The TJX Companies, Inc. (TJX) 20 Aug 192020 Q2 Earnings call transcript

Company Profile

Participants

Ernie Herrman	CEO & President
Debra McConnell	SVP of Global Communications
Scott Goldenberg	CFO
Kimberly Greenberger	Morgan Stanley
Matthew Boss	JPMorgan
Lorraine Hutchinson	Merrill Lynch
Paul Lejuez	Citigroup
Roxanne Meyer	MKM Partners
Alexandra Walvis	Goldman Sachs
Ike Boruchow	Wells Fargo
Omar Saad	Evercore
Jamie Merriman	Sanford C. Bernstein

Call transcript

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to the TJX Companies' Second Quarter Fiscal 2020 Financial Results Conference Call.

At that time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions].

conference being this XXXX. August reminder, a call recorded, is XX, As

The Please would conference Executive Herrman, of the to Officer Companies, over President I turn Ernie call like ahead, go sir. to Mr. and TJX Inc. Chief

Ernie Herrman

Thanks, Jordan.

some begin, comments. we Before opening has Deb

Debra McConnell

company's use and and the vary uncertainties XX-K and cause follows actual the and or Thank profit that today without the you, XXXX. are statements copyright Further, the Companies make of subject are same discussed SEC risks X, prior Form company's filed without by results the otherwise These TJX laws. to is States morning. United could consent today materially. violation comments and good other Ernie, plans company's The a TJX April other implementation retransmission, and forward-looking are The we prohibited of the about that copyrighted results risks plans including of the recording, and to Inc. for the Q&A Any of the in filings, these limitation, or reproduction

approved publishing Additionally, inaccuracies have no may for this that party, we the a we of take responsibility of a that in appear call while by transcript. transcript third

consolidated impact foreign the website, Investor the detailed today's have We press in our exchange results on of international our and release in our divisions section tjx.com. of

section. today measures posted are tjx.com discuss the GAAP measures to of we Investors non-GAAP Reconciliations the on website, in

it I'll and you, to turn now over Thank Ernie. back

Ernie Herrman

morning. Good

and increase result Consolidated high sales end X% plan. quarter year's Joining was the $X.XX, Earnings our over were Scott our line X% store I'll and plan per which strong me Goldenberg. start with and Deb with results. comp was our last second the very on increased is strong in call at last year. over of share

TJX drove apparel which the customer divisions. traffic and sales increase customer at comp quarter traffic line the this the our of major was quarter comp Further, was were increase with chain. particularly four up business, XXth Marmaxx in pleased each consecutive our increases at consolidated the of Marmaxx. again, We marks and Once in with

We strength at all shopping of around divisions with traffic increases, our appeal our difficult the are and market apparel the off-price younger extremely and customer of underscores believe age more our experience. business customers. and we across environment, all our retail major today's the our consistency In been and pleased we've world. the and business of consumers have treasure-hunt share values groups, we This the attracting of gained sales gaining enduring

quarter solid off third Looking a ahead, to start. is the

on the to executing are half and have We and laser focused many our second traffic sales driving in year. planned the business of model keep initiatives

excellent and We quality categories which loaded of an goods have to that take liquidity of in goods, plenty position marketplace with the range a is and of across widespread are brands. advantage are

are We market to years position great convinced to a capture many that world the share come. in for we remain around

numbers. call I over Scott I'll recap quarter the turn second our Before continue, to Scott? to

Scott Goldenberg

Ernie. Thanks, everyone. Good morning,

in and comparable quarter strong was year traffic up and second plan. was store consolidated driver overall over sales primary X% X% with our line mentioned, a Ernie increased last increase. sales of our comp As Customer the

sites. the excludes e-commerce increase comp our from Our growth

year's $X.XX Second the diluted share up earnings plan. high our over $X.XX, end per quarter X% at were prior of and the

home X% Marmaxx's with by comp, increased environment today's was Further driven again the performance outperformed. sales were last X% second retail in our quarter comp recap by see traffic. Marmaxx Again, increase over strong a to is year. great overall to very which line division. apparel in Now comp sales customer and performance once

we points, line with basis Segment anticipated. profit what margin in XX decreased

HomeGoods in the comp third initiatives was have sales the year. we many are planned the and the half quarter, to As drive in we we flat for second traffic quarter. begin of the excited second

believe third to to supply that categories primarily margin in costs related Segment and we was chain, to work will the on was a new expenses profit We our on expense the mostly higher deleverage comp, improving was few points. store markdowns. in quarter. due This flat due issues down this to openings XXX basis related

to long-term additional see a continue capture of opportunity the home market. We to US share

unseasonable TJX's to improvement last all foreign the the sales. month X%, first second segment weather three a the This negatively We X% of growth the from over was profit We well stack a quarter increase chains. very for the up of impacted On long-term transactional year sales. basis, quarter first in comp an was was strong increased prospects as as X% comp year. quarter. pressure, points. two believe Adjusted margin, excluding deleverage confident Canadian foreign down our remain XXX currency primarily on comp basis currency due the in softer

would across a sales the we transactional Adjusted X% UK TJX segment and very International, segment basis At Once grew up currency strong year. foreign down in be points saw foreign Europe. exchange. continued profit profit was been Adjusted to without XX have comp margin last TJX Australia, negative strong. the our In excluding International versus comp performance at regions margin second strength impact throughout quarter. again, of

slower market report are across stores. underperforming retailers been other growth as We Europe close we many share that significant convinced sales have and capturing major

I'll finish shareholder with distributions. our

dividend $XXX of dividends. paid to and returned dividends shareholders our $XXX stock million paid Year-to-date, million million $XXX We million programs. retiring back quarter of we $XXX million $XXX stock, through we TJX in and shares our shareholders. buyback second in back bought the TJX bought have X.X During million and to

we anticipate the year, stock. For TJX buying of billion $X.XX back approximately full

and me Now, the fiscal year of and call guidance the recap at Ernie end turn our full 'XX I'll back to third call. the let quarter

Ernie Herrman

formula that success in retail been winning and throughout Thanks, consumer of history. as kinds Scott. our these advantages to We and uncertain strengths retail consistency today's Today, of environment. economic our core recap I'll the our business through to key major see our many have cycles

in buying buying opportunistic our is First world-class organization. global

in allows seek nimble the be which deals goods and out greater around them the the world. to have at the best marketplace best buyers Our autonomy

talking almost the on which size of double we we huge Second, decade sourcing. flexibility XX,XXX us a over from were about affords source global a vendors, ago, universe

serve we brands. and better them We offers of very Third, across opportunity customer we sets our range and a broad Europe retailer good, only major believe and apart off-price growth global mortar Canada, and in are a merchandise best the demographic wide us as Australia. brick

merchandise format distribution assortments react store allow flex to flexible hot and take trends. consumer our and to us brands Next, categories market to of advantage and our network and

attractive to diversified in different a chains estate of Lastly, US which capitalize and and many areas. real locations retail on we the internationally, demographic operate allows portfolio us

also company support portfolio performance. diversified balance of Our consistency helps the and our consolidated

support been All of values every day. our strengths multiple our have importantly, our highly key and integrated Most strengths decades, business. global relentless focus consumers support specifically refined to these over on excellent developed offering

and we highlight see the driving sales traffic keep year. that in I'll half the second Now, opportunities of the

range brands, we seeing is we of First, phenomenal tariffs. believe related are which and to product of availability categories major widespread some a across

upcoming fashions enormous to comfortable holiday are plentiful in-store selling at and are We we very to the bring season. the values are right advantage gives position with consumers This ability and seeing. supply our in fall the right take our throughout confidence us inventory in the of levels great

our we will teams confident initiatives. Second, store merchandising our execute great plans on feel about and that these are

gifting being focus our destination We year, as excited to throughout a initiatives holidays. beyond particularly about we on are continue the major

we in the and season. for marketing fall very strong Third, have campaigns holiday place

value to around can't of I yet our experience. of them message our I will the divisions While entertainment of you great that share continue brands, details highlighting and each the just while shopping can and treasure-hunt tell excitement values

We with the believe of our digital existing customers. top of the advertising new to mind we attention while mix television consumers, staying of have right and capture

to thrilled These customer loyalty growth us further allow grow the to stores believe the frequently. in seeing significant with with visit them and and US, are opportunity we Canada the each Lastly, them. of more shoppers to encourage are UK our we programs in engage and programs our remains

to physical e-commerce, our and sites gives merchandise us stores with stores. be complementary a continue pleased online and Each highly online differentiated and in business. the our to our shop At to reason US are both our of our compelling we consumers UK mix online

e-commerce our potential to the we second believe year. in for We is customers anticipate half the excited the are new current launch which customers something are banner. the this about of are Marshalls, We attract waiting this of preparing to and for

quarter we to and business, share In our year, customer in closing, third and underway we of start traffic look to US the the feel second market half momentum initiatives great the our the both to and gains, in internationally. our sales, driving keep solid the about our

in an with the the tremendous marketplace, in of buying thrilled to opportunities them. are we take position advantage excellent are We see and

retail our our enormous consistency off-price of our record flexibility more we Longer environment. underscore long see globe. term, to off-price in values The confidence the and fundamental and deliver to track strength around today's consumers model of our potential

Now we'll the to through to for and it over I'll turn then go open call guidance Scott? our questions. Scott up

Scott Goldenberg

Thanks, Ernie.

want Before on tariffs. a spend detailed I guidance, to moment our I provide

impact and we've currently environment a primarily opportunities analyzing negative the planning We to continue have buying the through we this for in the We're to are savings. information. committed list favorable guidance tariff merchandise for included developments we expense tariff offset the only that what full Based monitor very small today, closely know to. proposed and already our year on impact in

to committed yet our to Chinese and the of demand, competitor Therefore, merchandise mitigate fourth if with it fluctuation the for and which vendor we for the any, not most quarter. It could and remains impact, us we of what the currency. However, tariff remains to forecast to have happens pricing, the difficult potential consumer it. pass-throughs seen be extent

helped will always our term, long all, weak for we a long major both gap to times flexibility the the our we through advantage. customers. continue us convinced that throughout Above are will navigate our history business that has and be strong of value a maintain Over

maintaining Now year guidance. To are EPS fiscal to be full 'XX clear, our estimates. we half back and full-year our

the increase EPS This $XX.X X% to to guidance assumes We which year charge. the adjusted range impact consolidated This year. prior in X% $XX.X translational continue prior settlement in guidance due a FX. a represent assumes sales $X.XX $X.XX from a to $X.XX. pension the impact excluded now a increase now over range, negative billion negative to EPS This X% to $X.XX, would of X% over X% the to expect full billion year's be to a

continue expect basis. comp We to a on X% X% consolidated to increase

last to sales be compared of a margin approximately the XX.X% year. profit percentage versus We're to to XX.X% in XX.X% the down We to basis XX profit adjusted points be be range pretax fiscal planning the in expect in continue 'XX. expecting last with XX.X% XX.X% We're of of range XX.X% XX.X%. to year. This gross versus to SG&A as XX.X% would margin be to XX

we're of modeling rate anticipating share expense million and approximately about billion. X.XX of For currently a weighted net purposes, $X of tax a interest average XX.X%, count

expect Now and division. in to full we to of to on our X% $XX.X profit Marmaxx, the to year by At growth X% store comp sales billion of guidance $XX.X billion margin comps XX.X%. planning XX.X% continue of segment of on to to $X.X to XX.X%. now HomeGoods, At the margin in to are XX.X% increase profit of range X% and range we billion sales be segment approximately

expect range to increase in of of to we a foreign is $X expect the comps currency International, currency X% margin now on Canada, billion. to approximately approximately of TJX, For excluding profit segment X.X%. to sales on to to is billion. TJX segment X% be X% margin profit of X% now expected $X.X excluding XX.X% Adjusted sales we expected comp At Adjusted billion foreign $X.X XX.X%. be of

to on QX Moving guidance.

FX. expect consolidated We're increase a a guidance X% $X.XX. to to modeling, the $X.XX X% be $X.XX, of prior over $XX.X adjusted to This quarter billion. $XX.X in sales assumes to range impact due translational to of earnings share in per range the X% We negative third the year's billion

approximately For basis of X% X% Marmaxx. consolidated a at comp store sales, on we're to assuming and growth

consolidated a reminder, a As year comp comp was at and last quarter QX increase X% strongest with our Marmaxx. X% a

XX.X% profit prior range planned adjusted to the versus XX.X%. pretax in the Third year's is XX.X% margin quarter

of range percent profit of XX.X% We're be We're as XX.X% to the year. a approximately quarter sales last gross third versus expecting last SG&A be to XX.X% to anticipating XX.X% XX.X% versus margin in year.

million X.XX $X average For purposes, expense XX.X%, and a approximately count, net weighted we're a of of interest modeling currently anticipating rate billion. tax share again, of

implies of quarter $X.XX. on EPS and quarter a comp X% full-year guidance to of fourth third $X.XX to X% Our

quarter. to the important at detailed guidance We of our remain rates third quarter the the will provide remember It's full quarter quarter on levels third guidance beginning year that quarter, of third fourth assumes and call. currency for our though exchange the unchanged conference the from will

to please happy it one ask now, we your are take questions call And we schedule, up per person. will on are we your limit questions. you Now questions. to Thanks. to To the keep that to going open

Operator

question comes Kimberly Greenberger. first Our from

Your line open. is now

Kimberly Greenberger

I to good with and much. said, areas any felt And comp, maybe so you start there were pleased look think just you Thank you about wanted disappointment? -- of talk comps. about Ernie, just Great. can I were you the specifically QX. of QX back Were any there at about you ask where

you any if have you Thanks. there, be So that add color could great. would

Ernie Herrman

Sure, Kimberly.

First of going bit May. impacted had -- category a let here. a of to board, on We and all, our not be the me specific negatively across sales I'm in

I out, in big the So should was that issue. QX, point weather a that of kind

like May -- then comp. a Europe on June, and softer, that was up and the a a to really and full-line business Canada our Marmaxx was significantly July picked a May And our fairly Our stores. relative

saw might June, we on-order with we is, few probably have fix categories amount HomeGoods, go we on, the a to would and heard them we that, we We there our that quickly, those where, I'll rather issue The of some fair The honor in there comps, in merchandise still us a May. of turned rapidly. issues. we had be able some be about you disappointed that, acceleration versus is, commitments. we working specifically, the talk were Kimberly, past. so right assumption you executional on-order July fixing in in we model had to that had categories our So are of obviously,

So we feel per category cancel the or don't the like in wrong wrong se. even orders, we if it's merchandise just

feeling feeling beginning amount of took call about very improving a what incrementally think seeing weeks the I of we're worked we of and it's the So just we're It's of that. is start feeling good the feeling solid our to of specifically good we availability a levels And is first markdowns, HomeGoods we're and different to, result, later across way, in I from out different we QX, and market as the the point, up Marmaxx, it, your that like there would was availability. couple categories. brands and this, business a standpoint the been we've word script been of and all on used phenomenal with very

of start a look and big guess, you as picture, say a off got bit it into rather QX. better have that I so, going slow, you would on QX we momentum And if little now went little

Operator

Our from next question Boss. comes Matthew

line Your is now open.

Matthew Boss

guys. Great. Thanks and congrats on a nice quarter,

Ernie Herrman

Thank you, Matthew.

Matthew Boss

a guess, maybe combination I Scott. for and Ernie

margin this earnings versus couple, like, how headwinds next guess As year you supply model think offset Scott, wages, I chain, we see as we the confident out that some ability the others are in and more and And specifically, It multi-year? to tariffs? sounds this items changing then flexibility last maybe that year's facing to think that in there? in nice guidance we've the you freight, year any X% X% it's about been whether

Scott Goldenberg

Mid-term, and freight this Ernie in second. costs, at least wage the long Matt. going on more a -- in again, the -- -- think part not terms of changes have giving of would actually chain hope in supply The kind out not take near expect supply term. I'll and components we've the the question. to At Thanks, deleverage of chain the we next not year, major in of costs. first but mitigate the much for is guidance of supply the major the take -- to chain, costs. Yeah. laid I would time, lower point term

doing in basis it's and what The seeing marketplace. -- would know states we the pretty the similar we've year. what this XX what that in point, is this to been and on to deleverage wage all XX again, based At in they're The be points

longer-term So guidance no that changes at this our point to one. on

between it's what bit this your a are. are and can the way the rates contract -- freight. at down then Freight spot stay is the the rates And and card of differential wild they point as spot going you the

would quarter that's renegotiate seeing we for when rates portend well from amount the currently a our could As what move about. we get to year and really or talk could the extent about we through contracts fourth that next of and expect I renewed are large a benefit drop

guidance over have the the Ernie the a half through offset third to the back what going tariffs point from say due reiterate I'm to it's one, I'd been tariffs. thing in when with, tariffs Ernie. in to have my or whether said the at largely the numerical only we and built turn of to to on I it what buying not committed statement to started two, view on kind three I just of able time, we've -- The at -- point committed And four. and we're great environment. tariffs this list and to

those As Ernie to I'll And tariffs. turn to, costs alluded it related Ernie. the over to

Ernie Herrman

Yes.

Matthew. So,

one it's advantageous some Short-term, early tariff category the more the could On we're buys here. we a story short-term, recently tariffs, long-term the of due of that bit of of believe a merchandise. delivery -- to making be

that makes to sense you. Longer-term, hopefully it's be I So think seen. to

and to what tail happens are be believe -- and of model We moderate able I business make any the to around eventually we that's right be position of retailing think on we're not till in to the so end decisions us. even in have we that risk to see

think moderates that, you risk. the really if that So about

other of in value our terms retail of never versus will of goods the We the retailers. our give up the GAAP

and buy moved goods the the when where categories place got of way chunk look many categories of inventories. excess September the September, we If got Remember, take is that the where at tariffs list, delayed split in and till out December. you on the that those categories portions

right only our what the value. on need focus we retail buyers So really to is really --

kind dynamics it us to of having self-insulates to on out figure from it going when those what's happens So of happen, the goods.

which have out a figured already amount. about, small Scott import on we've on tiny own our the that We that we small that's portion talked and a of goods degree

Probably this think long we benefit again, we a get little get see also. we say possibly. say, probably that, strangely in the hesitate And a situation. to some could washes I costs term midterm. enough could I short-term, would I because So with over advantage, hit then out

this So sorry parts that's what for with the on dealing lot moving but of answer, subject. we're

Matthew Boss

of That's great luck. color. Best

Ernie Herrman

you. Thank

Operator

question next Lorraine Our comes from Hutchinson.

Your now line is open.

Lorraine Hutchinson

morning. and acceleration earnings a earnings factors you quarter guidance? the Can sales growth. Good talk you nice in The give guidance Thanks. in both that implies fourth that just through confidence

Scott Goldenberg

I'll and in Ernie the off start on component. jump probably sales

I think costs our we as chain less the third year of quarter. the the we supply and -- where out laid back are expect the of be that half to a in some are costs less timing early in would

that to of that we're where last Some do up with has DCs opened anniversarying. timing the we year,

as the such costs lower the of fourth be to some that quarter. expect we So in

the There in a is quarter benefit the of that's tax a bit fourth rate. built into

that's EPS is. So the gain the of what -- of part part

I is In you're it. -- sales what think to terms of the of piece alluding

third a the two fourth stack quarter year We similar and have in for TJX.

Ernie Herrman

example, the Yeah. the here this business right it's are when a up look and all you in our think QX. the household lower Europe in different big brands phenomenal And then Lorraine, than good-better-best like at not it within is, portion we And across X% within then, really we're availability. with it's about haven't we in the now a store right comp now. those for across, against where stores, situation just categories marketplace brands, QX seen I it's

and new but case, ramped we've and every is domestically are feeling what's have more their opening in it in sales go Marmaxx. that new Europe, really in seen there based amazingly the actually is opportunity One unusual QX up for our of region division brands, available specifically, than obviously. healthier here up as shows we and brands in on column, they Europe years We've like, recently, the brands. that better over we more And been to and amount in -- business

to aiming If we gift mentioned look I've more have been the and in of script, become historically a you destination. it

even but Valentine's So, not from periods in just Day at other giving Day, gift Mother's to time Father's the Day. holiday,

the named You giving gift periods. time

trying to executed better now at after are We and go we've that. more that

amount bullish pretty the feeling we're on of ammunition. So

they just merchandise and have is be to it looking branded in on-order a visibility been nature also have were a at on-order buys item, of over the our also which mark go at was already making are a weeks, QX, getting we We're gift six QX like tends more what's happening because to way better the up buying in kicked mark-up that we also QX brands of for give some tracking brands. the okay, four margin healthier -- what notch, has which our us tending that, to the but content we're QX last the because and to of on on kind of people together been on

from perspective. answered So hope we that that I feel question there, bullish very your the Lorraine. of bulk

Lorraine Hutchinson

It you. does. Thank

Ernie Herrman

you. Thank

Operator

Our Paul Lejuez. next question from comes

line open. now is Your

Paul Lejuez

Maybe it guys. which margins Can by about maybe -- Hey, how really are segment. you terms a driving overall? down mix, initial there merchandise Which the more you performing think Thanks, promotions then on international required plan? little any more thanks, your hoping of and drivers countries guys. and concept the just which is looked below just to about you are I Ernie. get in detail are a strong markups, little drive sales? talk second, bit bit to And talk Can results mentioned margins

Scott Goldenberg

consistent and of the of kind Europe it's whether we give really of in all give segment, international to it's going and of your comment can very, is alluded talk mean, I across sales very on, I'll terms geographies I'm within Ernie -- going in and in what been in terms you Yeah, in color probably Ernie start sales, But some everything Europe. it's the to the strong to last about. script.

a all the well. increase out the called -- UK and the last wouldn't I consistent very regions healthy within quarters, sales wouldn't the UK want also point as within the four as So everything that. within consistency to for And comp out and really three, it's we've of

think So I pretty been uniformity good. that has

I I'll why we to I'll in turn think -- that maybe Europe. and go that back just see

to I do always mostly merchandise that think has we've the mix as seen. it with

Ernie Herrman

They Paul. increase, Yeah.

without has Europe numerous to branded penetration, better doubt categories. us a been So, in the branded driving key increased penetration

question, So think this many overall healthy mentioned business your we families before. I of are and to

total and home Scott? businesses apparel in trend. our eerily in running Our similar Right,

Scott Goldenberg

Yes.

Ernie Herrman

So which -- one that that the healthy we're that We're is a and always seeing really next dip of we're across off board, is going quarter the no big always seeing into better thing. when in end or spectrum. issue

Our been business a based. little apparel apparel weak, was concern going bullish strong, forward. we're our we're given as been not particularly when has Unfortunately, feeling that has apparel

a So that's been positive.

it's of obviously, earlier benefit about in terms deliveries, until talk the mark-up, asking to of what's values. in I the I QX -- I right with which tariffs is kind think now, even our of the I to benefit we're us showing, still Scott benefit but the think margin? I you to touch going the is -- recently, the QX, while some or on the more And believe, a environment helping on merchandise started us a didn't think potential so, issues the on why start that, were on because didn't of forward, think more

retail goods. the We way will the not up on we give

know… don't So, I

Scott Goldenberg

profit. gross on back on -- alluding what think drive I'll Yeah. the jump I to some the back overall of Paul in the on was

the with start international divisions. Let's

unfavorable Europe the the for situation due originally which year. to had gave the versus have the Canada, at when number likely in Brexit. there. currency is know, continued has -- lower for We've impact of to to you the -- are now years where beginning has due currency dollar And guidance largely both a -- we Canadian ongoing been As in

a pressure part the due the was of to So currency deleverage, FX mark on transactional impact. the both and currency between large Canadian their on their

by in chunk merchandise less, good their our FX impact. segment, similarly FX international margin on a significant impact impact. bit saw a to a we the the impact, due was our also virtually merchandise but margin of a And So

do, of buying on, Marmaxx Moving well they've very over also but -- the had we we -- always we had feel well we they're is in in there, been HomeGoods as open to did good markdown. real buying in we the inventory it, to, the excellent Ernie buy how we mark HomeGoods in is take took and with their ended our to HomeGoods. position as been that buying but good alluded feel excellent terms what as we've on comp shape, shape, that was we

gross due there markdowns, offset second bit the was we they saw margin markdown So bought to although primarily wasn't quarter. the down to able in it pressure better,

some better. more to, Ernie but having At some merchandise alluded and as second mark-on due we've also more freight on due the again, deleverage Marmaxx, buying was brands. largely due mark-on, really been Really to to was mix best quarter the their more to margin to and some partially due

much board currency third as we pretty real the even fourth quarter. and the feel move into the good with mark-on, going across So the about up

gross with for But again, guidance. issues were the essentially due that were margin really at just and so want it's currency the reiterate freight that, and profit HomeGoods in our line our to SG&A merchandise overall, story mark-on and the to some markdowns I though quarter. margin

of So quarter. bit than there was surprises, HomeGoods the really markdowns for no a in the other

Paul Lejuez

Yeah. it. Got you. Thank

Operator

Our next question comes from Roxanne Meyer.

line is open. Your now

Roxanne Meyer

Great. Good you orders that some follow-up quarter. fulfill mentioned taking question -- were you XQ and know had morning. HomeGoods. I that Quick great my to Thanks need in for you on that that still left committed and for are overhang relates continuation as the led orders there? you really XQ, are the some to still is it What of there. that's exposed to issues how what

business? that it's terms performing on for of the and how how And then, part can growth longer-term update opportunities thinking you HomeSense you're lot. a us Thanks give in an of about the

Ernie Herrman

gotten of the don't I first I on-order I The I the through, those category take issue will Scott know, about would HomeSense. will quarters say, talk Okay, categories. probably we've and three both in part and Roxanne --

of go into it some And will still of probably QX. the beginning

However, as progress some see We QX as percent should in categories our in total of business aren't because the incremental sales. those a high.

into going QX. So we better are feeling really positioned better,

-- address -- have never older we it would we so to do want value. of of down will that's And say not appropriately we're we what some [ph] we behind forward, kind would right some know start is HomeGoods in largely mark some again, we why goods, take also have But the put to us. did departments we to QX. I it pretty improvement but make is Scott? it even will out Yes, and is we completely, mix that, in reprice to as I chunk -- go way, problem now say goods, think incremental still liability we sure of confident we what the out want the do in of a adjust is if that which we that the those show not there, the we HomeGoods cancel by sales I

Scott Goldenberg

I to lowered wanted on and just in want from I to just said I Yeah. right-sized -- original clarify of in the all. Ernie Ernie that our think, have we reflected third based terms comp and what quarter. plan the covered -- it our HomeGoods

that, with year never sales we feel, level we of the to this you point, quarter. what as reflect saw third plan. de-risk in at that, can And that's you've we this again, our all. overall say comfortable feel point the have for at have for the But it we so we in lowered we particularly appropriate So why feel you the probably comp sales there

on to HomeSense. Moving

business, are open originally HomeGoods. of approximately XX for we at than for -- little we When more opened the to HomeSense are more -- this some the planned outsized which they to in didn't HomeSense for have the stores XX freight X year have year. the next this we for So and certainly costs, up

And as weighing same HomeGoods that some HomeSense on of impacted have at well. are the us issues also

making margin However, to lower in improvements were having costs to we store margins from last get we year this said four-wall that, expense year. our improving gross overall those and see and

I the be this at a metrics we'd are Ernie. still all of but done, key think, but think want lot So, work some say, that's to improving, point I of to

Ernie Herrman

want the fairly model the one are there. of in is, not Roxanne, execution is you cross the when or this of a miss the terms of TJX of locations. but And business, And here beauties the we times. in portfolio these that's see do having to an terms geographic diversified, of When

Fortunately, we those. to tend that banners have other offset brands or

have and enough we a see, have than wanted and at So offset. time were other the way comp Europe time, we yes, a business this which fortunate ran we HomeGoods go to than then this to slower more

as running Just know, like, for HomeGoods for major comp. of a a while was had couple you one comps, years of Europe and we type years years, running

even off results. beauty that have So is of multiple us I brands countries you in the guess our to TJX, when multiple helps do

Scott Goldenberg

lot other only would HomeGoods that. We going the initiatives, on thing marketing feel I good of is about The initiatives… say the

Ernie Herrman

prospects HomeGoods, Across existing all in about but customer, our our talked excited in division. Marmaxx, it's not we're every earlier, aiming And we shoppers. about marketing and and internationally that non-shoppers campaigns very about at frequent

the fall. on So, believe we campaign every I But to a lot you Scott's well. created going spot point, of is campaign think for HomeGoods, is seen, which bode of have the to

Scott Goldenberg

Yeah.

versus quarter TV We also third have advertising for to And couple have media year we weeks HomeGoods. of of digital a last increased in also year. last the the that compared more

of younger divisions, and our at shopped than So HomeGoods pretty strong And were would similar lower our that good to at other XX in that, also Having also again, customer about satisfaction XX it our new board. at scores even and very segments. the comp talk feel that. our but have we the liked, about we across up thing, despite HomeGoods was different the customers is HomeGoods to banners said in all that

So real feel well. that as we about good

Roxanne Meyer

all of Terrific. certainly your model. the additional of of for color. power Well, luck. the appreciate Best And thanks

Ernie Herrman

you. Thank

Operator

next question Walvis. from comes Our Alexandra

now Your is open. line

Alexandra Walvis

much so taking for question. the Thanks morning. Good

is there on willing types underperforming, you ticket I home that categories you're think is macro? category give the us maybe anything more versus are else to question bit any can Relatedly, And again again. of of ticket little my the more to a weakness that share? color that broadly, think you seeing do it's attributable there some on the is So the you're smaller big or

Ernie Herrman

the So, the business? asking Were Alexandra, you that, because make we to missed about we're first it just sure answering home part.

Alexandra Walvis

Yeah. you be I any environment. to the in if attributable business piece the of was just think that HomeGoods macro wondering is there could weakness

Ernie Herrman

Okay. -- We

execution very, competition clear, be, be about would the very, to online we ourselves when what which macro we -- are from that but And could one environment. competition at very up tendencies to be think course, from is home So and players. of we like business, issues because self-inflicted best that, little may XX% would XX% of slow to in the lot -- sales ask a tell, say we of

not we've a to still to competed have eight point, dug were those way could your the when at we like comps. as we those vividly we we We continued mix in you business of the should the pretty the we and are where yes, the the seven those businesses businesses, looked be could terms see for actually numbers, significant -- or run were If off float areas merchandise performing to we have, our we just compete, and years there we last in grow into where But categories. in look at piece. we

our weren't able some macro macro very us. XX% in it but on were say to would was identify more we we have what if little issues, we we own, So maybe there on we impact identified, thought because confident would

second question Now, what you second, or? I had think your was a

Alexandra Walvis

Yeah.

consistency was, the part The were second any the in of underperforming. of whether parts there question that was types

For example, categories? big were they ticket

Ernie Herrman

-- out tell were. not can't they I those that, calls you just consistently. unfortunately, you So, or tell give I the able there would the are That some externally. to of were type yes, what we're on information,

Alexandra Walvis

one Understood. maybe programs. And you more then wouldn't the if on mind loyalty

between update non-loyalty, are you're they, patterns there. having fast that the talked different they how metrics the big on on you spending growing, us and Can loyalty customers? You how that illustrates any success

Scott Goldenberg

give programs, don't Yeah. particularly would the we say amount. just -- that a We loyalty based. it's We our United generally don't card credit where States, out the in

improvement loyalty seeing sales overall getting are out a programs. we're -- our on our of that our slight We

Ernie Herrman

in that of we say customers US millions programs. the can't do We have

Scott Goldenberg

future particularly that job the particularly we're at in and And in for us well the reason at cross card, and and more -- level, customers excited we doing shop a so at upcoming are that good store feel HomeGoods, get that who we that We quarters Marmaxx credit Sierra so about terms our the -- that applications will that of sales. bode think use new the benefits ones is, getting

Ernie Herrman

frequent visits. More

Scott Goldenberg

More frequent visits, etcetera.

excited And the been particularly strong. rates, over in about effort are extremely terms had we of which a I at and of again that. have quarters application renewed couple last paying, So it's it's been dividends the guess, -- we've

Ernie Herrman

at to of look not of get to at that just level room there. those -- we'd needle our the know a for on opportunity We move we're look still saying think, you we percent at. And we when where ever stores our department We'll levels. business they're lot have

us it way So customer fully. and great the for more a offense engage is play to

Alexandra Walvis

Excellent. the I the appreciate all color. All best.

Operator

question comes from Ike Our next Boruchow.

is line open. now Your

Ike Boruchow

everyone. morning, good Hey,

So two questions.

First one for Scott.

on Just a the guidance of versus months margin ago. gross today couple

I a was think chain XX supply and freight headwind XX you suppose said to had bps. be bps about

Just Ernie to home maybe for the Scott. curious and/or about then apparel model what for And wanted thinking be for at if that talk still versus I year? should Marmaxx. we holds about this

year, and home any was I top. of as be apparel curious today? different, seems I'm give what now in you kind the like you. business, home it certain wrong help is the that styles can but year is word, you like were versus of if of normalization was of whether Thank seems us it on again, guess what back with of kind to really you the Last outperformance, were compares was there a more when can the anecdotes to just underperforms seeing apparel or kind kind outperforming category anything seems it last

Scott Goldenberg

terms change the of you that, from the freight. to to half. chain the on supply and basis numbers jump exactly supply closer first point I'll the second Again, the big got chain -- the is half is half, in basis -- Yeah. the closer on XX difference So to second a no XX points really right in to

there. half, all first the freight is there difference a pretty is terms much year. And So in uniform the of big second half,

savings go the back way the in down we fourth the At stay to end full -- the this of -- don't the we contractual quarter. happen the have the but point, put of we've probably not as half to they which third in extent to some might if not our rates, freight quarter what really spot the renegotiate are as rate

would expect the of see trend that you So that fourth in favorability still days, that's at we point. the XX some this early quarter, talked we but could off but about of what

a rounded Marmaxx our we've about about X%, all on I or X% rounded The basis, talking was would been our our -- our terms only to Ernie. say before numbers we very a comps in on give and but do it I to strong over thing that add that's comp turn down I'll of

Ernie Herrman

Yeah.

business, really and trend Marmaxx driven the the to in category, in remember, -- of we Marmaxx, So technical year question, kind we'd was if when we question in helped sales call where think the meat as had to Getting it, your earlier, see. about would we're or again, is the which it that last lot we fall in a comes home by specifically of apparel in which opportunities, before your drive more it A -- the performance a the our year was I now fall actually balanced tougher had like to before. said -- business and some some of our year business. you I year

flowed on actually apparel areas, made vacated can not year for We say the and back tell in gave by than year had we those but categories a more in which call year up of appropriately. I some before apparel Marmaxx. And the last and some that then fall were, up business after where can't got you, the what I lot really the before, really those going we

we it. that So took have technical we advantage opportunity, of

last giving think apparel to And after of also some really up our I gift of ramped we in drive in there, couple items helped years. more apparel type truly apparel year, gone that business. on last have We the that

bit we is, say the advantage took we lifestyle And which as in little one one categories are third thing a then apparel and there a it trends Marmaxx And I two was this continuing be be our continued said, of that Scott a to this to was those. than reason happen some that identified areas earlier trend normally have would or would apparel a in little has misleading. Those strong also business is year, year.

QX Marmaxx strong was QX. very Our a

So, it's recently, QX I'm we're with -- there I feeling the Marmaxx easy business to underestimate how and . happy started reiterate, healthy that was is way

Ike Boruchow

much. so Thanks

Ernie Herrman

Welcome

Operator

comes question next Our from Omar Saad.

Your line open. is now

Omar Saad

-- areas into -- perspective Thanks existing companies. additional several my been really that any opportunity to comp are performance. business? accelerate than thinking on or in the And and sense you stronger thing plans key a quarters your we're the Europe business? follow of I Are the international strength certainly lot you up of to consumers markets hearing within in American are markets a from It's color you And now macro accelerating is of a are part your consumers a international expansion for about question. new your from position any thinking getting in a the international the taking then there. of wanted business, that consistent on

Ernie Herrman

been -- couple Omar, years a with a I anyway of has on Brexit little so of for situation really let's first the new. And situation over these wary going think stay actually. our of consumers certainly now, a over -- there a -- more are It's isn't all, first. there. couple The little

value, better were a a are think for because So little looking they anxious. I there

well do -- to they like are now tailor-made executing additional which here, and just market trade right broadly, try so, we we capture we are share. when is And we again to

we base good, but consumers, upper-income there. transitional the basic carry looks. fashion goods just carry we've way moderate want customer we carry income We better, best, to and all to one we from talked as So up consumers before, don't through for

-- really is hand. and better So into availability really those our now And we -- the of job balanced UK, throughout and regions Germany we hotter different have to has over all of availability done from haven't there our that this our had just Austria, more playing Netherlands. fact an some shipping of from the pursuing Ireland, the Poland, that from team brands a for very seen and their amazing the honestly years there model much done way brands in there the it right just

tell But yeah, countries does environment. there when I All our the is businesses in bit playing most a pretty healthy is are just would there hand it tougher like a moving fashion. in environment of into you, a

weren't environment tougher we and year these ago a existed that comps. running However,

So environment Again, I our like that's those. would was may when XX%. go more of it's XX% weren't of running that would still execution, a be anything, when back as the we're like it's But comps I our execution. XX% it, to, running say year macro six because there, ago there we

Scott, part your of So will on. I jump question, your think second in

Scott Goldenberg

Yeah.

ready basis amount So of Brexit. third I business. ready, fairly that a quarter, their And deleverage there XX, think, we've overall Brexit the it's ourselves there point cost, on have get a Brexit had forgetting is still is actually for an second, we to profitability, a substantial but TJX the overhang, it XX not influences

said And we so we how we happens over the to see years, play the where commit and what out. always going to couple know before We've of countries going last are. wait to don't next that's

concentrating least markets even almost I at have for think we'd to to on we least start which in is, the thing International opportunity, have still were new given other at availability years. X%, particularly -- the X%, existing especially think X% up uncertainty. And levels stores the next several that a at open point. a segment of to where we The the one like Brexit getting up Germany, better much margins we lot in -- we profit And by the

I I we're it good it holding least least out laid they of are, our couple just for good where and But, of direction We've now. so was last to a right a at so, was on pretty despite opportunity ago, feel or moderate point just we've go two back would significant a on moving If us done profit And -- the up. pretty of the the in we to percents lot at this way job give years move year currency. headwind the that plans. where an think at think a

Omar Saad

understand. Thanks, . guys I

Scott Goldenberg

Thanks.

Ernie Herrman

Thanks, Omar.

Operator

Jamie Merriman. from comes day the of question final The

Your line is now open.

Jamie Merriman

plan of plan you was a business product it's relatively how just And I My marshalls.com in about for you Maxx. the from half. second very the launch to part I to the for TJ to then, us distinguish Thanks offering still much. terms try traffic. question small of drive know stores mean, Can remind

And there? so, a how successful you think about Thanks. defines launch what

Ernie Herrman

Yes.

Jamie. Okay, Yes.

So will to we Maxx highly launch in similarly very product. differentiated be our TJ

visit, do where just mortar Marshalls brick the to a product. we is store we like it TJ with would create consumer visit would by finding Maxx goal our same So, up lose the cannibalization give don't ensure our with a that and to

want to at business. the be to XX% least online XX% we in So Marshalls differentiated

our We merchandise of is categories, that scale that a same is as are of we team And to managers, doesn't -- when when set executing they are goods. that very cognizant it buyers the well the making actually in sure timings up look business cognizant same it there largely even as and to there. we also so not of our stagger families

when fairly at out will which give in the that that about information going look categories not liberty will evident distant to not be are we launch. so We future are way, to

-- we going get back we the believe it. per example, we after large And tjmaxx.com although complementary our returns, which the returns do se, are point, our and that why returns go this for is of size a is your stores. to to the not we how go part it's But know in business, back to big

the with on well. Marshalls are business We planning that as happening

are the with appeal it Maxx to has some we categories draw, a carry can on customer hopefully and done just Marshalls understand that new draw there. like the a online We customer that younger planning creating TJ consumers business, we

know, lines So Maxx. store, carry as footwear, which we you full TJ we in don't in Marshall of

like be shop different. tjmaxx.com marshalls.com to So versus the stores there'll just reasons are

and about excited -- we're it. that hopefully So

be future So not it too in distant yourself. experience you'll able to

Jamie Merriman

much. very Thanks

Ernie Herrman

Thank you.

call. updating think forward you the for in of all to you. joining you I Thank end on us call today. Thank is earnings look quarter our November. that the I third

Operator

your Ladies today. and for gentlemen, call that conference concludes

participating. may You for disconnect. all Thank you

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