Image Source: Pexels

The TJX Companies, Inc. (TJX) rang up a 6% increase in fiscal second quarter sales to $13.5 billion, with net income up 11% to $1.1 billion and EPS up 13% to $0.96. Comparable-store sales of 4% were entirely driven by customer transactions, which increased at every division, highlights Ingrid Hendershot, editor of Hendershot Investments.

Operating margin of 10.9% expanded by 0.5 percentage points, primarily due to a benefit from lower freight costs and stronger sales, partially offset by higher incentive compensation accruals and a contribution to the TJX Foundation.

The TJX Cos. (TJX)

By division, Marmaxx sales jumped 7% to $8.4 billion, HomeGoods sales increased 4% to $2.1 billion, TJX Canada expanded 2% to $1.2 billion, and TJX International sales rose 4% to $1.7 billion. TJX marked a milestone in the second quarter by opening its 5,000th store. Management sees a runway for 6,300 stores across its current banners and geographies.

During the second quarter, TJX generated $1.6 billion of operating cash flow, representing a fancy 146% of reported net income. During the first half of fiscal 2025, TJX generated $2.4 billion in operating cash flow and $1.4 billion in free cash flow, up 9% from last year. TJX’s robust cash flow and strong balance sheet enable it to invest in growing the business while returning significant cash to shareholders.

During the quarter, TJX signed a definitive agreement to make an investment of about $360 million for a 35% ownership stake in privately held Brands for Less (BFL). BFL is based in Dubai and is the region’s only major off-price branded apparel, toys, and home fashions retailer.

BFL currently operates over 100 stores, primarily in the UAE and Saudi Arabia, as well as an e-commerce business. The transaction is expected to be slightly accretive to EPS in fiscal 2026.

During the quarter, TJX returned $982 million to shareholders through share repurchases of $559 million at an average cost per share of $109.61 per share and dividends of $423 million. During the first half of fiscal 2025, TJX returned a total of $1.9 billion to shareholders through share repurchases of $1.1 billion and dividends of $800 million.

TJX also continues to expect to repurchase approximately $2 billion to $2.5 billion of TJX stock during the fiscal year ending Feb. 1, 2025.

My recommended action would be to consider buying shares of TJX.

About the Author

Ingrid R. Hendershot, CFA, is founder and president of Hendershot Investments, Inc., an investment management firm established in 1994. She is also editor of Hendershot Investments, a quarterly investment newsletter designed for long-term investors seeking to invest in high-quality companies at reasonable valuations.

Ms. Hendershot graduated from The Pennsylvania State University earning a BS in accounting and an MBA from George Washington University.

More By This Author: