TJX FY2027 Q2 Earnings: $15.2B Sales, 13.3% Pretax — and a 1.4-Point Tariff Asterisk

TJX just printed the kind of quarter that looks spectacular until you strip the one-time line. Net sales were $15.180 billion (+5%), consolidated comps rose 4% above plan, and net income hit $1.520 billion. Reported pretax profit margin was 13.3% — but 1.4 percentage points of that is a net IEEPA tariff-refund benefit. Adjusted pretax margin is 11.9%, up only 0.5 points versus last year. Diluted EPS of $1.36 becomes $1.22 adjusted. Cash ended at $6.004 billion; inventories at $7.862 billion, with inventory per store +2% — the forward tell for an off-price buyer still stocking into “outstanding” merchandise availability.

The Headline Numbers​

Fiscal 2027 second quarter is the period ended August 1, 2026, compared with the second quarter of Fiscal 2026 (IR press release / Exhibit 99.1, filed with the 8-K indexed at EDGAR accession 0000109198-26-000048):

Pretax profit reconciles cleanly from the ledger income statement: net income $1,520M plus income tax $498M equals pretax $2,018M, and $2,018M / $15,180M = 13.3%. That is the reported rate. The adjusted rate of 11.9% is management’s explicit exclusion of a 1.4-point net tariff-refund benefit (refunds less related incremental compensation accruals).

Two growth stories sit on top of each other. Sales and comps are the durable half: +5% net sales and +4% consolidated comps, both described as above plan. Earnings are the noisier half: reported diluted EPS +24% to $1.36, but adjusted diluted EPS +11% to $1.22 after stripping a $0.14 net tariff benefit. The Bull Case owns the 0.5-point underlying pretax expansion on 4% comps. The Bear Case owns the $331 million refund that made the headline margin look like a step-change.

Cash generation was not subtle. Operating cash flow was $2.2 billion in the quarter; period-end cash was $6.004 billion. The company returned $1.3 billion to shareholders in Q2 ($798 million of buybacks plus $529 million of dividends). That is an off-price retailer with both a working P&L and a funded capital-return machine — once you decide how much of the margin print to annualize.

Revenue Deep Dive: Diversified Comps, Soft Marmaxx​

TJX’s useful split is division sales and comps, not a software-style ARR bridge. The release’s own tables:

Marmaxx is still ~60% of the sales stack ($9.1B of $15.2B), and it was the soft spot: comps +1% after +3% a year ago, with CEO Ernie Herrman stating sales at Marmaxx were “below our expectations.” The offsets carried the consolidated print. HomeGoods comps +7%, Canada +6%, International +7% — the exact 6%–7% band Herrman called out as underscoring “the strength of our global diversified business.”

Constant-currency sales growth was +6% consolidated versus +5% reported; FX cost about a point on the top line. Canada constant-currency growth was +8%; International +10%. The dollar translation is noise around a still-positive international engine.

Management signal scan on robust demand / comps (verbatim from the release):

“I am very pleased with our above-plan consolidated results in the second quarter”

— Ernie Herrman, CEO and President — and the bullet that matches the ledger’s sales growth:

“Q2 consolidated comparable sales increased 4%, which was above the Company’s plan”

That is the clean demand hit for this quarter: above-plan comps, not a capacity story. Herrman also said “Availability of branded, quality merchandise continues to be outstanding” and that Q3 is “off to a strong start,” with “improvement at our Marmaxx division to start the quarter.” Those are forward color, not Q2 segment math.

Absence is a finding. The release does not use “demand exceeds supply,” “tight supply,” or “industry upcycle” wording. TJX is an off-price buyer that benefits from abundant branded merchandise in the marketplace — the opposite of a sold-out manufacturer narrative. Quoting those themes here would invent a signal the primary source never made.

The thesis the mix supports: consolidated 4% comps are a portfolio result. Marmaxx decelerated; HomeGoods and the international banners accelerated. Modeling the company as “TJ Maxx comps” alone would have missed the quarter. Modeling it as four divisions that sum to $15,180M matches both the filing and the Open Ledger income line.

The Margin Story: 13.3% Reported, 11.9% Underlying​

Reported pretax margin 13.3% versus 11.4% last year is a +1.9-point jump. Management’s own bridge is unambiguous (verbatim):

“For the second quarter of Fiscal 2027, the Company’s pretax profit margin was 13.3%, up 1.9 percentage points versus last year’s 11.4%. Excluding a 1.4 percentage point net benefit from IEEPA tariff refunds and related incremental compensation expense accruals, adjusted pretax profit margin was 11.9%, up 0.5 percentage points versus last year”

Gross margin carried most of the optics:

“Gross profit margin for the second quarter of Fiscal 2027 was 33.4%, up 2.7 percentage points versus last year’s 30.7%. Excluding a 2.0 percentage point net benefit from IEEPA tariff refunds…”

Adjusted gross margin was 31.4%, up 0.7 points, “driven by an increase in merchandise margin.” That 0.7-point residual is the part of the COGS story you can argue is operational. The 2.0-point gross-rate benefit is the refund window.

Refund size, again verbatim:

“During the second quarter of Fiscal 2027, the Company received aggregate refunds of $331 million for a portion of the IEEPA tariffs it previously paid.”

Related incremental compensation accruals were $112 million (year-end incentive and discretionary bonuses). Net pretax benefit: $219 million. On $15,180M of sales that is the ~1.4-point pretax bridge (219 / 15180 ≈ 1.4%). Diluted EPS embeds a $0.14 net benefit; adjusted EPS is $1.22.

SG&A is the other half of the tariff accounting. Reported SG&A was 20.3% of sales, up 0.8 points versus 19.5%. Excluding a 0.6-point negative impact from tariff-related compensation accruals, adjusted SG&A was 19.7%, up only 0.2 points — “driven by incremental store wage and payroll costs.” So the Bear Case’s “SG&A up 0.8 pt reported” is true on the face of the P&L; the adjusted read is a much smaller wage creep. The ledger books SG&A at the filed figure (3,085 MUSD), not the adjusted rate — same rule as COGS (10,108 MUSD). The refund and bonus accruals live inside those lines; the post separates them in prose because the 10-Q does not invent a separate tariff-refund chart account.

Pricing language is mild. There is no “sustained ASP increases” theme. Merchandise-margin improvement on the adjusted gross line is the closest pricing/mix signal, and it sits beside a buyer model that lives on value, not list-price harvest. Net interest income had a neutral impact on pretax margin versus the prior year — no below-the-line rescue.

The mechanical read: underlying profitability expanded half a point on above-plan comps. Everything else in the 1.9-point pretax headline is the IEEPA package.

The One Big Question: How Much Margin Survives Without the Refund?​

The quarter’s defining issue is not whether TJX can grow mid-single-digit sales. It did — $15.2B, +5%, comps +4%. The question is what pretax rate you should underwrite once the tariff-refund window closes.

Management already told you Q3 still has more refunds coming, with uncertainty attached: additional IEEPA refunds are expected to benefit Q3 cost of sales, with related bonus accruals, but “the amount, timing and likelihood of additional tariff refund recovery remain uncertain,” and total refunds “may not equal the full amount of IEEPA related tariffs paid.” Full-year guidance now embeds an expected 0.3-point net tariff benefit in pretax margin (adjusted FY pretax outlook 12.0%–12.1%; reported 12.3%–12.4%). That is management saying the refund is material enough to guide around — and small enough, on a full-year basis, that the underlying mid-12% pretax band is the real operating claim.

Inventory per store is the balance-sheet check on whether the buyer is still loading for fall. Total inventories were $7.9 billion (ledger assertion 7,862 MUSD) versus $7.4 billion a year earlier. Consolidated inventories on a per-store basis — including DCs, excluding in-transit and e-commerce — were up 2% reported and up 3% constant currency. In an off-price model, modest inventory growth into “outstanding” availability is a feature: it is the raw material for the treasure-hunt assortment. A +2% per-store build is not a clearance crisis; it is the forward tell that the company is positioned to flow fresh goods into fall and holiday.

Store growth is the multi-year capacity answer. TJX ended the quarter with 5,285 stores (+23 in the quarter) and raised the long-term global store target to 7,500, with store-opening growth planned at 4% beginning in FY2028. That is a physical-retail compounding story measured in doors, not in AI capex.

Peer framing is optional for this print. What matters internally is the two-margin stack: 13.3% for the filing, 11.9% for the operating business after the $331M refund and $112M accrual. Own the second; disclose the first.

Tracking a $60B Retailer in Plain Text​

Modeling TJX in Beancount forces every million to reconcile. Income credits are negative; expenses are positive; Equity:Adjustments absorbs net income so the income-statement transaction sums to zero — the same house conventions we use for every Open Ledger company. Double-entry does not care that $331M of the COGS line is a tariff refund; it only cares that revenue, cost, SG&A, other income, tax, and net income still zero-sum.

Here is the FY2027Q2 income statement as booked (MUSD = millions of USD), including the ledger’s zero-sum check:

; Check: −15180 + 10108 + 0 + 3085 + −31 + 498 + 1520 = 0 ✓
 
2026-08-01 * "The TJX Companies, Inc." "FY2027Q2 Income Statement"
  Income:Revenue                         -15180 MUSD
  Expenses:CostOfRevenue                   10108 MUSD
  Expenses:ResearchAndDevelopment          0 MUSD  ; not separately reported
  Expenses:SellingGeneralAdministrative    3085 MUSD
  Income:OtherNet                        -31 MUSD
  Expenses:IncomeTax                       498 MUSD
  Equity:Adjustments                      1520 MUSD  ; net income offset (RE set by balance assertion)

And the two balance-sheet assertions that carry this quarter’s narrative — cash from $2.2B of operating cash flow, and inventories for the +2% per-store forward tell:

2026-07-31 pad Assets:Current:Cash                              Equity:Adjustments
2026-08-01 balance Assets:Current:Cash                               6004 MUSD
 
2026-07-31 pad Assets:Current:Inventories                       Equity:Adjustments
2026-08-01 balance Assets:Current:Inventories                        7862 MUSD

Cost of goods sold is one number in the chart (10,108 MUSD). The $331M IEEPA refund sits inside that line and in the period-file banner — not as a fake Income:TariffRefund account — because the filing presents refunds as a benefit to cost of sales, not a separate GAAP caption you can pad to. SG&A (3,085 MUSD) likewise absorbs its share of the bonus accrual. Pretax of $2,018M over $15,180M revenue is the 13.3% you can recompute from the same seven postings.

The balance-sheet number that tells the narrative is inventories at 7,862 MUSD with per-store up 2%. Cash at 6,004 MUSD is the liquidity counterpart: enough dry powder to fund $1.3B of Q2 shareholder returns and still end the quarter with a six-billion cash line.

The Multi-Year Arc​

Five full fiscal years from the Open Ledger annual files (MUSD), plus this quarter’s run-rate context:

Revenue compounded from $48.6B to $60.4B across FY2022–FY2026 — roughly a $11.8B absolute add — while net income rose from $3.3B to $5.5B. Net margin widened from the high-6% to low-9% band. That is the off-price compounding story before any tariff footnote: more doors, more comps, more merchandise margin over a multi-year stretch.

Q2’s 10.0% net margin ($1,520M / $15,180M) sits above the FY2026 annual 9.1% — and should. Part of the lift is seasonal mix and part is the $219M net tariff benefit flowing through the same COGS/SG&A accounts. Annualize the adjusted pretax band management is guiding (full-year adjusted pretax 12.0%–12.1%), not the single-quarter 13.3% reported print.

The compounding story is not software-like revenue acceleration. It is a global off-price retailer adding mid-single-digit sales, widening net margin over five years, returning billions via buybacks and dividends, and still claiming thousands of stores of white space to 7,500. The ledger makes that path auditable year by year instead of a slide-deck assertion.

The Verdict: Bull vs. Bear​

Bull Case

• Underlying pretax margin +0.5 pt to 11.9% on consolidated comps +4% above plan — real operating expansion after stripping the refund.
• Net sales $15.180B (+5%) with HomeGoods, Canada, and International comps in the 6%–7% band offsetting soft Marmaxx.
• Operating cash flow $2.2B in the quarter; cash ended at $6.004B after $1.3B returned to shareholders.
• Off-price model with “outstanding” branded merchandise availability — a buyer’s market, not a sold-out manufacturer constraint.
• Inventory per store +2% (constant currency +3%): positioned to flow fall/holiday assortments rather than starving the floor.

Bear Case

• 1.4 points of the 13.3% pretax margin is a non-recurring IEEPA tariff-refund package ($331M refunds, $112M related accruals, $219M net pretax benefit).
• Reported diluted EPS +24% compresses to adjusted +11%; $0.14 of the $1.36 is the refund.
• Reported SG&A up 0.8 pt to 20.3% of sales — even if 0.6 pt is tariff-related bonus accruals, wage/payroll pressure remains on the adjusted +0.2 pt.
• Marmaxx comps only +1% and “below expectations” — the largest division is the softest.
• Tariff policy and further refund recovery remain uncertain; management itself says timing, amount, and likelihood of additional refunds are not assured.

Our Take

Treat Q2 as two stacked stories that the ledger refuses to conflate. The first is durable: above-plan 4% comps, diversified banners carrying Marmaxx’s soft patch, half a point of underlying pretax expansion, $2.2B of operating cash flow, and inventory/store +2% into a still-open buying environment. The second is a $331M IEEPA refund that juiced reported pretax margin by 1.4 points and diluted EPS by $0.14. Own TJX for the off-price compounding machine and the 11.9% adjusted pretax print; do not annualize 13.3%. The Open Ledger entry keeps that honest — Income:Revenue at −15180, Expenses:CostOfRevenue at 10108 matching filed COGS, cash at 6004, inventories at 7862, and the tariff story in the comments where a reader can see it next to the numbers instead of buried in a non-GAAP footnote alone.