out there.

So again once once again, our planning and allocation teams work hand in hand with the buyers of developing these plans by family of business, whether it's ladies apparel, our kids apparel our men's apparel.

Speaker #2: We have many different areas in accessories that I believe we are outperforming the market in as well. So, you know, Alex, what I like about that is we're not just, you know, it's not just one story why our business is so healthy.

Which families of business in those apparel areas, which are in or whether it's in footwear or beauty area or in handbags.

We are very strategic and balanced about the way we planned it but we can turn on a dime based on what happens in the market.

Speaker #2: It's kind of widespread, and that always allows us, I think, to feel good about where we're heading in the future. Because if something slows up, I can still fuel one of the other areas.

So hopefully that gives you some color there.

And then as far as Q4 margins. So we are improving by 20 basis points versus last year.

Speaker #2: To take advantage of the market opportunities that are out there. So you know again, once again, our planning and allocation teams work hand in hand with the buyers in developing these plans by family of business, whether it's ladies apparel or kids apparel or men's apparel, which families of business in those apparel layers, which in our you know whether it's in footwear or beauty area or handbags.

But is your question more comparison to Q3 to Q4, yes.

Ernie Herrman: So, again, once again, our planning and allocation teams work hand in hand with the buyers in developing these plans by family of business, whether it is ladies' apparel or kids' apparel or men's apparel, which families of business in those apparel areas, which in our, you know, whether it is in footwear or our beauty area or handbags. We are very strategic and balanced about the way we plan it, but we can turn on a dime based on what happens in the market. Hopefully, that gives you some color there.

Yeah.

So theres two things that are happening on the Q3 to Q4 comparison the <unk>.

First one is is that in Q3, our inventory levels are probably at their highest during the year. So we've got inventory.

<unk> favorability and then we bring the inventories back down in the fourth quarter.

Speaker #2: We are very strategic and balanced about the way we plan it, but we can turn on a dime based on what happens in the market.

The other piece of it is this year with our shrink accrual. So this year, we've got a favorable comparison in Q1, Q2, and Q3 that reverses out in Q4 and its just a function of how we accrue versus last year, where last year.

Speaker #2: So, hopefully, that gives you some color there.

Speaker #4: Yeah. And then, as far as Q4 margin, we are improving by 20 basis points versus last year. But is your question more a comparison to Q3?

John Klinger: Yeah. As far as Q4 margins, we are improving by 20 basis points versus last year. But is your question more comparison to Q3 to Q4?

We had.

A favorable impact in Q4.

Speaker #4: To Q4?

Speaker #10: Yeah. Exactly.

Matthew Boss: Yeah, exactly.

Speaker #4: Yeah, so there are two things that are happening. On the Q3 to Q4 comparison, the first one is that in Q3, our inventory levels are probably at their highest during the year.

John Klinger: Yeah. There are two things that are happening on the Q3 to Q4 comparison. The first one is that in Q3, our inventory levels are probably at their highest during the year. So we have inventory cap favorability, and then we bring the inventories back down in the fourth quarter. The other piece of it is this year with our shrink accrual. So this year we have a favorable comparison Q1, Q2, and Q3 that reverses out in Q4. It is just a function of how we accrue versus last year, where last year we had a favorable impact in Q4. So when you are planning it, we are planning a shrink slightly favorable this year. So naturally, Q1, Q2, Q3, there is a favorable variance. In Q4, it flips the other way to be slightly up on the full year. Is that clear?

So when you when you are planning it we're planning shrink slightly favorable this year. So naturally Q1 Q2 Q3.

Speaker #4: So we've got inventory cap favorability, and then we bring the inventories back down in the fourth quarter. The other piece of it is this year, with our shrink accrual, we have a favorable comparison in Q1, Q2, and Q3 that reverses out in Q4.

There is a favorable variance in Q4 it flips the other way to be slightly up on the full year.

Is that clear.

Yeah Super clear thanks, so much.

Our next question comes from Adrian Yay.

Yes, good morning, congratulations the stores, both both concepts look fabulous.

Speaker #4: And it's just the function of how we accrue versus last year, where last year we had a favorable impact in Q4. So when you're planning it, we're planning a shrink slightly favorable this year.

Ernie.

The last time that we had sort of a pass through at frontline or a real significant kind of price inflation with that kind of 2011 for the apparel retailers.

And what we're seeing kind of since July since these apparel retailers had dramatically started to raise initial retailers are at retail.

Speaker #4: So, naturally, Q1, Q2, Q3, there's a favorable variance in Q4. It flips the other way to be slightly up on the full year. Is that clear?

We see a lot of pricing power I got to tell you like we see hard pricing that looks really similar hard prices similar to last year and so I guess kind of if you can give us some perspective I know what happened in 2011, you got the sales and you didn't get the margins.

Speaker #10: Yep, super clear. Thanks so much.

Matthew Boss: Yep, super clear. Thanks so much.

Speaker #4: Yeah.

John Klinger: Yeah.

Speaker #1: Our next question comes from Adrian Ye.

Ernie Herrman: Our next question comes from Adrienne Yih.

Speaker #6: Yes, good morning. Congratulations. The stores, both concepts, look fabulous. Ernie, the last time that we had sort of a pass-through at the front line of a real significant kind of price inflation was back kind of 2011 for the apparel retailers.

And then you guys cleaned up right. After that you guys cleaned up and picked up a lot of the disruption.

Adrienne Yih: Yes, good morning. Congratulations. The stores, both concepts, look fabulous. Ernie, the last time that we had a pass-through at front line of a real significant kind of price inflation was back in 2011 for the apparel retailers. What we are seeing since July, since these apparel retailers have thematically started to raise initial retailers, we do not see a lot of pricing power. I have to tell you, we see hard pricing that looks really similar, hard prices similar to last year. I guess if you can give us some perspective, I know what happened in 2011. You got the sales and you did not get the margins. Then you guys cleaned up, right? Right after that, you guys cleaned up and picked up a lot of the disruption. As I said, we do not see, we see promos out there on fall goods, on apparel specifically.

Right you know like I said, we don't see we see promos out there on fall goods on apparel, specifically can you talk about category pricing power, maybe footwear is better than apparel or something like that.

Speaker #6: And what we're seeing, kind of since July, since these apparel retailers have thematically started to raise initial retailers, we don't see a lot of pricing power.

Right, yes, so without telling you again for competitive reasons, we don't like to give.

While our strategy is but let me give you the philosophy of it which is that we and I think.

Speaker #6: I’ve got to tell you, we see hard pricing that looks really similar to hard prices from last year. So, I guess kind of if you can give us some perspective. I know what happened in 2011.

<unk> in general has been deflationary for years that when I go back to year spot on when you talk about that it's been promotional for years and the newness.

Speaker #6: You got the sales, and you didn't get the margins. And then you guys cleaned up, right? Right after that, you guys cleaned up and picked up a lot of the disruption.

And the world of <unk>.

<unk> if you look at it it's been a very spotty.

Speaker #6: So, you know, like I said, we see promotions out there on fall goods, specifically on apparel. Can you talk about category pricing power? Maybe footwear is better than apparel.

You have some pockets in ladies businesses across the industry that have been good I think men's has been very inconsistent not great. So long story short what we do is we look at our pricing I guess you'd call. It the pricing power a likelihood of where things might go up around US again, it's not us driving the bus.

Adrienne Yih: Can you talk about category pricing power? Maybe footwear is better than apparel or something like that?

Speaker #6: Or something like that?

Speaker #4: I I know.

Speaker #2: Right. Yeah, so without telling you again, for competitive reasons, we don't like to give wire strategies, but let me give you the philosophy of it.

Ernie Herrman: Right. So, without telling you, again, for competitive reasons, we do not like to give what our strategy is, but let me give you the philosophy of it, which is that we, and I think apparel in general, has been deflationary for years. When I go back to your spot on, when you talk about that, it has been promotional for years. The newness in the world of apparel, if you look at it, it has been very spotty. You have some pockets in ladies' businesses across the industry that have been good. I think men's has been very inconsistent, not great. Long story short, what we do is we look at our pricing, I guess you would call it the pricing power, the likelihood of where things might go up around us. Again, it is not us driving the bus on that. That would probably be in other areas.

On that would probably be in other areas. We just won't talk about what those areas are and so.

Speaker #2: Which is that we, and I think apparel in general, have been deflationary for years. So when I go back to your spot on when you talk about that, it's been promotional for years.

And it'll vary by items within apparel that Michael but in general what you're hearing and feeling would kind of be in sync with what what I would guess.

Speaker #2: And the newness in the world of apparel is, if you look at it, it's been very spotty. You know, you have some pockets in ladies' businesses across the industry that have been good.

Again, I just cannot give you any specifics on that front.

Other than to tell you that we will manage it.

As I described earlier on case by case. This is what's great about our model our buyers don't have to be.

Speaker #2: I think men’s has been very inconsistent, not great. So long story short, what we do is we look at our pricing— I guess you’d call it the pricing power, the likelihood of where things might go up around us.

Ahead of everybody in terms of deciding what the retailers. We just follow and then we say we're going to fall, but we're going to have the best value out there.

Speaker #2: Again, it's not us driving the bus on that. It would probably be in other areas, and we just won't talk about what those areas are. It will vary by items within apparel that might go up.

And.

And then John a quick one for you on the horizon of kind of the flow through of tariffs.

Ernie Herrman: We just will not talk about what those areas are. It will vary by items within apparel that might go up. But in general, what you are hearing and feeling would kind of be in sync with what I would guess. Again, I just cannot give you many specifics on that front, other than to tell you that we will manage it, as I described earlier on, case by case. This is what is great about our model. Our buyers do not have to be ahead of everybody in terms of deciding what the retail is. We just follow. We say, we are going to follow, but we are going to have the best value out there.

This kind of Grace period, right. If you ship it before August 9th and get it in before.

Speaker #2: But, in general, what you're hearing and feeling would kind of be in sync with what I would guess. Again, I just cannot give you many specifics on that front.

October 5th.

On the tariffs.

Tariffs.

How should we think about and I know youre, not giving guidance, but how should we think about kind of impact probably not to you because of what Randy just said, but impacted the sector kind of on the spring horizon prices go up again right.

Speaker #2: Other than to tell you that we will manage it as I described earlier, on a case-by-case basis. This is what's great about our model.

Speaker #2: Our buyers don't have to be ahead of everybody in terms of deciding what the retail is. We just follow. And then we say, we're going to follow, but we're going to have the best value out there.

Yeah I'll jump in on that I think Adrian I think so what's half thing I've been seeing across the board on anything where tariffs are heading even if they are China is there's a gradual I can some of the retailers seem to be not moving the price directly with the first landing of the tariff and it's going up in steps.

Speaker #2: And yeah.

Speaker #1: And then, John, a quick one for you on the horizon of kind of the flow-through of tariffs. There's this kind of grace period, right?

Adrienne Yih: John, a quick one for you on the horizon of the flow-through of tariffs. There is this grace period, right? If you ship it before August 9th and get it in before October 5th, it is on the old tariffs. How should we think about, and I know you are not giving guidance, but how should we think about the impact, probably not to you because of what Ernie Herrman just said, but impact to the sector on the spring horizon prices go up again, right?

So I think youre going to see more of a little bit of a gradual increase in pricing as the tariffs come in and I don't know if thats answering a question I don't think Youll see the step all of a sudden right with the tariffs hit because they don't want to I think turn off customers immediately by seeing a dramatic price shift.

Speaker #1: If you ship it before August 9th and get it in before you know October 5th, that it's on the old tariffs. So how should we think about, and I know you're not giving guidance, but how should we think about kind of impact, probably not to you because of what Ernie just said, but impact to the sector kind of on the spring horizon?

So I think they might they might they might absorb it initially for a little bit and eventually they'll get there, but again that varies by retailer and again their vendors could be negotiating with factories to also allowed it out.

Speaker #1: Prices go up again, right?

Speaker #2: Yeah, I'll jump in on that. I think, Adrian, what's happened is that I've been seeing across the board that anything where tariffs are hitting, even if they're changing, is there's a gradual... I can... some of the retailers seem to be not moving the price directly with the first landing of the tariff, and it's going up in steps.

Ernie Herrman: Yeah, I will jump in on that. I think Adrienne, I think, so what has happened, the thing I have been seeing across the board on anything where tariffs are hitting, even if they are changing, is there is a gradual, some of the retailers seem to be not moving the price directly with the first landing of the tariff, and it is going up in steps. So I think you are going to see more of a little bit of a gradual increase in pricing as the tariffs come in. I do not know if that is answering the question. I do not think you will see this step all of a sudden with the tariffs hit, because they do not want to, I think, turn off customers immediately by seeing a dramatic price shift.

Sure some of the pressure yes.

Great Fabulous best of luck.

Thank you Adrian impressive as always.

Speaker #2: So I think you're going to see a more of a little bit of a gradual increase in pricing as the tariffs come in. I don't know if that's answering the question.

Speaker #2: I don't think you'll see this step all of a sudden.

Speaker #4: Right.

Speaker #2: With the tariffs hit because they don't want to, I think, turn off customers immediately by seeing a dramatic price shift. So I think they might they might they might absorb it initially for a little bit and eventually they'll get there.

We spent a lot of time being creative with the title.

Ernie Herrman: So I think they might, they might, they might absorb it initially for a little bit, and eventually they will get there. But again, that varies by retailer.

Speaker #2: But again, that varies by retailer.

Speaker #4: And again, the vendors could be negotiating with factories too.

John Klinger: The vendors could be negotiating with factories also.

For comp in the quarter.

Accelerating from the three in first quarter did overall traffic accelerate or is it the same as <unk> and then on the.

Speaker #2: Without a doubt. Yeah.

Ernie Herrman: Without a doubt, yeah.

Speaker #4: Share some of the pressure.

John Klinger: Share some of the pressure.

Speaker #2: Yep.

Ernie Herrman: Yeah.

Speaker #1: Great. Fabulous. Best of luck.

Adrienne Yih: Great. Fabulous. Best of luck.

On the merch margin you said it was flat.

Speaker #2: Thank you, Adrian.

With the inventory sorry, with the inventory hedge with merch margins have been down excluding that benefit or how should I think about the inventory hedge impact.

Ernie Herrman: Thank you, Adrienne.

Speaker #1: Impressive as always.

Adrienne Yih: Impressive as always.

Speaker #4: Thank you.

Ernie Herrman: Thank you. Thank you.

Speaker #2: Thank you.

Speaker #1: Our next question comes from Michael Benetti.

Ernie Herrman: Our next question comes from Michael Binetti.

Speaker #5: Hey guys, thanks for taking our questions. I'll add my congrats on the quarter. Just a couple.

Michael Binetti: Hey, guys, thanks for taking our questions. I'll add my congrats on the quarters.

So as far as the four comp than what we saw for transactions.

Ernie Herrman: Thanks, Michael. Michael, by the way, we liked your headline. You had a great headline.

Speaker #2: Thank you, Michael. By the way, we really liked your headline; it was great!

Yes transactions again were up across the board I would say compared to Q1, probably the basket as it may be a little bit more.

Speaker #5: Oh, thanks. We spent a lot of time being creative with the title today. Thanks, guys. Maybe a few quick ones for the model. When I look at the fourth comp in the quarter, slightly accelerating from the third and first quarter, did overall traffic accelerate or is it the same as Q1?

Michael Binetti: Oh, thanks. We spent a lot of time being creative with the title today.

Ernie Herrman: Thanks.

Michael Binetti: Maybe a few quick ones from the model. When I look at the Q4 comp in the quarter, slightly accelerating from the Q3 and Q1, did overall traffic accelerate, or is it the same as Q1? On the merchandise margin, you said it was flat. With the inventory, sorry, with the inventory hedge, would merchandise margins have been down excluding that benefit, or how should I think about the inventory hedge impact the rest of the year?

Particularly in <unk>.

But then.

As far as your merchandise margin question can you just ask that one more time sorry.

Speaker #5: And then on the merch margin, you said it was flat. With the inventory, sorry, with the inventory hedge, would merch margins have been down excluding that benefit? Or how should I think about the inventory hedge impact for the rest of the year?

Yes, you said it was flat I know the inventory hedge was a component.

On the gross margin I don't know merch margin would have been down excluding that benefit just to help me think about.

On the merch margin in the rest of the year.

Yes so.

The inventory hedge.

Speaker #4: So, as far as the four comp and what we saw for transactions, yeah, transactions again were up across the board. I would say compared to Q1, probably the basket is maybe a little bit more.

John Klinger: As far as the 4 comp and what we saw for transactions, transactions again were up across the board. I would say compared to Q1, probably the basket is maybe a little bit more, particularly in Marmaxx. As far as your merchandise margin question, can you just ask that one more time? Sorry.

<unk>.

Yes. It was it was a slight it was it was the headwind that we did see.

Going forward.

I think the way the way you would look at it as that.

Speaker #4: Particularly in Maramax. But then, as far as your merchandise margin question, can you just ask that one more time? Sorry.

<unk>.

There probably is a little bit of a.

A headwind in the back half, but not significant.

Speaker #5: Yeah, yeah, you said it was flat. I know the inventory hedge was a component. On the gross margin, I didn’t know if merchandise margin would have been down excluding that benefit.

Michael Binetti: Yeah, you said it was flat. I know the inventory hedge was a component on the gross margin. I didn't know if merch margin would have been down excluding that benefit, just to help me think about the merch margin in the rest of the year.

Okay, and then can I just ask.

A little bit of a follow up to an earlier question.

At the margin bridge pretax expanded 50 basis points in the second quarter guidance is for a little bit of compression, 25%, 35% in third quarter, and then reaccelerate to expansion 10 to 20 basis points in the fourth quarter.

Speaker #5: Just to help me think about the merch margin and the rest of the year.

Speaker #4: Yeah, so the inventory hedge, yeah, it was a slight headwind that we did see. Going forward, you know, I think the way you would look at it is that there probably is a little bit of a headwind in the back half, but not significant.

John Klinger: Yeah, so the inventory hedge, it was a slight, it was the headwind that we did see. Going forward, I think the way you would look at it is that there probably is a little bit of a headwind in the back half, but not significant.

Can you maybe just help me connect those any unusual items to be aware of the rest of the year. This year in the base.

So as far as the bottom line pre tax profit.

So.

Q3.

We obviously have some headwinds that.

Average retail being one of them the reversal of expenses from the second quarter.

Speaker #5: Okay. And then can I just ask a little bit of a follow-up to an earlier question? A little bit about the margin bridge on pre-tax expanded 50 basis points in the second quarter.

Michael Binetti: Okay. Can I just ask a little bit of a follow-up to an earlier question? A little bit about the margin bridge on pre-tax, expanded 50 basis points in Q2, guidances for a little bit of compression, 25, 35, and Q3, and then reaccelerate to expansion, 10 to 20 basis points in Q4. Can you maybe just help me connect those? Any unusual items to be aware of the rest of the year, either this year or in the base?

Mainly into the third quarter is another headwind there.

And then in the fourth quarter.

Speaker #5: Guidance is for a little bit of compression 25, 35 in third quarter and then re-accelerate to expansion 10 to 20 basis points in fourth quarter.

Again, we we have.

The benefit from from the higher sales volume.

Speaker #5: Can you maybe just help me connect those? Are there any unusual items to be aware of for the rest of the year, either this year or in the base?

Between Q3, and Q4, but again, what we talked about before about Q3 and Q4 Q3 has the benefit from the inventory cap in Q4 has the headwind from the.

Speaker #4: So, as far as the bottom line, pre-tax profit, you know, Q3, we obviously have some headwinds that average retail being one of them.

John Klinger: As far as the bottom line pre-tax profit, in Q3, we obviously have some headwinds, average retail being one of them. The reversal of expenses from the second quarter, mainly into the third quarter, is another headwind. In the fourth quarter, again, we have the benefit from the higher sales volume between Q3 and Q4. What we talked about before about Q3 and Q4, Q3 has the benefit from the inventory cap, and Q4 has the headwind from the shrink accrual. Does that make sense?

From the.

The shrink accrual.

Does that makes sense, yeah couple of things to work through Okay. I appreciate it and we'll talk to you guys later on thank you.

Speaker #4: The reversal of expenses from the second quarter you know mainly into the third quarter is another headwind there. And then in the fourth quarter, again, we have the benefit from the higher sales volume that, between Q3 and Q4, but again, what we talked about before about Q3 and Q4, Q3 has the benefit from the inventory cap and Q4 has the headwind from the shrink accrual.

Thank you Michael.

Our last question comes from Marni Shapiro.

Hey, guys, congratulations great quarter and stores that look beautiful homegoods perfect Prologis honestly stunning.

I have a quick thank you marni.

You you've mentioned gifting I think more than once in your prepared with Mark I'm, just not always usual for you. So I'm assuming that you feel good about anybody that you've made it <unk> and holiday and we were able to pack away some of that given how have heavily tariff Halloween holiday decor.

Are you seeing a change in consumer behavior in your stores.

Speaker #4: Does that make sense?

Speaker #5: Yeah, a couple of things to work through. Okay, I appreciate it. We'll talk to you guys later on. Thank you.

Michael Binetti: Yeah, a couple of things to work through. I appreciate it. We will talk to you guys later on. Thank you.

That is.

Kind of shifting your focus a little even more so to gifting I mean, you guys have done.

Speaker #4: Yeah.

John Klinger: Yeah.

Speaker #2: Thank you, Michael.

Ernie Herrman: Thank you, Michael.

An improved job year after year after year, but its something changed because you don't usually mention it necessarily in the.

Speaker #1: Our last question comes from Marni Shapiro.

Ernie Herrman: Our last question comes from Marni Shapiro.

Comment.

Speaker #6: Hey, guys. Congratulations! Great quarter, and the stores have looked beautiful. HomeGoods? Perfect. Apologies—honestly stunning. I have a quick question.

Adrienne Yih: Hey guys, congratulations. Great quarter, and the stores have looked beautiful. HomeGoods for back to college is honestly stunning. I have a quick question.

Right.

No great question Marni, well part of part of what's happened over the last couple of years, we've evolved in terms of actually going after gifting for not just holiday. So we've started going after the gifting seasons, whether it's mother's day father's day and whats.

Speaker #2: Thank you, Marni.

Ernie Herrman: Thank you, Marni.

Speaker #6: You've mentioned gifting, I think more than once in your prepared remarks, which is not always usual for you. So I'm assuming that you feel good about any buys that you've made in advance in the holiday and that you were able to pack away some of that.

Adrienne Yih: have mentioned gifting, I think, more than once in your prepared remarks, which is not always usual for you. I am assuming that you feel good about any buys that you have made in advance and holiday, and you were able to pack away some of that, given how heavily tariffed holiday decor is. Are you seeing a change in consumer behavior in your stores that is kind of shifting your focus a little, even more so to gifting? You guys have done an improved job year after year after year, but has something changed? You do not usually mention it this early in the year, your prepared comments.

What's happened is more a lot of our merchants, our merchandise managers and their and their families of business have figured out product to go after that is more appropriate to be gifted I think you combine that with there has been momentum if you look at Marni.

Speaker #6: Given how heavily tariffed holiday decor is, are you seeing a change in consumer behavior in your stores that is kind of shifting your focus a little even more so to gifting?

Do you shop, our stores aggressively I know youre right, commenting on what you see there you got a holiday.

Speaker #6: I mean, you guys have done an improved job year after year after year, but has something changed? Because you don't usually mention it this early in the year in your prepared comments.

And if you look at our results in Q4, <unk> been shoe for consistent year after year.

Speaker #2: Right. No, great question, Marni. Well, part of what's happened over the last couple of years is that we've evolved in terms of actually going after gifting for not just the holiday season. We’ve started going after gifting occasions, whether it's Mother's Day, Father's Day, and what's happened is that a lot of our merchants and merchandise managers, along with their families of business, have figured out products to go after that are more appropriate to be gifted.

Ernie Herrman: Right. No, great question, Marni. Part of what has happened over the last couple of years, we have evolved in terms of actually going after gifting for not just holiday. So we have started going after the gifting seasons, whether it is Mother's Day, Father's Day. What has happened is a lot of our merchants, our merchandise managers, and their families of business have figured out product to go after that is more appropriate to be gifted. I think you combine that with there has been momentum. If you look at, Marni, you know, you shop our stores aggressively. I know you are right commenting on what you see there. If you go to holiday, and if you look at our results in Q4, they have been super consistent year after year.

And I think what's been building year after year, where we're showing everybody is that we're very fresh as you go into holiday.

As you get nearer to Christmas and back again to are a combination of our merchants and our planning areas given the right product, that's very giftable, where we think where some retailers have vacated some of those items in certain categories. Even in apparel and I think we tend to go after some of the.

Speaker #2: I think you combine that with the momentum. If you look at Marni, you know you shop our stores aggressively. I know you're right, commenting on what you see there.

I guess market share opportunity categories, where we feel like other retailers have walked away and we can go after those gifting categories more aggressively and for this back half and holiday, that's what I'm, saying our teams do.

Speaker #2: If you go on holiday, and if you look at our results in Q4, they've been super consistent year after year. I think what's been building year after year, what we're showing everybody, is that we're very fresh as you go into holiday.

And thats across home and apparel and accessories, they're going strongly after the categories that tend to spike during the gifting category combine that with the venue you notice as well I think you've commented on it as well.

Ernie Herrman: I think what has been building year after year, what we are showing everybody, is that we are very fresh as you go into holiday, as you get nearer to Christmas, and back again to a combination of our merchants and our planning areas, given the right product that is very giftable, where we think where some retailers have vacated some of those items in certain categories, even in apparel. I think we tend to go after some of the, I guess, market share opportunity categories where we feel like other retailers have walked away, and we can go after those gifting categories more aggressively. For this back half and holiday, that is what I am seeing our teams do. That is across home and apparel.

Speaker #2: As you get nearer to Christmas, and back again to our accommodation of our merchants and our planning areas, given the right product that's very giftable, we think where some retailers have vacated some of those items and certain categories, even in apparel. I think we tend to go after some of the, I guess, market share opportunity categories where we feel like other retailers have walked away, and we can go after those gifting categories more aggressively.

Talked about is where we are cool today to be a gifting destination.

And I think I know you and I have joked about that at a time, but it's true we are people like giving a home goods or a T. J maxx or every place we're in are our.

Our brands have become.

Very desirable to be gifting destination brands and I guess, that's the whole team that's whether Europe at winners are in Europe.

Speaker #2: And for this back half and holiday, that's what I'm seeing our teams do. And that's across home, apparel, and accessories. They're going strongly after the categories that tend to spike during the gifting season.

Every division marketing wise store.

Store execution wise in terms of treating customers well and most importantly, the product.

Ernie Herrman: And accessories, they are going strongly after the categories that tend to spike during the gifting category. Combine that with, and you know this as well, I think you have commented on it as we have talked about, is we are cool, we are cool today to be a gifting destination, right? And I think I know you, you and I have joked about that at times, but it is true. We are people like giving a HomeGoods or a TJ Maxx or every place we are in, our brands have become very desirable to be gifting destination brands. And I give, that is the whole team. That is whether you are up at Winners or in Europe, every division, marketing-wise, store execution-wise, in terms of treating the customers well, and most importantly, the product.

I think the whole thing is working right now in terms of more consumers wanting to buy gifts from <unk> brands.

Speaker #2: Combine that with the, and you know this as well, I think you've commented on it. We've talked about how we are cool today to be a gifting destination.

Thanks, I'll follow up on that.

Speaker #2: Right? And I think I know you, and I have a joke about that at times, but it's true. We are people like giving a HomeGoods or a TJ Maxx, or every place we're in. Our brands have become very desirable gifting destination brands.

Home care home goods.

Homegoods back to college.

It's really next level.

Ever seen you guys book that cohesive and your storytelling.

So I'm listening to you talk about gifting I am thinking about what I thought.

In Homegoods for back to college, and thinking that you guys from a merchant standpoint really.

Doing a better job storytelling and merchandising in store that the buying with Ali there, but now combining it with the storytelling in store is that kind of been where the unlock is around all of these holidays and events, yes, Barney, yes, and I Should've mentioned that our store teams and in conjunction again with the merchants executing for the seasonal time periods like back.

Ernie Herrman: I think the whole thing is working right now in terms of more consumers wanting to buy gifts from TJX brands.

Ernie Herrman: Can I just follow up on that with your HomeGoods? Your HomeGoods Back to College was really next level. I have never seen you guys look that cohesive in your storytelling. I am listening to you talk about gifting. I am thinking about what I saw in HomeGoods for Back to College, and thinking that you guys, from a merchant standpoint, are really doing a better job storytelling and merchandising in-store, that the buying was always there, but now combining it with the storytelling in-store. Is that kind of been where the unlock is around all of these holidays and events?

To college.

They're doing a great job in buying the product for those time periods and then the stores are excellent.

Home goods store teams are doing an excellent job on pulling that together to make it really easy to shop and you know what.

That does right does somebody like you or EMEA creates an impulse.

To purchase.

Two or three items instead of just one when you see it all put together that way.

I'm, calling broker.

Congratulations you guys. This is just a great quarter.

Thank you very much marni.

Really appreciate it.

Ernie Herrman: Yes, Barney, and I should have mentioned that. Our store teams, in conjunction again with the merchants executing for the seasonal time periods, like a Back to College, they are doing a great job in buying the product for those time periods. Then the HomeGoods store teams are doing an excellent job on pulling that together to make it really easy to shop. You know what that does, right? To somebody like you or me, it creates an impulse to purchase two or three items instead of just one when you see it all put together that way.

And that was our last question.

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.

Thank you everybody.

That concludes today's conference. Thank you for participating you may disconnect at this time.

Ernie Herrman: am going broke, Ernie. Congratulations, you guys. This is a great quarter.

Ernie Herrman: Thank you very much, Ernie. Really appreciate it. That was our last question. 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. Thank you, everybody.

Debra McConnell: That concludes today's conference. Thank you for participating. You may disconnect at this time. Ladies and gentlemen, thank you for standing by. Welcome to The TJX Companies Inc. second quarter fiscal 2026 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 press star one. As a reminder, this conference is being recorded. August 20th, 2025. I would like to turn the conference over to Mr. Ernie Herrman, Chief Executive Officer and President of The TJX Companies Inc. Please go ahead, sir.

Ernie Herrman: Thanks, Courtney. Before we begin, Debra McConnell has some opening comments.

John Klinger: 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 reconciliation to non-GAAP measures we discuss. Thank you, and now I'll turn it back over to Ernie.

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 reconciliation to non-GAAP measures. We discuss. Thank you. And now I'll turn it back over to Ernie.

Ernie Herrman: Good morning. Joining me and Debra McConnell on the call is John Klinger. I will start today with our second quarter results. I am extremely pleased with our outstanding second quarter performance and our above-planned sales, profit margin, and diluted EPS results. Overall, comp sales for the second quarter exceeded our expectations, increasing 4%, and were strong across all of our divisions. Customer transactions were up at every division and drove our overall comp sales increase. As we have seen through so many retail and economic environments, consumers were drawn to our excellent values and brands. Going forward, we continue to see market share opportunities across each of our U.S. and international divisions. With our profit results in the second quarter also well exceeding our plan, we are raising our full-year guidance for both pre-tax profit margin and diluted EPS.

Good morning. Joining me on the call is John.

I'll start today with our second quarter results.

I am extremely pleased with our outstanding second quarter performance and our above-plan sales, profit margin, and earnings per share results.

Overall, comp sales for the second quarter exceeded our expectations, increasing 4%, and we were strong across all of our divisions.

Customer transactions were up at every division and drove our overall comp sales increase.

As we have seen through so many retail and economic environments, consumers were drawn to our excellent values in brands, and going forward, we continue to see market share opportunities across each of our U.S. and international divisions.

Ernie Herrman: John Klinger will talk about our results and guidance in more detail in a few minutes. I want to thank our global associates who drove these excellent results. Our teams across The TJX Companies Inc. successfully executed our off-price business fundamentals to deliver an exciting assortment of merchandise at great value to our customers every day. This is a testament to the talent of our teams and the depth of their off-price expertise. Across our company, we saw our associates working together as one TJX to deliver on our value mission for consumers. As we look to the second half of the year, I am very confident in our position of strength in retail. Our teams are energized by the opportunities we see to keep attracting shoppers to our retail brands and to build upon our success of prior years in being a gifting destination for consumers.

With our profit results in the second quarter also well exceeding our plan, we are raising our full-year guidance for both pre-tax profit, margin, and earnings per share.

John will talk about our results and guidance in more detail in a few minutes.

I want to thank our global associates who drove these excellent results. Our teams across the company successfully executed our off-price business fundamentals to deliver an exciting assortment of merchandise at great value to our customers every day.

This is a testament to the talent of our teams in the depth of their off-price expertise.

Across our company, we saw associates working together as one TJX to deliver on our value mission for consumers.

As we look to the second half of the year, I am very confident in our position of strength in retail.

Ernie Herrman: We see outstanding buying opportunities in the marketplace for quality branded merchandise, which also gives me great confidence in our plans for the fall and holiday selling seasons. The third quarter is off to a strong start. We are confident in our full-year sales and profitability plans, and as always, we will strive to beat them. Longer term, we believe the strength and resiliency of our flexible off-price business model will continue to be a tremendous advantage. We feel great about our core businesses and the opportunities we see for growth with our newer vehicles. We are convinced we have a long runway ahead to capture additional market share worldwide and continue our successful global growth. I will talk more about our second half opportunities and key strengths in a moment.

Our teams are energized by the opportunities we see to keep attracting shoppers to our retail brands and to build upon our success from prior years, establishing ourselves as a gifting destination for consumers.

We see outstanding buying opportunities in the marketplace for quality branded merchandise, which also gives me great confidence in our plans for the fall and holiday selling seasons.

Third quarter is off to a strong start.

We are confident in our full-year sales and profitability plans. And, as always, we will strive to beat them.

Longer term, we believe the strength and resiliency of our flexible off-price business model will continue to be a tremendous advantage.

We feel great about our core businesses and the opportunities we see for growth with our newer vehicles.

We are convinced that we have a long runway ahead to capture additional market share worldwide and continue our successful global growth.

Ernie Herrman: But first, I will turn the call over to John Klinger to cover our second quarter results in more detail.

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

John Klinger: Thanks, Ernie. I also want to add my gratitude to all of our global associates for their continued hard work and commitment to delivering our customers great value every day. Now I will share some additional details on the second quarter. As Ernie mentioned, our consolidated comp sales growth of 4% came in above our plan. Further, we saw comp increases in both our apparel and home categories, with home outperforming apparel. Second quarter pre-tax profit margin of 11.4% was up 50 basis points versus last year and well above our plan. Gross margin increased 30 basis points versus last year, primarily due to favorable hedges. Merchandise margin was flat despite higher tariff costs versus last year. Importantly, we are very pleased with our mitigation strategies, which allowed us to offset the tariff pressure we saw in the second quarter. SG&A decreased 30 basis points versus last year.

Thanks, Ernie. I also want to add my gratitude to all of our Global Associates for their continued hard work and commitment to delivering our customers great value every day.

Now, I'll share some additional details on the second quarter.

As Ernie mentioned, our consolidated comp sales growth of 4% came in above our plan.

Further, we saw comp increases in both our apparel and home categories, with home outperforming apparel.

Second quarter pre-tax profit margin of 11.4% was up 50 basis points versus last year and well above our plan.

Gross margin increased 30 basis points versus last year, primarily due to favorable hedges.

Merchandise margin was flat, despite higher tariff costs versus last year.

Importantly, we are very pleased with our mitigation strategies, which allowed us to offset the tariff pressure we saw in the second quarter.

John Klinger: This was primarily due to operational efficiencies, as well as a benefit from the timing of certain expenses, some of which we expect to reverse out in the third quarter. Net interest income negatively impacted pre-tax profit margin by 10 basis points versus last year. Second quarter, diluted earnings per share of $1.10 increased 15% versus last year and was also well above our expectations. Lastly, we were extremely pleased that our second quarter pre-tax profit margin came in 90 basis points above the high end of our plan. This was due to a combination of items including lower than expected tariff costs, expense leverage on above-planned sales, and the timing of certain expenses. This was also partially offset by higher incentive compensation accruals and contribution to TJX's charitable foundations. Now to our second quarter divisional performance. Again, this quarter, customer transactions increased at every division.

SG&A decreased 30 basis points versus last year. This was primarily due to operational efficiencies, as well as a benefit from the timing of certain expenses, some of which we expect to reverse out in the third quarter.

Net interest income negatively impacted pre-tax profit margin by 10 basis points versus last year.

Second quarter diluted earnings per share of $110 increased 15% versus last year and was also well above our expectations.

Lastly, we were extremely pleased that our second quarter pre-tax profit margin came in 90 basis points above the high end of our plan. This was due to a combination of items including lower than expected tariff costs, expense leverage on above-plan sales, and the timing of certain expenses. This was also partially offset by higher incentive compensation across the board.

TJX TJX is charitable foundations.

John Klinger: We see this as an excellent indicator of the strength of our value proposition across our retail banners. At Marmaxx, comp sales grew a strong 3%. A combination of a higher average basket and an increase in customer transactions drove the comp increase. It was great to see strength in our store performance across all income demographics, which speaks to our broad-based appeal of our values. Marmaxx's segment profit margin was 14.2%, up 10 basis points versus last year. Our Sierra stores and U.S. e-commerce sites, which report as part of this division, also saw strong sales results. We feel great about Marmaxx's performance, the initiatives underway for the second half of the year, and our long-term opportunities that we believe will allow us to drive sales and capture additional market share. At HomeGoods, comp sales grew a very strong 5%, with strength at both our HomeGoods and HomeSense banners.

Now, to our second quarter divisional performance. Again, this quarter, customer transactions increased at every division. We see this as an excellent indicator of the strength of our value proposition across our retail banners.

At Marimax, comp sales grew a strong 3%. A combination of a higher average basket and an increase in customer transactions drove the company's increase.

It was great to see strength in our store performance across all income demographics, which speaks to our broad-based appeal of our values.

Profit margin was 14.2%, up 10 basis points versus last year.

Our Sierra stores and U.S. e-commerce sites, which report as part of this division, also saw strong sales results.

We feel great about Marx's performance, the initiatives underway for the second half of the year, and our long-term opportunities that we believe will allow us to drive sales and capture additional market share.

John Klinger: Segment profit margin grew 10%, up 90 basis points versus last year. Our eclectic assortment of home fashions that we source from around the world are clearly resonating with customers. We are excited about what's in store for the back half of the year, and we're confident our customers will be too. We remain confident that we can continue to capture additional share of the U.S. home market. TJX Canada's comp sales increased an outstanding 9%. Segment profit margin on a constant currency basis grew to a very strong 16%, up 100 basis points versus last year. Our retail banners in Canada, which consist of Winners, Marshalls, and HomeSense, have extremely high brand awareness and customer loyalty. We see great potential for our Canadian banners for the rest of 2025 and long term, and for their continued successful growth across the country.

At HomeGoods, comp sales grew a very strong 5%, with strength at both our HomeGoods and HomeSense banners. Segment profit margin grew 10%, up 90 basis points versus last year.

Our eclectic assortment of home fashions that we source from around the world are clearly resonating with customers.

We are excited about what's in store for the back half of the year, and we're confident our customers will be too. We remain confident that we can continue to capture additional share of the U.S. home market.

TJX Canada's comp sales increased at an outstanding 9%.

Segment profit margin on a constant currency basis grew to a very strong 16%, up 100 basis points versus last year.

Our retail banners in Canada, which consist of Winners, Marshalls, and HomeSense, have extremely high brand awareness and customer loyalty.

Great potential for our Canadian banners for the rest of 2025 and long-term, and for their continued successful growth across the country.

John Klinger: At TJX International, comp sales increased a very strong 5%. Once again, we're very pleased to see sales strength in Europe and outstanding sales in Australia. Segment profit margin on a constant currency basis grew to 5.2%, up 80 basis points versus last year. With our leadership position and decades of international operating experience, we are confident we can continue to be an attractive shopping destination for value-seeking customers across Europe and Australia. Moving to inventory, balance sheet inventory was up 14%, and inventory on a per-store basis was up 10% versus last year, as we've been buying into the excellent opportunities for quality branded merchandise we've been seeing in the marketplace. We are confident that availability of merchandise will continue to be outstanding and that we are well positioned to flow fresh assortments to our stores and online this fall and holiday season.

At TJX, international comp sales increased a very strong 5%.

Once again, we're very pleased to see sales strength in Europe and outstanding sales in Australia.

Segment profit margin on a constant currency basis grew to 5.2%, up 80 basis points versus last year.

With our leadership position in decades of international operating experience, we are confident we can continue to be an attractive shopping destination for value-seeking customers across Europe and Australia.

Moving to inventory, balance sheet: inventory was up 14% on a per-store basis and was up 10% versus last year, as we've been buying into the excellent opportunities for quality branded merchandise we've been seeing in the marketplace.

We are confident that the availability of merchandise will continue to be outstanding and that we are well positioned to flow fresh assortments to our stores and online this fall and holiday season.

John Klinger: As to capital allocation, we continue to reinvest in the growth of our business while returning $1 billion in the second quarter to shareholders through our buyback and dividend programs. Now I'll turn it back to Ernie.

As to capital allocation, we continue to reinvest in the growth of our business while returning $1 billion in the second quarter to shareholders through our buyback and dividend programs. Now, I'll turn it back to Ernie.

Ernie Herrman: Thank you, John. Now I would like to take a moment and highlight the opportunities we see to keep driving sales and traffic in the second half of the year. First, I am convinced that consumers will continue to seek our value and that we will remain a very attractive option for consumers seeking great brands, fashions, and quality merchandise at compelling prices. Our customer surveys tell us that our value perception remains strong, and we are laser-focused on keeping it that way. Again, product availability has been outstanding. Our global, world-class buying organization of over 1,300 buyers sourced from an ever-changing universe of over 21,000 vendors across more than 100 countries. I am extremely confident that our buyers will bring consumers the right assortment at the right values throughout the fall and holiday season.

Thank you, John.

Now, I'd like to take a moment and highlight the opportunities we see to keep driving sales and traffic in the second half of the year.

First, I am convinced that consumers will continue to seek out value.

And that we will remain a very attractive option for consumers seeking great brands, fashions, and quality merchandise at compelling prices.

Our customer surveys tell us that our value perception remains strong, and we are laser-focused on keeping it that way.

Again, product availability has been outstanding.

Our global, world-class buying organization of over 1,300 buyers sources from an ever-changing universe of over 21,000 vendors across more than 100 countries.

I am extremely confident that our buyers will bring consumers the right assortment at the right values throughout the fall and holiday season.

Ernie Herrman: Next, we feel great about the product category initiatives underway for the back-to-school and holiday shopping season. 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. We believe that shoppers will be inspired to visit us frequently to see what is new. Lastly, we are planning exciting marketing campaigns that will continue to reinforce our value leadership. 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 believe these campaigns will help us continue to attract new shoppers, stay top of mind with our existing customers, and encourage cross-shopping of our retail banners.

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.

We believe that shoppers will be inspired to visit us frequently to see what's new.

Lastly, we are planning exciting marketing campaigns that will continue to reinforce our value leadership.

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 believe these campaigns will help us continue to attract new shoppers, stay top of mind with our existing customers, and encourage cross-shopping by dropping our retail banners.

Ernie Herrman: Beyond this year, we have great confidence in our key success factors that have served us so well through our nearly 50-year history. We are convinced that these key characteristics of our business set us up extremely well for continued growth around the world over the long term. First, we are convinced that our position as a trusted value leader in the U.S., Canada, Europe, and Australia will continue to be a tremendous advantage. We believe our value proposition of brand, fashion, price, and quality will continue to resonate with consumers. Our commitment to offer great value on every item, every day, to every customer will always be a top priority. Second, we aim to attract shoppers across a very wide customer demographic with our treasure hunt shopping experience.

Beyond this year, we have great confidence in our key success factors that have served us so well through our nearly 50-year history. We're convinced that these key characteristics of our business set us up extremely well for continued growth around the world over the long term.

First, we are convinced that our position as a trusted value leader in the U.S., Canada, Europe, and Australia will continue to be a tremendous advantage.

We believe our value proposition of brand fashion, price, and quality will continue to resonate with consumers.

Our commitment to offer great value on every item, every day, to every customer will always be a top priority.

Ernie Herrman: Our extensive assortments of good, better, and best brands allow us to offer merchandise to a broad range of income and age groups. We believe our strategy of trading across a wide customer demographic differentiates us from many other retailers and is a tremendous advantage. Further, we continue to attract younger customers to our stores, which we believe bodes well for the future. Third, we believe the flexibility of our business will continue to be a significant benefit as we operate through the ever-changing macro and retail environments. The flexibility of our buying, store formats, systems, and supply chain allow us to merchandise stores individually with a rapidly changing curated mix of goods with a wide range of price points. Next, we see the long-term potential to open an additional 1,800 plus stores in just our current countries and Spain.

Second, we aim to attract shoppers across a very wide customer demographic with our treasure hunt shopping experience.

Our extensive assortments of Good, Better, and Best Brands allow us to offer merchandise to a broad range of income and age groups.

We believe our strategy of trading across a wide customer demographic.

Differentiates us from many other retailers and is a tremendous advantage.

Further, we continue to attract younger customers to our stores, which we believe is bode well for the future.

Third, we believe the flexibility of our business will continue to be a significant benefit as we operate through the ever-changing macro and retail environments.

Store formats, systems, and supply chain allow us to merchandise stores individually with a rapidly changing curated mix of goods with a wide range of price points.

Next, we see the long-term potential to open an additional 1,800 Plus stores in just our current countries and Spain.

Ernie Herrman: We also see great growth potential with our joint venture in Mexico and investment in the Middle East. Importantly, I am extremely confident that there will be plenty of quality merchandise available to support our store growth plans. We believe we can keep delivering the best merchandise, values, and shopping experience to our customers around the world. Lastly, and most importantly, is the longevity and knowledge of our talent, which I believe is unmatched. Throughout TJX, our management teams have deep, decades-long off-price experience in the U.S. and internationally. We take great pride in our TJX University and other teaching and training programs, and are laser-focused on succession planning to ensure we develop the next generation of leaders for our company. Additionally, our deep bench gives us great flexibility to rotate talent throughout the company to further develop our future leaders.

We also see great growth potential with our joint venture in Mexico and investment in the Middle East.

Importantly, I am extremely confident that there will be plenty of quality merchandise available to support our store growth plans.

We believe we can keep delivering the best merchandise values and shopping experience to our customers around the world.

Lastly, and most importantly, is the longevity and knowledge of our talent.

Which I believe is unmatched.

Throughout TJX, our management teams have deep, decades-long off-price experience in the U.S. and internationally.

We take great pride in our TJX University and other teaching and training programs, and we are laser-focused on succession planning to ensure we develop the next generation of leaders for our company.

Additionally, our deep bench gives us great flexibility to rotate talent throughout the company to further develop our future leaders.

Ernie Herrman: I am also very proud of our culture, which I believe is a major differentiator and will continue to be another key component of our success. Summing up, we are extremely pleased to deliver another quarter of strong sales and profitability. We believe our performance and momentum in the first half of the year puts us in an excellent position for continued success for the remainder of the year. We feel great about our value position in the current environment and are confident that we will have an appealing assortment of merchandise in our stores and online throughout the fall and winter seasons. We have a strategic vision for long-term success, and I am convinced that we are set up well to capitalize on the opportunities we see to grow our company and capture market share around the world for many years to come.

I am also very proud of our culture, which I believe is a major differentiator and will continue to be another key component of our success.

Summing up, we are extremely pleased to deliver another quarter of strong sales and profitability.

We believe our performance and momentum in the first half of the year puts us in an excellent position for continued success for the remainder of the year.

We feel great about our value positioning in the current environment and are confident that we will have an appealing assortment of merchandise in our stores and online throughout the fall and winter seasons.

We have a strategic vision for long-term success, and I am convinced that we are set up well to capitalize on the opportunities. We seek to grow our company and capture market share around the world for many years to come.

Ernie Herrman: 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 Klinger: Thanks again, Ernie. I will start with our full year fiscal 2026 guidance. We now expect overall comp sales to increase by 3%. We are increasing our full year consolidated sales guidance to a range of $59.3 billion to $59.6 billion. This increase now reflects a significant benefit from favorable foreign exchange rates on the translation of our foreign sales to U.S. dollars, as well as the flow-through of our above-planned sales in the second quarter. We are increasing our full year profitability guidance to be in the range of 11.4% to 11.5%. This would be flat to down 10 basis points versus last year's 11.5%. Moving to gross margin, we now expect it to be in the range of 30.5% to 30.6%, flat to down 10 basis points versus last year's 30.6%.

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

Thanks again, Ernie. I'll start with our full year fiscal 2026 guidance.

We now expect overall comp sales to increase by 3%.

We are increasing our full-year consolidated sales guidance to a range of $59.3 billion to $59.6 billion.

This increase now reflects a significant benefit from favorable foreign exchange rates on the translation of our foreign sales to U.S. dollars, as well as the flow-through of our above-plan sales. In the second quarter,

We're increasing our full-year profitability guidance to be in the range of 11.4% to 11.5%.

This would be flat to down 10 basis points versus last year's 11.5%.

Moving to gross margin, we now expect it to be in the range of 30.5% to 30.6%, flat to down 10 basis points versus last year's 30.6%.

John Klinger: We now expect full year SG&A to be 19.4% flat versus last year. We are now assuming net interest income of about $108 million, which we expect to delever fiscal 2026 pre-tax profit margin by 10 basis points. Our full year guidance assumes a tax rate of 24.5% and a weighted average share count of approximately 1.13 billion shares. As a result of these assumptions, we are increasing our full year diluted earnings per share to be in the range of $4.52 to $4.57, up 6% to 7% versus last year's diluted earnings per share of $4.26. This EPS guidance now includes our second quarter above-planned sales and a negative 1% impact to EPS growth due to unfavorable foreign exchange versus a negative 3% impact on our previous guidance.

We now expect full year SG&A to be 19.4%, flat versus last year.

We're now assuming net interest income of about $108 million, which we expect to de-lever fiscal 2026 pre-tax profit margin by 10 basis points.

Our 4-year guidance assumes a tax rate of 24.5% and a weighted average share count of approximately 1.13 billion shares.

As a result of these assumptions, we're increasing our full year, diluted earnings per share to be in the range of $4.52 to $4.57, up 6 to 7 percent versus last year's diluted earnings per share of $4.26.

John Klinger: Moving to the third quarter, we expect overall comp sales to increase 2% to 3%, consolidated sales to be in the range of $14.7 billion to $14.8 billion, pre-tax profit to be in the range of 12% to 12.1%, down 20% to 30 basis points versus last year's 12.3%. Gross margin to be in the range of 31.6% to 31.7%. This would be flat to up 10 basis points versus last year. SG&A to be 19.8%, 30 basis points unfavorable to last year. We are also assuming net interest income of about $25 million, which we expect to deliver third quarter pre-tax profit margin by 10 basis points. Our third quarter guidance also assumes a tax rate of 24.7% and weighted average share count of approximately 1.13 billion shares.

John Klinger: Based on these assumptions, we expect third quarter diluted earnings per share to be in the range of $1.17 to $1.19, up 3% to 4% versus last year's $1.14. Lastly, our implied guidance for the fourth quarter assumes that overall comp sales would be up 2% to 3%. Pre-tax profit margin would be in the range of 11.7% to 11.8%, up 10 to 20 basis points versus last year. Diluted earnings per share would be in the range of $1.33 to $1.36, up 8% to 11% versus last year. As for tariffs, our third quarter, fourth quarter, and full year guidance assumes that we will be able to offset the incremental tariff pressure on our business this year. We are making an assumption that the current level of tariffs on imports into the U.S. will stay in place for the remainder of the year.

John Klinger: In closing, I want to reiterate Ernie Herrman’s confidence in our plans for the second half of the year and our long-term opportunities. I also want to emphasize that we remain in an excellent position to continue to invest in the growth of The TJX Companies Inc. while simultaneously returning significant cash to our shareholders. Now we are 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 will open it up for questions.

Debra McConnell: Thank you. Our first question comes from Matthew Boss.

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

Ernie Herrman: Thank you.

Matthew Boss: Ernie, could you speak to the consistency of your comp sales despite the volatile macro backdrop and elaborate on strength that you've seen to start the third quarter and excitement around product availability? For John Klinger, just maybe put some takes on merchandise margins in the back half of the year relative to flat performance in the second quarter despite the impact of tariffs that you saw.

Ernie Herrman: Okay, sounds good, Matt. Yeah, consistency, where I give the teams a lot of credit, and again, we have talked about the broad range of the customer base that we go after. What I really like to highlight, we mentioned it a little bit in the script, but our categories of business were healthy across all areas, meaning home, apparel, accessories, all of that was good. That, combined with our flexible business model, I think allows us to execute in a more consistent fashion on our comp sales because we are able to flex regardless of the, and you mentioned availability. Yes, availability has continued to be fantastic out there.

Ernie Herrman: Again, in terms of demand by family of business, whether you are dealing with ladies or men's apparel or kids' apparel or our accessories divisions, of which there are multiple families of business in there, and our home business, because we are so flexible in the way we buy hand-to-mouth, we are able to go after the opportunities across all the different families of business, which then results, I think, in more consistent comp sales performance. I believe we are sometimes able to escape, Matt, which I think is what you are getting at, is the volatility of having a quarter where all of a sudden your comps are four points off the prior quarter or whatever, which is not uncommon in retail. For us, it is less common.

Ernie Herrman: As you can see, by the way, Marmaxx got a point better than Q1, as did a lot of our international division. I think the flexibility of the business model, and at the same time, we are taking advantage, I think, of a marketplace out there where you have had store closures and perhaps less exciting execution across the board in retail brick and mortar specifically. I think that helps us to bob and weave and take advantage of consistency to keep driving consistency in our sales. By the way, your point B of your first question when you mentioned availability, that is, and I did mention that back, as you know, a few months ago, it continues to be super strong availability as we go into Q3. I guess I will hand it over to John Klinger now.

John Klinger: Yeah, so Matt, on the merchandise margin, not a tremendous amount to add from what I've prepared and what Mark said. We still have foreign exchange that is negatively impacting us in the third quarter. We do feel confident that we can continue to offset the tariff pressures, again, like we said, in the third quarter, fourth quarter, and back half of the year.

Ernie Herrman: Great color. Best of luck.

Matthew Boss: Thank you.

Debra McConnell: Our next question comes from Brooke Roach.

Adrienne Yih: Good morning, and thank you for taking our question. Ernie Herrman, as pricing in the industry has begun to increase, are you seeing an acceleration of market share gains as consumers look for value at TJX Companies Inc.? What are your latest thoughts on pricing as you move into fall and holiday? Are you looking to maintain the percent gaps? Will you selectively raise prices in this inflationary environment? Thank you.

Ernie Herrman: Great questions, Brooke, and obviously your time is quite appropriate based on what's going on in the world around us. We have, you know, again, this is one of those funky situations where we don't top-down dictate prices. We don't go in with the strategy that we're going to raise price per se. In fact, and I think I've gone through this a few times, we kind of use other retailers around us that are out the door pricing, and our buyers work it backwards. They look at what the out-the-door pricing is around, and then we say, yes, and by the way, this was part of your question. Are we going to, our pricing percentage gap, is that going to change or not? This is where the art form comes in and the secret sauce.

Ernie Herrman: We don't go by an exact percentage because sometimes on a fit, say you have a women's top, for example, that we think the right phenomenal value on that is $19.99, and that top is being sold, or that top's retail went up in another store, and their out-the-door sale price is, you know, $35. Maybe we could go to $25. We may not go because, and this is the art form, because in our mix, we have possibly made so many other great buys with all of the availability that's out there that we have to now, that buyer says, I have to compete in my own mix now for the customer. That's why it's absolutely a deal-by-deal, SKU-by-SKU, brand-by-brand situation.

Ernie Herrman: I don't know if that pricing, in that case, the pricing % gap might be higher, or if we had to go up on that retail because of, we can, because the retails around us went up, and maybe the % gap is back to the same as what it was before. I never broad brush that we have a strategy overall on that because I know our buyers are doing it deal by deal. One of the strengths of our buying teams is they are aggressively comp shopping all of the competition, whether it's online, brick and mortar, vertical brands, department stores, specialty stores. I give them a lot of credit, by the way. We've been navigating in the tariff environment by just staying simple and pure to that model.

Ernie Herrman: The other thing I'd point out, it's easy to forget, is that remember, you know, 90 years, give or take, you know, we're dealing the bulk, vast bulk of maybe 90% of what we buy is third parties, and we're not the direct importer. That's why our buyers can really pretty much just negotiate off the retail and work it backwards because we're not starting with. This is what we're paying, and those goods aren't in other retails. We have to just mark it up off of what we're paying. Does that make sense?

John Klinger: Brooke, the other thing I would add to that is that our customer surveys continue to show that we are continuing to offer exceptional value to the customer.

Ernie Herrman: Yeah, very strong. If anything, our perception on value of our customers has improved over the last couple of years. You are asking, you are so on to the right question, though, because this is really motherhood and apple pie to us in terms of what we concentrate on.

John Klinger: Yeah.

Ernie Herrman: Did we answer that, Brooke, or?

Adrienne Yih: Yes, thank you so much. I will pass it on.

Ernie Herrman: Okay. Thank you.

Debra McConnell: Our next question comes from Lorraine Hutchinson.

Adrienne Yih: Thanks. Good morning. I wanted to build on Brooke's pricing question. Was pricing a key factor in your tariff mitigation in Q2 and a comp track, and how has the customer reacted to some of these higher price points?

Ernie Herrman: Sure. Yeah, Lorraine, great questions. It also goes hand in hand with that.

John Klinger: Overall, for TJX, transactions continue to drive the comp. For Marmaxx, it was basket and transactions.

Ernie Herrman: I think you are finding that, you know, our margins are healthy. A couple of things. One is please don't underestimate. I want to emphasize that tariff costs were higher, and they were a headwind for us in Q2 and year over year, just in the end, a little bit lower than we had expected. So that, you know, we had a bit of a savings there. We also, because of this environment, I would say the retail adjustments based on what the out the door happened in pockets, I don't think there was as much of that as there was our merchants taking advantage of the market opportunities, which allowed us to, in many cases, buy better to help offset the tariffs that way on the market goods, if that makes sense, Lorraine.

Ernie Herrman: In other words, you know, we were getting more hit on the tariffs directly on our own direct imports, but that's a small portion of our total. So our buyers did a very good job on taking advantage of the market, you know, in terms of market access inventory by category, back to the flexibility there. We are also, we manage, we are able to manage our markdowns efficiently, which also helps with our merchandise margin. And one team I'd like to give a lot of credit to is our planning and allocation teams. They are sometimes the unsung heroes because I am always talking about, right, you know, rightfully so, having the right goods. So we tend to talk, I tend to talk about the buyers and the merchandise managers who are doing a phenomenal job in this environment.

Ernie Herrman: But our planning and allocation division is amazing, and that applies to every division we are in, whether it's TJX Canada, Marmaxx, HomeGoods, Sierra, Europe, Australia. Every planning and allocation division is so good at balancing our mixes by category, family of business, by literally by district, by store. So what happens, and we keep getting better and better at it. So what happens there, we are able to manage our, drive our sales. That's back to answering the consistency question that I think Matt had asked. And at the same time, help our merchandise margin by saving on markdowns, by flowing the right amount of goods to the right stores. So I think that's been a key component also.

Ernie Herrman: But taking advantage of market opportunities, I think, has allowed us to do the bulk of our dealing with the tariffs, which are still a headwind no matter what, you know, they are still there.

Adrienne Yih: Thank you.

Ernie Herrman: Thank you.

Debra McConnell: Our next question comes from John Kernan.

Matthew Boss: Hey, good morning. Congrats on a great quarter.

Ernie Herrman: Thank you.

John Klinger: Thanks.

Matthew Boss: So, Ernie, some of the data we look at and other folks look at showed a nice acceleration in traffic. It picked up in mid to late July and then through August. How would you characterize the comp progression throughout the quarter? I got a quick follow-up. Thank you.

John Klinger: Yeah, I mean, I can take to that. We started the quarter strong, as we said in our opening remarks last quarter. June, there was a little bit of weather that negatively impacted us, but we came out of June even stronger in July. As we said in the remarks today, we entered this quarter with strong sales.

Ernie Herrman: Yeah, so John, to your question, we had a little bit of, I guess you'd call it a little bit of a lull in the middle of the quarter, but other than that, it was remarkable, strong. If I leave everyone with nothing else after this call, it's our balance and consistency seems to be the hallmark of this quarter. Again, the way we try to manage the business is we try to avoid any major ups and downs. Fortunately, this quarter represented that.

Matthew Boss: Yeah, and then John, just a quick follow-up. Obviously, nice upside to the pre-tax margin this quarter on a for comp. Is there any change to the rule of every 100 basis points upside of same store sales can give you 10 or so basis points flow through to the bottom line? It seems like you have, over the last few years, generally outperformed that. Curious if business has become just.

John Klinger: That's generally what it is. For every point in comp, we would expect to get, you know, 10 to 20 basis points on the bottom line. That's what we feel going forward, that's what you should model.

Matthew Boss: All right. Great. Thank you.

Ernie Herrman: John, I want you to know that John Klinger says that to me all the time, just so you know. When I ask similar questions, I get the same answer.

Matthew Boss: Good to know. Consistency.

Ernie Herrman: Yeah, yeah, because yes, there you go.

Debra McConnell: Our next question comes from Paul Lejuez.

John Klinger: Hey, thanks, guys. Ernie Herrman, I think you mentioned consistency a couple of times. I think related to your income, demographic performance, anything else that you can give, any more detail you could share, higher income demos versus lower income? Maybe just to build on that, also, just regional differences. You know, there's also a lot of question marks around the border stores. Any comments you can make about how those stores are performing?

Ernie Herrman: Yeah, sure. John and I both talked to this. Paul, great question. I will start off with talking about, we look at this all of the time consistently because of, A, yes, consistency and balance. Really, here the word is balance across all the different age groups and income demographic groups. Our marketing team and other team that has really equipped us, I think, to take a strategic approach, even our creative, by the way, on the marketing campaigns we have going right now is aimed at a wide age and income demographic group, which not all marketing does for the different retailers. We have, and as we also remember, we do always talk about in our merchandise mix going after good, better, best.

Ernie Herrman: Our marketing, we are very good at being balanced across the different age and income groups relative to, we will not give you the exact numbers, but relative to the U.S. general population, we are very balanced in that respect. If anything, our focus has been, and you have heard this before from us, we have had a focus, I think this is one of your questions, on acquiring the younger age group as we go forward here. We have been doing that for the last number of years. Even if I look at across our divisions in the new customer base, which again tends to be a smaller number, but our new customer base skews younger than the current customer base, which is good. Our current customer base also skews a little bit younger than the general population. This has been.

John Klinger: Yeah, I mean, the other thing is, we are giving the customers more reasons to come into our stores. The consumables that we offer give a customer a reason to come in and, you know, likely find something else in the store that they like. As Ernie Herrman talks about all the time, it is the good, better, best mix, and, you know, really appealing. That is the reason why we appeal to such a broad customer demographic. As far as the border stores, we look at our Canadian border. The nice thing is we have got stores on both sides. We have seen, and again, we are not talking about a lot of stores that we have on our borders, so it is really hardly any impact to the total. But we did see a little less cross-border shopping.

John Klinger: So more of the Canadians were staying home and shopping Winners versus coming over and shopping TJ Maxx. But again, very, very, very small impact.

Ernie Herrman: We do also see a little lift on the same side of our TJX Canada stores, as you can imagine, right?

John Klinger: Yeah, those sales just, you know, they just transferred.

Ernie Herrman: They transfer over.

Matthew Boss: Got it. Then on the southern border?

John Klinger: Again, we're not seeing a large impact. If you look at our sales across the different geographies, it was pretty consistent across all the geographies in the country. So again, we're not seeing a large impact.

Ernie Herrman: We see an impact if there is some natural disasters, for example, and even in the news media gets more viewership in a region. For example, in California, we would see a little dip when that was going on. That is what John Klinger and I typically are seeing. We are not seeing anything really radical along the Mexico border at all.

John Klinger: Right. Usually the weather, like we saw in June, when the weather subsides, we see things bounce back.

Ernie Herrman: Bounce back, yep. Yep, yep.

Matthew Boss: Got it. Thank you, guys. Good luck.

Ernie Herrman: Yeah, oh, and also, Paul, to that regional, I know you are kind of on the regional question, is we, back to the planning and allocation, our planning and allocation division, they are also good at this. If we end up in a district, an area of, say, a dozen stores or a region or in a certain geography where there is something going on, or it is our planning and allocation with our store ops division, they are fantastic at reacting very quickly. Our field organization, if there is something on you, this happens. So John Klinger and I are talking at a high level, but there is a lot of work that our teams in the field and in planning and allocation do to compensate for any strange regional or local market.

John Klinger: We turn our stores roughly once a month.

Ernie Herrman: Right.

John Klinger: We do have the ability to react quickly.

Ernie Herrman: Which I think goes back to the consistent. All of these things help our consistency because we are able to then take goods and say, "Oh, I will ship it to these other areas that are doing better." It helps offset the area that is a little weak. We have been very happy with the balance of healthy business across the entire country and internationally, as you can see, very pleased with TJX Canada and Europe.

John Klinger: Thank you, guys. Good luck.

Ernie Herrman: Thank you.

Debra McConnell: Our next question comes from Dana Telsey.

Adrienne Yih: Hi. Good morning, everyone, and congratulations on the results. As you think about the merchandise market.

Ernie Herrman: Hello?

Adrienne Yih: Can you hear me okay?

Ernie Herrman: Yep. Yep. Now we can. Yep.

Adrienne Yih: Oh, great. Good morning, afternoon. Congratulations on the terrific results.

Ernie Herrman: Thank you, Dana.

Adrienne Yih: Delivering a flat merchandise margin with tariffs is very impressive. Ernie, as you mentioned, the pricing mechanism of not only comparing against competitors, but even within the mix, how are you thinking about the merchandise margin going forward, given the planning of tariffs? Just lastly, on store openings, closings, relocations, what are you seeing out there, given the continued influx of available boxes? Thank you.

Ernie Herrman: So, John, do you want to?

John Klinger: Yeah, I mean, as far as merchandise margin goes, we were pleased that in the third quarter that we were flat, given the tariff pressures. Markdowns did come in favorable, which we were happy to see. Going forward, we feel confident that we can continue to offset the tariffs that we have out there based on what Ernie Herrman said earlier in the call of how our buyers are executing. We will just continue to execute the overall margin, the pre-tax profit, just by executing the cost efficiency that we saw in the second quarter, continuing to go after those in the back half of the year as well.

Ernie Herrman: Yeah, Dana, I think, you know, a couple of highlights why we are feeling bullish on being able to deal with the tariffs as we go forward is the way we buy, combined with the amount of availability out there right now, which is really going to create more buying opportunities for our teams. Even if the retail wasn't changing, they can buy better than we did before because of the amount of availability. And yes, of course, the ability to adjust our ticket while maintaining our value gap. Again, back to we look at what the out the door is on the like or like item, and then we say if that has gone up, we will preserve the gap and maybe we will go up and adjust it accordingly. Again, we do not lead the charge on that, though.

Ernie Herrman: Our flexibility, by the way, gives us the ability to diversify our sourcing, which I think is another. We are fortunate that we do not have a contract with the customer saying we have to have X amount of people know that when they come to us, we may not have a category in inventory as much as we did the time before, or we might have more of something else versus the time. So that flexibility to diversify in our store just by where the best values are that we opportunistically go after really helps our merchandise margin deal with any tariffs. Because if we run into a, say there is a category that is highly tariff-driven and we are not happy with the values we would be on that, we can just downplay that category.

Ernie Herrman: Whereas maybe other retailers, they are living off of it. We are so diverse in our families of business that we are able to do that. We can also, the last thing I would leave you with is, you know how we talk about the 1,300 buyers? We have buyers, we have all these global buying offices in different locations over in Europe and the Far East looking for excess inventories that nobody else has. Nobody else has these satellite buying offices like we have in all of these different locations that can source easier, flex, and faster sourcing in different countries, which can also allow us to flex against the tariff situation. So good question. I think that is why we are feeling okay. I will leave you with it. It is still a challenge, but we feel like we have strategies to kind of deal with the challenge.

John Klinger: Getting to your store question, we are still on track to hit our plan of just over 130 net new stores. We are seeing a lot of great locations available to us going forward. That gives us optimism to continue roughly a 3% net unit opening over the next couple of years. The other thing we are seeing a lot of success in, again, we continue to see relocations as being a great opportunity for us to relocate stores that there is a better shopping environment in the area that we can move to, and we are seeing improvement there. Then, of course, close to 500 remodels that we are planning on doing this year.

John Klinger: Again, that makes our stores, the older stores, be able to compete similar to our younger stores because when the customer comes in, they are seeing a consistent shopping experience no matter what store they go into. That is one of the things that kind of separates us from some of our competition, where the product mix just looks better when we maintain our store fit and finish. It all kind of works hand in hand with the merchandise.

Adrienne Yih: Thank you.

Ernie Herrman: Thank you, Dana.

Debra McConnell: Our next question comes from Alex Stratton.

Adrienne Yih: Perfect. Thanks so much. Congrats on another great quarter. Ernie, I had a question on Marmaxx specifically. I know you spoke to categories being super healthy across the business, but I am wondering if you could kind of break that down for us at Marmaxx and how you think exposure can change over time. It seems like that has been a part of the margin story there. Then maybe just one quick one for John. It seems like you are embedding more particular gross margin degradation in the fourth quarter. I am wondering if there is something specific happening in that quarter or why that is the case. Thanks so much.

Ernie Herrman: Yeah, Alex. So on Marmaxx, in terms of the families, as I think, as I mentioned, our home business was good there, which is nice to see. Also, I am proud of, again, our HomeGoods and HomeSense businesses across The TJX Companies Inc. and the home business within our full family stores across The TJX Companies Inc. of all goods. I do not want to leave that out. But apparel has been very healthy. I think relative to the market, specifically in Marmaxx, relative to the market, my guess is we are gaining market share there, just looking at the results of the other apparel players, the way they have been trending over the last six months. So I am very proud of in the pure apparel areas.

Ernie Herrman: As you know, we have, and I cannot give you the details by actual department, but I would tell you throughout our accessories areas, which, you know, we are an open book. If you walk in the store, we have many different areas and accessories that I believe we are outperforming the market in as well. Alex, what I like about that is we are not just, you know, it is not just one story why our business is so healthy. It is kind of widespread. That always allows us, I think, to feel good about where we are heading in the future because if something slowed up, I can still fuel one of the other areas to take advantage of the market opportunities that are out there.

Ernie Herrman: So, again, once again, our planning and allocation teams work hand in hand with the buyers in developing these plans by family of business, whether it is ladies' apparel or kids' apparel or men's apparel, which families of business in those apparel areas, which in our, you know, whether it is in footwear or our beauty area or our handbags. We are very strategic and balanced about the way we plan it, but we can turn on a dime based on what happens in the market. Hopefully, that gives you some color there.

John Klinger: Yeah. As far as Q4 margins, we are improving by 20 basis points versus last year. But is your question more comparison to Q3 to Q4?

Adrienne Yih: Yeah. Exactly.

John Klinger: Yeah. There are two things that are happening on the Q3 to Q4 comparison. The first one is that in Q3, our inventory levels are probably at their highest during the year. So we have inventory cap favorability, and then we bring the inventories back down in the fourth quarter. The other piece of it is this year with our shrink accrual. So this year we have a favorable comparison Q1, Q2, and Q3 that reverses out in Q4. It is just a function of how we accrue versus last year, where last year we had a favorable impact in Q4. So when you are planning it, we are planning a shrink slightly favorable this year. So naturally, Q1, Q2, Q3, there is a favorable variance, and Q4 it flips the other way to be slightly up on the full year. Is that clear?

Adrienne Yih: Yep, super clear. Thanks so much.

John Klinger: Yeah.

Debra McConnell: Our next question comes from Adrienne Yih.

Adrienne Yih: Yes. Good morning and congratulations. The stores, both concepts, look fabulous. Ernie, the last time that we had sort of a path through that front line of a real significant kind of price inflation was back in 2011 for the apparel retailers. What we are seeing since July, since these apparel retailers have thematically started to raise initial retails, we do not see a lot of pricing power. I have to tell you, we see hard pricing that looks really similar, hard prices similar to last year. I guess if you can give us some perspective, I know what happened in 2011. You got the sales and you did not get the margins. Then you guys cleaned up, right? Right after that, you guys cleaned up and picked up a lot of the disruption.

Adrienne Yih: As I said, we do not see, we see promos out there on fall goods, on apparel specifically. Can you talk about category pricing power? Maybe footwear is better than apparel or something like that?

Ernie Herrman: Right. Yeah. So, without telling you, again, for competitive reasons, we do not like to give what our strategy is, but let me give you the philosophy of it, which is that we, and I think apparel in general has been deflationary for years. So, when I go back to your spot on when you talk about that, it has been promotional for years. And the newness in the world of apparel, as if you look at it, it has been very spotty. You have some pockets in ladies' businesses across the industry that have been good. I think men's has been very inconsistent, not great. Long story short, what we do is we look at our pricing, I guess you would call it the pricing power, the likelihood of where things might go up around us.

Ernie Herrman: Again, it is not us driving the bus on that. It would probably be in other areas. We just will not talk about what those areas are. And it will vary by items within apparel that might go up. But in general, what you are hearing and feeling would kind of be in sync with what I would guess. Again, I just cannot give you many specifics on that front, other than to tell you that we will manage it, as I described earlier, on case by case. This is what is great about our model. Our buyers do not have to be ahead. Everybody in terms of deciding what the retail is, we just follow. And then we say, we are going to follow, but we are going to have the best value out there. And, yeah.

Ernie Herrman: John, a quick one for you on the horizon of the flow-through of tariffs. There is this grace period, right? If you ship it before August 9th and get it in before October 5th, it is on the old tariffs. How should we think about, and I know you are not giving guidance, how should we think about impact, probably not to you because of what Ernie Herrman just said, but impact to the sector on the spring horizon prices go up again, right?

Ernie Herrman: Yeah, I will jump in on that. I think, Adrienne, I think, so what has happened, the thing I have been seeing across the board on anything where tariffs are hitting, even if they are changing, is there is a gradual, I can, some of the retailers seem to be not moving the price directly with the first landing of the tariff, and it is going up in steps. So I think you are going to see more of a little bit of a gradual increase in pricing as the tariffs come in. I do not know if that is answering the question. I do not think you will see this step all of a sudden, right, with the tariffs hit, because they do not want to, I think, turn off customers immediately by seeing a dramatic price shift.

Ernie Herrman: So I think they might, they might, they might absorb it initially for a little bit, and eventually they will get there. But again, that varies by retailer.

Debra McConnell: The vendors could be negotiating with factories also.

Ernie Herrman: Without a doubt, yeah.

Debra McConnell: Share some of the pressure.

Ernie Herrman: Yeah.

Ernie Herrman: Great. Fabulous. Best of luck.

Ernie Herrman: Thank you, Adrienne.

Ernie Herrman: Impressive as always.

Debra McConnell: Thank you.

Ernie Herrman: Thank you.

John Klinger: Our next question comes from Michael Binetti.

John Klinger: Hey, guys, thanks for taking our questions. I will add my congrats on the quarters.

Ernie Herrman: Thanks, Michael. Michael, by the way, we liked your headline. You had a great headline.

John Klinger: Oh, thanks. We spent a lot of time being creative with the title. Thank you. Maybe a few quick ones from the model. When I look at the 4% comp in the quarter, slightly accelerating from the 3% in Q1, did overall traffic accelerate or is it the same as Q1? On the merchandise margin, you said it was flat. With the inventory, sorry, with the inventory hedge, would merchandise margins have been down excluding that benefit or how should I think about the inventory hedge impact the rest of the year?

Debra McConnell: So as far as the comp and what we saw for transactions, transactions again were up across the board. I would say compared to Q1, probably the basket is maybe a little bit more, particularly in Marmaxx. As far as your merchandise margin question, can you just ask that one more time? Sorry.

John Klinger: Yeah, you said it was flat. I know the inventory hedge was a component on the gross margin. I didn't know if merch margin would have been down excluding that benefit, just to help me think about the merch margin in the rest of the year.

Debra McConnell: Yeah, so the inventory hedge, it was a slight, it was the headwind that we did see. Going forward, you know, I think the way you would look at it is that there probably is a little bit of a headwind in the back half, but not significant.

uh,

John Klinger: Okay. Can I just ask a little bit of a follow-up to another question? A little bit about the margin bridge on pre-tax, expanded 50 basis points in Q2. Guidance is for a little bit of compression, 25 to 35 basis points in Q3, and then re-accelerate to expansion 10 to 20 basis points in Q4. Can you maybe just help me connect those? Any unusual items to be aware of the rest of the year, either this year or in the base?

there probably is a, a little bit of a, a headwind in in, in, in the back cap, but not significant.

Okay. And can I just ask, uh, a little bit of a follow-up to an earlier question? A little bit about the margin bridge on pre-tax expanded. 50 basis points in second quarter guidance is for a little bit of compression, 25-35 in third quarter, and then re-accelerate to expansion, 10-20 basis points in fourth quarter.

Can you maybe just help me connect those any unusual items to be aware of, uh, the rest of the year, either this year or in the base.

Debra McConnell: As far as the bottom line pre-tax profit, in Q3 we obviously have some headwinds, average retail being one of them. The reversal of expenses from the second quarter, mainly into the third quarter, is another headwind there. In the fourth quarter, again, we have the benefit from the higher sales volume between Q3 and Q4. What we talked about before about Q3 and Q4, Q3 has the benefit from the inventory cap and Q4 has the headwind from the shrink accrual. Does that make sense?

Um, so as far as the bottom line pretext profit, um... so, um.

um,

Uh, you know, the benefit from the higher sales volume that, um, between Q3 and Q4. Uh, but again, what we talked about before about Q3 and Q4: Q3 has the benefit from the inventory cap, and Q4 has the headwind from the, uh, from the, the, um, the shrink accrual.

John Klinger: Yeah, a couple of things to work through. I appreciate it. We will talk to you guys later on. Thank you.

Debra McConnell: Yeah.

Ernie Herrman: Thank you, Michael.

Does that make sense? Yeah, a couple of things worked through. Okay, I appreciate it. We'll talk to you guys later on. Thank you.

Thank you, Michael.

John Klinger: Our last question comes from Marni Shapiro.

Our last question comes from Marne Shapiro.

Ernie Herrman: Hey guys, congratulations. Great quarter, and the stores have looked beautiful. HomeGoods for back to college was honestly stunning. I have a quick question.

Ernie Herrman: Thank you, Marni.

Ernie Herrman: have mentioned gifting, I think, more than once in your prepared remarks, which is not always usual for you. So I am assuming that you feel good about any buys that you have made in advance and holiday, and you were able to pack away some of that, given how heavily tariffed holiday decor is. Are you seeing a change in consumer behavior in your stores that is kind of shifting your focus a little, even more so to gifting? I mean, you guys have done an improved job year after year after year, but has something changed? You do not usually mention it this early in the year in your prepared comments.

Hey, guys. Congratulations. Um, great quarter in the source. That looks beautiful. HomeGoods. Perfect. Colleges. Honestly, stunning. Um, I have a quick question. Thank you. Morning.

You’ve mentioned gifting, um, I think more than once in your prepared remarks, which is not always usual for you. So, I'm assuming that you feel good about anybody that you've made it in advance and holiday, and you were able to pack away some of that, um, given how heavy, tired, how holiday décor is. But are you seeing a change in consumer behavior in your stores?

Kind of shifting your focus a little even more, so to gifting. I mean, you guys have done an improved job year after year after year. But something has changed because you don't usually mention it this early in the year, your fare comments.

Ernie Herrman: Right. No, great question, Marni. Part of what has happened over the last couple of years, we have evolved in terms of actually going after gifting for not just holiday. We have started going after the gifting seasons, whether it is Mother's Day, Father's Day. What has happened is a lot of our merchants, our merchandise managers, and their families of business have figured out product to go after that is more appropriate to be gifted. I think you combine that with there has been momentum. If you look at Marni, you know, you shop our stores aggressively. I know you are right commenting on what you see there. You go to holiday, and if you look at our results in Q4, they have been super consistent year after year.

Right. Um, no great question, Marie. Well, part of what's happened over the last couple of years is we've evolved in terms of actually going after gifting for not just the holiday. So we've started going after the gifting seasons, whether it's Mother's Day, Father's Day. And, uh, what's happened is more and more of our merchants, merchandise managers, and their families and businesses have figured out.

Product, uh, to go after that's more appropriate to be gifted. I think you combine that with, uh, there's been momentum. If you look at Marne, uh, you know, uh, you shop our stores aggressively. I know you're all right. Commenting on what you see there, if you go to Holiday.

Ernie Herrman: I think what has been building year after year, what we are showing everybody, is that we are very fresh as you go into holiday, as you get nearer to Christmas, and back again to a combination of our merchants and our plan.