We’re Raising Our Price Target for This Retail Holding
Stellar comp sales underscore the company’s position amid renewed inflation pressures.
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Shares of off-price retailer TJX Companies (TJX) are zooming Wednesday following the company’s consensus-smashing April-quarter results that featured comp sales growth of 6%, well ahead of management’s guidance for a 2%-3% increase. That makes Monday’s Portfolio move to add more TJX, a rather good one.
While TJX’s comp sales will garner much attention compared to smaller comp sales figures from Target (TGT), Lowe’s (LOW), and Home Depot (HD), we’re also going to call out the 50-basis-point year-over-year improvement in TJX’s operating margin.
For the current fiscal year that ends in January 2027, TJX increased its consolidated comparable sales outlook to a rise of 3% to 4%, from its prior forecast of 2%-3%. Given renewed inflation tailwinds, we suspect even that increased outlook is likely to prove conservative. Paired with an upward revision for its pretax profit margin, management also boosted its full-year EPS outlook to $5.08 to $5.15 from $4.93-$5.02.
In response, we’ll bump our price target to $185 from $180, and we’re likely to see the market consensus price target of $172 move closer to us. We fully intend on monitoring consumer spending and inflation data as a potential springboard to revisit that new target in the months ahead.
Now let’s get into the nitty gritty of TJX’s quarter and share a parting thought on Costco’s (COST) comp sales.
TJX’s Quarterly Results and Comp Sales
TJX reported April-quarter EPS of $1.19, $0.19 ahead of the market consensus, on revenue that rose 9.2% year over year to $14.32 billion, easily clearing the $14 billion consensus.
Overall comp sales rose 6%, driven equally by higher average basket size and increased customer transactions. Viewed against inflation pressures that stepped up starting earlier this year, this confirms our view on TJX’s positioning. Every TJX division delivered comp sales that were ahead of management’s 2%-3% guidance for the April quarter. HomeGoods led at +9%, TJX Canada at +7%, Marmaxx at +6%, and TJX International at +4%. E-commerce sales were up 7%.
Pretax profit margin came in at 12%, up 170 basis points versus last year and well above plan. Gross margin was 31.3%, up 180 basis points, driven by better merchandise buying, favorable inventory and fuel hedges, and expense leverage on higher sales. SG&A was 19.5%, only 10 basis points unfavorable — significantly better than the 40 basis points of deleverage originally planned.
Exiting the April quarter, TJX’s total store count stood at 5,214, compared to 5,085 a year ago, with gains across all segments and in all geographies. TJX and Marshalls remain the two largest properties, accounting for 50% of total locations. Adding in its third largest segment, Home Goods, and that brings the tally to 68%.
When TJX reported its January quarter, management shared plans to grow the company’s footprint, and during Wednesday’s earnings call, management signaled they are actively evaluating raising their long-term store count target beyond 7,000, pointing to adjacent markets and new ventures. Australia, Mexico, and the Middle East were all cited as growing or promising markets. Sierra Trading Post was also highlighted as an emerging growth vehicle, particularly with male and higher-income customers
During the April quarter, TJX repurchased 3.8 million shares for a total price of $604 million, which implies an average cost basis near $159. That makes our TJX buy on Monday executed at $150.47 look even better. TJX stepped up its buyback intention for the current year to $2.75 billion-$3 billion, $250 million higher than the range shared back in January.
A Quick Word on Costco
While the market takes note of TJX’s April-quarter comp sales and even the 5.4% comp sales posted by Target, let’s remember Costco’s adjusted total company and U.S. comp sales for February -April 2026:
February 2026: 7.0% total company, 6.0% U.S
March 2026: +6.2%, 6.2%
April 2026: +7.8%, 8.0%
When we assessed those figures at the time they were reported, we shared our view they pointed to Costco taking consumer wallet share. Our thinking was vindicated by sizing those figures up against the monthly Retail Sales report data, but against April comp sales being reported, questions should be firmly squashed.
At the time of publication, TheStreet Pro Portfolio was long COST and TJX.
