TJX Companies on Wednesday reported a slowdown at its TJ Maxx and Marshalls discount apparel chains in the second quarter, overshadowing strong growth in its home goods business and fueling concerns about a pullback in U.S. consumer spending. While the off-price retailer is still drawing in bargain-hunting shoppers, its core apparel-focused Marmaxx division is facing headwinds ahead of the crucial back-to-school and holiday seasons. Shares of the company fell about 3 per cent in midday trading. CEO Ernie Herrman acknowledged on a post-earnings call that the company “could have executed our store mix better” at TJ Maxx and Marshalls, with certain products, including basic and “impulse-driven” items, missing from shelves. But sales trends are improving in the current quarter, he added. “We’re convinced that the issues were self-inflicted and within our control.” The weaker-than-expected U.S. apparel results clouded TJX’s earnings beat. The Framingham, Massachusetts-based company also raised its annual profit forecast and maintained its comparable store sales growth target of 3 per cent to 4 per cent. TJX faces mounting competition from value retailers Ross Stores ROST.O and Burlington Stores BURL.N as consumers grow more selective with discretionary purchases amid economic uncertainty and a softer labor market. Marmaxx, TJX’s largest division, posted comparable sales growth of 1 per cent in the second quarter, slowing from 6 per cent in the previous quarter. “Our fear is that it relates to lower ticket (less purchases per shopping trip) given wider signs of consumer weakness and price increases over the last year and a half,” said William Blair analyst Dylan Carden. TJX also plans to accelerate its store openings to 4 per cent starting next year. Herrman stressed that “there will be plenty of quality merchandise available to us to support our growth plans.” The company, which offers merchandise priced from under $10 to designer goods that cost thousands of dollars, has boosted marketing efforts with new launches and celebrity-led campaigns. It expects tariff refunds to lower merchandise costs in the third quarter, although partly offset by higher incentive compensation and bonus expenses. Excluding an expected net benefit of six cents from tariff refunds, TJX sees third-quarter adjusted earnings per share of $1.30 to $1.32, compared with analyst expectations of $1.35, according to LSEG data. It expects earnings per share for fiscal 2027 between $5.31 and $5.36, compared with $5.08 to $5.15 forecast earlier. Quarterly net sales rose 5.4 per cent to $15.18 billion, narrowly beating estimates of $15.16 billion. Adjusted earnings per share rose 11 per cent to $1.22, above expectations of $1.19. (Reporting by Sanskriti Shekhar in Bengaluru and Danielle Kaye in New York; Editing by Devika Syamnath)
