We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
TJX's Q1 EPS Down Slightly: Is FY26 Profit Target Still in Reach?
Read MoreHide Full Article
Key Takeaways
TJX reported Q1 FY26 EPS of $0.92, down from $0.93 last year but above internal expectations.
Margin pressure from hedging, wages, and lower interest income weighed on Q1 results.
TJX maintained FY26 EPS guidance of $4.34-$4.43, expecting a stronger second half to offset Q1 softness.
The TJX Companies, Inc. (TJX - Free Report) is leaning on disciplined execution after reporting a modest 1-cent year-over-year decline in first-quarter fiscal 2026 earnings to 92 cents, but ahead of internal expectations. Despite the minor decline, the company maintained its full-year fiscal 2026 EPS guidance of $4.34 to $4.43, implying 2-4% growth over the prior year’s $4.26. The central question: Can TJX bridge the year-over-year gap and still hit its profit target?
The fiscal first quarter EPS softness stemmed from a 50-basis-point (bps) gross margin contraction, caused by unfavorable inventory hedge adjustments. Additionally, SG&A expenses rose 20 bps, impacted by higher wage and payroll costs. Interest income also weighed slightly, trimming 20 bps from pre-tax margin due to lower cash balances and interest rates.
Management maintains that much of the margin pressure is front-loaded. Mitigation efforts, including expense controls, productivity initiatives and sourcing flexibility, are expected to gain traction in the second half. Moreover, some unfavorable hedging impacts are forecasted to reverse in future quarters as inventory is recognized at previously locked-in exchange rates.
While the first quarter’s year-over-year EPS decline indicates some near-term pressures, TJX’s decision to maintain its full-year guidance indicates management’s expectation of a recovery through the year. The outcome will depend on the effectiveness of planned mitigation efforts and the broader operating environment. If those factors evolve unfavorably, achieving the fiscal 2026 EPS target may prove more challenging.
How Are BURL & DG Managing EPS Stability Compared With TJX?
While The TJX Companies reported a modest EPS decline, Burlington Stores (BURL - Free Report) relied on cost discipline and operational planning to deliver earnings growth in the face of external pressures. In the first quarter of fiscal 2025, the company reported adjusted EPS of $1.67, an 18% increase over the prior year, even as comparable store sales remained flat. Management pointed to favorable timing of merchandise receipts between the fiscal first and second quarters, as well as early cost-saving initiatives, as key contributors to the performance. Despite rising supply-chain and asset-protection costs, Burlington Stores maintained its full-year adjusted earnings guidance of $8.70 to $9.30.
Dollar General (DG - Free Report) focused on inventory control and margin improvement to support earnings growth amid cost headwinds. In the first quarter of fiscal 2025, the company reported EPS of $1.78, a 7.9% increase over the prior year. Lower shrink and stronger inventory markups contributed to gross margin expansion, while operational challenges persisted on the expense side. Dollar General did flag higher SG&A, including incentive compensation, as a headwind for the fiscal second quarter. Still, Dollar General raised the lower end of its full-year EPS guidance to a range of $5.20 to $5.80, despite tariff-related uncertainties.
TJX’s Price Performance, Valuation and Estimates
Shares of The TJX Companies have lost 3.9% in the past month compared with the industry’s decline of 4.5%.
Image Source: Zacks Investment Research
From a valuation standpoint, TJX trades at a forward price-to-earnings ratio of 26.52X, down from the industry’s average of 32.3X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for The TJX Companies’ current fiscal-year sales and earnings per share implies year-over-year growth of 4.4% and 4.7%, respectively.
Image: Bigstock
TJX's Q1 EPS Down Slightly: Is FY26 Profit Target Still in Reach?
Key Takeaways
The TJX Companies, Inc. (TJX - Free Report) is leaning on disciplined execution after reporting a modest 1-cent year-over-year decline in first-quarter fiscal 2026 earnings to 92 cents, but ahead of internal expectations. Despite the minor decline, the company maintained its full-year fiscal 2026 EPS guidance of $4.34 to $4.43, implying 2-4% growth over the prior year’s $4.26. The central question: Can TJX bridge the year-over-year gap and still hit its profit target?
The fiscal first quarter EPS softness stemmed from a 50-basis-point (bps) gross margin contraction, caused by unfavorable inventory hedge adjustments. Additionally, SG&A expenses rose 20 bps, impacted by higher wage and payroll costs. Interest income also weighed slightly, trimming 20 bps from pre-tax margin due to lower cash balances and interest rates.
Management maintains that much of the margin pressure is front-loaded. Mitigation efforts, including expense controls, productivity initiatives and sourcing flexibility, are expected to gain traction in the second half. Moreover, some unfavorable hedging impacts are forecasted to reverse in future quarters as inventory is recognized at previously locked-in exchange rates.
While the first quarter’s year-over-year EPS decline indicates some near-term pressures, TJX’s decision to maintain its full-year guidance indicates management’s expectation of a recovery through the year. The outcome will depend on the effectiveness of planned mitigation efforts and the broader operating environment. If those factors evolve unfavorably, achieving the fiscal 2026 EPS target may prove more challenging.
How Are BURL & DG Managing EPS Stability Compared With TJX?
While The TJX Companies reported a modest EPS decline, Burlington Stores (BURL - Free Report) relied on cost discipline and operational planning to deliver earnings growth in the face of external pressures. In the first quarter of fiscal 2025, the company reported adjusted EPS of $1.67, an 18% increase over the prior year, even as comparable store sales remained flat. Management pointed to favorable timing of merchandise receipts between the fiscal first and second quarters, as well as early cost-saving initiatives, as key contributors to the performance. Despite rising supply-chain and asset-protection costs, Burlington Stores maintained its full-year adjusted earnings guidance of $8.70 to $9.30.
Dollar General (DG - Free Report) focused on inventory control and margin improvement to support earnings growth amid cost headwinds. In the first quarter of fiscal 2025, the company reported EPS of $1.78, a 7.9% increase over the prior year. Lower shrink and stronger inventory markups contributed to gross margin expansion, while operational challenges persisted on the expense side. Dollar General did flag higher SG&A, including incentive compensation, as a headwind for the fiscal second quarter. Still, Dollar General raised the lower end of its full-year EPS guidance to a range of $5.20 to $5.80, despite tariff-related uncertainties.
TJX’s Price Performance, Valuation and Estimates
Shares of The TJX Companies have lost 3.9% in the past month compared with the industry’s decline of 4.5%.
Image Source: Zacks Investment Research
From a valuation standpoint, TJX trades at a forward price-to-earnings ratio of 26.52X, down from the industry’s average of 32.3X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for The TJX Companies’ current fiscal-year sales and earnings per share implies year-over-year growth of 4.4% and 4.7%, respectively.
Image Source: Zacks Investment Research
TJX currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.