The TJX Companies Inc (NYSE:TJX) closed its fiscal 2026 with a robust fourth-quarter performance that handily exceeded Wall Street's expectations. However, the off-price retail giant's initial guidance for the coming year appears to be tempering investor enthusiasm, as reflected in early market trading.
Strong Q4 Results Top Estimates
For the critical holiday quarter ending January 31, 2026, TJX reported net sales of $17.74 billion, a 9% increase over the prior year. This result surpassed the analyst consensus estimate of $17.54 billion. The company's performance was driven by a consolidated comparable store sales increase of 5%, indicating healthy customer traffic and spending across its vast store network.
The bottom-line performance was even more impressive. TJX reported adjusted diluted earnings per share (EPS) of $1.43 for the quarter, which excludes a net benefit from a litigation settlement. This figure represents a 16% year-over-year increase and solidly beat the analyst estimate of $1.40 per share. On a GAAP basis, which includes the one-time legal gain, EPS was $1.58.
Key drivers for the earnings beat included:
- A higher merchandise margin and expense leverage on strong sales.
- Lower-than-expected inventory shrink expense.
- A pretax profit margin of 13.5%, significantly above the company's own plan.
Market Reaction and the Guidance Question
Despite the clear earnings and revenue beat for the quarter, TJX shares traded lower in the pre-market session following the report. This reaction is primarily attributed to the company's initial outlook for fiscal year 2027, which appears conservative compared to existing Wall Street forecasts.
For the full 2027 fiscal year, TJX provided the following guidance:
- Consolidated comparable sales growth: 2% to 3%
- Diluted EPS range: $4.93 to $5.02
This EPS outlook brackets the current analyst consensus estimate of $5.22 for FY2027, with the high end of the company's range falling notably short. Similarly, for the first quarter of FY2027, TJX expects EPS between $0.97 and $0.99, which is below the analyst estimate of $1.03. This cautious forward view suggests management is anticipating a potential normalization in consumer spending or facing tougher year-over-year comparisons after several strong years.
Press Release Highlights and Capital Return
Beyond the quarterly numbers, the earnings release underscored TJX's financial strength and commitment to shareholder returns. The company achieved a major milestone by surpassing $60 billion in annual sales for the first time. Furthermore, TJX announced a significant capital return program:
- A planned 13% increase in its quarterly dividend, subject to board approval.
- A new stock repurchase authorization of up to $3.0 billion, with plans to buy back $2.5 to $2.75 billion of its stock in the coming fiscal year.
In fiscal 2026, the company generated $6.9 billion in operating cash flow and returned a total of $4.3 billion to shareholders through dividends and buybacks.
Conclusion
TJX delivered a powerful finish to its fiscal year, demonstrating the continued resilience of its off-price model in attracting bargain-hunting consumers. The quarterly beat on both the top and bottom lines highlights effective execution and strong fundamental demand. However, the market's initial lukewarm reaction centers on the company's guidance for the year ahead, which implies a deceleration in growth and profits relative to analyst expectations. Investors will now weigh the strength of the underlying business against the prospects of a more challenging operating environment in 2027.
For a detailed look at TJX's historical earnings, future estimates, and analyst projections, you can review the data here.
Disclaimer: This article is for informational purposes only and does not constitute financial advice, a recommendation, or an offer to buy or sell any securities. Investing involves risk, including the potential loss of principal.
