TJX Blames Itself for Weak U.S. Comps, But Analysts See a Bigger Problem

Quick Facts

Marmaxx Q2 comparable sales rose just 1%, the weakest result for the division in nearly a decade, against a 6% gain last quarter.
TJX received $331 million in IEEPA tariff refunds during Q2, producing a $219 million net pretax benefit that padded headline earnings.
TJX raised full-year adjusted diluted EPS guidance to $5.15-$5.20 and expanded its long-term store target by 500 locations to 7,500 stores globally.

TJX Companies reported second-quarter fiscal 2027 results Wednesday that beat on the headline numbers but exposed a serious soft spot in its core U.S. business. Marmaxx, the division that includes T.J. Maxx, Marshalls, and Sierra, posted comparable sales growth of just 1%, well below the 6% gain it recorded last quarter and the 3% it posted in the same period a year ago.

Net sales for Marmaxx rose 3% to $9.1 billion, carried largely by new store openings. Companywide, net sales reached $15.2 billion, up 5% year over year. Consolidated comparable sales grew 4%, and net income came in at $1.5 billion. Diluted EPS of $1.36 was up 24%, though that figure included a $0.14 boost from tariff refunds. Excluding that benefit, adjusted EPS rose 11% to $1.22.

CEO Ernie Herrman told analysts on a post-earnings call that the Marmaxx weakness was entirely the company’s own fault. “We’re convinced that the issues were self-inflicted and within our control,” he said. He pointed to gaps in basic and impulse-driven merchandise on store shelves, adding that “it’s more about what we didn’t have in the mix.”

Herrman said the company has already put new planning processes in place and expects Marmaxx comps to return to 2% to 3% growth by Q4. “I’m convinced that our team of more than 1,400 buyers will bring shoppers the right assortments at the right values,” he said.

Not everyone is buying the self-inflicted explanation. Wells Fargo analysts led by Ike Boruchow drew a direct comparison to a similar Marmaxx slowdown nearly a decade ago, when TJX was slow to diagnose the problem, initially blamed weather, and took nine months to fix it. “This is all to say, we aren’t out of the woods just yet,” Boruchow wrote.

William Blair analyst Dylan Carden raised a different concern. “Our fear is that it relates to lower ticket given wider signs of consumer weakness and price increases over the last year and a half,” he wrote. That points to a structural issue, not a merchandising one.

TJX also benefited from a significant one-time item in Q2. The company received $331 million in refunds for IEEPA tariffs it had previously paid. After accounting for incremental compensation expenses triggered by the refund, the net pretax benefit was $219 million. Shares still fell roughly 4.2% Wednesday and dropped another 2.3% Thursday to $141.28.

The rest of the TJX portfolio outperformed Marmaxx by a wide margin. HomeGoods posted 7% comp growth, with adjusted segment profit margin up 240 basis points to 12.4%. TJX Canada grew comps 6% and TJX International grew 7%, both driven primarily by transaction volume.

TJX also expanded its long-term growth target by 500 stores, bringing the total opportunity to 7,500 locations across 10 countries. That includes room for T.J. Maxx and Marshalls to add 300 stores combined to reach 3,300 locations, and for HomeGoods to add 200 stores to reach 2,000.

For Q3, TJX is guiding to 2% to 3% consolidated comp growth and adjusted diluted EPS of $1.30 to $1.32. The full-year adjusted pretax margin target is 12.0% to 12.1%.

The pressure on Marmaxx comes as Ross Stores and Burlington Stores compete for the same value-seeking shopper. With consumers becoming more selective on discretionary purchases and the labor market softening, the off-price sector faces a more contested environment than it has in years.