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TJX International's Adjusted Margin Hits 7.3%: More Upside Ahead?
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Key Takeaways
TJX International's adjusted segment profit margin rose 210 basis points year over year to 7.3%.
TJX International sales climbed 11% to $2.09 billion, while comparable sales advanced 7%.
TJX International's margin gains came alongside higher sales and customer transactions.
The TJX Companies, Inc.’s (TJX - Free Report) International division delivered a sizable profitability improvement in the second quarter of fiscal 2027. Adjusted segment profit margin on a constant-currency basis reached 7.3%, up 210 basis points year over year. Reported segment profit margin was 6.4%. Excluding a 0.9-percentage-point impact from tariff-refund-related incremental compensation expense accruals, adjusted segment profit margin was 7.3%. Foreign currency had no impact on the adjusted margin in the quarter.
The stronger margin performance came alongside healthy sales growth. TJX International (Europe and Australia) generated second-quarter net sales of $2.09 billion, up 11% from $1.89 billion a year earlier. Sales increased 10% on a constant-currency basis, while comparable sales advanced 7%, compared with 5% growth in the prior-year quarter. The comparable-sales increase was primarily driven by higher customer transactions, with strong, consistent sales in Europe and excellent sales in Australia.
Expansion activity also continued during the quarter, with TJX opening its second TK Maxx store in Spain. Customer response to the new location was described as extremely positive, reflecting continued activity within the division’s European footprint.
Overall, the quarter reflected improved profitability alongside solid sales growth at TJX International. The margin improvement was primarily driven by favorable merchandise margin and expense leverage on higher comparable sales, partly offset by incremental compensation expense accruals related to tariff refunds.
How TJX Compares With ROST and BURL
Ross Stores (ROST - Free Report) also posted meaningful margin improvement in the second quarter of fiscal 2026. The company’s operating margin increased 610 basis points, including a 405-basis-point benefit from IEEPA tariff refunds. Excluding that benefit, Ross Stores’ operating margin rose 205 basis points year over year, supported by stronger merchandise margin and lower distribution costs. Ross Stores also benefited from 10% comparable-store sales growth.
Burlington Stores, Inc. (BURL - Free Report) also delivered notable margin expansion in the second quarter of fiscal 2026. The company’s adjusted EBIT margin rose 100 basis points year over year to 7%. The improvement came alongside an 11% increase in total sales and 2% comparable-store sales growth. Burlington Stores expects fiscal 2026 adjusted EBIT margin to increase 20-40 basis points.
TJX’s Price Performance, Valuation and Estimates
Shares of TJX Companies have fallen 16.5% in the past month compared with the industry’s decline of 6.9%.
Image Source: Zacks Investment Research
From a valuation standpoint, TJX trades at a forward price-to-earnings ratio of 22.73X, down from the industry’s average of 27.02X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for TJX Companies’ fiscal 2027 and 2028 earnings per share has inched up 5 cents to $5.22 and $5.74, respectively, in the past 30 days.
View the Zacks #1 Rank List
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TJX International's Adjusted Margin Hits 7.3%: More Upside Ahead?
Key Takeaways
The TJX Companies, Inc.’s (TJX - Free Report) International division delivered a sizable profitability improvement in the second quarter of fiscal 2027. Adjusted segment profit margin on a constant-currency basis reached 7.3%, up 210 basis points year over year. Reported segment profit margin was 6.4%. Excluding a 0.9-percentage-point impact from tariff-refund-related incremental compensation expense accruals, adjusted segment profit margin was 7.3%. Foreign currency had no impact on the adjusted margin in the quarter.
The stronger margin performance came alongside healthy sales growth. TJX International (Europe and Australia) generated second-quarter net sales of $2.09 billion, up 11% from $1.89 billion a year earlier. Sales increased 10% on a constant-currency basis, while comparable sales advanced 7%, compared with 5% growth in the prior-year quarter. The comparable-sales increase was primarily driven by higher customer transactions, with strong, consistent sales in Europe and excellent sales in Australia.
Expansion activity also continued during the quarter, with TJX opening its second TK Maxx store in Spain. Customer response to the new location was described as extremely positive, reflecting continued activity within the division’s European footprint.
Overall, the quarter reflected improved profitability alongside solid sales growth at TJX International. The margin improvement was primarily driven by favorable merchandise margin and expense leverage on higher comparable sales, partly offset by incremental compensation expense accruals related to tariff refunds.
How TJX Compares With ROST and BURL
Ross Stores (ROST - Free Report) also posted meaningful margin improvement in the second quarter of fiscal 2026. The company’s operating margin increased 610 basis points, including a 405-basis-point benefit from IEEPA tariff refunds. Excluding that benefit, Ross Stores’ operating margin rose 205 basis points year over year, supported by stronger merchandise margin and lower distribution costs. Ross Stores also benefited from 10% comparable-store sales growth.
Burlington Stores, Inc. (BURL - Free Report) also delivered notable margin expansion in the second quarter of fiscal 2026. The company’s adjusted EBIT margin rose 100 basis points year over year to 7%. The improvement came alongside an 11% increase in total sales and 2% comparable-store sales growth. Burlington Stores expects fiscal 2026 adjusted EBIT margin to increase 20-40 basis points.
TJX’s Price Performance, Valuation and Estimates
Shares of TJX Companies have fallen 16.5% in the past month compared with the industry’s decline of 6.9%.
Image Source: Zacks Investment Research
From a valuation standpoint, TJX trades at a forward price-to-earnings ratio of 22.73X, down from the industry’s average of 27.02X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for TJX Companies’ fiscal 2027 and 2028 earnings per share has inched up 5 cents to $5.22 and $5.74, respectively, in the past 30 days.
Image Source: Zacks Investment Research
TJX currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.