TJX (TJX)

Off-price retail company TJX (NYSE:TJX) reported revenue ahead of Wall Street’s expectations in Q4 CY2025, with sales up 8.5% year on year to $17.74 billion. Its GAAP profit of $1.58 per share was 14.3% above analysts’ consensus estimates.

Company Overview

Initially based on a strategy of buying excess inventory from manufacturers or other retailers, TJX (NYSE:TJX) is an off-price retailer that sells brand-name apparel and other goods at prices much lower than department stores.

Discount retailers understand that many shoppers love a good deal, and they focus on providing excellent value to shoppers by selling general merchandise at major discounts. They can do this because of unique purchasing, procurement, and pricing strategies that involve scouring the market for trendy goods or buying excess inventory from manufacturers and other retailers. They then turn around and sell these snacks, paper towels, toys, clothes, and myriad other products at highly enticing prices. Despite the unique draw and lure of discounts, these discount retailers must also contend with the secular headwinds of online shopping and challenged retail foot traffic in places like suburban strip malls.

Off-price and discount retail competitors include Ross Stores (NASDAQ:ROST), Burlington Stores (NYSE:BURL), and Ollie’s Bargain Outlet (NASDAQ:OLLI)

A company’s long-term performance is an indicator of its overall quality. Any business can have short-term success, but a top-tier one grows for years.

With $60.37 billion in revenue over the past 12 months, TJX is a behemoth in the consumer retail sector and benefits from economies of scale, giving it an edge in distribution. This also enables it to gain more leverage on its fixed costs than smaller competitors and the flexibility to offer lower prices. However, its scale is a double-edged sword because it’s harder to find incremental growth when you’ve penetrated most of the market. To accelerate sales, TJX likely needs to optimize its pricing or lean into international expansion.

As you can see below, TJX’s sales grew at a tepid 6.5% compounded annual growth rate over the last three years, but to its credit, it opened new stores and increased sales at existing, established locations.

This quarter, TJX reported year-on-year revenue growth of 8.5%, and its $17.74 billion of revenue exceeded Wall Street’s estimates by 2.3%.

Looking ahead, sell-side analysts expect revenue to grow 5.2% over the next 12 months, similar to its three-year rate. We still think its growth trajectory is attractive given its scale and implies the market sees success for its products.

Number of Stores

TJX sported 5,214 locations in the latest quarter. Over the last two years, it has opened new stores quickly, averaging 2.6% annual growth. This was faster than the broader consumer retail sector.

When a retailer opens new stores, it usually means it’s investing for growth because demand is greater than supply, especially in areas where consumers may not have a store within reasonable driving distance.

Same-Store Sales

A company's store base only paints one part of the picture. When demand is high, it makes sense to open more. But when demand is low, it’s prudent to close some locations and use the money in other ways. Same-store sales gives us insight into this topic because it measures organic growth for a retailer's e-commerce platform and brick-and-mortar shops that have existed for at least a year.

TJX’s demand has been spectacular for a retailer over the last two years. On average, the company has increased its same-store sales by an impressive 3.9% per year. This performance suggests its rollout of new stores is beneficial for shareholders. We like this backdrop because it gives TJX multiple ways to win: revenue growth can come from new stores, e-commerce, or increased foot traffic and higher sales per customer at existing locations.

In the latest quarter, TJX’s same-store sales rose 4% year on year. This performance was more or less in line with its historical levels.

TJX has bad unit economics for a retailer, signaling it operates in a competitive market and lacks pricing power because its inventory is sold in many places. As you can see below, it averaged a 30.8% gross margin over the last two years. Said differently, TJX had to pay a chunky $69.21 to its suppliers for every $100 in revenue.

In Q4, TJX produced a 30.9% gross profit margin, in line with the same quarter last year. On a wider time horizon, the company’s full-year margin has remained steady over the past four quarters, suggesting it strives to keep prices low for customers and has stable input costs (such as labor and freight expenses to transport goods).

TJX’s operating margin might fluctuated slightly over the last 12 months but has remained more or less the same, averaging 11.5% over the last two years. This profitability was solid for a consumer retail business and shows it’s an efficient company that manages its expenses well. This result was particularly impressive because of its low gross margin, which is mostly a factor of what it sells and takes huge shifts to move meaningfully. Companies have more control over their operating margins, and it’s a show of well-managed operations if they’re high when gross margins are low.

Looking at the trend in its profitability, TJX’s operating margin might fluctuated slightly but has generally stayed the same over the last year. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability.

In Q4, TJX generated an operating margin profit margin of 13.3%, up 2 percentage points year on year. The increase was encouraging, and because its operating margin rose more than its gross margin, we can infer it was more efficient with expenses such as marketing, and administrative overhead.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

TJX’s EPS grew at a decent 17.9% compounded annual growth rate over the last three years, higher than its 6.5% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

In Q4, TJX reported EPS of $1.58, up from $1.23 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects TJX’s full-year EPS of $4.88 to grow 5.9%.

If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.

TJX has shown robust cash profitability, giving it an edge over its competitors and the ability to reinvest or return capital to investors. The company’s free cash flow margin averaged 7.8% over the last two years, quite impressive for a consumer retail business.

TJX’s free cash flow clocked in at $2.69 billion in Q4, equivalent to a 15.2% margin. This result was good as its margin was 1.8 percentage points higher than in the same quarter last year. Its cash profitability was also above its two-year level, and we hope the company can build on this trend.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? A company’s ROIC explains this by showing how much operating profit it makes compared to the money it has raised (debt and equity).

TJX’s five-year average ROIC was 28.3%, placing it among the best consumer retail companies. This illustrates its management team’s ability to invest in highly profitable ventures and produce tangible results for shareholders.

TJX reported $6.23 billion of cash and $13.49 billion of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $8.29 billion of EBITDA over the last 12 months, we view TJX’s 0.9× net-debt-to-EBITDA ratio as safe. We also see its $49 million of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

We were impressed by how significantly TJX blew past analysts’ EBITDA expectations this quarter. We were also glad its revenue outperformed Wall Street’s estimates. On the other hand, its EPS guidance for next quarter missed and its full-year EPS guidance fell short of Wall Street’s estimates. Overall, this print was mixed. The stock remained flat at $156.76 immediately after reporting.

Updated: February 25, 2026 at 8:00 AM EST

Before investing in or passing on TJX, we urge you to understand the company’s business quality (or lack thereof), valuation, and the latest quarterly results - in that order.

We think TJX is a good business. Although its revenue growth was a little slower over the last three years and analysts expect growth to slow over the next 12 months, its coveted brand awareness makes it a household name consumers consistently turn to. And while its gross margins make it more challenging to reach positive operating profits compared to other consumer retail businesses, its stellar ROIC suggests it has been a well-run company historically.

TJX’s P/E ratio based on the next 12 months is 30.5x. When scanning the consumer retail space, TJX trades at a fair valuation. If you believe in the company and its growth potential, now is an opportune time to buy shares.

Wall Street analysts have a consensus one-year price target of $167.72 on the company (compared to the current share price of $156.76), implying they see 7% upside in buying TJX in the short term.