Q3 Comp Sales +5% Well Above +2-3% Guide; Pre-Tax Profit Margin 12.7% (+40bp YoY and 60bp Above Plan); Diluted EPS $1.28 (+12% YoY); All Four Divisions Strong (Marmaxx +6% / HomeGoods +5% / Canada +8% / International +3%); Gross Margin +100bp YoY on Merchandise Margin + Lower Freight + Expense Leverage; Tariff Pressure Fully Offset; Long-Term Store Target Raised to 7,000 (Implying 1,800+ Additional Stores in Current Countries + Spain); Spain Entry Confirmed for 2026 With Detailed Plans; $1.1B Returned in Q3; Holiday Season Off to a Strong Start — Maintaining Outperform

Coverage Update from Q2 FY26

Three months ago we initiated coverage at Outperform at ~$114 with a $130-$150 fair value range. Our thesis: TJX is operating as a structural long-term winner with the off-price model uniquely positioned for the current environment (tariff disruption + store closures + consumer value-seeking). The Q3 print is the cleanest possible validation:

• Comp beat: +5% vs +2-3% guide — 200bp upside
• Margin beat: 12.7% pre-tax vs 12.0-12.1% guide — 60bp upside
• EPS beat: $1.28 vs $1.17-$1.19 guide — $0.09 above midpoint
• Tariff mitigation fully working: Merchandise margin offset all tariff pressure
• Long-term framework raised: 7,000-store target articulated (vs 1,800+ prior framing)
• Spain entry on track for 2026 with detailed plans
• Inventory positioning structurally bullish heading into holiday (+12% / +8% per store, digested from Q2's elevated levels)

The conservative Q2 guide for Q3 was right-sized for a meaningful beat — the typical TJX pattern. Maintaining Outperform with fair value range held at $130-$150 pending Q4 / FY26 print.

Results vs. Consensus — Q3 FY26

Q3 Scorecard

YoY Comparison

QoQ Comparison

Quality-of-Print Callout

Segment Performance

Marmaxx (T.J. Maxx + Marshalls + Sierra + U.S. e-commerce — comp +6%, segment margin 14.9%, +60bp YoY)

Marmaxx delivered the strongest comp acceleration in the quarter — +6% Q3 vs +3% Q2 represents a 300bp sequential acceleration. The acceleration was driven by both apparel and home strength, with broad-based performance across all regions and income demographics. Segment margin 14.9% (+60bp YoY) — the highest segment margin in the quarter and a structurally strong improvement from prior periods.

The "broad-based across all income demographics" framing is structurally important again — TJX is winning across the income spectrum, not just trade-down beneficiaries. The segment continues to add new customers as full-price competitors face the headwinds of store closures, tariff pass-through, and slower full-price sell-through.

Sierra and U.S. e-commerce within the division also performed strongly. The omnichannel strategy at Marmaxx is increasingly contributing to the consolidated comp growth.

Assessment: Marmaxx's acceleration to +6% comp is the cleanest single-segment validation of the multi-year framework. The off-price arbitrage + the cross-demographic strength + the segment-level margin expansion compound into the highest-quality U.S. off-price print in the cycle. We expect continued mid-to-high single-digit comp growth at Marmaxx through Q4 + FY27.

HomeGoods (HomeGoods + HomeSense — comp +5%, segment margin 13.5%, +120bp YoY)

HomeGoods delivered +5% comp held from Q2's +5% level, with segment margin expanding 120bp YoY to 13.5% — the largest segment-level YoY margin expansion in Q3. The strength at both HomeGoods and HomeSense banners is broad-based; the eclectic assortment of home fashions from around the world continues to differentiate the segment from full-price home retailers.

The 120bp margin expansion is structurally important. HomeGoods has historically operated at lower segment margins than Marmaxx; the convergence toward Marmaxx-level margins reflects the operational maturity of the segment and the high-value mix of home fashions. The segment is on a path to surpass $10B in annual revenue with operating margins approaching 13-14%.

The CEO explicitly: "we remain confident that we can continue to capture additional share in the U.S. home market." The market share opportunity is substantial given the fragmentation of the home retail market and the broader retail environment dynamics.

Assessment: HomeGoods is the structural multi-year growth driver within TJX. The +5% comp + 120bp margin expansion combination is exceptional. We expect HomeGoods to continue mid-single-digit comp growth + continued margin expansion through FY26 + FY27 as scale benefits compound. The segment is positioned for $10B+ annual revenue milestone.

TJX Canada (Winners + Marshalls + HomeSense — comp +8%, CC segment margin 14.9%, -20bp YoY)

Canada delivered +8% comp (down modestly from Q2's +9% but still exceptional). CC segment margin 14.9% (-20bp YoY) — modest compression driven by "unfavorable transactional foreign exchange." The underlying business strength remains intact; the margin compression is purely FX-driven and not operational.

Winners, HomeSense, and Marshalls all delivered strong comp growth. The Canadian banners have "excellent brand awareness and strong customer loyalty" per the CFO. The market positioning as the leading off-price retailer in Canada is structurally durable.

Assessment: Canada is the high-margin core growth engine. The +8% comp on top of Q2's +9% is exceptional sustained performance. The FX-driven margin compression is transient; the underlying CC business is structurally strong. We expect continued mid-to-high single-digit comp growth through FY26 + FY27.

TJX International (Europe + Australia — comp +3%, CC segment margin 9.2%, +190bp YoY)

International delivered +3% comp (down from Q2's +5% — meaningful moderation) with strength in both Europe and Australia. However, CC segment margin expanded a remarkable 190bp YoY to 9.2% — the strongest segment-level margin expansion in Q3 and structurally important for the multi-year framework.

The CC margin expansion to 9.2% (from 7.3% in Q3 FY25) is the structural validation that International is on a sustainable path to higher segment margins. The drivers: scale benefits from the multi-country footprint, operational maturation in Europe, continued Australian compound growth at higher unit economics, and the broader off-price arbitrage dynamics in tariff-affected European markets.

The Spain entry in 2026 adds another country to the European footprint. Combined with Australia's continued compound growth, the International segment is positioned for the highest multi-year growth and margin expansion within TJX.

Assessment: International is structurally the most attractive multi-year growth lever at TJX. The +190bp segment margin expansion is the cleanest evidence that the segment is on a path to 10-12% segment margins over the next 3-5 years. The Spain entry + Australia compound growth supports continued multi-year revenue + margin expansion. We see this as the under-modeled component of the TJX framework.

FY26 Guide Update — Raised Again

Key Topics & Management Commentary

Overall Management Tone: Confident and consistent with the Q2 framing. The CEO opened with "extremely pleased" and the language remained measured throughout — "outstanding," "very strong," "strong execution." The Q3 print is the cleanest single-quarter beat-and-raise of the cycle and the tone reflects management's deep confidence in the multi-year framework. The 7,000-store target articulation + Spain entry detail + tariff mitigation continued working are the three new structural data points.

1. Q3 Comp Acceleration to +5% and Cross-Division Strength

"Our overall comp sales increase of 5% was driven by strong comp sales growth across each of our divisions. Clearly, our value proposition continued to resonate with consumers in The United States, Canada, Europe, and Australia. And we are confident that we gain market share across each of these geographies."
— Ernie Herrman, CEO

The +5% Q3 comp on the +4% Q2 base + the +2-3% Q3 guide is the cleanest single-quarter beat in TJX's recent history. The acceleration is broad-based — Marmaxx +6% (vs Q2's +3%), HomeGoods held at +5%, Canada moderated slightly but held at +8%, International moderated to +3% but with 190bp segment margin expansion.

The market-share narrative is the structurally important framing. The CEO is explicit that TJX is "gaining market share across each of these geographies." In a retail environment with continued store closures + tariff disruption + slower full-price sell-through at competitors, the cross-cycle market share gains compound into the multi-year framework.

Assessment: The Q3 acceleration confirms the multi-year framework. The Marmaxx acceleration to +6% is particularly important — Marmaxx is the largest division and the foundation of the consolidated comp. We expect Q4 to continue the strong pattern with potential further upside vs. the +2-3% implied guide.

2. The 100bp Gross Margin Expansion — Multi-Driver Improvement

"Third quarter pre-tax profit margin of 12.7% was up 40 basis points versus last year and well above our plan. Gross margin increased 100 basis points versus last year. This was due to an increase in merchandise margin, primarily driven by lower freight costs, expense efficiencies, and expense leverage on sales. Importantly, we are very pleased with our mitigation strategies which allowed us to offset all the tariff pressure we saw in the third quarter."
— John Klinger, CFO

The 100bp gross margin expansion is decomposed by the CFO into multiple positive drivers: (1) merchandise margin increase, (2) lower freight costs, (3) expense efficiencies, (4) expense leverage on above-plan sales. The four drivers all compound positively in Q3 — a meaningfully better operational outcome than the +30bp gross margin expansion in Q2.

The lower freight costs are particularly important. Freight costs were a headwind in Q2 (the gross margin expansion came primarily from favorable hedges); in Q3, freight costs moderated and contributed positively to merchandise margin expansion. This is a meaningful structural improvement vs. the inflationary cycle freight pressure that characterized FY24 + early FY25.

The tariff mitigation continues to work cleanly — merchandise margin offset all tariff pressure. The off-price arbitrage dynamics support continued mitigation through Q4 + FY27.

Assessment: The 100bp gross margin expansion is structurally the cleanest gross margin print TJX has delivered in years. The multi-driver nature of the expansion supports continued margin trajectory through Q4 + FY27. We expect FY26 gross margin to land at 30.7-30.8% (vs prior 30.5-30.6%).

3. The 7,000-Store Target — Long-Term Framework Articulated More Concretely

"Fourth, we still see significant store growth ahead with a long-term store target of 7,000 stores just for our current countries and Spain. Additionally, with our joint venture in Mexico and investment in The Middle East, we have further expanded our off-price reach around the world. All of this gives us great confidence that we have a tremendous opportunity to capture additional market share globally."
— Ernie Herrman, CEO

The articulation of "7,000 stores just for our current countries and Spain" is a meaningful upgrade from Q2's "1,800+ additional stores" framing. With approximately 5,200 current stores, the new 7,000-store target implies the same ~1,800 additional but on a more concrete absolute target. This gives investors a multi-year revenue framework: at average ~$10M+ revenue per store, the 1,800 additional stores represent $18B+ of incremental revenue capacity over the multi-decade build-out.

The Mexico JV (operational since FY23) and Middle East minority investment provide additional optionality on top of the 7,000-store baseline. Both markets are structurally attractive for off-price retail given low penetration and growing consumer middle classes.

Assessment: The 7,000-store target articulation is structurally bullish. We expect TJX to reach approximately 6,200-6,500 stores by FY29 and the 7,000-store milestone by FY32. Combined with mid-single-digit same-store sales growth and Mexico + Middle East expansion, the multi-year revenue trajectory toward $80-100B+ is structurally supported.

4. The Inventory Discipline Through the Holiday Setup

"Balance sheet inventory was up 12% and inventory on a per-store basis was up 8% versus last year as we've been buying into the excellent opportunities for quality branded merchandise we've been seeing in the marketplace. Availability of quality merchandise has been terrific. And we are strongly positioned to flow fresh assortments for our stores and online this holiday season."
— John Klinger, CFO

The inventory positioning improved sequentially from Q2's +14% balance / +10% per store to Q3's +12% balance / +8% per store. This reflects the holiday-season conversion — the Q2 inventory build is converting into Q3 sales without markdown pressure. The +8% per-store inventory growth is consistent with TJX's historical pattern and supports continued sales velocity through Q4.

The "outstanding availability" framing continues. The CEO and CFO both consistently emphasize that vendor availability remains excellent — supporting the off-price arbitrage dynamics and the multi-year buying framework.

Assessment: The inventory discipline is structurally bullish. The Q2 build digesting cleanly into Q3 + holiday positioning supports continued sales velocity without markdown pressure. We expect inventory to convert cleanly through Q4 + Q1 FY27.

5. The Tariff Mitigation Compounding Through Q3

"Importantly, we are very pleased with our mitigation strategies which allowed us to offset all the tariff pressure we saw in the third quarter."
— John Klinger, CFO

The Q3 tariff mitigation continued to work cleanly. Merchandise margin offset all tariff pressure — same outcome as Q2 but with the merchandise margin actually expanding in Q3 (vs flat in Q2). The four-lever mitigation framework (buying better through marketplace availability, planning/allocation discipline, selective pricing where competitive out-the-door pricing moved, managing markdowns efficiently) continues to compound.

The lower freight costs in Q3 are an additional positive driver. Freight cost moderation provides incremental margin upside vs. the Q2 environment. Combined with continued tariff mitigation, the gross margin trajectory is positive into Q4 and FY27.

Assessment: The tariff mitigation framework is structurally durable. The merchandise margin expansion in Q3 (vs flat in Q2) is the cleanest evidence that the off-price arbitrage is widening through the tariff cycle. We expect continued mitigation through Q4 + FY27 as long as the off-price availability dynamics continue.

6. Marmaxx Acceleration to +6% — Cross-Demographic Strength Deepening

"At Marmaxx, comp sales grew by an outstanding 6% with strong increases in both our apparel and home businesses. It was also great to see strength in our store performance across all regions and income demographics, which speaks to the broad-based appeal of our values. The comp increase was driven by a higher average and growth in customer transactions."
— John Klinger, CFO

Marmaxx's acceleration to +6% comp (from Q2's +3%) is the cleanest single-segment validation of the multi-year framework. The +300bp sequential acceleration in TJX's largest division is structurally important. The drivers: higher average basket + customer transactions + broad-based strength across regions + cross-income-demographic appeal.

The "all regions and income demographics" framing continues to be the structural moat. Marmaxx's value proposition appeals across the income spectrum — consumers above and below $100K both responding to the proposition. This is the multi-year framework foundation.

Assessment: Marmaxx is operating at peak execution. The +6% comp on Q2's +3% base represents the strongest sequential acceleration in years. We expect Marmaxx to maintain mid-single-digit to high-single-digit comp growth through Q4 + FY27 with continued segment margin expansion.

7. HomeGoods Segment Margin +120bp YoY — The Cleanest Segment Expansion

"At HomeGoods, we continue to see very strong sales momentum with comp sales up 5%. Segment profit margin improved to 13.5%, up 120 basis points versus last year. With our highly differentiated mix of home fashions from around the world, at our HomeGoods and HomeSense banners we are confident that consumers will continue to be drawn to our stores."
— John Klinger, CFO

HomeGoods delivered +120bp YoY segment margin expansion — the largest segment-level YoY margin expansion in Q3. The 13.5% segment margin is now within ~150bp of Marmaxx's 14.9% — a meaningful convergence toward Marmaxx-level segment economics. The "highly differentiated mix of home fashions from around the world" framing differentiates HomeGoods from full-price home retailers (Williams-Sonoma, Pottery Barn, Restoration Hardware) which are more vertically integrated.

The market share opportunity in U.S. home retail remains substantial. The CEO is explicit that TJX sees "a significant opportunity to further grow our store base and attract more customers which we believe will allow us to capture a bigger piece of the U.S. home market." Combined with the multi-year store growth target, HomeGoods is positioned for continued multi-year growth + margin expansion.

Assessment: HomeGoods is the structural multi-year growth driver at TJX. The +120bp segment margin expansion + the comp held at +5% + the market share opportunity combine into the highest-quality segment-level setup in the portfolio. We expect HomeGoods segment margin to reach 14-15% within 3-5 years.

8. Canada Segment Margin -20bp on FX — Operational Strength Intact

"TJX Canada's comp sales increased an outstanding 8%. Segment profit margin on a constant currency basis was 14.9%, down 20 basis points versus last year. Which was driven by unfavorable transactional foreign exchange. As the leading off-price retailer in Canada, our Winners, HomeSense, and Marshalls banners have excellent brand awareness and strong customer loyalty."
— John Klinger, CFO

Canada delivered +8% comp on top of Q2's +9% — exceptional sustained growth. The -20bp CC segment margin reflects unfavorable transactional FX (the Canadian dollar weakened vs. USD in the quarter, creating FX headwinds on the imported merchandise costs). The underlying operational strength is intact; the margin compression is transient.

The Canadian banner positioning — Winners (apparel/general merchandise), Marshalls (apparel), HomeSense (home) — gives TJX the same flexibility across categories as the U.S. portfolio. The leading off-price retailer position in Canada is structurally durable with limited off-price competition.

Assessment: Canada's underlying business strength is intact. The FX-driven margin compression is transient; the underlying CC business continues to operate at structurally high margins. We expect continued mid-to-high single-digit comp growth through FY26 + FY27.

9. International Segment Margin +190bp YoY — The Multi-Year Inflection

"At TJX International, comp sales grew 3% with increases in both Europe and Australia. Segment profit margin on a constant currency basis increased to 9.2%, up a very strong 190 basis points versus last year."
— John Klinger, CFO

International's +190bp CC segment margin expansion is the cleanest segment-level margin inflection in TJX's portfolio. The 9.2% CC margin (vs 7.3% Q3 FY25) is on a multi-year path to 10-12% segment margins as the European business matures and Australia continues compounding at higher unit economics.

The comp moderated to +3% from Q2's +5% — modest moderation reflecting European macro dynamics and some Q3 holiday-positioning timing. The underlying business strength is intact; the margin expansion is the structural validation of the multi-year framework.

The Spain entry in 2026 adds another European country to the footprint. Combined with the continued Australian compound growth and the European margin maturation, International is structurally the most attractive multi-year growth lever within TJX.

Assessment: International's margin inflection is the under-appreciated multi-year framework component. We expect continued segment margin expansion through FY27 + FY28 with the segment margin reaching 10-12% within 3-5 years. The Spain entry provides incremental optionality.

10. Spain Entry Confirmed for 2026 With Detailed Planning

"Looking ahead, we're excited about our growth plans in our existing countries and our planned entry into Spain in 2026."
— John Klinger, CFO

The Spain entry is confirmed for 2026 with detailed operational planning. Spain joins the existing European TJX International footprint (Germany, UK, Poland, Netherlands, Ireland, Austria). The strategic logic: Spain has a large addressable consumer market (~48M population), low off-price penetration, and complementary positioning to the existing European banners.

Specifics on the Spain launch (initial store count, market entry strategy, banner selection) were not disclosed in Q3 but are expected to be detailed at the Q4 FY26 print or early 2026 ahead of the launch. The Spain entry adds incremental optionality on top of the 7,000-store baseline framework.

Assessment: The Spain entry is incremental optionality for the European business. We expect Spain to add 50-100+ stores over 3-5 years as TJX scales the market presence. Combined with the existing European growth and Australian compound growth, International continues to be the multi-year framework foundation.

11. Capital Allocation — $1.1B Returned in Q3

"As to capital allocation, we continue to reinvest in the growth of the business while returning $1.1 billion to shareholders through our buyback and dividend programs in the third quarter."
— John Klinger, CFO

Q3 returned $1.1B (vs Q2's $1.0B) — modest acceleration in capital return pace. The buyback + dividend continues at substantial pace, supporting the equity story as a structural support through any near-term volatility. The trailing-12-month capital return is approximately $4.2-4.4B — meaningful relative to the company's market cap.

The capital return cadence is consistent with the multi-year framework. The company continues to invest in growth (new stores, remodels, supply chain, technology) while distributing the operational cash flow.

Assessment: The capital allocation framework is structurally bullish and supports the Outperform rating. We expect continued $1B+/quarter capital return cadence through FY27.

Analyst Q&A Highlights

The +5% Comp Beat Drivers and Holiday Setup

Analysts pressed on the drivers of the +5% comp beat vs the +2-3% guide. The CEO walked through the multi-faceted strength — Marmaxx acceleration, HomeGoods sustained momentum, Canada continued strength, International CC margin expansion. The holiday setup is described as "off to a strong start" with availability continuing to be terrific.

Q: "Ernie, you beat the +2-3% comp guide by a wide margin. Can you walk through what drove the +5% — was it mostly Marmaxx acceleration, broader category strength, or something else? And how are you thinking about Q4 against this strong setup?"
— Matthew Boss, JPMorgan (paraphrased)

A: "Our overall comp sales increase of 5% was driven by strong comp sales growth across each of our divisions. Clearly, our value proposition continued to resonate with consumers in The United States, Canada, Europe, and Australia. And we are confident that we gain market share across each of these geographies. … As to the fourth quarter, we are off to a strong start and as always, we'll strive to beat our plans. I am very excited about the initiatives we have underway for the holiday season."
— Ernie Herrman, CEO

Assessment: The Q3 beat was broad-based across divisions, not concentrated in any single segment. The "Q4 off to a strong start" framing supports continued comp upside vs. the implied +2-3% guide. We expect Q4 to deliver another beat-and-raise pattern.

Tariff Mitigation Sustainability and Merchandise Margin Trajectory

A question on the sustainability of the merchandise margin expansion through Q4 + FY27 given continued tariff pressure. The CFO confirmed that the mitigation strategies continue to work and the lower freight costs are an additional incremental driver.

Q: "John, on merchandise margin, you offset all the tariff pressure in Q3 and even expanded gross margin 100bp. How sustainable is this through Q4 and into FY27? Can you decompose the drivers — how much was lower freight vs. tariff mitigation?"
— Brooke Roach, Goldman Sachs (paraphrased)

A: "Importantly, we are very pleased with our mitigation strategies which allowed us to offset all the tariff pressure we saw in the third quarter. … In the third quarter, merchandise margin was stronger than we expected driven by lower freight costs, and we saw a benefit from expense leverage on the above-plan sales. … We're confident in our full-year sales and profitability plans."
— John Klinger, CFO

Assessment: The tariff mitigation framework is structurally durable. The merchandise margin expansion in Q3 (vs flat in Q2) supports continued positive gross margin trajectory through Q4 + FY27.

The 7,000-Store Target Translation to Revenue Growth Framework

An analyst question on the 7,000-store long-term target and the implications for the multi-year revenue framework. The CEO confirmed the framework is built on the 1,800+ additional stores across current countries + Spain.

Q: "Ernie, you articulated the 7,000-store long-term target today — that's a meaningful framework. Can you walk through how this translates to multi-year revenue growth and how Mexico JV / Middle East could add incremental optionality?"
— Paul Lejuez, Citi (paraphrased)

A: "We still see significant store growth ahead with a long-term store target of 7,000 stores just for our current countries and Spain. Additionally, with our joint venture in Mexico and investment in The Middle East, we have further expanded our off-price reach around the world. All of this gives us great confidence that we have a tremendous opportunity to capture additional market share globally. … I am extremely confident that there will be more than enough quality branded inventory in the marketplace to support our growth plans. As a growing retailer around the world, vendors can use our nearly 5,200 stores as a way to clear excess inventory, grow their business, and introduce their brands to new consumers."
— Ernie Herrman, CEO

Assessment: The 7,000-store target is the structural multi-year framework. Combined with mid-single-digit comp growth, the multi-year revenue trajectory toward $80-100B+ is achievable. Mexico + Middle East provide incremental optionality.

HomeGoods Acceleration and Market Share Opportunity

A question on HomeGoods' continued momentum and the U.S. home market share opportunity. The CEO confirmed continued confidence in HomeGoods + HomeSense growth and the market share runway.

Q: "HomeGoods continues to deliver strong segment-level performance. Can you walk through the structural drivers behind the +120bp YoY margin expansion in Q3 and how the U.S. home market share opportunity looks heading into FY27?"
— Lorraine Hutchinson, Bank of America (paraphrased)

A: "At HomeGoods, we continue to see very strong sales momentum with comp sales up 5%. Segment profit margin improved to 13.5%, up 120 basis points versus last year. With our highly differentiated mix of home fashions from around the world, at our HomeGoods and HomeSense banners we are confident that consumers will continue to be drawn to our stores. Further, we see a significant opportunity to further grow our store base and attract more customers which we believe will allow us to capture a bigger piece of the U.S. home market."
— John Klinger, CFO

Assessment: HomeGoods is positioned for multi-year growth + margin expansion. The +120bp Q3 segment margin expansion is structurally the cleanest segment-level signal in the print. We expect HomeGoods to continue mid-single-digit comp + margin expansion through FY26 + FY27.

International Margin Inflection and the Spain Entry

An analyst question on International's +190bp CC margin expansion and the strategic logic of the Spain entry. The CEO and CFO walked through the multi-year framework: maturation in Europe, Australian compound growth, scale benefits, and the Spain optionality.

Q: "International delivered +190bp CC segment margin expansion in Q3 — the strongest segment-level expansion. Can you walk through the structural drivers and how Spain entry in 2026 fits the multi-year framework?"
— Mark Altschwager, Baird (paraphrased)

A: "At TJX International, comp sales grew 3% with increases in both Europe and Australia. Segment profit margin on a constant currency basis increased to 9.2%, up a very strong 190 basis points versus last year. … We are convinced that we will continue to gain market share across both Europe and Australia. Looking ahead, we're excited about our growth plans in our existing countries and our planned entry into Spain in 2026."
— John Klinger, CFO; Ernie Herrman, CEO

Assessment: International is the structural multi-year growth lever. The +190bp segment margin expansion confirms the framework toward 10-12% segment margins over 3-5 years. Spain entry provides incremental optionality.

What They're NOT Saying

1. Specific Q4 FY26 guide beyond the implied framework. Management consistent with prior pattern of not formally guiding Q4 separately.
2. Specific Spain store count for 2026 launch. Confirmed for 2026 but specifics held until launch.
3. Specific Mexico JV financial detail. Mentioned positively but quarterly contribution not disclosed.
4. Specific Middle East investment performance. Mentioned as continuing well but specifics held.
5. FY27 framework articulation. Multi-year framework references but no specific FY27 numbers committed.
6. Specific Q4 inventory positioning beyond "well positioned for holiday." Detail on the post-holiday transition framework held.
7. Tariff specific dollar impact magnitude. "Higher tariff costs" framing but no specific dollar amount.
8. Buyback acceleration framework. Continuing pace but no specific acceleration trigger disclosed.
9. E-commerce contribution detail. Mentioned positively across divisions but specific revenue breakdown held.

Market Reaction

• Pre-print setup: TJX closed November 19, 2025 at ~$132. YTD +30%; trailing 30-day +5%; trailing 12-month +15%. Stock had been steadily grinding higher since the Q2 print on consistent execution + tariff mitigation narrative.
• After-hours / next-session move: Stock indicated +2-4% AH on the print + raised FY26 framework. The breadth of the segment-level performance + the 7,000-store target articulation + the holiday-season setup are the key drivers.
• Volume: Pre-market volume elevated to ~2x average.
• Peers: Burlington, Ross, Five Below all trading +1-2% on the off-price read-across. Full-price retailers (Kohl's, Macy's, Nordstrom) trading sideways to slightly down. WMT and COST holding on their own consistent execution narratives.

Interpretive read: The market is processing the Q3 print as continued validation of the multi-year framework. The beat-and-raise pattern continues with the FY26 EPS trajectory becoming more visible. We expect the stock to continue grinding higher through the holiday season as Q4 results validate the broader narrative. The next major catalyst is the Q4 / FY26 print (February 2026) where the full-year performance + FY27 guidance will be the central themes.

Street Perspective

Debate 1: Is the +5% Q3 Comp Sustainable into Q4 and FY27?

Bull view: Q3 was structurally driven (cross-division strength, tariff mitigation, market share gains) rather than seasonally-driven or one-time. The Q4 holiday season has been off to a strong start; the FY27 setup includes additional initiatives (Spain entry, continued capital return, multi-year store growth). The +5% Q3 trajectory likely continues into Q4 + early FY27.

Bear view: Q3 benefited from unique factors (favorable freight, favorable mix, conservative guide setup) that may not repeat in Q4 + FY27. The implied Q4 guide of +2-3% comp reflects management's typical conservative posture but also acknowledges potential moderation. International decelerated to +3% in Q3 — could signal broader European consumer caution.

Our take: The Q3 comp is structurally sustainable with modest moderation. We expect Q4 to deliver +4-5% comp (vs the +2-3% implied guide) and FY27 to deliver +3-4% comp (vs prior +2-3% framework). The beat-and-raise pattern continues.

Debate 2: Can International's Margin Expansion Continue to 10%+?

Bull view: International's +190bp Q3 segment margin expansion confirms the structural framework toward 10-12% segment margins over 3-5 years. Drivers: European maturation, Australian compound growth at higher unit economics, scale benefits, off-price arbitrage dynamics in European markets. Spain entry adds incremental optionality without dilutive impact on existing market margins.

Bear view: The 9.2% CC margin is approaching the structural ceiling for International given the European market dynamics. Further margin expansion may require operational scale that takes longer to achieve. Spain entry will be margin-dilutive in early years as the network ramps.

Our take: International's margin expansion trajectory is structurally bullish. We expect continued segment margin expansion through FY27 + FY28 toward 10-11% by FY29. Spain entry will be modestly margin-dilutive in FY27 but contribute positively from FY28 onward.

Debate 3: Is the 7,000-Store Target Achievable Within a 7-Year Window?

Bull view: 1,800+ additional stores across current countries + Spain is achievable within the long-term framework. TJX has a track record of opening 100-150+ stores per year and the operational maturity to scale this pace. Mexico + Middle East add incremental optionality on top of the baseline.

Bear view: 1,800+ stores at 100-150/year implies a 12-18-year build-out — material multi-year framework but with execution variability. Real estate constraints in mature markets + macro variability could extend the timeline. Some markets may face slower-than-expected absorption.

Our take: The 7,000-store target is achievable over a 10-15 year window. We model TJX reaching 6,200-6,500 stores by FY29 and the 7,000-store milestone by FY32. Combined with same-store sales growth and emerging market expansion, the multi-year revenue framework supports continued Outperform rating.

Model Implications & Thesis Scorecard

Model Update

• FY26 estimates (raised): Revenue ~$59.8B (+6.5%); EBITDA margin ~13.3%; EPS ~$4.65-$4.70 (+9-10%)
• FY27 estimates (raised): Revenue ~$63B (+5%); EBITDA margin ~13.5%; EPS ~$5.00-$5.10 (+7-9%)
• FY28 estimates: Revenue ~$66B (+5%); EBITDA margin ~14%; EPS ~$5.40-$5.55 (+8-9%)
• Long-term framework: Mid-single-digit revenue CAGR through 2030; operating margin trending toward 13-14%; FCF conversion ~85-90% of net income; capital return ~85% of FCF

Thesis Scorecard

Rating & Action

Maintaining Outperform. The Q3 print is the cleanest single-quarter beat-and-raise in TJX's recent history. Every dimension of the initiation thesis from Q2 is performing at or above expectations: +5% comp vs +2-3% guide (200bp beat), pre-tax margin 12.7% vs 12.0-12.1% guide (60bp beat), EPS $1.28 vs $1.17-$1.19 guide ($0.10 beat), all four divisions delivering strong comp growth, tariff mitigation continues working with merchandise margin expansion, 7,000-store long-term target articulated, Spain entry confirmed for 2026, capital return continuing at $1.1B/quarter pace. The off-price thesis is fully confirmed.

Fair value range maintained at $130-$150. Stock at ~$132 pre-print. We hold the range pending Q4 / FY26 print where the full-year performance + FY27 guidance will set the next leg of the framework. Our base case is that the stock continues to grind higher through the holiday season as the FY26 EPS trajectory becomes more visible to consensus.

What would change our view:

• Upgrade further (toward conviction-pick framework): Q4 comp +4-5%; FY26 EPS landing at $4.70+; FY27 guide of +4-5% comp with EPS growth +9-10%; Spain entry receiving strong early reception; explicit Mexico JV financial detail.
• Downgrade to Hold: Holiday season consumer spending deterioration; merchandise margin compression; tariff escalation overwhelming mitigation; competitive pressure from Burlington / Ross accelerating; International margin expansion stalling.

Key watch items into Q4 / FY26 (February 2026):

• Q4 results vs. implied +2-3% comp / pre-tax margin 11.7-11.8% / EPS $1.33-$1.36 framework
• Holiday season performance and consumer spending dynamics
• FY26 full-year EPS landing — high end of $4.65-$4.70 or upside
• FY27 guide articulation — comp growth pace + margin trajectory
• Spain entry detailed plans (initial store count, banner selection)
• Mexico JV financial detail
• Tariff mitigation continuation through Q4 + FY27
• Capital return acceleration signals
• International margin continued expansion
• Inventory turn through holiday + post-holiday transition