The TJX Companies, Inc. (TJX) 19 Nov 192020 Q3 Earnings call transcript

Company Profile

Participants

Ernie Herrman	CEO & President
Debra McConnell	SVP of Global Communications
Scott Goldenberg	CFO
Alexandra Walvis	Goldman Sachs
Matthew Boss	JPMorgan
Kimberly Greenberger	Morgan Stanley
Paul Lejuez	Citigroup
Kate Fitzsimons	RBC Capital
Jay Sole	UBS
Omar Saad	Evercore ISI
Mark Altschwager	Baird
Lorraine Hutchinson	Bank of America Merrill Lynch
John Kernan	Cowen
Bob Drbul	Guggenheim Securities

Call transcript

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Operator

Welcome to the TJX Companies' Third Quarter Fiscal 2020 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session [Operator Instructions]. And as a reminder, this conference call is being recorded, November 19, 2019.

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

Ernie Herrman

Thanks, Aelan.

Deb opening has begin, we Before some comments.

Debra McConnell

XX-K subject limitation, results Thank discussed SEC you, make plans, that company's we the the implementation are actual plans forward-looking The XXXX. the and results including filed are could filings, and and cause Ernie, and risks April today to company's good about vary in morning. These to Form the uncertainties risks X, without of the statements company's the materially.

these today laws. of comments consent prior other profit Inc. United the retransmission, and are Further, for the Q&A and violation without or by Any of States follows copyright that TJX reproduction use copyrighted same otherwise Companies of is the The prohibited other TJX or a recording, and

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

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

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

now, I’ll back Thank you. Ernie. it And to over turn

Ernie Herrman

Good morning.

call the on Deb Scott and me Goldenberg. is Joining

saying extremely strong third Let that quarter I me pleased begin results. by am with our

very store increase a last comp X% strong above over of sales and increase consolidated our Our X% was expectations well year.

both our and particularly X% top Once of plan. on apparel store Earnings with last am very increased comp also division, continued above strength we a saw strong I our businesses. sales per share of largest strength as in again, year. Marmaxx, Marmaxx's $X.XX significantly were home the pleased increase of X%

the terrific TJX European traffic want I drove the of comp our and at X% International. addition, increase comp In to business, which strength highlight

at Further, branded which of Marmaxx. are quarter increases values each our consecutive third XXst increases quarter, in divisions. excellent eclectic third Scott mix our TJX and marks was outlook, comp shoppers attract customer our great traffic full Clearly, traffic we detail continue will world. our and at to the for moment. merchandise of With a the year around store of quality results, primary this customer the the driver raising sales our quarter major of quarter In

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

We gaining are seeing continuing a availability internationally. in wide we the keep TJX our and great flowing the and are successful Longer-term, season. a U.S. about fantastic fresh throughout position market to product our share to the of range are across merchandise and excited to growth keep we of online holiday potential and stores brands, in

to Before the call our I’ll Scott to numbers. turn I recap quarter over continue, third

Scott Goldenberg

Thanks, good Ernie, morning everyone. and

store consolidated plan. well year As and traffic up comparable our increased overall our increase comp increases X%, was Ernie mentioned, above sales third at sales X% driver and last each divisions. over the was four major primary was which our quarter of Customer of

As a the e-commerce increases growth our sales businesses. exclude our from reminder, comp

prior over share adjusted our and $X.XX Third above earnings were $X.XX, diluted per well the expectations. X% quarter up year’s

division -- quarter strong exceeded third year. Further, last by were or results our every second comp division. recap division their a profit Now, over performance margin at comp We pleased above I’ll the each quarter that plan. plan delivered very increase profit

points strong, increase driven were X% the good divisions businesses X% comp holiday last momentum and year, our were both to keep by ability season. again, into heading Marmaxx’s home increased all which strong over a raising apparel our and traffic. Once customer very the to seeing We’re Marmaxx at bar. sales

margin Segment points. basis XX profit increased

X% third increase keep we and driving holiday planned traffic beyond. comp the X% are to year. we about initiatives over have being excited increased season last HomeGoods a during in we As quarter, and the strong sales fourth the the quarter

in We two pleased two-year with half the improvement HomeGoods comp is compared with are increase which of X% first a stack significant stock very increase comp the years X%, the of year.

on Segment and points, very was the in comp. we X% deleverage profit division. of due down for this primarily its and are Customers margin fundamental to love HomeGoods expense confident XX consumers enduring basis appeal strength the

TJX merchandise was X% pressure, primarily third quarter Canada's foreign segment foreign last exchange to and basis of excluding over comp a points, higher increase chain margin, growth costs X% due margin. was XXX Adjusted transactional profit lower currency, year. supply down

three the term, our We convinced in we have Canada that and chains. share country initiatives we are in holiday about continue gain planned market are longer will Canadian through excited to

foreign grew quarter challenging XX versus Australia, this and European In and comp this environment. of the organization At be was the retail to the Brexit X% basis margin, excluding currency, result a year. comps TJX segment pleased continued last remain the strong in despite we very points of uncertainty throughout saw down our execution sharp strength across Europe. Adjusted performance and Again, very International, regions We strong. third profit with terrific the quarter. UK

press I'll in which we release. finish our investment Familia, with in detailed our

exposure an off-price position significant apparel of in like Familia's potential. investment a has We fashions profitable retailer and We Russia. allows an team. strong This new growth that management world financial to region a have home are in established and us the to with ownership excited in profile of off-price gain retailer

attractive for We a looking always shareholders, value of an ways with this use to good for increase see return TJX's and profile. cash as are

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

Ernie Herrman

Thanks, Scott.

driving fourth see the of some in like quarter. the sales I'd we Now, to keep opportunities to traffic and highlight

giving. exciting set well are consumers brands extremely for gift compelling to up offer their we holiday First,

most of our We branded ever this season. families as be stores to as across expect business holiday

advantage quality, for marketplace and our product of numerous of We range are fantastic brands. taking seeing better it availability in throughout the categories buyers wide good, are best and

of year, for days everyone list. and even holiday this visit times multiple week exciting of holidays. am I shopping will this gifts season, to Second, their get throughout we later confident the on our fresh and to flowing their done and stores the be us expect merchandise a consumers shopping number for online Regardless

In addition, post a the being year. guests throughout focused on we holiday, destination remain for

Third, Across that see month. we started us position "The about Destination" holiday divisions, had bold to this have gifts Shopping our inspiring them. campaigns airing amazing a to earlier chance hope at I great distinctly our feel marketing our order you prices. campaigns in are as for

Each our are week of digital also media throughout leveraging will four the We and actively our marketing campaigns be social divisions major holiday season. platforms. across every

to vehicles to frequent the and we're to to Next, on promote programs for programs. with loyalty more customers continue and engage cross capitalize us season shopping. holiday visits These encourage our are planning important

Next, way consumers with we holiday convenient this believe and our efficient season. shop stores provide to

stores very we to access. shoppers able where something everyone's timely shop very our to our Again, XX/X. off-mall Our and multiple are for locations can categories Once us an manner. gift extremely scan in across stores, they merchandise easy in will of a online wide make shopping selection in-store have list

selection our confident our great Lastly, will our them entice gift stores merchandise and initiatives well believe and post we positioned shoppers are to that when visit feel right transition use be holidays. are that cards, We with they exciting will of the plans our many looking after fresh and about and holiday are consumers to us.

happy e-commerce, of the marshalls.com launch with September. At the very in were we

the Maxx and consumers whenever We of to Marshalls they online convenience excited offer shopping, TJ are both want.

growth tjmaxx.com, businesses, shop metrics are a stores with that from and we UK As to our offering the we differentiating consumers Marshall to channels. In like compelling our online both marshalls.com's give are reason and we seeing. both U.S.

bodes quarter, is customer In a significant great are solid about closing, heading start. off we the Gen confident and several we which Z our major the the into growing believe have to millennial last opportunity continue We for that world. share a and across in fourth around we base all well for feel growth divisions our future. Long-term, the of to market we momentum have our gaining customers years our seen

unwavering treasure values remain experience, hunt We to believe business and consumers winning we to a continue our shopping brands fashions, great off-price combined will offering for model. always, As on focused TJX. commitment our with formula laser our executing on be excellent

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

Scott Goldenberg

Ernie. Thanks,

margins to goods committed sourced provide This we China. on from our pressure and on the moment the and call. in legislation that are directly want tariff update I includes Based tariffs detailed see see guidance, from a after to you the the on QX we our our that tariffs. some in was to started announced Before spend place changes merchandise I now, we've

includes guidance impact our now QX, For tariffs. from these negative the

moving to guidance. our Now QX on

quarter XX% $X.XX, consolidated increase to $XX.X in be the earnings billion of X% We're modeling in $X.XX. $XX.X expect fourth prior share billion. range $X.XX a the the year to over to of We per sales to range

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

profit the to versus pre-tax of versus prior is a XX.X% margin percent year. as year. quarter the in the to profit XX.X% range XX.X% be range year's XX.X% We're last expecting sales XX.X% margin gross XX.X% fourth anticipating Fourth to quarter last XX.X%. We're versus SG&A of XX.X% be planned in to approximately

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

'XX to on year fiscal Moving full guidance. our

negative $X.XX. FX. X% $XX.X the $X.XX fiscal This be earnings We of are range to billion assumes guidance translational increase per would year's to prior billion year. X% This share guidance a now $XX.X adjusted increase for X% the sales consolidated EPS range, This guidance assumes in represent to 'XX prior over the due raising in $X.XX. to the impact over

increase consolidated approximately We of are comp X% a expecting a on basis.

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

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

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

on we $X billion. Canada, of X% approximately a TJX expect of increase to comp For X% sales

the levels Adjusted X% remember full At segment exchange to is the at the $X.X be foreign fourth range that now we expected the of Adjusted for X.X%. segment profit excluding in expected guidance our to XX.X%. X% of growth comp to and currency, XX.X% rates sales to on foreign expect margin the currency currency of billion. unchanged is excluding International, will profit quarter be margin, remain approximately assumes that of important quarter. beginning It's from fourth to TJX year

our In fiscal closing, you 'XX in to we forward on look call February. QX earnings guidance giving

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

Operator

Thank Instructions]. you [Operator

is first Alexandra Walvis. today Our question from

Alexandra Walvis

My decision-making the about the thinking about so Can question sort that? And is buy the retail new you build market about in formats? a thinking this on you when made you Russia. much. versus potential? bit particular, are see the Why, that Thanks process where talk growth you behind in of investment how little

Ernie Herrman

this to felt a what that pretty fashions thing we is, and opportunity home know and much a like terrific investor our a The anything you first and apparel business was approach become is is. off-price this, strategic business we

financial a you see where down us. as a us, was our profile allows road, great earnings opportunity slightly in it strong the a fiscal look accretive XXXX. to addition we So for It beginning

Familia when of at down, that with way is approach were very that similar you the what things when we But the business do. hit engaged DNA the us is they to the of first we it business, very to boil one really looking similar

of stores XXX XX by strong margins, start low financial significant profile due so adding of They including you You diligence. where stores aspects, profitable structure. potential have have with growth more have store way, today, cost XXXX, a did than the we amount nearly these in opening they all tremendous a and

were could compatible of tell whole Doug highly had it, tell management Brenner. to their visits. was Goldenberg, teams that is one facets had who We Senior America Glenn you We engaged, involved, a strong Bank us Executive the on We we multiple were really established during of Scott us, President with PWC. that merchant really to thing relationships that and advising had all core, our team. important process. is teams. So Mezy, We the did we team that I’ll our Vice the which engaged merchant

with continue buyers had a to in strong love already over there In as model to to very out in relationship much market I buyers see, screams we we’re a anything part. which share on if add… there themselves investment it's and our focused. set Everything gain know heads very that over and fact, a in they they merchant place, that have XXX Russia, of because nice just Scott, you TJX don’t

Scott Goldenberg

just finance and sheet, So few of strong ahead. capital of go both they opportunities They generated of operating new talked -- also but Ernie a from finance But flow. their there's great similar expand to of families balance about there, their we as ones growth store a merchandizing, and lot are internally lot in all lot categories cash stuff funds. so a from of guy things, echo working businesses still important love that a we their in, can, to both

So still have to love it well of characteristics. characteristic about that room pay dividend, and the financial a so

terms only effectively And white of lot space Ernie mentioned to retailer are in Russia, is the of stores. just and There up, off-price of the they Russia. a really again, number open in

Ernie Herrman

number and be Alexandra, who who Mizzi you Australia. a just move and Senior they’re on a a Scott of is have which over Canada so expecting to Vice understand, is their forward, will we going our five observer similar Goldenberg to years, actually as Board next exciting. President, very Doug Doug the Mizzi oversees Executive board. again, three And is to seat add stores

So we continued terms in our will of relationship a have strong investment.

Operator

Thank you.

Our question Matthew from comes next Boss.

Matthew Boss

highly highlight speak we apparel as you're driving of and both into despite stack the that really that wins that's this strongest the And promotional and fourth again, anything we're across Ernie, momentum? some I backdrop guess, opportunity you and to two-year Can years as in Marmaxx, particularly seven from quarter other competitive hearing at consistent seeing the home retailers. you holiday? look

Ernie Herrman

a of stack, Yes, would do in Marmaxx maybe quarter which course, and number, here. I strong. full last I it the looks the number transparency. up stack two-year on because was say, the year as to weak the strong before would the teams as like third Not was against relatively with two-year

have extremely I branded two past all well our three having years, we content and we've So here, been if said third driven that, think a as opportunistic. yes, quarters even added on these done by quarters particularly

us brands I across of in like As store, the what to beginning all after and quarter. script, of third mentioned of families lot year in apparel the of within different we'd better, business lot a and the of Matthew numerous been brands really families business started We've is best availability in good, across that has go the it's particularly. allowed a able last the

the well. good going And trends after category our Home a has there been healthy as done our teams have yes, really and has -- very I home job been business think there.

trends, why of brands home I more integral increases our been putting we've the business about category think the to about So on have the increases. which and top less been in

in things every the to of and Ironically, of just one we've One the that branded TJX and in every I differentiate keep we're been geographic divisions you're Marmaxx. in -- content feel one us having. important that that terms We in about it's talking of in. of area the mentioned branded the push

and of apparel say, that the on the last great home as in been Marmaxx categories on push had But Europe there So more has in would availability quarter. and has well. the and execution similar epitome a certainly that, really I front

What been your fourth that the of quarter, of second as to the because there, go kind a of was accessories, content looking tend for by good giftable excellent apparel question. holiday. I in Those lot it's strong of for branded too, areas. been part the accessories areas for Oh, the way, areas to so we as has we're think women's us; be well. And

And than in more going for this have buys that obviously, We've lot holiday into And so made content the those momentum. branded ever by areas, point we fourth time. quarter. visibility branded, great into the in a of see we

great question. So

Scott Goldenberg

Ernie the we've like ex-urban, all comps higher to the the would and very thing of among what good of the Matt, is suburban, just when consistency on all et the consistency regions comps, is in across types is cetera. business I said stores, only add for, and we the, the seen of almost the States United have the of our

comps the consistency well think it's the lifting overall that So bodes I the well comp. of as for

Matthew Boss

providing Well, maybe not And you're SG&A. know, today. then Scott, on guidance just formal I

we on would Just think the as consider line helpful. ahead, expense any puts to takes I really look be and

Scott Goldenberg

of what freight real in real the one year both be our than for better do third we the would we've changes, other the freight freight were out talked place some we the other our little had in said infrastructure the what investments. thought Wild some some a we costs what supply no end contract the having inbound obviously, thought is would at with are renewals quarter strategies mostly is biggest that going trending. are been this of the probably we that the have chain our a due would put better and building would forward mean, little to to than terms about changes only own when of of still ones no on I I we've and happen had renewal we plus of of some outbound one about et talk Again, cetera. to before. is cards, But And FX, wage, tariffs, the all similar. cost,

significantly what about last think and on quarter. positive overall, news than different we've nothing talked the elaborated I So But there.

Ernie Herrman

back thing would the your of stack two to to to question, I in -- the because I'm circle year hit just like Matt, one me going Marmaxx. on also And

terrific, in the the past, merchandise, many of you that's planning is done been we've a this I've One organization trend. things the flows think that they've with I the really of been discussed chasing there

a So country have of on the top just trend the business. done team team planning region by at of the job staying the and and family buying great by sales of

Sales talking planning have above done regions very but job It's the Marmaxx how been being teams easy. in always to flow that the not area think clearly has of I sales was by able healthy. outstanding planning an sales our to to that's we And our all plan, trend a of have Scott chase was because the widespread, lot credit been So teams, be to Marmaxx about planned buying able and be. give in complicated. what I higher to category it than a

Operator

Thank you.

Our Greenberger. next from question Kimberly is

Kimberly Greenberger

margin. I just impact, include fourth if for margin does wanted seems XX gross sort guidance, It seems is to which flat tariffs, It points really declining basis ask could. gross I modest. quarter Scott, of tariff about quite like the of to

So be able guys into very managing more guess, little you were you were nicely bit would a pressure, but it I to would that be just there to so through thought remediation some maybe have put place? there seem efforts I far.

Scott Goldenberg

and fourth opportunity as Yes. improvement what see we I some to Yes, been we there of think the and seeing in fourth had fourth quarter, in jump the we've well. quarter better mean, in fourth is sales markdowns some quarter. quarter in the overall due We third the will quarter, in in the quarter and I'll Ernie both the third start in. third then what so

changes due of more seen better tariff that mostly, we tariff in to piece had the had and as expense we buying goods there well as tariffs were quarter. that spend. with have third to Tariffs move we have do more as through but the We did the -- some legislation bigger to to we committed fourth

mentioned earlier, to We slightly. the have also, as freight compared I cost come down just

there's freight have year. quarters the in first we in So than -- the what the less certainly, of costs the seen fourth quarter would first three

can would planned But yes, buying. we Ernie, about talk as more have internationally. been there you up has a bit. the pressure, bit evenly primarily And margins a it been So I yes, and split are FX some think up better

Ernie Herrman

vendor the XXXX had The not been advantage which vendors challenging next of us goods this forward have have into as mitigate helped It we we is can earlier is of believe have. pricing. into whether tariffs we happens year the quarter forward One be don't benefits remains as much more keep or has move as that a to we to issue seen such. in mitigating competitor the that that, lot and because bringing as than to unfortunately third us has we what been going year, visibility like we with and

fourth demand, tariff versus so to through. have next potential have for we currently much committed Consumer over we of is the much 'XX visibility this the pass that year. And fiscal where so not quarter,

portion that, committed can to kind what We year. the have as in mitigate to we're just a and little air, for it's of small we suspect a up next

as We well on things know are number. that also unfortunately huge on we imports, which As some tariffs those. here isn't direct of scheme with the getting know in our of we

to tell and a wait happens with a we have for of get time to again, that it's next until to see, a start and that the period closer little So bit what vendors. see I year, you

Kimberly Greenberger

your of your out the you of early? QX remain best the seen? comments or Does bringing where vendors on with the in regarding at is to their case? product Does that and QX that call goods basically end you've And the does relate particularly talked some that in even the about behavior commentary, marketplace availability the that

Ernie Herrman

that major is think I To been driver it would the I So though. a help. a say has degree, not

where some we are when markets aren't. European more where categories here goods tariffs It's a markets, tariffs to tariffs the actually. the in lot way So like, had have all go with and it's and Canada, our yes,

e-com more been of the spill been do more the e-com tell their number stores, Kimberly, that board, on that general have I through of it's think the it's e-com little off to and a that that, would relates of around -- the been. some might just creating many merchandise. businesses early. sales, still have I think is what that off availability business tariffs a less because us it's projections So roof. as in the business, it's believe have the component But coming department And beyond creating that I would

Operator

our from Paul question And you. next is Thank Lejuez.

Paul Lejuez

you've seeing talk terms of HomeGoods Homesense, the about Can two you're Also, head-to-head concepts cannibalization relative it got XX performance same on something year? and you Thanks. where the of to for play market? about the what the those you stores, in be location now and should how best in Homesense next with might in the HomeGoods Homesense view you that thinking curious be how the go where opening And many market? might any early

Ernie Herrman

the Paul, what I'll stores. next Scott then as talk --. to and in of maybe year off start terms But start can cannibalization,

So all, bit had our hoped. of were Part the in of also as Homesense first a HomeGoods categories strong weren't for we that as off weak of is were little some weak HomeSense. sales tapered had in that

back. was us holding that So

about transfer total actual seen we've planned it be. where in the we of terms to sales, In

stores is a but HomeGoods trades than is way, It more the had HomeSense stores. a some little the away stores hitting further HomeGoods, by from of draws because the have the HomeGoods, a And radius as nearby actually it -- what than large is Marmaxx. transfer, so nearby are was less other little

to identical cannibalization. end been planned up So what after have sales transfer almost in our with we total,

opening, store would to I…? which that as where at, terms plan. on talk say in Scott, I you much want front, do So we’re pretty about of on We,

Scott Goldenberg

pretty healthy store at this that thinking would store in any all we’re next haven’t forma seeing, openings our I terms what just point so guidance given HomeSense We overall better, like HomeGoods a still year, on openings, any HomeGoods general stores. really, and of we’re HomeGoods, number so or about is have our Paul, of in going say pro to on doing new both we of stores that. our for the much both

model the mentioned, the one not thing we thing business. contemplating I for we was certainly and be is done. to have were had amount little when seen still of Ernie more HomeSense the impact, wage, has we home stores, in to think, impacts do tariff work One as a freight

were those we created think non-contemplated pressures first I So model. where were that the

Having of been work too, has to continued terms and seen done get said expense lot in some the of business a of the the side results better. of the that, operational of management improving has we’ve

are but moving in I margins Our work still be all think improve. direction. the And to continuing right to done,

I expected. that what we in is differentiation all think would the have

So think, in even I we still still on the we harder on I recently have think categories, But of said, bit and feel Ernie we just businesses HomeSense HomeGoods still, like in as the certainly business. sales in little think good general can I lot hit home as overall, seen we’ve room about, improve the pretty operating. than those were a

Paul Lejuez

of Do buy Familia. investment? this on at Thanks. up have option part as follow one an you Just to a stake larger price initial a certain

Scott Goldenberg

the of going to on not any details. comment We’re

we comment going what at any of go -- on further more, but any not point. we'll this done Obviously, the all into think about we’ve now. and that’s like buy could I overtime into we

Operator

Thank you.

Fitzsimons. Kate Our next question is from

Kate Fitzsimons

inventory were in your you we a think just per pack there question are pushing about XX%. just to greater Should prepared is My inventory. with the store strategies? buying was on higher commentary. what later on inventory environment? a basis, that given number overall flows mention a your at X% away balance Inventories speak And up Could seeing you at year-on-year,

Just the about great. how you. for about any flow color that and quarter, product be Thank would on we that how fourth inventory should think you’re plans thinking

Ernie Herrman

with few we’re why is different there comfortable a -- are. very is this reasons where we So

scheme the we of up. It had is years in number a inventory of First is, couple big actually are drivers is where inventories -- not our growth. our that is ahead were more sales thing the Yes, this That the there's a of though. little packaway. of a things. not Part of bit

time playing number really this trend with to business when the bit that reason one the of. goods want we has TJX catch-up the we're are of that take is market of a absolutely But, chasing the comes advantage is little loaded of there. we So, opportunistic approach through. And been a really ultimate our with a

like okay, of for So, the logistically with up we primetime we going them to to are in -- one own than goods who DCs. this us can set few to stores say, retailers, the flow because we is are differently

want if now some driver really the off kind do deal, we to propel try the quarter back a could it so stack it has think a a very a in And cost the maximize us to think that's we're to two-year exciting you’d an that we're we long packaway, continue bought go up even been advantageously. about. provides And allows Marmaxx end Matt of just fourth about become what the healthy go stacks strong, of goods allows buy able two-year in right about for this asked at our So, big aggressive had as trend. as right these talking we because I packaway, able something, that to And at of deal as so that of we you to little us heard to the of you're trend forward. the some inventory beginning, number into and sales wasn't right chase strong if that keep we to a in then, retail the specifically that, obviously. And doing is

compressed really the there's window So, into selling business holiday that's little of the trend. entering of Also, a it's ultimate chasing the play.

that better kind at having of off bit we're that piece a this with little again, hey, these goods reserve And a top-line. the able buy to that's drive costs. said, the fact advantageous start to of inventory think, we're I

Scott Goldenberg

we And enhanced to took Yes. this more liked year what a that. little what we bit did The only add flow. thing I'd think, so above year, step last I a with said, Ernie we

It's and be at cause ending as see our our and stores. inventories talked wanted about rates the would didn't it we as came be per in to the third in we Marmaxx, So, operational quarter our inventories, to affecting to flowed And be to business. our down. centers, you out waiting more higher. third particularly where can our markdown store quarter, not This staged be, distribution obviously

of forward. we likely what I had still more go will Obviously, about a at think, the the this good prior packaways come be feel it year, But, in we than year. end the and management down. So, year end there we overall when will

Operator

Jay from is question next Our Sole.

Jay Sole

Was on saw by trend. you of just tough month by of case? the Marmaxx talked really lot like but at weather. can was you or of that whatever August didn't warm that what the sounds okay, September was maybe you and was It weren't about impacted talk kind from you how A about in going comp why because maybe that retailers maybe weather September? Like, see

Ernie Herrman

had where up don't down consistent. pretty of Jay, But, these down. can tell just what was quarters it like fairly consistently month. that it it quarter you we is a -- was wasn't one I we break It sales in by healthy and

by consistent. breakdowns give don't it month, we again, So, was but

Jay Sole

you possible a little maybe then, on contracts, how And about I directionally? it like to just it talk a more of you bit when you transportation -- maybe if year-over-year is bit Do on transportation little bit basis, changed little cost. came better. the you the a costs, renewed can just just those maybe, -- said dimensionalize know sort

Ernie Herrman

we step Yes. a do I'm significantly what biggest going a the on outbound not unpack just to what inbound less negotiations less bit of dropdown for down But, than the rates, our piece all. there with was Again, on on a rates with were it but natural increases had were. was planned. those the to us

was driver. not the been Fuel a have costs that So, biggest factor. big

there's it that's be the into is. going And we're too for were going to they really truckload is year, one when change freight next wildcard low still in was really things go the to to deliveries go there. of it rates, overall, real have ocean -- -- so fuel But were could intermodal rest to rates is one of had determined some overall, the or -- that's freight, I it the be much the on which a inbound savings. The think, biggest whether effect, some rates, for going be higher the [ph] increases, low the sulfur on it mid-single-digit rates requirements determined the year. to not that freight, ocean no next was what ocean the into ocean but

on it, that's Jay, So, that.

Operator

is question Your Saad. Omar from next

Omar Saad

comments made good. Ernie, I you quarter inventory to to wanted at you about the end follow-up of being of ask the really availability one a the the

from help dynamic that inventory you understand appreciate much I too I'm that businesses? to its it e-commerce that from ending Is comment made Maybe it traditional what of coming you lot seeing trying meant e-commerce pure is. a that. it. are by would You DCs are unpack what a is the channel. businesses or exactly e-commerce retailers in with are overstocked those

Ernie Herrman

your and Omar, -- all you news, good widespread. what fairly so it's vertical have have So, across you the here's is fronts,

-- lump -- goods their are vertical the So, players e-com times. and by brands and for goods way selling all have all I your I -- they're with long would, the into e-com almost their defense would lead remember own have you e-com imported challenge me so the players, sites, difficult on their -- websites predicting most that

to -- e-com into category that do. or mortar you're e-com trying running an not and the categories you haven't and certain sales a have thought. all have to long challenge relative predict e-com and vertical guys have. as applies on just to what their so the on and need still as challenge They always And needs. item well the a it's because would whole to brick So, more being really And been try players the guys sites, of retailer that they because and brick easy needs years that to a little predict to the those been for -- and that's don't are category mortar on volatile sales of item, bit by history their

by or off-price accessory way channel, it's to were they from say, that they and many is have applies total. has whether vertical yielded of they there the are out would are mean coming doesn't in our don't now I enough, way, reasons. than players categories chunk spread didn't the there hard right, growing thought a because so e-com is -- the that were across that from better multichannel lines, buys those it’s and where the whether By and the -- have yielded it guys the board, -- guys they sales categories or In categories, just total apparel

difficult. spent a offices week e-com, where were which If wanted their trying to to need, the ability in far a -- pattern, it’s one you’d volatility very how of them growth and there you to on are of you project. those see kind of predict in website are if high And of -- you placing goods ahead so just adds on a most the

Omar Saad

helpful really very Thank really helpful, is you luck. This Ernie. Good Fair insight. enough. Thanks. much. It's

Ernie Herrman

Okay.

Operator

Altschwager. Thank from you. And our next question is Mark

Mark Altschwager

change HomeGoods nice trajectory You quarter. the operating in a the had in margin in

You And, a I be raised about was just HomeGoods trajectory year. the we to for how there more about bit drivers and your performance here? that the the your upside on thinking guidance little should you the margin hoping to from expectations.

Scott Goldenberg

I'll jump on in for second that. Mark a

line, buying opportunity better controlled buying we impacts, despite was prior. buying. HomeGoods markdown inventory I leverage of one in higher think, to saying tariff but the is even Ernie even versus that's We similar technical having Ernie some has a just some certainly better quarter to the nonetheless, than what the the taken year, of what all particularly the advantage indicated, But on with were able lot environment, about the well. comp, planned, very -- we a I as think, third

big factor there. margins So, certainly were a merchandise

cycled of of two [ph] New piece in the in impact we did costs it And would the the opening and the was distribution beginning of the be a supply that to As first the supply the first Cataract, we chain Jersey weighted. year the first half chain more quarter. going be the third quarters because in we opening freight said the when call costs also, at bigger

a So, that bit. drop started to see

was and going the the of are that the year lower to piece half. of it a half be freight first than the in costs So, back

components I doing rest. job did would management. lower a up good say So, comp those mitigating of HomeGoods of the a planned three the expense job than made on And great then, and particularly

than that we substantially better So, had thought. was what

difference change the supply-chain buying primarily between the third better was year. quarter So, the the of the and to better in management, combination margin the lower first merchandise and the and the expense of half the freight due

Mark Altschwager

as you. that on suboptimal inventory then, inventory mix -- fourth Do you’ve like talked Thank into head that being you drag know through And I worked some last you some comp of of quarter? feel you HomeGoods, the a on quarter. about the the

Ernie Herrman

on to with happy execution. work not those been Yes. of have Mark, we I and do areas departments would say some we actually still have that the

So, stay that. tuned on

of I do. think, have we a work lot to

have not think the and where I sequential those ticked more you’re we say straightened other up that that's getting happy and those In hoping have would still areas would other have We are improvement. first quarter by we I the with where we’re more out. that actually areas,

months where done. So, were we’re yes, still those specifically six the in in really I’m total momentum happy categories. more be with but the work ago, entering terms not than way very of we better to quarter in

Mark Altschwager

And best luck. you. Thank of

Ernie Herrman

you. Thank

Operator

Hutchinson. Thank And from next question is our Lorraine you.

Lorraine Hutchinson

you next XXXX? should see tariff look freight to pressure we as of tariff we any to Do year, of morning. easing offsetting Good some opportunities Thanks. or any to model the take price fiscal offset costs,

Ernie Herrman

that Lorraine. the for all see Actually, at Hi, next we do not year.

moving -- environment. not the haven’t retails we tariffs, seen in moved we of terms have any In

So, that’s in to categories competition. the part to going any seen retailer last of in ability the on do retail seen of because are -- be an part it we And our haven’t any adjustments. we we ever not the have

We enough haven’t retail strangely going seen any up.

the probably -- we under be And pressure areas in specifically home are wouldn’t categories where tariffs of are hit, of terms value. in actually Some and by area have We like actually the that the retails. where like we to, was less the -- the case. there we wish would would is the that I of could -- way, some raise that areas the likely

apprehensive the that are us the result, on mitigate, of we when the It’s lack standby, next to don’t can commit just the it to today. now. tariffs being saying to least now that we a right have why really standby visibility want able mode. at not to And having year, mitigate we be a this could is on we so, based as about go challenge because you a And again, the

Lorraine Hutchinson

next around growth And could or then, in any insight have you do earnings year’s guardrails those how scenarios? look

Scott Goldenberg

I’ll Yes. in, jump Yes. Lorraine.

is -- Ernie pricing. early just too still it’s happen majority the haven’t the what think, haven’t I has as could much There the bought could with So, basically, volatility vast said, we tell. we since or and of to goods, not

amount we it, now So, we call on buying, having obviously, better taken have, three that we’ll a plus place. next months indication of what at from get have meaningful a when we’ll to of least comment the should

not guidance to we’re time. at So, scenarios you answer the go or but to barely point this any probably hear, in any going want give not through

Lorraine Hutchinson

Thank you.

Operator

Thank you.

Our John Kernan. next is question from

John Kernan

as thanks head And the all next moment we on year. guys. morning, and congrats into Good

Ernie Herrman

you. Thank

John Kernan

Scott, on question SG&A. a

SG&A in supply You’ve well a as investments as both the on chain few made year, this quite CapEx.

ability just that Just effects SG&A we long-term wondering your next and of as go think source how year a how upside? margin leverage SG&A to as should about thematically into we

Scott Goldenberg

stores, our a Again, medium-term. opening -- about of much not we commenting supply similar a most all us, longer stores, amount. is And answer to -- new going and of should really Yes. money, growth point. in term our new distribution lot to for next adding distribution a we're point new going too this centers it’s it year about guidance, that's The not piece lot we're of the on in chain, be deleverage spend long the still a it remodelling of say centers to at short-term opening

want So, several or looks specifically may I at the may about what say, just call, amount to it's -- At chain. not said of moment, years thing a supply just similar comment be the now. least from I happen would on don't talking in last to I deleverage, same

John Kernan

year, on into stepped the up bit think in of next year, to can supply I CapEx that of some us color this obviously chain you the a direction where give investments? related Any -- terms

Scott Goldenberg

to factors. due to but at what the our this I million, what position bit thought. make combination this thought. to mean, looks stepped a less point, a our early up That's be a better think, hundred too cash we call. be we year, couple of We lot capital than of really it Again, than will a we

much year. be planned it not So, be probably this had -- I think would CapEx that we different will for into what

be just I next capital think, get moving which will year. that this of projects end timing this less, done means into year year a up for didn't will

good but a we going this what specific we're guide to is next would I say number year. a to year's not number. do give So, would

Operator

we have final And one question. do time for

last today Bob Drbul. Our from is question

Bob Drbul

merchandise out there. Just investment gave wondering how mix, And versus Russian comment in UK the what's sort on sure, that could and vendor the TK if you terms if the happening of apparel, you today? of the of not I'm for Maxx overlap but shakes in mix Thanks. where in you just this, are terms guys

Ernie Herrman

retail off logistics, again, go finance as again, in not earlier. when the And we it's you those charts easy kept a their TK store what been you Scott, every would Bob, And logistics, now their of Maxx Company, what well. to be portion a a And at are similar have -- to from and strongly that as that comps flow would in as keep area the conservative marketing there culturally the teams goes that they what’s execution are. just is back team. strong That contributing performing a ahead to earlier release course one happening drive capturing. is to running fantastic -- have the mentioned right Marmaxx They planning all share over trend would and planning obviously. a and you we I And as happier, job. plans to say at from I of the that trend I'd a to now to actually looking DCs, couldn't team business, and this conservatively. now just we plan team there, well, our on sales you really know, buying we team requires right very merchandise Sure. there. thing be in their just from like if right script market and The we as done the talk much with highlight the that can’t start

So, have branded the were beginning of case, goods. about, just just really back and it very delivered, I happy more their with, in what in again, in They said the goes terms asking best of better the to mix though. you

seeing at yes, looking happened been recently. categories almost family I there. to there teams my to the was the before be when we every goods. So, in different Scott’s one really the visits I just that just with throughout And ever level branded week stores, across of of was were content of it’s over a it And the really haven't seen business. I actually ago. And I there on

thing. he guys think Scott? and I seen have the same his

Scott Goldenberg

Yes. terms of We're see mean, was we like the I'm about on consistent lot to of merchandise do performance, across love, that been all overall, in. their there. we alluding there's I’d factors going the -- the all The new countries content. of the business I in well. think across The what markets. to. just stores just performing which comment jump consistent of Marmaxx some opening really we not that talked a But, across great we of has conversion are vendors, I Ernie other

in much, versus European about the share, better earnings, retailers. UK and performance Some we -- whether UK, the best outperformance, our things talking better determine and of of it's alluded to than the have strikingly retailers, can we also it's due in to Vendors one the the is market is Europe particularly but like versus particularly e-commerce. or much the that that

So, love that. We've that delta. maintained

lot margins impact, wage, Brexit, other lot in been job to with -- good pretty Europe last two of due which the the maintaining a done retailers and have currency. they both a pressure of what with the to the we've done compared that's in And have years a FX our and

about feel number the thing how And good real certainly, commented, So, one up. sales. Ernie great this as being top line held we've

good season. business the our going feel real yes, into holiday So, about

Ernie Herrman

vendors think will and we or a tell said do then, Familia’s Right part -- was it how much run overlaps I this now, not. wouldn't And the of overlap I we Bob, there's you mix. and they that obviously a similar what beginning, we it's in good think I families store, Scott on again, line relationship. would your And division; home B, fair I to some on don't. they comment full have they a that amount think do. have think But And business. multi

Scott Goldenberg

Yes.

we want also so things of do Europe UK say as competitors, to yes, thing here just is would think, one is, But, and add I merchandise I the business thing There with on two that. plenty I brick of combination is with the our segments us and same ordered in in Collect. particularly with think add availability want that e-com almost and strong plenty and there's I goods and in merchandise, how just to well. of are both the Click mortar. XX% pleased e-com of real with strong -- UK doing We're that we And there. you on X% almost strong brick our bridged mortar, we're are feel have sales

differentiated that something a again, our bit with So business. that's there e-commerce

Ernie Herrman

much. e-com And so that as you it talk purposely one the know, don't cannibalize business, stores is we as differentiated, we of our pluses, here keep about our we

still as the differentiated as not maybe of with but having here, goal customer there, over shuffle. So, differentiated the

So, February. think forward was all question. you our joining on I we've Thank that in We Thank And everybody. the look us fourth call. for updating you, enjoyed you our call earnings last today. quarter to

Operator

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

may participating. You thank and all disconnect, you for

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