Q1 2027 The TJX Co Inc Earnings Call

May 20, 2026

Operator: Ladies and gentlemen, thank you for standing by. Welcome to The TJX Companies' First Quarter Fiscal 2027 Financial Results Conference Call. As a reminder, this conference is being recorded, 20 May 2026. I would like to turn the conference call over to Mr. Ernie Herrman, Chief Executive Officer and President of The TJX Companies. Please go ahead, sir.

Operator: Ladies and gentlemen, thank you for standing by. Welcome to The TJX Companies' First Quarter Fiscal 2027 Financial Results Conference Call. At this time, all participants are on listen-only mode. We will later conduct a question-and-answer session, at that time if you have a question, you will need to press star one.. As a reminder, this conference is being recorded, 20 May 2026. I would like to turn the conference call over to Mr. Ernie Herrman, Chief Executive Officer and President of The TJX Companies. Please go ahead, sir.

Speaker #1: Ladies and gentlemen, thank you for standing by. Welcome to the TJX COMPANIES I QUARTER FISCAL 2027 FINANCIAL RESULTS CONFERENCE CALL. At this time, all participants are in listen-only mode.

Speaker #1: Later, we will conduct an question-and-answer session; at that time, if you have a question, you will need to press *1. As a reminder, this conference is being recorded.

Speaker #1: May 20, 2026. I would like to turn the conference call over to Mr. Ernie Herrmann, Chief Executive Officer and President of the TJX COMPANIES.

Speaker #1: Please go ahead, sir.

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

Ernie Herrman: Thanks, Ted. Before we begin, Deb 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, including among others the factors identified in our filings with the SEC.

[Company Representative] (The TJX Companies): Thank you, Ernie. Good morning. Today's call is being recorded and includes forward-looking statements about our results and plans. These statements are subject to risks and uncertainties that could cause the actual results to vary materially from these statements, including, among others, the factors identified in our filings with the SEC. Please review our press release for a cautionary statement regarding forward-looking statements as well as the full safe harbor statements included in the investor section of our website, tjx.com. We have also detailed the impact of foreign exchange on our consolidated results and our international divisions in today's press release and in the investor section of tjx.com, along with reconciliations to non-GAAP measures we discuss. Thank you. Now I'll turn it back over to Ernie.

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

Speaker #3: 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.

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.

Speaker #3: Along with reconciliations to non-GAAP measures we discussed. Thank you, and now I'll turn it back over to Ernie.

Speaker #2: Good morning. Joining me and Deb on the call is John. I want to begin by thanking our global associates for their hard work. I truly appreciate their ongoing commitment to both TJX and to our customers.

Ernie Herrman: Good morning. Joining me and Deb on the call is John. I want to begin by thanking our global associates for their hard work. I truly appreciate their ongoing commitment to both TJX and to our customers. Now to an overview of our Q1 results. I am extremely pleased with our excellent Q1 results. Q1 sales, profitability, and earnings per share were all well above our expectations. Overall comp sales were up an outstanding 6%. I am particularly pleased that each of our divisions delivered strong comp sales growth and drove increases in customer transactions. With our above-plan Q1 sales, we are raising our full-year sales and profitability outlook. John will give some more detail about our Q1 results and full-year guidance in a moment. Our terrific Q1 performance is a testament to the strong execution across the company.

Speaker #2: Now, to an overview of our first quarter results. I am extremely pleased with our excellent first quarter results. First quarter sales profitability and earnings per share were all well above our expectations.

Speaker #2: Overall comp sales were up an outstanding 6%. I am particularly pleased that each of our divisions delivered strong comp sales growth and drove increases in customer transactions.

Speaker #2: With our above-planned first quarter sales, we are raising our full-year sales and profitability outlook. John will give some more detail about our first quarter results and full-year guidance in a moment.

Speaker #2: Our terrific first quarter performance is a testament to the strong execution across the company. Our global teams work together as one TJX to offer customers across a wide demographic excellent values in an exciting treasure hunt shopping experience every day.

Ernie Herrman: Our global teams work together as one TJX to offer customers across a wide demographic excellent values and an exciting treasure hunt shopping experience every day. I am confident that our values and merchandise assortment resonated with consumers across all of our retail banners, and that each of our divisions grew their customer base. Looking ahead, the Q2 is off to a good start, and we have many initiatives underway that we believe can continue to drive sales and customer traffic. Availability of quality branded merchandise continues to be outstanding, and we are in a great position to take advantage of the plentiful opportunities we're seeing in the marketplace. Longer term, we are energized by the opportunities we see to continue driving sales and profitability, and expanding our global footprint and gaining market share in the US and internationally.

Speaker #2: I am confident that our values and merchandise assortment resonated with consumers across all of our retail banners and that each of our divisions grew their customer base.

Speaker #2: Looking ahead, the second quarter is off to a good start, and we have many initiatives underway that we believe can continue to drive sales and customer traffic.

Speaker #2: Availability of quality branded merchandise continues to be outstanding, and we are in a great position to take advantage of the plentiful opportunities we're seeing in the marketplace.

Speaker #2: Longer term, we are energized by the opportunities we see to continue driving sales and profitability, expanding our global footprint, and gaining market share in the U.S. and internationally.

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

Ernie Herrman: Now, I'll turn the call over to John to cover our Q1 results in more detail.

Speaker #1: Thanks, Ernie. I also want to add my gratitude to all of our global associates for their continued hard work and commitment to TJX. Now, I'll share some additional details on the first quarter versus last year.

John Klinger: Thanks, Ernie. I also want to add my gratitude to all of our global associates for their continued hard work and commitment to TJX. Now I'll share some additional details on Q1 versus last year. As Ernie mentioned, our Q1 consolidated comp sales increased 6%, which was well above our plan. Our Q1 comp was driven equally by a higher average basket and an increase in customer transactions. Further, we saw very strong comp sales increases in both our apparel and home categories. Pre-tax profit margin was 12%, up 170 basis points and well above our plan. Gross margin was 31.3%, up 180 basis points. This increase was primarily driven by an increase in merchandise margin, a benefit from favorable inventory and fuel hedges, and expense leverage on sales. SG&A was 19.5%, unfavorable by 10 basis points.

Speaker #1: As Ernie mentioned, our first quarter consolidated comp sales increased 6%, which was well above our plan. Our first quarter comp was driven equally by a higher average basket and an increase in customer transactions.

Speaker #1: Further, we saw very strong comp sales increases in both our apparel and home categories. Pre-tax profit margin was 12%, up 170 basis points and well above our plan.

Speaker #1: Gross margin was 31.3%, up 180 basis points. This increase was primarily driven by an increase in merchandise margin, a benefit from favorable inventory and fuel hedges, and expense leverage on sales.

Speaker #1: SG&A was 19.5% unfavorable by 10 basis points. Net interest income was neutral to pre-tax profit margin versus last year. All this led to diluted earnings per share of $1.19, up 29%, and well above our plan.

John Klinger: Net interest income was neutral to pre-tax profit margin versus last year. All this led to diluted earnings per share of $1.19, up 29%, and well above our plan. Q1 pre-tax profit margin and diluted earnings per share were both well above our plan. This was primarily due to expense leverage on our above-plan sales, favorable fuel hedges, and stronger than expected merchandise margin. Now to our Q1 divisional performance. Once again, we are extremely pleased that every division delivered strong comp sales growth and saw increases in customer transactions. At Marmaxx, comp sales grew an outstanding 6%, and segment profit margin increased 100 basis points to 14.7%. Comp sales in both Marmaxx's apparel and home categories were strong. Also, we were very pleased with the broad strength of comp sales across each of Marmaxx's region and income demographics.

Speaker #1: First quarter pre-tax profit margin and diluted earnings per share were both well above our plan. This was primarily due to expense leverage on our above-plan sales favorable fuel hedges and stronger-than-expected merchandise margin.

Speaker #1: Now to our first quarter divisional performance. Once again, we are extremely pleased that every division delivered strong comp sales growth and saw increases in customer transactions.

Speaker #1: At MarMax, comp sales grew an outstanding 6%, and segment profit margin increased 100 basis points to 14.7%. Comp sales in both MarMax's apparel and home categories were strong.

Speaker #1: Also, we were very pleased with the broad strength of comp sales across each of MarMax's region and income demographics. At our Sierra stores and US e-commerce sites, which we report as part of this division, we saw very strong comp we saw a very strong comp increase.

John Klinger: At our Sierra stores and US e-commerce sites, which we report as part of this division, we saw a very strong comp increase. We continue to see excellent opportunities to keep growing Marmaxx, our largest division, across the US. At HomeGoods, comp sales increased a remarkable 9%. Similar to Marmaxx, HomeGoods saw strong comp sales increases across each of their region and income demographics. Segment profit margin increased 270 basis points to 12.9%. HomeGoods offers consumers an exciting, eclectic assortment of merchandise sourced from around the world, all at great value. We believe our HomeGoods and HomeSense banners are highly differentiated from other home fashion retailers and would be very hard for others to replicate. We see a tremendous opportunity to grow this division further and believe we are very well positioned to capture additional share of the US home market.

Speaker #1: We continue to see excellent opportunities to keep growing MarMax, our largest division, across the US. At HomeGoods, comp sales increased a remarkable 9%. Similar to MarMax, HomeGoods saw strong comp sales increases across each of their region and income demographics.

Speaker #1: Segment profit margin increased 270 basis points to 12.9%. HomeGoods offers consumers an exciting eclectic assortment of merchandise sourced from around the world, all at great value.

Speaker #1: We believe our HomeGoods and HomeSense banners are highly differentiated from other home fashion retailers and would be very hard for others to replicate. We see a tremendous opportunity to grow this division further and believe we are very well positioned to capture additional share of the US home market.

John Klinger: We see a tremendous opportunity to grow this division further and believe we are very well positioned to capture additional share of the US home market.

Speaker #1: At TJX Canada, comp sales were up an outstanding 7%. Segment profit margin on a constant currency basis grew 100 basis points to 11%. Across all three of our Canadian banners, we are Canada's only major off-price retailer and we believe we are well positioned to keep growing our customer base across the country.

John Klinger: At TJX Canada, comp sales were up an outstanding 7%. Segment profit margin on a constant currency basis grew 100 basis points to 11% across all three of our Canadian banners. We are Canada's only major off-price retailer, and we believe we are well positioned to keep growing our customer base across the country. At TJX International, comp sales increased a strong 4%. We were pleased with our sales growth in Europe and the strong sales increase in Australia. TJX International segment profit margin on a constant currency basis improved by 40 basis points to 4.7%. During the quarter, we opened our first store in Spain, and the customer response was terrific. We are very excited about our growth plans in Spain and remain confident in the opportunities we see to capture additional market share in both Europe and Australia. Moving to inventory.

Speaker #1: At TJX International, comp sales increased a strong 4%. We were pleased with our sales growth in Europe and the strong sales increase in Australia.

Speaker #1: TJX International's segment profit margin on a constant currency basis improved by 40 basis points to 4.7%. During the quarter, we opened our first store in Spain and the customer response was terrific.

Speaker #1: We are very excited about our growth plans in opportunities we see to capture additional market share in both Europe and Australia. Moving to inventory, first quarter balance sheet inventory was up 8% and inventory on a per-store basis was up 7%.

John Klinger: Moving to inventory.

John Klinger: Q1 balance sheet inventory was up 8%, and inventory on a per store basis was up 7%. We feel great about our inventory levels and the excellent availability we're seeing in the marketplace. As to our capital allocation, we continue to reinvest in the growth of our business while returning $1.1 billion to shareholders through our buyback and dividend programs in Q1. As we mentioned in our press release this morning, we have increased our fiscal 2027 share buyback guidance to a range of $2.75 billion to $3 billion, which will allow us to buy more opportunistically at favorable stock price levels. Now I'll turn it back to Ernie.

Speaker #1: We feel great about our inventory levels and the excellent availability we're seeing in the marketplace. As to our capital allocation, we continue to reinvest in the growth of our business while returning $1.1 billion to shareholders through our buyback and dividend programs in the first quarter.

Speaker #1: As we mentioned in our press release this morning, we have increased our fiscal 2027 share buyback guidance to a range of $2.75 billion to $3 billion, which will allow us to buy more opportunistically at favorable stock price levels.

Speaker #1: Now, I'll turn it back to Ernie.

Speaker #2: Thanks, John. I would now like to delve into the ways we are playing offense to drive our top-line and gain larger share of both the apparel and home fashions markets.

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

Speaker #2: First is how we're approaching our marketing. This year, many of our retail banners are launching fresh, new campaigns and exciting partnerships that continue to reinforce our value leadership.

Speaker #2: Our marketing targets a broad demographic, including younger shoppers, through a wide variety of channels, with a strong emphasis on digital media. We are continuously testing new ways to engage today's consumers to demonstrate our value proposition, highlight the joy of shopping our stores, and build loyalty among our customers.

Speaker #2: I am very pleased with the results we have seen so far and am confident that our marketing strategy will continue to attract new shoppers and encourage existing shoppers to visit more often.

Ernie Herrman: I am very pleased with the results we have seen so far, and I'm confident that our marketing strategy will continue to attract new shoppers and encourage existing shoppers to visit more often.

Speaker #2: Next is our exciting mix of merchandise at great value every day. This all starts with our team of more than 1,400 buyers who are in the marketplace throughout the year.

Ernie Herrman: Next is our exciting mix of merchandise at great value every day. This all starts with our team of more than 1,400 buyers who are in the marketplace throughout the year. They work with our vast vendor network to find the best assortments at the best values across good, better, and best brands. Our planning and allocation team does the terrific work of allocating the goods based on the demographic characteristics of each individual store. This allows us to offer a curated mix of exciting categories and brands that we believe will resonate with shoppers every time they visit, whether it's their first time shopping with us or they are a long-time customer. Availability of merchandise is off the charts. In addition to our long-term mutually beneficial relationships, we typically add thousands of new vendors each year.

Speaker #2: They work with our vast vendor network to find the best assortments at the best values across good, better, and best brands. Our planning and allocation team does the terrific work of allocating the goods based on the demographic characteristics of each individual store.

Speaker #2: This allows us to offer a curated mix of exciting categories and brands that we believe will resonate with shoppers every time they visit. Whether it's their first-time shopping with us or they are a long-time customer.

Speaker #2: Availability of merchandise is off the charts. In addition to our long-term, mutually beneficial relationships, we typically add thousands of new vendors each year. We work hard to be the first call for vendors when they have excess goods.

Ernie Herrman: We work hard to be the first call for vendors when they have excess goods. As TJX continues to open stores, grow its top line, and attract broad range of shoppers, we believe we are becoming even more appealing to vendors who are looking to clear inventory and grow their business. Further, with our global footprint, we can introduce brands to new geographies around the world. As we pursue our future growth plans, we are extremely confident there will be more than enough merchandise to support our growth. In fact, the bigger we have become, the more availability we see. Next is the in-store shopping experience and investing in our stores through our remodeling program and new prototypes. We believe keeping our stores refreshed helps drive consistent comp sales growth across different store ages.

Speaker #2: At TJX, as TJX continues to open stores, grow its top line, and attract broad range of shoppers, we believe we are becoming even more appealing to vendors who are looking to clear inventory and grow their business.

Speaker #2: Further, with our global footprint, we can introduce brands to new geographies around the world. As we pursue our future growth plans, we are extremely confident there will be more than enough merchandise to support our growth.

Speaker #2: In fact, the bigger we have become, the more availability we see. Next, is the in-store shopping experience and investing in our stores through our remodeling program and new prototypes.

Speaker #2: We believe keeping our stores refreshed helps drive consistent comp sales growth across different store ages. Further, we continue to invest in our store payroll to maintain a high level of customer satisfaction and are always looking at ways to improve the store environment and the speed of checkout.

Ernie Herrman: We continue to invest in our store payroll to maintain a high level of customer satisfaction and are always looking at ways to improve the store environment and the speed of checkout. All of this has led to very strong customer satisfaction scores at each of our divisions. Moving to our global store growth and increasing our exposure to off-price around the world. We now operate stores in 10 countries, and we see the potential to add another 1,700 plus stores in these countries alone with our existing banners. We recently opened our first store in Spain, and customer reaction has been outstanding. We are on track to open additional stores in Spain this year and are excited about our growth potential in that country. In Mexico, we are very pleased with our joint venture with Axo and the Promoda stores.

Speaker #2: All of this has led to very strong customer satisfaction scores at each of our divisions. Moving to our global store growth and increasing our exposure to off-price around the world.

Speaker #2: We now operate stores in 10 countries and we see the potential to add another 1,700-plus stores in these countries alone with our existing banners.

Speaker #2: Again, we recently opened our first store in Spain and customer reaction has been outstanding. We are on track to open additional stores in Spain this year and are excited about our growth potential in that country.

Speaker #2: In Mexico, we are very pleased with our joint venture with AXO and the Promota stores. The teams are working together very effectively combining our merchandising expertise with their local operating knowledge.

Ernie Herrman: In Mexico, we are very pleased with our joint venture with Axo and the Promoda stores.

Ernie Herrman: The teams are working together very effectively, combining our merchandising expertise with their local operating knowledge. While still early, we are very optimistic about the long-term potential in Mexico. Regarding our investment in Brands For Less in the Middle East, beyond the current geopolitical environment, we remain confident in the long-term opportunity for that business. Lastly, and most importantly, we continue to play offense by investing in the teaching and training of our associates. I strongly believe the tenure and depth of our off-price knowledge and expertise within TJX is unmatched. We have a very deep bench and are laser-focused on developing the next generation of TJX leaders in order to maintain continuity in the business for many years to come. I am so proud of our culture, which I believe will continue to be a major contributor to our success going forward.

Speaker #2: While still early, we are very optimistic about the long-term potential in Mexico. Regarding our investment in brands for less in the Middle East, beyond the current geopolitical environment, we remain confident in the long-term opportunity for that business.

Speaker #2: Lastly, and most importantly, we continue to play offense by investing in the teaching and training of our associates. I strongly believe that tenure and depth of our off-price knowledge and expertise within TJX is unmatched.

Speaker #2: We have a very deep bench and are laser-focused on developing the next generation of TJX leaders in order to maintain continuity in the business for many years to come.

Speaker #2: I am so proud of our culture, which I believe will continue to be a major contributor to our success going forward. Summing up, we are extremely pleased with our performance in the first quarter and with the opportunities we see for our business going forward.

Ernie Herrman: I am so proud of our culture, which I believe will continue to be a major contributor to our success going forward.

Ernie Herrman: Summing up, we are extremely pleased with our performance in Q1 and with the opportunities we see for our business going forward. Our teams across our entire organization are driving excellent execution of our off-price fundamentals. We feel great about our plans for the remainder of the year and as always, we will strive to beat them. Throughout our 50-year history, we believe that the flexibility and resiliency of our business model and our wide customer demographic have been tremendous advantages that have allowed us to successfully navigate through many types of macroeconomic and retail environments. We are convinced that our strategies to play offense and the characteristics of our business set us up very well to capitalize on the market share and growth opportunities that we see for many years to come.

Speaker #2: Our teams across our entire organization are driving excellent execution of our off-price fundamentals. We feel great about our plans for the remainder of the year and, as always, we will strive to beat them.

Speaker #2: Throughout our 50-year history, we believe that the flexibility and resiliency of our business model and our wide customer demographic have been tremendous advantages that have allowed us to successfully navigate through many types of macroeconomic and retail environments.

Speaker #2: We are convinced that our strategies to play offense, and the characteristics of our business, set us up very well to capitalize on the market share and growth opportunities that we see for many years to come.

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

Ernie Herrman: Now, I'll turn the call back to John to cover our Q2 and full year guidance, and then we'll open it up for questions.

Speaker #1: Thanks again, Ernie. I'll start with our second quarter guidance. We are planning overall comp sales to increase 2 to 3 percent, consolidated sales to be in the range of 15 to 15.1 billion dollars, up 4 to 5 percent.

John Klinger: Thanks again, Ernie. I'll start with our Q2 guidance. We are planning overall comp sales to increase 2% to 3%, consolidated sales to be in the range of $15 to 15.1 billion, up 4% to 5%. pre-tax profit margin to be in the range of 11.4% to 11.5%, flat to up 10 basis points versus last year's 11.4%. gross margin to be in the range of 30.9% to 31%, which would be up 20 to 30 basis points versus last year's 30.7%. We are expecting an increase in merchandise margin in the Q2. SG&A to be 19.6%, 10 basis points unfavorable versus last year. This would be due to incremental store wage and payroll costs. We're assuming net interest income of $28 million, which we expect to be neutral to the Q2 pre-tax.

Speaker #1: Pre-tax profit margin to be in the range of 11.4 to 11.5 percent, flat to up 10 basis points versus last year's 11.4 percent. Gross margin to be in the range of 30.9 to 31 percent, which would be up 20 to 30 basis points versus last year's 30.7 percent.

Speaker #1: We are expecting an increase in merchandise margin in the second quarter. SG&A to be 19.6 percent, 10 basis points unfavorable versus last year. This would be due to incremental store wage and payroll costs.

Speaker #1: We're assuming net interest income of 28 million, which we expect to be neutral to the second quarter pre-tax also assumes a tax rate of 24.9 percent and a weighted average share count of approximately 1.12 billion shares.

John Klinger: Also assumes a tax rate of 24.9% and a weighted average share count of approximately 1.12 billion shares. As a result of these assumptions, we expect Q2 diluted earnings per share to be in the range of $1.15 to $1.17, up 5% to 6% versus last year's $1.10. Moving to the full year, we now expect overall comp sales growth of 3% to 4%. We are increasing our full year consolidated sales guidance to be in the range of $63.2 to $63.7 billion, up 5% to 6% versus last year. We are increasing our full year pre-tax profit margin guidance to be in the range of 11.9% to 12%, up 20 to 30 basis points versus last year's adjusted 11.7%. Moving to gross margin. We now expect it to be in the range of 31.2% to 31.3%, up 20 to 30 basis points versus last year's adjusted 31%.

Speaker #1: As a result of these assumptions, we expect second-quarter diluted earnings per share to be in the range of $1.15 to $1.17, up 5 to 6 percent versus last year's $1.10.

Speaker #1: Moving to the full year, we now expect overall comp sales growth of 3 to 4 percent. We are increasing our full-year consolidated sales guidance to be in the range of 63.2 to 63.7 billion dollars, up 5 to 6 percent versus last year.

Speaker #1: We are increasing our full-year pre-tax profit margin guidance to be in the range of 11.9 to 12 percent, up 20 to 30 basis points versus last year's adjusted 11.7 percent.

Speaker #1: Moving to gross margin, we now expect it to be in the range of 31.2 to 31.3 percent, up 20 to 30 basis points versus last year's adjusted 31 percent.

Speaker #1: We continue to expect full-year SG&A to be 19.5 percent, flat versus last year's adjusted 19.5 percent. We're now assuming net interest income of about 122 million dollars, which we expect to be neutral to our full-year pre-tax profit margin versus last year.

John Klinger: We continue to expect full year SG&A to be 19.5%, flat versus last year's adjusted 19.5%. We're now assuming net interest income of about $122 million, which we expect to be neutral to our full year pre-tax profit margin versus last year. Our full year guidance assumes a tax rate of 24.7% and a weighted average share count of approximately 1.12 billion shares. As a result of these assumptions, we are increasing our full year diluted earnings per share to be in the range of $5.08 to $5.15. This will represent a 7% to 9% increase versus last year's adjusted $4.73. I want to mention that we did not flow the entire first quarter pre-tax profit and earnings per share beat to the full year, as we are now planning current fuel prices to remain in place for the rest of the year.

Speaker #1: Our full-year guidance assumes a tax rate of 24.7 percent and a weighted average share count of approximately 1.12 billion shares. As a result of these assumptions, we are increasing our full-year diluted earnings per share to be in the range of $5.08 to $5.15. This would represent a 7 to 9 percent increase versus last year's adjusted $4.73.

Speaker #1: I want to mention that we did not flow the entire first quarter pre-tax profit and earnings per share beat to the full year, as we are now planning current fuel prices to remain in place for the rest of the year.

Speaker #1: Of course, if fuel prices come down from their current levels, we would expect to see favorability to our full-year profitability plan. In closing, I want to reiterate that we are excited about the growth in market share opportunities we see in the near and long term.

John Klinger: Of course, if fuel prices come down from their current levels, we would expect to see favorability to our full year profitability plan. In closing, I want to reiterate that we are excited about the growth and market share opportunities we see in the near and long term. We are in an excellent position to continue to invest in the growth of TJX while simultaneously returning significant cash to our shareholders. Thank you. Now we're happy to take your questions.

Speaker #1: We are in an excellent position to continue to invest in the growth of TJX while simultaneously returning significant cash to our shareholders. Thank you and now we're happy to take your questions.

Speaker #2: The phone lines are now open for questions. If you would like to ask a question over the phone, please press star one and record your name.

Operator: The phone lines are now open for questions. If you would like to ask a question over the phone, please press star one and record your name. To withdraw your question, press star two. The first question in the queue is from Lorraine Hutchinson with Bank of America. Your line is open.

Speaker #2: To withdraw your question, press star two. The first question in the queue is from Lorraine Hutchinson with Bank of America. Your line is open.

Speaker #3: Hi. Thank you. Good morning. Ernie, you had called out ticket for a couple of quarters, and now the comp is equally transaction-driven. Is this a signal that the customer is shying away from some of the higher-priced products, or, said differently, are you seeing any change in behavior from your customer based on macro factors?

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

Speaker #4: Hi, Lorraine. No. No change in behavior. Again, we don't top-down drive that. We do it from bottom up with our merchants. And because we're across good, better, and best, and we do monitor even purchases by income group, by ticket, etc., and we've seen no change in the pattern across any of that.

Ernie Herrman: Hi, Lorraine. No change in behavior. Again, we don't top-down drive that. We do it from bottom up with our merchants. Because we're across good, better, and best, and we do monitor even purchases by income group, by ticket, et cetera, and we've seen no change in the pattern across any of that.

John Klinger: Yeah.

Ernie Herrman: Yeah.

Speaker #4: So yeah.

Ernie Herrman: Yeah.

Speaker #1: Yeah. And Lorraine, similar to the last few quarters, when we look at the comp performance in Marmaxx by department and the ticket change by department, there's no correlation.

John Klinger: Lorraine, similar to the last few quarters, when we look at the comp performance in Marmaxx by department and the ticket change by department, there's no correlation at all.

Speaker #4: At all. Yeah.

Ernie Herrman: Yeah

Speaker #1: The ticket movement and the comp performance. So again, we continue to just see that we are pricing our goods at fantastic value, against what the full price out the door retail is.

John Klinger: to the ticket movement and the comp performance. Again, we continue to just see that we are pricing our goods at fantastic value against what the full price out the door retail is.

Ernie Herrman: To your point, Lorraine, transactions have remained healthy.

Speaker #4: And to your point, Lorraine, transactions have remained healthy, and what's nice is the other thing that's consistent—I guess one of the headlines today would be consistency—is we're consistent across all our divisions.

Ernie Herrman: To your point, Lorraine, transactions have remained healthy.

John Klinger: Yeah.

Ernie Herrman: What's nice is, the other thing that's consistent, I guess one of the headlines today would be consistency, is we're consistent across all our divisions, in that respect, right, John?

Speaker #4: In that respect, right, John, in terms of transactions? And then even the dynamics of what you were asking about, that applies to every division.

John Klinger: Absolutely

Ernie Herrman: transactions. Even the dynamics of what you were asking about, that applies to every division.

Speaker #3: Great. Thank you.

Lorraine Hutchinson: Great. Thank you.

Speaker #4: Thank you.

Ernie Herrman: Thank you.

Speaker #2: The next question in the queue is from Brooke Roche with Goldman Sachs. Your line is open.

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

Speaker #3: Thank you, competitive.

Brooke Roach: Good morning, thank you for taking our question. I was hoping you could elaborate on the cost implications that you're seeing as a result of higher oil prices and macro factors. Can you help us understand the magnitude of the fuel headwinds that you expect, particularly into H2 of the year? It looks like gross margins are expected to turn negative in the back. What are the offsets that you see as a result of that? John, can you quantify the benefit from the fuel hedge gain in Q1? Thank you.

Speaker #5: Good morning and thank you for taking our question. I was hoping you could elaborate on the cost implications that you're seeing as a result of higher oil prices and macro factors.

Speaker #5: Can you help us understand the magnitude of the fuel headwinds that you expect, particularly into the back half of the year? It looks like gross margins are expected to turn negative in the back.

Speaker #5: And what the offsets that you see as a result of that? And then, John, can you quantify the benefit from the fuel hedge gain in the first quarter?

Speaker #5: Thank you.

Speaker #1: Yeah. So the cost of the fuel so when we beat our guidance in the first quarter by 20 pennies and we're flowing 13 to the year, that differential is the fuel costs that we've embedded into our plan.

Ernie Herrman: Yeah. The cost of the fuel. When we beat our guidance in Q1 by $0.20 and we're flowing $0.13 to the year, that differential is the fuel cost that we've embedded into our plan. We're assuming that the current fuel rates that we're seeing for diesel today are going to remain for the rest of the year. Again, if the issues in the Strait are resolved and we see the price of diesel start to go down, we'll see savings against our plan. We're not going to parse out the components of our gross margin. We did see a benefit because we are hedged in fuel. That benefit came through in Q1. When you look at the back nine, we've already taken the benefit of the fuel hedge, assuming that the price stays where it is.

John Klinger: Yeah. The cost of the fuel. When we beat our guidance in Q1 by $0.20 and we're flowing $0.13 to the year, that differential is the fuel cost that we've embedded into our plan. We're assuming that the current fuel rates that we're seeing for diesel today are going to remain for the rest of the year. Again, if the issues in the Strait are resolved and we see the price of diesel start to go down, we'll see savings against our plan. We're not going to parse out the components of our gross margin. We did see a benefit because we are hedged in fuel. That benefit came through in Q1. When you look at the back nine, we've already taken the benefit of the fuel hedge, assuming that the price stays where it is.

Speaker #1: And we're assuming that the current fuel rates that we're seeing for diesel today are going to remain for the rest of the year. So again, if we do see—if the issues in the Strait are resolved and we see the price of diesel start to go down, we'll see savings against our plan.

Speaker #1: As far as the we're not going to parse out the components of our gross margin, but we did see a benefit because we are hedged in fuel.

Speaker #1: That benefit came through in the first quarter. So when you look at the back nine, we've already taken the benefit of the fuel hedge, assuming that the price stays where it is.

Speaker #1: If the price continues to go up, then we will have more savings to that fuel hedge. Likewise, if it goes down, there'd be a little bit of a hit from what we took in the first quarter.

Ernie Herrman: If the price continues to go up, then we will have more savings to that fuel hedge. Likewise, if it goes down, there'll be a little bit of a hit from what we took in Q1. Our assumptions are that that fuel price would remain flat for the remainder of the year, which may or may not happen.

John Klinger: If the price continues to go up, then we will have more savings to that fuel hedge. Likewise, if it goes down, there'll be a little bit of a hit from what we took in Q1. Our assumptions are that that fuel price would remain flat for the remainder of the year, which may or may not happen.

Speaker #1: But our assumptions are that that fuel price would remain flat for the remainder of the year, which may or may not happen.

Speaker #3: Right.

Brooke Roach: Great. Thanks so much.

Speaker #5: Yeah.

Speaker #3: Great. Thanks so much.

Speaker #2: The next question in the queue is from Matthew Boss with JPMorgan. Your line is open.

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

Speaker #6: Great. Thanks. And congrats. So, Ernie, strong first quarter, further comp acceleration. You raised top line for the year. Despite the macro backdrop. So is it value?

Matthew Boss: Great. Thanks, and congrats.

Ernie Herrman: Thank you.

Matthew Boss: Ernie, strong Q1, further comp acceleration. You raised top line for the year despite the macro backdrop. Is it value, is it product improvement, or is it just great management here?

Speaker #6: Is it product improvement? Or is it just great management here? And more realistic, can you.

Ernie Herrman: Matt, this is a great question. It doesn't get bigger than that one, I guess.

Speaker #4: Matt, this is a great question. It doesn't get bigger than that one, I guess.

Speaker #6: I figured you'd like this one.

Matthew Boss: I figured you'd like this one.

Speaker #4: Yeah. I do. I do. On the back end of it, is it new customer acquisition or I guess, is there a way to think about the durability of the comp drivers in place?

Ernie Herrman: Yeah.

Matthew Boss: I do. On the back end of it, is it new customer acquisition, or I guess, is there a way to think about the durability of the comp drivers in place? As you talked about the good start to Q2, just kind of thinking beyond the quarter and the consistency and the durability, where do we go from here?

Speaker #4: And as you talked about the good start to the second quarter, just kind of thinking beyond the quarter and the consistency and the durability, where do we go from here?

Speaker #4: Well, first of all, you have set the record. This is a four-part question. That's good. But it's good. It's under ABCD, right? So the well, the value let's start with let's start with, as you know, we try to stay steady with the value proposition.

Ernie Herrman: Well, first of all, you have set the record. This is a four-part question. That's good. It's good. It's under A, B, C, D, right? Let's start with, as you know, we try to stay steady with the value proposition. I mentioned in the script the 1,400 buyers that are going around in this environment, which you also referred to briefly. We always try to take advantage of what's going on in the economy or in the markets. This is like any other. Fuel prices can cause pressure all around the board. We try not to get too theoretical about what the impact is going to be, other than we know the better value we offer and the more exciting we make the treasure hunt shopping experience for our customers, the more market share we will gain.

Speaker #4: I mentioned in the script, the 1,400 buyers that are going around. And this environment, which you also referred to briefly, we always try to take advantage of what's going on in the economy, right, or in the markets.

Speaker #4: So this is like any other fuel prices can cause pressure all around the board. We try not to get too theoretical about what the impact is going to be other than we know the better off the better value we offer and the more exciting we make the treasure hunt shopping experience for our customers, the more market share we will gain.

Speaker #4: And I believe our teams that are great job in the first quarter which is why those results and you ask about product it's both.

Ernie Herrman: I believe our teams did a great job in Q1, which is why those results. You ask about product. It's both product and value. We look at the nature of our product, the quality level, the fashion, the brand, and at the price that it's at. Our merchants have done a terrific job in that. Remember, when you have a situation like this where there's uneasiness out there, we look at it as an opportunity for us to capture additional market share. More consumers looking for value is an opportunity for us going forward. Secondly, I love the way we're positioned. We talk about our good start to Q2. We are positioned so well going forward here, with our inventories, our liquidity, the availability of merchandise, I believe I mentioned in the script.

Speaker #4: Product and value we look at the nature of our product, the quality level, the fashion, the brand, and at the price that it's at.

Speaker #4: Our merchants have done a terrific job in that. And remember, when you have a situation like this where there's uneasiness out there, we look at it as an opportunity for us to capture additional market share.

Speaker #4: And the consumer is looking for. They'll have more consumers looking for value as an opportunity for us going forward. Secondly, I love the way we're positioned.

Speaker #4: We talk about our good start to the second quarter. We are positioned so well going forward here with our inventories, our liquidity, the availability of merchandise.

Speaker #4: I believe I mentioned in the script—I think I said it was off the charts. We're always trying to think of new words to describe it.

Ernie Herrman: I think I said it was off the charts. We're always trying to think of new words to describe it. We have, in most cases, I think, the first call from the vendors. We mean more to them than we ever have before, and yet our buyers are so good at maintaining such good level relationships with them that I think that's why we have consistent great value on the floor from the right brands, which also is important. You mentioned new customers.

Speaker #4: But we have in most cases, I think, the first call from the vendors we mean more to them than we ever have before. And yet our buyers are so good at maintaining such good level relationships with them that I think that's why we have consistent great value on the floor from the right brands, which also is important.

Speaker #4: You mentioned new customers. One of the things that our marketing teams have done and obviously, our goal is when you talk durability also, our goal is to increase visits from our existing customers, obviously, but to also attract another visit from our infrequent customer or an entirely new customer.

Ernie Herrman: One of the things that our marketing teams have done. Obviously, our goal is, when you talk durability also, our goal is to increase visits from our existing customers, obviously, but to also attract another visit from our infrequent customer or an entirely new customer. A metric we're always looking at is our first time new customers that we're acquiring have been at a disproportionately younger age group relative to the general population. That has continued. We've talked about that before. I think that speaks to our durability and consistency for the future because we're playing this for the long game, not just for quarter by quarter, right? We're in it for years of strong growth. Yeah, as you can see, we're very bullish on the year.

Speaker #4: So a metric we're always looking at is our first-time new customers that we're acquiring have been at a disproportionately younger age group relative to the general population.

Speaker #4: So that has continued. We talked about that before. I think that speaks to our durability and consistency for the future because we're playing this for the long game, not just for quarter by quarter, right?

Speaker #4: We're in it for years of strong growth. So yeah, as you can see, we're very bullish on the year. That's why John and I took the year the guidance up on the sales.

Ernie Herrman: That's why John and I took the guidance up on the sales granted, flowing it through in the profitability, because clearly it's not just about sales, it's about doing it profitably. Really, I don't know when we've done that before in Q1 where we would have adjusted the year like this. Yeah, I hope I've answered your questions.

Speaker #4: Granted, flowing it through in the profitability because it's clearly it's not just about sales. It's about doing it profitably. And really, I don't know when we've done that before in the first quarter where we would have adjusted the year.

Speaker #4: Like this. So yeah, I hope I've answered your questions.

Speaker #6: You did. Congrats to the whole team. Best of luck.

Matthew Boss: You did. Congrats to the whole team. Best of luck.

Ernie Herrman: All right. Thank you, Matt.

Speaker #4: All right. Thank you, Matt.

Speaker #2: The next question in the queue is from Ike Borcha with Wells Fargo. Your line is open.

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

Speaker #5: Good morning. Thank you for taking my question. This is Juliana on for Ike. I was wondering if you could expand upon the category trends that you're seeing within MarMax and then separately within HomeGoods.

[Analyst] (Wells Fargo): Good morning. Thank you for taking my question. This is Juliana on for Ike. I was wondering if you could expand upon the category trends that you're seeing within Marmaxx and then separately within HomeGoods. Thank you.

Juliana Duque: Good morning. Thank you for taking my question. This is Juliana on for Ike. I was wondering if you could expand upon the category trends that you're seeing within Marmaxx and then separately within HomeGoods. Thank you.

Speaker #5: Thank you.

Speaker #4: Hi, Juliana. We actually don't give that information out for understandable reasons competitive reasons. What I would tell you is obviously, when we run a six comp at and healthy across all the divisions is it's very widespread.

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

Speaker #4: So we have numerous categories contributing or, as you can imagine, the math never works. The business isn't as healthy unless we have most category trends taking place.

Speaker #4: I can't really give you this—I mean, I could. We just don't give the specifics of category trends. What I would tell you is, we are aggressive about the hot categories that have been helping to drive the incremental comp sales.

Speaker #4: We're aggressive with funding. We're aggressive with real estate and the stores. And we're aggressive with moving people with internally merchants whether it's in planning and allocation or in our buying teams to the hot businesses to further fuel the procurement of those goods as well as the shipping to the stores.

Ernie Herrman: We're aggressive with funding, we're aggressive with real estate in the stores, and we're aggressive with moving people with internally merchants, whether it's in planning and allocation or in our buying teams, to the hot businesses to further fuel the procurement of those goods as well as the shipping to the stores. We're very flexible, as you know, in our model. One of our big advantages is hand to mouth. We can adjust to strong category performance, and we can back off weaker category performance faster than most other retailers, that we know of. I can assure you, without giving you which categories, that we will maximize the hot categories that we're experiencing, and we will actually downplay sooner than most ones that are just not performing that well.

Speaker #4: We're very flexible, as you know, in our model. So one of our big advantages is hand-to-mouth. We can adjust to strong category performance. And we can back off weaker category performance faster than most other retailers that we know of.

Speaker #4: So, without giving you— I can assure you, without giving you which categories— that we will maximize the hot categories that we're experiencing, and we will actually downplay sooner than most, ones that are just not performing that well.

Speaker #7: Due to the speed of our turn.

John Klinger: Due to the speed of our turn.

Ernie Herrman: Yeah, speed of our turn. Yeah, that's another point. We turn so fast, and you can see, if you want to see that on a different category level, you look at our HomeGoods business, which just continues to perform at a rapid rate, one of our fastest turning businesses, and probably one of the ones where we are most adaptable in terms of moving fast. Marmaxx moves super fast. Every division moves super fast on adjusting to category trends. To John's point, though, turns allow us to do that also.

Speaker #4: Yeah, speed of our turn. Yeah, it's another point. We turn so fast. And you can see if you want to see that on a different highly level you look at our HomeGoods business which just continues to perform at a rapid rate.

Speaker #4: One of our fastest turning businesses and probably one of the ones we are most adaptable in terms of moving fast. But MarMax moves super fast.

Speaker #4: Every division moves super fast on adjusting the category trends. To John's point, though, turns allow us to do that also.

Speaker #7: Yeah.

John Klinger: Yeah.

Speaker #5: Got it. Thank you. And then maybe separately a follow-up if I may. Going back to the prior question on marketing and the new consumers you're seeing in the business, how much runway do you see left on these marketing improvements that you've had?

[Analyst] (Wells Fargo): Got it. Thank you. Then maybe separately, a follow-up, if I may. Going back to the prior question on marketing and the new consumers you're seeing in the business, how much runway do you see left on these marketing improvements that you've had? Just any commentary on there. Thank you.

Juliana Duque: Got it. Thank you. Then maybe separately, a follow-up, if I may. Going back to the prior question on marketing and the new consumers you're seeing in the business, how much runway do you see left on these marketing improvements that you've had? Just any commentary on there. Thank you.

Speaker #5: Just any commentary on there. Thank you.

Speaker #4: Oh, on the marketing—wow, I'll tell you. Our marketing team, at our core, we see a lot of ability, a lot of opportunity going forward. We've made a lot of improvement.

Ernie Herrman: Oh, on the marketing improvement. Well, I'll tell you, our marketing team, we see a lot of ability of opportunity going forward, that we've made a lot of improvement, and there's more we can still do. We've talked about this before. We've become a lot more sophisticated with our marketing mix modeling. We're able to analyze and spend more wisely on the advertising vehicles and the campaigns that we utilize. We are more efficient in our marketing. If you look at the different campaigns, for example, Marshalls, we continue to run the Hustlers campaign. HomeGoods, we continue to run the Never Shop the Same campaign. At Canada, when did we start the Stop Wondering, Start Winning campaign?

Speaker #4: And there's more we can still do. We've talked about this before. We've become a lot more sophisticated with our marketing mix modeling where we're able to analyze and spend more wisely on the advertising vehicles and the campaigns that we utilize.

Speaker #4: So we are more efficient in our marketing. If you look at the different campaigns, for example, Marshall's we continue to run the Hustlers campaign, HomeGoods we're continuing to run, the Never Shop the Same campaign.

Speaker #4: At Canada, when did we stop the Stop Wondering, Start Winning campaign? We measure each one of these. And we can determine whether or not we are going to spend the working media similarly to what we've been doing or we're going to improve on it.

Ernie Herrman: We measure each one of these, we can determine whether or not we are going to spend the working media similarly to what we've been doing or we're going to improve on it. We've started utilizing these tools over the last few years greater than ever before, and I think we have a long runway, to your question, to continue to do more of that going forward. Also, on the creative, our teams, I think, have done some of the best new marketing in years to try to go after new customers, at the same time, create a reason for an additional visit from our existing customers. It's a two-pronged effort on part of the marketing team, and I think they've done an amazing job on it.

Speaker #4: And these tools really have we've started utilizing these tools over the last few years greater than ever before. And I think we have a long runway to your question to continue to do more of that going forward.

Speaker #4: Also, on the creative, our teams are I think have done some of the best new marketing in years to try to go after new customers at the same time create a reason for an additional visit from our existing customers.

Speaker #4: So it's a two-pronged effort. On part of the marketing team, and I think they've done an amazing job on it. So as you can see, I'm very bullish in a time when I believe TJX and every geography we're in can continue to gain market share.

Ernie Herrman: As you can see, I'm very bullish in a time when I believe TJX and every geography we're in can continue to gain market share. Marketing has become more of a weapon for us to continue to do that and play offense. You heard me talk about play offense in the script, and I really believe what any good business does, just like a good sports team, is they're able to play offense and defense, but you always have to have good offense. Marketing is a tool for us that we're using more of as an offensive tool than we ever have before.

Speaker #4: Marketing has become more of a weapon for us to continue to do that and play offense. You heard me talk about play offense in the script.

Speaker #4: And I really believe what any good business does, just like a good sports team, is they're able to play offense and defense. But you always have to have good offense.

Speaker #4: And marketing is a tool for us that we're using more of as an offensive tool than we ever have before.

Speaker #7: And I'll just add to Ernie's comments that we only have a single-digit market share for apparel and home in the US. And we still see opportunity to grow there.

John Klinger: I'll just add to Ernie's comments that we only have a single-digit market share for apparel and home in the US, and we still see opportunity to grow there.

Ernie Herrman: Plenty of room.

Speaker #7: The other thing is we see a lot of opportunity to continue to grow our footprint of our store base, as well. And so both of those are going to give us the ability to continue to gain market share.

John Klinger: The other thing is we see a lot of opportunity to continue to grow our footprint of our store base as well. Both of those are going to give us the ability to continue to gain market share.

Speaker #5: Got it. Thank you very much.

[Analyst] (Wells Fargo): Got it. Thank you very much.

Juliana Duque: Got it. Thank you very much.

Speaker #4: Thank you.

Ernie Herrman: Thank you.

Speaker #1: The next question. The cue is from Michael Bennetty with Evercore Your Line Is Open.

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

Speaker #8: Hey, guys. Thanks for taking our question here.

Michael Binetti: Hey, guys. Thanks for taking our question here.

Speaker #4: Of course.

John Klinger: Of course.

Michael Binetti: Congrats on a great quarter. Let me ask on the bridge to the HomeGoods margin, really nice to see the margin there. How do we think about that through the year? I know you don't guide on margins, just conceptually, considering freight is what we're taking from EPS the rest of the year. I know it's pretty sensitive to that. Maybe just bigger picture on the HomeGoods margin, maybe separate cyclical stuff from what's happening on the underlying efficiency of that business. I know you guys have some long-term goals for the profitability of that business and always look at Marmaxx as a North Star for what you like your businesses to strive for someday. Just maybe orient us there. I'll just ask the opposite of Lorraine's question on transaction versus ticket.

Speaker #1: So, congrats on a great quarter. Let me ask about the bridge to the HomeGoods margin—really nice to see the margin there. How should we think about that through the year?

Speaker #1: I know you don't guide on margins. Just conceptually, considering freight is what we're taking from EPS the rest of the year. I know it's pretty sensitive to that.

Speaker #1: And then maybe just but bigger picture on the HomeGoods margin. Maybe separate cyclical stuff from what's happening on the underlying efficiency of that business.

Speaker #1: I know you guys have some long-term goals for the profitability of that business and always look at MarMax as a North Star for what you like your businesses to strive for someday.

Speaker #1: Just maybe orient us there. And then I'll just ask the opposite of Lorraine's question on transaction versus ticket. I think that was the clearest signal you've given us on traffic in a few quarters.

Michael Binetti: I think that was the clearest signal you've given us on traffic in a few quarters. It sounds maybe like it improved a little bit sequentially this quarter. If that's the case, maybe why you think that is, or if that's right?

Speaker #1: It sounds maybe like it improved a little bit sequentially. This quarter, if that's the case, maybe why you think that is or if that's right.

Speaker #4: Yeah. So I can give you a little more detail on the HomeGoods. So I mean, the nine comp is when we look at leveraging one of the biggest levers that we can pull is on the driving the top line.

John Klinger: Yeah. I'll give you a little more detail on the HomeGoods. The 9 comp is when we look at leveraging, one of the biggest levers that we can pull is on driving the top line. That allows us to be more efficient in our expenses, which we saw in HomeGoods for our store in DC. Then, of course, merchandise margin improvement we saw as well. We're not giving full year guidance on HomeGoods, but again, as Ernie talked about earlier, we're hitting on all cylinders as far as executing that business model. Then your other question, I'm sorry.

Speaker #4: And that allows us to be more efficient in our expenses, which we saw in HomeGoods for our store in D.C. And then, of course, merchandise margin improvement we saw as well.

Speaker #4: We're not giving full-year guidance on HomeGoods, but again, as Ernie talked about earlier, we're hitting on all cylinders as far as executing that business model.

Speaker #4: And then your other question, I'm sorry.

Ernie Herrman: Transactions.

Speaker #8: Transaction.

John Klinger: Transactions. Yeah. The last couple of quarters, the basket has been the primary driver. In this quarter, we're seeing about half and half. We really don't look at it that closely because to us, it's really up to the customer. Our goal is just to execute the model to the highest level that we can. We see the results in the top line.

Speaker #4: Transactions, yeah. So the last couple of quarters, the basket has been the primary driver, and this quarter, we're seeing about half and half. We really don't look at it that closely because, to us, it's really up to the customer, and our goal is just to execute the model to the highest level that we can.

Speaker #4: And we see the results in the top line.

Speaker #8: Yeah, Michael, over the we've talked about this from many seasons, I think, is we sometimes have our average ticket go up and down, the transactions dovetail, and they can move around a little bit.

Ernie Herrman: Yeah, Michael, we've talked about this for many seasons, I think we sometimes have our average ticket go up and down, the transactions dovetail, and they can move around a little bit. The thing that's difficult to measure in off-price because it's not so pre-planned and pre-programmed item to item is you can have some, and mix can do it as well. Because we do a little like that other question where I was talking about, we will chase trends very aggressively regardless of what the ticket. If it's going to drive sales, we don't worry so much about ticket. We worry about ultimately, is it going to drive incremental sales. Again, to John's point, it's kind of something we don't necessarily manage.

Speaker #8: But the thing that's difficult to measure in off-price because it's not so pre-planned and pre-programmed item to item is you can have some and mix can do it as well.

Speaker #8: Because we do a little like that other question when I was talking about, we will chase trends very aggressively. Regardless of what the ticket, wherever, if it's going to drive sales, we don't worry so much about ticket, or—we worry about ultimately, is it going to drive incremental sales?

Speaker #8: So again, to John's point, it's kind of something we don't necessarily manage so specifically.

John Klinger: Right

Ernie Herrman: specifically.

Speaker #1: I guess I was wondering, because if you did see something clear in a sequential improvement in traffic, I'm wondering if you'd tie that to some evidence that a value-seeking consumer might be showing you some improving signs on trade-down into the store or anything like that.

Michael Binetti: I guess I was wondering because if you did see something clear in a sequential improvement in traffic, I'm wondering if you tied that to some evidence that a value-seeking consumer might be showing you some improving signs on trade down into the store or anything like that?

John Klinger: No. Look, across all geographies, income demographic bands, we're very pleased with what we saw.

Speaker #4: Well, I mean, look, across all geography, income, demographic bands, we're very pleased with what we saw.

Speaker #8: Yeah. Although to your point, yeah, what we can tell you is we saw a growth in all the income levels in Q1. So across the board.

Ernie Herrman: Yeah. Although, to your point, Michael, what we can say is we saw a growth in all the income-.

John Klinger: Yeah

Ernie Herrman: levels in Q1.

John Klinger: Yeah

Ernie Herrman: across the board.

John Klinger: Very consistent.

Speaker #8: Very consistent.

Ernie Herrman: Very consistent.

Michael Binetti: Okay.

Ernie Herrman: Yeah.

Speaker #1: Yeah. All right, guys. Thanks for joining.

Michael Binetti: All right, guys. Thanks for taking my question.

Ernie Herrman: Remarkably consistent by income group.

Speaker #8: And remarkably consistent by income group.

Ernie Herrman: Remarkably consistent by income group.

Speaker #1: Yeah. Interesting. Okay. Thanks a lot, guys. Congrats again.

John Klinger: Yeah.

Michael Binetti: Interesting. Okay. Thanks a lot, guys. Congrats again.

Speaker #8: Yep. Thank you.

Ernie Herrman: Yep. Thank you.

John Klinger: Thanks, Michael.

Speaker #4: Thanks, Michael.

Speaker #1: The next question is from JSOL with UBS Your Line Is Open.

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

Speaker #7: Terrific. Thanks so much. Ernie, you talked about how they opened up the store in Spain. It sounds like you're excited about what you've seen.

Jay Sole: Terrific. Thanks so much. Ernie, you talked about how you opened up this store in Spain. It sounds like you are excited about what you have seen. You mentioned Grupo Axo. I think it has been over a year now since you put out that 7,000 number for the total store count potential for TJX. I think you essentially implied that again today. It has also been over a year since the Brands For Less deal, and you mentioned Grupo Axo. How do you think about potentially raising that 7,000 number? Based on what you have seen, what would give you the confidence to sort of say, Hey, maybe we can be more. Maybe we can do more. Can you give us a little color on that? Thank you.

Speaker #7: You mentioned Google X. So I think it's been over a year now since you put out that 7,000 number for the total store comp potential for TJX.

Speaker #7: I think you essentially implied that again today. And it's also been over a year since the brand for Lesteel. And you mentioned Google X.

Speaker #7: So what do you how do you think about potentially raising that 7,000 number? I mean, based on what you've seen, what would give you the confidence to sort of say, "Hey, maybe we can be more.

Speaker #7: Maybe we can do more? Can you give us a little color on that? Thank you.

Speaker #8: Absolutely, Jay. So where I can't be too specific here is these are things we're talking about internally. And we're always looking at this, especially where I mentioned we're in 10 countries now.

Ernie Herrman: Absolutely, Jay. Where I can't be too specific here is these are things we're talking about internally. We're always looking at this, especially where I mentioned we're in 10 countries now, and you're probably also getting at domestically, we have successful brands. There has been store closures and impending store closures in the US and in other countries, such as in Canada as well. As we speak, we are looking at it, and I think at one point you'll see us revisit those numbers, to your being very upfront with your question. Very timely question, Jay. John and his team and the senior team were very strategic and thoughtful about those issues before we come out with them.

Speaker #8: And you're probably also getting at domestically. We have successful brands. There has been store closures. And impending store closures in the US. And in other countries, such as in Canada, as well.

Speaker #8: So as we speak, we are looking at an I think at one point, you'll see us revisit those numbers to your being very upfront with your question.

Speaker #8: So, very timely question, Jay. And John and his team, and the senior team—we're very strategic and thoughtful about those issues before we come out with them.

Speaker #8: But we're feeling pretty bullish. And we know we have by the way, our model has worked wherever we go. As we've shown that when we put in the right people, we've learned in the past when we haven't put in the right teams to start with in a new market, but to add fuel to your fire, for example, our Australia business has also doing really well.

Ernie Herrman: We're feeling pretty bullish, and we know we have By the way, our model has worked wherever we go. As we've shown, that when we put in the right people, we've learned in the past when we haven't put in the right teams to start with in a new market. To add fuel to your fire, for example, our Australia business is also doing really well, which, as you know, we started there about 10 years ago, and that has really had a good run. Mexico, to John's point. We have space still here in the States, I think, given what's going on. We will stand by to stand by, I would say, and we'll be back to you on that.

Speaker #8: Which, as you know, we started there about 10 years ago. And that has really had a good run. And so we — and Mexico, to your point.

Speaker #8: And we have space still here in the States, I think, given what's going on. So we will stand by to stand by, I would say.

Speaker #8: And we'll be back to you on that.

Speaker #7: Got it. I mean, that's super interesting. Would you say there's obviously opportunities to start entering markets from scratch, like the ones you mentioned? Are there other opportunities to do partnerships like you've done?

Jay Sole: Got it. That's super interesting. Would you say there's obviously opportunities to start entering new markets from scratch, like the ones you mentioned? Are there other opportunities to do partnerships like you've done? Do you see maybe different regions where there's opportunity to establish a JV or a minority interest in a partner that could sort of be an unlock to figuring out how to grow in an incremental market as well?

Speaker #7: Do you see maybe different regions where there's opportunity to establish a JV or a minority interest in a partner that could sort of be an unlock to figuring out how to grow in an incremental market as well?

Ernie Herrman: It's almost like you've been talking to a couple people. All of those things you just said are of interest, I'll put it that way. Yes. Various ways to approach it, joint venture, investment, and us starting up or just new markets where we're already kind of in the market and we can go to an adjacent country type of thing. All of those things would apply, yes. To your timing, because we show, I think I've talked about this, we have talent here. We've built the talent over years, so we're able to do things now, and you've seen us do it the last few years, because we don't risk the core business, which you've seen that. As we've opened up in Australia or Mexico, we've had zero distraction for our core execution across the big banners.

Speaker #8: It's almost like you've been talking to a couple of people. But the all of those things you just said are of interest. I'll put it that way.

Speaker #8: Yes. And various ways to approach it. Joint venture, investment, and our starting up or just new markets where we're already kind of in the market.

Speaker #8: And we can go to an adjacent country type of thing. So all of those things would apply, yes. And to your time, because we show I think I've talked about we have talent here.

Speaker #8: We've built the talent over years. So we're able to do things now. And you've seen us do it the last few years. Because we don't risk the core business in the way which you've seen that as we've opened up in Australia or Mexico.

Speaker #8: We've had zero distraction for our core execution. Across the big banners. And that's why we feel there's an opportunity exactly as you've exactly as your question would speak to.

Ernie Herrman: That's why we feel there's an opportunity, exactly as your question would speak to.

Speaker #4: And we spent many years preparing and making sure that when we do enter a country, that we understand the culture, the customer, what they're looking for, the real estate, that we're looking for.

John Klinger: We spend many years preparing and making sure that when we do enter a country, that we understand the culture, the customer, what they're looking for, the real estate that we're looking for. That's why we've been successful in every country we've entered to date.

Speaker #4: And so that's why we've been successful in every country we've entered. To date.

Speaker #8: So your timing is good on your question. And again, stand by to stand by. We will be back in touch, so to speak.

Ernie Herrman: Your timing is good on your question. Again, stand by to stand by. We will be back in touch, so to speak.

Speaker #7: Right. Well, thank you so much.

Jay Sole: Great. Well, thank you so much.

Speaker #8: Thank you.

Ernie Herrman: Thank you.

Speaker #1: As a reminder, if you would like to ask a question over the phone, please press star one and record your name. The next question is from Dana Telsey with the Telsey Group.

Operator: As a reminder, if you would like to ask a question over the phone, please press star one and record your name. The next question is from Dana Telsey with Telsey Advisory Group. Your line is open.

Speaker #1: Your line is open.

Speaker #9: Hi. Good morning, everyone, and congratulations on the nice progress on one of the banners.

Dana Telsey: Hi. Good morning, everyone, and congratulations on the nice progress.

Speaker #8: Hi, Dana.

Ernie Herrman: Hi, Dana.

Speaker #9: Hi. One of the banners that I've seen that seems to be doing nicely is Sierra Trading Post. Any updates there? How are you thinking about the growth of that banner?

Dana Telsey: Hi. One of the banners that I've seen that seems to be doing nicely is Sierra. Any updates there, how you're thinking about the growth of that banner? Just lastly, so impressive, the sales growth and the operating income growth of every brand, of every banner, nearly double. Is there a difference between one or the other, gross margin or SG&A, that was the real driver for each, and how are you thinking of that sustainability going forward? Thank you.

Speaker #9: And then, just lastly—so impressive, the sales growth and the operating income growth of every brand, of every banner, nearly double. Is there a difference between one or the other, gross margin or SG&A, that was the real driver for each?

Speaker #9: And how you're thinking of that sustainability going forward? Thank you.

Speaker #8: All right. So, Dana, I will take Sierra and John will take the margin. So in Sierra, yes, we've been very happy—we're growing the store comp pretty aggressive.

Ernie Herrman: All right. Dana, I will take Sierra.

John Klinger: Yeah.

Ernie Herrman: John will take the margin. On Sierra, yes, we've been very happy. We're growing the store count pretty aggressive. What the team has done a great job on over the last few years is really creating this different DNA, and a good, better, best within that lifestyle, from gear to outdoor apparel to various hard lines, to a pet business, to a healthy outdoor food. It gravitates to actually an upper income customer. The average sales per store, we've been very happy with over the last few years, which is why we're growing it. We don't talk about it a lot because it's still kind of in its younger stage, but we're very bullish on the potential there, as well as the different customers that it brings into us.

Speaker #8: What the team has done a great job on over the last few years is really creating this different DNA and a good, better, best within that lifestyle—from gear to outdoor apparel to various hardlines, to pet business, to healthy outdoor food.

Speaker #8: And it gravitates to actually an upper-income customer and the sales average sales per store. We've been very happy with over the last few years, which is why we're growing it.

Speaker #8: And we don't talk about it a lot, because it's still kind of in its younger stage. But we're very bullish on the potential there, as well as the different customers that it brings into us.

Speaker #8: We're also more highly a male customer there than we are in some of our other brands, which is that is good. And they do tend to be some different customers.

Ernie Herrman: We're also more highly a male customer there than we are in some of our other brands, which that is good. They do tend to be some different customers. The market awareness isn't out there yet because we don't have that many in certain markets, so that's another thing we're working on. The marketing team there has really worked on programs to do that in a very balanced manner, given the size of the business and spending the appropriate amount. The team, we really have strong talent in there, and I think you're gonna see us talk more about Sierra as we move forward, because it will be, 5 years from now, so to speak, a bigger player on the bottom line in TJX.

Speaker #8: The market awareness isn't out there yet because we don't have that many in certain markets. So that's another thing we're working on. The marketing team there has really worked on programs to do that.

Speaker #8: And a very balanced manner, given the size of the business and spending, the appropriate amount. But the team, we really have strong talent in there.

Speaker #8: And I think you're going to see us talk about more about Sierra as we move forward because it will be five years from now, so to speak.

Speaker #8: Bigger player on the bottom line in TJX.

Speaker #4: And then, Dana, just to answer your question about the sales and profit, the profit margin expansion, I mean, it really comes down to the just continued executing the model at a high level.

John Klinger: Dana, just to answer your question about the sales and profit, the profit margin expansion. It really comes down to the just continued executing the model at a high level. Ernie talked a lot about, earlier in the call, about being liquid and being able to respond to the customer's needs by turning quickly and going after those hot departments. It's nothing more than that.

Speaker #4: And again, Ernie talked a lot about earlier in the call about being liquid and being able to respond to the customer's needs as by turning quickly and going after those hot departments.

Speaker #4: So it's nothing more than that.

Speaker #9: Thank you.

Dana Telsey: Thank you.

Speaker #8: Thank you, Dana.

Ernie Herrman: Thank you, Dana.

John Klinger: Thanks.

Speaker #4: Thanks.

Speaker #1: Our next question is from Bob Durble with BDIG. Your line is open.

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

Ernie Herrman: Hi. Good morning, and great results. Good morning. A couple of questions from me. I guess the first one is, in terms of the US, are the full price selling trends continued at a very high level? I was wondering if you could comment around that piece within the business. I guess the second question is, within the international markets, on the consumer, are you seeing any changes to the consumer spending levels in Canada or throughout Europe and any major markets that you might call out? Thanks. Yeah, Bob. I just want to make sure I'm clear on the first question. The US full price selling trends, are you saying on what you would consider our ticketed price? Yes, exactly. Oh, okay. Yeah.

Bob Drbul: Hi. Good morning, and great results.

Speaker #7: Hi. Good morning. And great results.

Speaker #8: Good morning.

Ernie Herrman: Good morning.

Bob Drbul: A couple of questions from me. I guess the first one is, in terms of the US, are the full price selling trends continued at a very high level? I was wondering if you could comment around that piece within the business. I guess the second question is, within the international markets, on the consumer, are you seeing any changes to the consumer spending levels in Canada or throughout Europe and any major markets that you might call out? Thanks.

Speaker #7: A couple of questions for me. I guess the first one is, in terms of the US, are the full price selling trends continued at a very high level?

Speaker #7: I was wondering if you could comment around that piece within the business. And I guess the second question is, within the international markets, on the consumer, are you seeing any changes to the consumer spending levels in Canada or throughout Europe and any major markets that you might call out?

Speaker #7: Thanks.

Speaker #8: Yeah, Bob. So the I just want to make sure I'm clear on the first question. On the US full price selling trends, are you saying on what you would consider our ticketed price?

Ernie Herrman: Yeah, Bob. I just want to make sure I'm clear on the first question. The US full price selling trends, are you saying on what you would consider our ticketed price?

Speaker #7: Yes. Yes, exactly.

Bob Drbul: Yes, exactly.

Speaker #8: Oh, okay. Yeah. Well, no, they've been extremely strong, which is one reason we've had this strong merchandise margin. And the merchants have been able to buy at really extreme value.

Ernie Herrman: Oh, okay. Yeah.

Bob Drbul: Well, no, they've been extremely strong, which is one reason we've had this strong merchandise margin, and the merchants have been able to buy at really extreme value and exciting value. Our full price selling has been really terrific. We sell most items, I can't give you the numbers, but we sell most at full price, and then we do markdowns and some sub-markdowns. Most of what we sell, we sell at the first full price and then most at the first markdown, once we go to markdown. Our model has been, we never sell off our end of clearance because we always eventually hit the price where the goods all sell out. That's been encouraging.

Ernie Herrman: Well, no, they've been extremely strong, which is one reason we've had this strong merchandise margin, and the merchants have been able to buy at really extreme value and exciting value. Our full price selling has been really terrific. We sell most items, I can't give you the numbers, but we sell most at full price, and then we do markdowns and some sub-markdowns. Most of what we sell, we sell at the first full price and then most at the first markdown, once we go to markdown. Our model has been, we never sell off our end of clearance because we always eventually hit the price where the goods all sell out. That's been encouraging.

Speaker #8: And exciting value. So our full price selling has been really terrific. We call it our we sell most items. I can't give you the numbers, but we sell most at full price.

Speaker #8: And then we do markdowns and some sub-markdowns, but most of what we sell is at the first full price, and then most at the first markdown once we go to markdown.

Speaker #8: And our model has been we never sell off our end of clearance because we always eventually hit the price where the goods all sell out.

Speaker #8: And so that's been encouraging. I don't see any change in that because, again, our merchants do a great job in ensuring our out-the-door value is so strong relative to what other retailers are selling it for at their "full price," even though it's their maybe sale price.

Ernie Herrman: I don't see any change in that because, again, our merchants do a great job at ensuring our out the door value is so strong relative to what other retailers are selling it for at their "full price," even though it's their maybe sale price. I think that's built into our model, why we're always providing our customers great value. Internationally, there's been a lot of talk about concern, fuel prices or whatever on the international markets, and it's been actually written and talked about more recently over the last week. We have not experienced that. Partly there could be the whole market share thing where we're over-indexing on grabbing more of the market internationally. Our Europe business and Canada business and our Australian business have all been very healthy. See it in the comps. You can see it in our comps in all those geographies.

Speaker #8: So I think that's built into our model, why we're always providing our customers great value. And internationally, we so I've heard there's been a lot of talk about concern fuel prices or whatever on the international markets.

Speaker #8: And it's been actually written and talked about more recently over the last week, and we have not experienced that. Partly, there could be the whole market share thing where we're over-indexing on grabbing more of the market internationally.

Speaker #8: But our Europe business, and Canada business, and Australia business have all been very healthy.

Speaker #4: See it in the comp.

Speaker #8: You can see it in our comps and all those geographies. So I would say we might be I do hear, though, there could be reports of tough international retail business.

Ernie Herrman: You can see it in our comps in all those geographies.

Ernie Herrman: I would say, I do hear, though, there could be reports of tough international retail business. We are not falling into that, fortunately, knock on wood. Great. Thank you very much. Welcome.

Ernie Herrman: I would say, I do hear, though, there could be reports of tough international retail business. We are not falling into that, fortunately, knock on wood.

Speaker #8: We are not falling into that, fortunately. Knock on wood.

Speaker #1: Great. Thank you very much.

Bob Drbul: Great. Thank you very much.

Speaker #8: Welcome.

Ernie Herrman: Welcome.

Speaker #1: The next question is from Corey Carlow with Jefferies. Your line is open.

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

Speaker #6: Great. Thanks. John, I was wondering if you could talk a little bit more about the gross margin performance in the quarter? It's been I think a couple of years since you've had gross margin expansion.

Corey Tarlowe: Great, thanks. John, I was wondering if you could talk a little bit more about the gross margin performance in the quarter. It's been, I think, a couple of years since you've had gross margin expansion as significant as 200 basis points. Would love to just get a little bit more color there as to what drove that, if possible. I had two other questions. One was just on the Middle East, if there's any impact you could share there. Thirdly, anything on tariff refunds that you can provide any details on, that would be great. Thanks so much.

Speaker #6: As significant as 200 basis points. So would love to just get a little bit more color there. So what drove that, if possible? And then I had two other questions.

Speaker #6: One was just on the Middle East, if there's any impact you could share there. And then thirdly, anything on tariff refunds that you can provide any details on, that would be great.

Speaker #6: Thanks so much.

Speaker #4: Yeah, sure. So gross margin, I mean, it's pretty straightforward. Obviously, a six comp is generates margin expansion. Merchandise margin through better buying again, the six comp helps us leverage our DC expenses.

John Klinger: Yeah, sure. Gross margin, it's pretty straightforward. Obviously, a 6 comp generates margin expansion. Merchandise margin through better buying. Again, the 6 comp helps us leverage our DC expenses. We talked about the inventory and fuel hedge in the Q1. That was a piece of it as well. Yeah, we're just very pleased with how the quarter came together. Getting to your next questions, do you want to answer Middle East, or want me to? I can jump to tariffs. Yeah. The Middle East, fortunately, there was a little softness there when the war was closer in, so to speak, but they have actually been performing surprisingly well. Yeah. I would say, given the circumstances, and so we're pretty happy with that, and we're again looking at, we're just full steam ahead on working with them.

Speaker #4: And then we talked about the inventory and fuel hedge in the first quarter, so that was a piece of it as well. And so, yeah, we're just very pleased with how the quarter came together.

Speaker #4: And getting to your next questions, do you want to answer Middle East, or do you want me to? I mean, I can jump to tariffs.

Speaker #8: Yeah. Yeah. The Middle East, fortunately, there was a little softness there when the war was closer in, so to speak. But they have actually been performing surprisingly well.

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

John Klinger: Yeah.

Speaker #8: And so, I would say, given the circumstances, we're pretty happy with that. And we're, again, looking at—we're just full steam ahead on working with them.

Ernie Herrman: I would say, given the circumstances, and so we're pretty happy with that, and we're again looking at, we're just full steam ahead on working with them.

Speaker #8: We put a couple of people in that we think are going to help with the merchandising there, because that's, we think, one of the places where we will help with that investment.

Ernie Herrman: We put a couple people in that we think are going to help with the merchandising there, because that's, we think, one of the places where we will help with that investment and with that total business. Relatively speaking, given everything going on, we've been actually happy with their performance. Yeah. Yeah. From the tariff front, we have submitted for tariff refunds, but our guidance currently does not assume any benefit from any potential refund. Nothing more to add on that.

Speaker #8: And with that total business, and so, relatively speaking, given everything going on, we've been actually happy with their performance.

John Klinger: Yeah.

Speaker #4: Yeah. And then from the tariff front, I mean, we so we have submitted for tariff refunds. But our guidance currently does not assume any benefit from any potential refund.

Ernie Herrman: Yeah.

John Klinger: From the tariff front, we have submitted for tariff refunds, but our guidance currently does not assume any benefit from any potential refund. Nothing more to add on that.

Speaker #4: And nothing more to add on that.

Speaker #6: Okay. And then just one quick follow-up. On a six comp, also SG&A, I think delivered about 10 basis points. Curious as to why that was.

Corey Tarlowe: Okay. Just 1 quick follow-up. On a 6 comp, also, SG&A, I think, delevered about 10 basis points. Curious as to why that was. Thanks so much.

Speaker #6: Thanks so much.

Speaker #4: Well, again, we came out with our guidance was 40 basis points of deleveraging. And we came in at 10. So versus our guidance, we definitely saw store efficiencies gain from to store efficiencies from our guidance.

John Klinger: Well, again, we came out with our guidance was 40 basis points of deleverage, and we came in at 10. Versus our guidance, we definitely saw store efficiencies regained to store efficiencies from our guidance.

Speaker #6: Understood. Great. Thanks so much, and best of luck.

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

Speaker #4: Thank you.

Ernie Herrman: Thank you.

Speaker #1: The next question in the queue is from Mark Altschwager with Baird. Your line is open.

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

Speaker #7: Good morning. Thanks for taking the question. Wanted to ask on Europe, if you could talk a little bit more about what you're seeing in the consumer there today.

Mark Altschwager: Good morning. Thanks for taking the question. Wanted to ask on Europe, if you could talk a little bit more about what you're seeing in the consumer there today, if there's any change by market or category as some of the macro uncertainty has picked up. Relatedly, are you seeing the value proposition resonate more in this environment that could support traffic, or is the consumer just behaving pretty consistently with what you saw exiting Q4? Thank you.

Speaker #7: If there's any change by market or category as some of the macro uncertainties picked up. Relatedly, yeah, are you seeing the value proposition resonate more in this environment that could support traffic?

Speaker #7: Or is the consumer just behaving pretty consistently with what you saw exiting the fourth quarter? Thank you.

Speaker #8: Yeah. No, Mark. Good question. I mean, overall, the headline there is we think as and as you know, when Europe, for example, some fuel prices, especially in the UK, can be a significant increase, even more so than in the States.

Ernie Herrman: Yep. No, Mark, good question. Overall, the headline there is, we think as few, and as you know, in Europe, for example, some fuel prices, especially in the UK, can be a significant increase even more so than in the States. I do feel there is a bit of a value play there in that they will gravitate certain customer percentages more open to going to value when maybe they were shopping more, the high street, as they call it there. I do think there is a possibility of that has been going on and would continue to go on. What our teams do is they focus on, just like we said before, again, key differentiator for us is all income levels can feel that over in Europe.

Speaker #8: I do feel there is a bit of a value play there in that they will gravitate certain customer percentages more open to going to value when maybe they were shopping more the high street, as they call it there.

Speaker #8: So do think there is a possibility of that has been going on and would continue to go on. So with the teams do, our teams do is they focus on just like we said before, again, key differentiator for us is all income levels can feel that over in Europe.

Speaker #8: And so we want to continue to emphasize that we have good, better, best product across good, better, best brands and various price points from moderate to better to best price points.

Ernie Herrman: We want to continue to emphasize that we have good, better, best products across good, better, best brands and various price points from moderate to better to best price points and quality level always consistent. Our store shopping experience, that division, they've done an amazing job on that and keeping convenience in the shopping experience so that we can take advantage because even when you're starting to grab maybe some market from customers that haven't been into your store for a bit, and they're coming in because they're looking for the value given the situation that's going on, we want to ensure that we're capitalizing on that and retaining them for future purchases. Because we look at this as opportunity.

Speaker #8: And quality level always consistent. And our short store shopping experience, that division—they've done an amazing job on that, and keeping convenience in the shopping experience so that we can take advantage, because even when you're starting to grab maybe some market from customers that haven't been into your store for a bit, and they're coming in because they're looking for the value given the situation that's going on.

Speaker #8: We want to ensure that we're capitalizing on that and retaining them for future purchases. Because if the fuel does we look at this as opportunity.

Ernie Herrman: If fuel prices do come down at one point, we want to hang on to the customers that maybe we have grabbed in certain situations due to the fuel, and due to them being value conscious. We want them for the long term. Hopefully that makes sense. Yes, we feel like that could be playing in for a bit.

Speaker #8: If fuel prices do come down at one point, we want to hang on to the customers that maybe we have grabbed in certain situations due to the fuel.

Speaker #8: And due to them being value-conscious, we want them for the long term. So, hopefully, that makes sense. But yes, we feel like that could be playing in for a bit.

Speaker #7: That does make sense. Thank you. And if I could follow up once more on merch margin, you all perform plan the biggest driver to the expansion was merch margin, which you attributed to better buying.

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

Speaker #7: In terms of those tailwinds, the better buying, what are you incorporating in your outlook for the remainder of the year? I guess asked another way, if you perform in line with what you did in Q1 from a buying execution standpoint, would that be upside to your gross margin for the remainder of the year?

Speaker #7: Or how are you thinking about that? Thank you.

Speaker #4: Yeah. Our gross margin—our forecast contemplates everything we're thinking today as far as the rest of the year gross margin. And again, it wasn't just the merch margin.

Ernie Herrman: Yes. Our forecast contemplates everything we're thinking today as far as the rest of the year gross margin. Again, it wasn't just the merch margin, it was the sales as well, and the expense efficiencies or expense leverage. If we outperform our sales for the remainder or for Q2 and H2, then we would expect to see, again, some type of expansion based on our sales growth. Right now, on a two to three for the back nine, the forecast we're giving you is what we're seeing.

John Klinger: Yes. Our forecast contemplates everything we're thinking today as far as the rest of the year gross margin. Again, it wasn't just the merch margin, it was the sales as well, and the expense efficiencies or expense leverage. If we outperform our sales for the remainder or for Q2 and H2, then we would expect to see, again, some type of expansion based on our sales growth.

Speaker #4: It was the sales as well. And the expense efficiencies or expense leverage. If we outperform our sales for the remainder or for second quarter and back half, then we would expect to see again, some type of expansion based on our sales growth.

Speaker #4: So right now, on a two to three for the back nine, I mean, the forecast we're giving you is what we're seeing.

Ernie Herrman: Right now, on a two to three for the back nine, the forecast we're giving you is what we're seeing.

Speaker #1: And the final question of the day is going to come from Paul Lewis, right? From Citigroup, your line is open.

Operator: The final question of the day is going to come from Paul Lejuez from Citigroup. Your line is open.

Paul Lejuez: Hey, thanks, guys. I'm curious what beat your plan in Q1, Q2 from a traffic versus ticket perspective. Maybe if you can talk about these metrics, in terms of what you're seeing quarter to date or how you expect them to look in Q2. Second, Ernie, you mentioned each division growing their customer base. I'm curious, what is the profile of the new customer at each of the divisions? How do they look different from your existing customer base? Are you seeing a greater percentage of your customers that are higher income, lower income, young or old, or anything that you could frame the new customers that you're seeing by division? Thanks.

Speaker #8: Hey, thanks, guys. I'm curious what beat your plan in one Q from a traffic versus ticket perspective. And maybe if you can talk about these metrics in terms of what you're seeing quarter to date or how you expect them to look in the second quarter.

Speaker #8: And then, second, Ernie, you mentioned each division growing their customer base. I'm curious, what is the profile of the new customer at each of the divisions?

Speaker #8: How do they look different from your existing customer base? Are you seeing a greater percentage of your customers that are hiring come lower income, young or old, or anything that you could frame the new customers that you're seeing by division?

Speaker #8: Thanks. Sure.

Ernie Herrman: Sure.

John Klinger: Hey, Paul, your first question, are you asking for Q2 what we expect the transactions in the basket to be?

Speaker #4: Hey, Paul, your first question, are you asking for the second quarter what we expect the transactions and the basket to be?

Paul Lejuez: I'd love to know that, but the first part of that question was.

Speaker #8: I'd love to know that. But the first part of that question was, what beat your plan in the first quarter from a traffic versus ticket perspective?

Ernie Herrman: Yeah

Paul Lejuez: beat your plan Q1 from a traffic versus ticket perspective.

Speaker #4: Yeah. We don't look, it's we just don't we don't parse that out. And it's really not significantly important. It's whether it comes from somebody making an extra trip or having a bigger basket.

Ernie Herrman: Yeah. We don't parse that out, and it's really not significantly important. Whether it comes from somebody making an extra trip or having a bigger basket, it's just driving the top line, and that's really what we focus on. Yeah, Paul, though, on what you were asking about customer we're seeing, and I kind of alluded to it before, but at all the TJX brands, we're continuing to attract a disproportionate number of really new Gen Z and millennial shoppers. It's disproportionate from what our current mix or the general population would be, which again, I think bodes well for us for the future. Again, our income, it hasn't moved as much on the new versus existing, but what we like on our income breakdown with our customer base, is we skew a little higher than the general population, but the key is it's very balanced.

John Klinger: Yeah. We don't parse that out, and it's really not significantly important. Whether it comes from somebody making an extra trip or having a bigger basket, it's just driving the top line, and that's really what we focus on.

Speaker #4: It's just driving the top line, and that's really what we focus on.

Ernie Herrman: Yeah, Paul, though, on what you were asking about customer we're seeing, and I kind of alluded to it before, but at all the TJX brands, we're continuing to attract a disproportionate number of really new Gen Z and millennial shoppers. It's disproportionate from what our current mix or the general population would be, which again, I think bodes well for us for the future. Again, our income, it hasn't moved as much on the new versus existing, but what we like on our income breakdown with our customer base, is we skew a little higher than the general population, but the key is it's very balanced.

Speaker #8: Yeah, Paul, on what you were asking about the customer, what we're seeing is that—and I kind of alluded to it before—but all the TJX brands are continuing to attract a disproportionate number of really new Gen Z and Millennial shoppers.

Speaker #8: And that's—and it's—disproportionate from what our current mix or the general population would be, which again, I think bodes well for us for the future.

Speaker #8: Not as dramatic again, our income what we like about our it hasn't moved as much on the new versus existing, but what we like on our income breakdown with our customer base is we skew a little higher than the general population, but the key is it's very balanced.

Speaker #8: So we are very, and again, it goes back to the good, better, best. What we absolutely love about our customer base from an income perspective is it's very balanced by income groups.

Ernie Herrman: We are very, again, it goes back to the good, better, best. What we absolutely love about our customer base from an income perspective is it is very balanced by income groups. Under 50 to 100, over 100. We compare it to the general population. By the way, we monitor this consistently. Obviously, I cannot give you the numbers, but all I can tell you is it is a balanced portfolio that any of us would like to see. If you owned a little store yourself, you would like to see that you are selling merchandise to all different income groups.

Speaker #8: So, under 50, 50 to 100, over 100, we compare it to the general population. And, by the way, we monitor this consistently. Obviously, I can't give you the numbers, but all I can tell you is it's a portfolio—a balanced portfolio—that any of us would like to see.

Speaker #8: If you owned a little store yourself, you'd like to see that you're selling—it, you're selling merchandise to all different income groups.

Paul Lejuez: Yeah.

Speaker #8: Very proportional. So I hope that helps. Got it. Okay. Thanks. Thank you. Yes. Good luck.

Ernie Herrman: Very proportional. I hope that helps.

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

Ernie Herrman: Thanks, Paul. Thank you all for joining us today. We look forward to updating you again on our Q2 earnings call in August. Thank you.

Speaker #4: Thanks, Paul. And thank you all for joining us today. We look forward to updating you again on our second quarter earnings call in August.

Speaker #4: Thank you.

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