TJX - The TJX Companies, Inc.

Operator: Ladies and gentlemen, thank you for standing by. Welcome to The TJX Companies, Inc. Third Quarter Fiscal 2026 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session. At that time, if you have a question, you will need to press star 1. This conference call is being recorded, 11/19/2025. I would now like to turn the conference over to Mr. Ernie Herrman, Chief Executive Officer and President of The TJX Companies, Inc. Please go ahead, sir. Thanks, Courtney. Ernie Herrman: Before we begin, Deb has some opening comments. Operator: Thank you, Ernie, and good morning. Today's call is being recorded and includes forward-looking statements. Deb McConnell: About our results and plans. These statements are subject to risks and uncertainties that could cause the actual results to vary materially from these statements, including among others, the factors identified in our filings with the SEC. Please review our press release for a cautionary statement regarding forward-looking statements as well as the full Safe Harbor statements included in the Investors section of our website, tjx.com. We have also detailed the impact of foreign exchange on our consolidated results and our international divisions in today's press release and in the Investors section of tjx.com along with reconciliations to non-GAAP measures we discuss. Thank you. And now I'll turn it back over to Ernie. Ernie Herrman: Good morning. Joining me and Deb on the call is John. I'd like to start by thanking our global associates for working together to deliver our shoppers an exciting assortment of merchandise at excellent values every day. I truly appreciate their continued hard work and dedication to The TJX Companies, Inc. Moving to our third quarter performance, I am extremely pleased that comp sales, profitability, and earnings per share were all well above our plan. Our overall comp sales increase of 5% was driven by strong comp sales growth across each of our divisions. Clearly, our value proposition continued to resonate with consumers in The United States, Canada, Europe, and Australia. And we are confident that we gain market share across each of these geographies. With our above-plan results in the third quarter, we are raising our full-year guidance for sales and profitability. John will detail our results and guidance in a few minutes. As to the fourth quarter, we are off to a strong start and as always, we'll strive to beat our plans. I am very excited about the initiatives we have underway for the holiday season. We are convinced that we will keep attracting shoppers to our retail banners. Availability of quality branded merchandise has been exceptional and we are in an excellent position to flow a fresh assortment of goods to our stores and online. We feel great about the strength of our business and are confident that our flexibility, wide customer demographic, and focus on value will continue to be a tremendous advantage. I'll talk more about our fourth quarter opportunities in a moment, but first, I'll turn the call over to John to cover our third quarter results in more detail. Thanks, Ernie. I also add my gratitude to all of our associates for their continued hard work and commitment to The TJX Companies, Inc. John Klinger: Now I'll share some additional details on the third quarter. As Ernie mentioned, our consolidated comp sales growth of 5% came in well above our plan. This was driven by a combination of a higher average basket and an increase in customer transactions. Further, we saw strong comp increases in both our apparel and home categories. Third quarter pre-tax profit margin of 12.7% was up 40 basis points versus last year and well above our plan. Gross margin increased 100 basis points versus last year. This was due to an increase in merchandise margin, primarily driven by lower freight costs, expense efficiencies, and expense leverage on sales. Importantly, we are very pleased with our mitigation strategies which allowed us to offset all the tariff pressure we saw in the third quarter. SG&A increased 60 basis points versus last year. This was due to incremental store wage payroll costs, a contribution to the TJX Foundation, and higher incentive compensation accruals. Net interest income negatively impacted pre-tax profit margin by 10 basis points versus last year. Third quarter diluted earnings per share of $1.28 increased 12% versus last year and was also well above our expectations. Lastly, we are extremely pleased with our third quarter pre-tax profit margin came in 60 basis points above the high end of our plan. In the third quarter, merchandise margin was stronger than we expected driven by lower freight costs, and we saw a benefit from expense leverage on the above-plan sales. Further, with our above-plan results, we had higher incentive compensation accruals and made a contribution to the TJX Foundation. Now to the third quarter divisional performance. At Marmaxx, comp sales grew by an outstanding 6% with strong increases in both our apparel and home businesses. It was also great to see strength in our store performance across all regions and income demographics, which speaks to the broad-based appeal of our values. The comp increase was driven by a higher average and growth in customer transactions. Marmaxx's segment profit margin was 14.9%, up 60 basis points versus last year. We were also pleased with the results at our Sierra stores and U.S. e-commerce businesses which we report as part of this division. We are extremely pleased with Marmaxx's momentum and continue to see terrific opportunities for our largest division to grow its footprint and capture additional market share. At HomeGoods, we continue to see very strong sales momentum with comp sales up 5%. Segment profit margin improved to 13.5%, up 120 basis points versus last year. With our highly differentiated mix of home fashions from around the world, at our HomeGoods and HomeSense banners we are confident that consumers will continue to be drawn to our stores. Further, we see a significant opportunity to further grow our store base and attract more customers which we believe will allow us to capture a bigger piece of the U.S. home market. TJX Canada's comp sales increased an outstanding 8%. Segment profit margin on a constant currency basis was 14.9%, down 20 basis points versus last year. Which was driven by unfavorable transactional foreign exchange. As the leading off-price retailer in Canada, our Winners, HomeSense, and Marshalls banners have excellent brand awareness and strong customer loyalty. We believe our position as a top value retailer in Canada sets us up very well to continue our growth in this country for many years to come. At TJX International, comp sales grew 3% with increases in both Europe and Australia. Segment profit margin on a constant currency basis increased to 9.2%, up a very strong 190 basis points versus last year. Ernie Herrman: We are convinced that we will continue to gain market share across John Klinger: both Europe and Australia. Looking ahead, we're excited about our growth plans in our existing countries and our planned entry into Spain in 2026. Moving to inventory. Balance sheet inventory was up 12% and inventory on a per-store basis was up 8% versus last year as we've been buying into the excellent opportunities for quality branded merchandise we've been seeing in the marketplace. Availability of quality merchandise has been terrific. And we are strongly positioned to flow fresh assortments for our stores and online this holiday season. As to capital allocation, we continue to reinvest in the growth of the business while returning $1.1 billion to shareholders through our buyback and dividend programs in the third quarter. Now I'll turn it back to Ernie. Ernie Herrman: Thank you, John. Now I'd like to highlight some of the opportunities that we see to drive sales and transactions in the fourth quarter. First, I am convinced that our retail banners will be a shopping destination for value-conscious shoppers this holiday season. As always, we believe consumers will see compelling values throughout the store every time they visit us. We see this as a major differentiator as our customers can shop our excellent values every day and not have to wait for sales, or promotional days like they do for many other retailers. Second, we believe we are strongly positioned to be a top destination for gifts. With the excellent availability of merchandise we have been seeing, we are confident that we will have a very exciting assortment of gifts this holiday season. Importantly, we plan to have gifting options across good, better, and best brands so our shoppers can find something for everyone on their list. At prices that fit their budget. Additionally, after the holidays, we will remain focused on being a gifting destination year-round. Next, we will be flowing fresh selections to our stores and online multiple times a week throughout the holiday season. We believe this differentiates us from many other major retailers as our ever-changing mix of merchandise allows shoppers to see a new assortment every time they visit. Further, we believe this may encourage shoppers to visit our stores more frequently to see what's new. I am also excited about our post-holiday initiatives to transition our stores to the categories and trends that we believe consumers want. John Klinger: Lastly, Ernie Herrman: we are excited about our holiday marketing campaigns. We recently launched our campaigns across a variety of media channels with an emphasis on digital. At every division, we believe our campaigns position us as a destination for holiday decor and inspiring gifts at terrific values. John Klinger: Further, Ernie Herrman: we are targeting a wide consumer demographic to emphasize that our values are available to all shoppers, to all our shoppers every day. We believe our campaigns will keep our retail brands top of mind and may encourage cross-shopping of our banners and attract new customers this holiday season. John Klinger: Now I'd like Ernie Herrman: to quickly summarize the key reasons why I am so confident that we are in an excellent position to continue our global growth and increase market share over the short and long term. First, we're convinced that consumers will continue to seek out value. Our value proposition of brand, fashion, quality, and price sets us apart from many other retailers and has served us extremely well through many kinds of retail and economic environments over the course of our nearly fifty-year history. Second, we successfully operate stores across a very wide customer demographic. We curate each of our stores individually to appeal to shoppers across various income and age demographics. Further, we continue to see our customer growth driven by both attracting and retaining shoppers across age groups. Next, we are confident that the flexibility of our buying, planning, and allocation, store formats, systems, and supply chain will continue to be a key advantage. Operator: Fourth, Ernie Herrman: we still see significant store growth ahead with a long-term store target of 7,000 stores just for our current countries and Spain. Additionally, with our joint venture in Mexico and investment in The Middle East, we have further expanded our off-price reach around the world. All of this gives us great confidence that we have a tremendous opportunity to capture additional market share globally. Operator: Fifth, Ernie Herrman: I am extremely confident that there will be more than enough quality branded inventory in the marketplace to support our growth plans. As a growing retailer around the world, vendors can use our nearly 5,200 stores as a way to clear excess inventory, grow their business, and introduce their brands to new consumers. Next, we are convinced that the appeal of in-store shopping is here to stay. We see our treasure hunt shopping experience as an important advantage and believe it will continue to resonate with consumers. Further, we make it very easy for our customers to shop our banners by locating our stores in convenient, easy-to-access locations, and offering them the ability to shop multiple categories across our store very quickly. Most importantly, I truly believe the depth of off-price knowledge and expertise within The TJX Companies, Inc. is unmatched. We have many leaders across the company with decades of off-price experience who are laser-focused on driving the current business at a very high level while also teaching and developing the next generation of TJX leaders. We also have a very deep bench which gives us the ability to rotate talent between divisions and geographies. Finally, I am so proud of our culture. Which I believe has been a major contributor to our long history of strong performance. Summing up, we are extremely pleased with the overall performance of The TJX Companies, Inc. in the third quarter and the momentum of the business entering the holiday season. I am so proud of the continued execution of our teams around the world and their relentless focus on our value commitment to our shoppers. We remain convinced that we have significant opportunities for growth and believe we can continue to capture market share around the world for many years to come. Finally, I am pleased to share that during the third quarter, we published our 2025 Global Corporate Responsibility Report. The report covers our ongoing work across four key areas: workplace, communities, environmental sustainability, and responsible sourcing. We invite you to learn more by visiting our website tjx.com. Now I'll turn the call back to John to cover our fourth quarter and full-year guidance. And then we'll open it up for questions. John Klinger: John? Thanks again, Ernie. I'll start with our fourth quarter guidance where we are planning overall comp sales to increase 2% to 3%, consolidated sales to be in the range of $17.1 billion to $17.3 billion, pre-tax profit margin to be in the range of 11.7% to 11.8%, up 10 to 20 basis points versus last year's 11.6%. Gross margin to be in the range of 30.5% to 30.6%, flat to up 10 basis points versus last year. SG&A to be in the range of 18.9%, which would be 30 basis points favorable versus last year. We're assuming net interest income of $26 million which we expect to delever fourth quarter pretax profit margin by 10 basis points. Our fourth quarter guidance also assumes a tax rate of 25.4% and a weighted average share count of 1.12 billion shares. Based on these assumptions, we expect fourth quarter diluted earnings per share to be in the range of $1.33 to $1.36, up 8% to 11% versus last year's $1.23. Moving to the full year. We now expect overall comp sales to increase by 4%. We are increasing our full-year consolidated sales guidance to a range of $59.7 billion to $59.9 billion. This increase reflects the flow-through of the above-plan sales in the third quarter. We are increasing our full-year pre-tax profit margin guidance to 11.6%, up 10 basis points versus last year's 11.5%. Moving to gross margin, we now expect it to be 30.9%, up 30 basis points versus last year's 30.6%. We now expect full-year SG&A to be 19.5%, a 10 basis points unfavorable versus last year. We're assuming net interest income of $111 million which we expect to delever fiscal 2026 pretax profit margin by 10 basis points. Our full-year guidance assumes a tax rate of 24.5% and a weighted average share count of approximately 1.13 billion shares. As a result of these assumptions, we're increasing our full-year diluted earnings per share to be in the range of $4.63 to $4.66, up 9% versus last year's diluted earnings per share of $4.26. In terms of tariffs, we're assuming that the current level of tariffs on imports into The US will stay in place for the remainder of the year. As such, our guidance assumes that we will be able to continue to offset the tariff pressure on our business in the fourth quarter. In closing, I want to reiterate Ernie's confidence in our plans for the remainder of the year and our long-term opportunities going forward. I want to emphasize that we remain in an excellent position to continue to invest in the growth of our company while simultaneously returning cash to our shareholders. Now we're happy to take your questions. As a reminder, please limit your questions to one per person so we can answer as many questions as we can. Thanks and now we'll open it up to questions. Operator: Thank you. To join the queue, press 1. Our first question comes from Brooke Roach from Goldman Sachs. Good morning and thank you for taking our question. Ernie, I'd love to hear a little bit more about what gives you confidence in continuing to deliver the comp momentum as we come up into a tough compare for the holiday season. John Klinger: And then Operator: can you also give a little bit of commentary on what the benefit was to comp in the quarter from AUR and pricing growth and what your plans are for pricing and price gaps as you deliver value into the holiday season. Thank you. Ernie Herrman: Sure, Brooke. Well, in the comp momentum, you can see we've been kind of building momentum for a bit now, right? It's going back a number of months. I think when you look around the board here, at the opportunity to deliver a shopping experience and merchandise, that is branded at tremendous value across good, better, and best. And then you look at the lack of that customer mission being serviced really by anybody else around us. Nobody is really doing that. So, and I'm talking good, better, best, branded. At tremendous value. In a shopping environment, which I think over the last decade has become more important to consumers in terms of not only the merchandise but our shopping environment is very pleasant. Our associates are very accommodating. They're happy. We're providing, I think, an overall pleasant, exciting treasure hunt shopping experience. Even if they're running for treasure hunt. Our consumers, and we have data on this, really enjoy shopping. It's a very positive experience. And contrast that with what's happening around us, And I think ultimately that's why our formula just bodes well in terms of confidence in our comp momentum. Yeah. John, did you want to jump in? Yeah. I mean, just to give you some color on the cadence and the build of the comp. John Klinger: So the cadence in the quarter was very consistent by month, which was really nice to see. As to transactions, and basket, both transactions and basket were up with basket driving a little bit more of the comp within And within basket, ticket was the driver. Ernie Herrman: Does that help you, Brooke, with that part of that question? Deb McConnell: Yes. Very helpful. Thank you. Ernie Herrman: Yes. But you had kind of a third part which I believe was around the you know, the pricing gap, which, you know, it's on what John is getting at. But clearly, another component is our merchants are so driven by keeping a gap on our retail against the out the door We've talked about that many times. And I think that's what speaks to the third question you were getting at is, we will continue to shop aggressively competition, which by the way is clearly all retail, whether it's online, whether it's brick and mortar, at mass market, discount, or department stores or specialty, And then we will ensure, as we always do, that our out the door retail retail is below their, promotional retailer promotional retails. And we'll continue to do that regardless, you know, and that's where it gets down to item and SKU and that, you know, our teams are so good at staying laser-focused on executing that. So, that, by the way, I guess you could argue another component of being confident in our continued momentum. Operator: Thank you, Ernie. John Klinger: You're welcome, Brooke. Operator: Our next question comes from Paul Lejuez from Citi. Ernie Herrman: Hey, thanks guys. Just a John Klinger: follow-up on the traffic and ticket. I'm curious if if it was mix that drove the basket. When you think about the higher people? So I will Ernie Herrman: Sorry, Paul. That didn't come. Can you, repeat that first part? Paul Lejuez: Sure. I'm curious. If it was mix that drove the basket. In terms of higher AUR, higher ticket. Or are you seeing true true price increases? Based on what's happening in the competitive landscape? Are you seeing that opportunity to take prices higher across the assortment because others are doing the same? And then I'm also just curious if you could talk about the income demographic comment. I think you said consistent performance. Was curious if you were referring to The United States specifically, or if you could maybe talk about income demographics in other geographies as well, any differences that you're seeing? Ernie Herrman: Sure. Yeah. Paul Lejuez: So when you break down the ticket, John Klinger: it was a bit more of the price versus the mix. That drove that. Don't know if Ernie, do you want to expand on that? Yeah, sure. Yeah, Paul, I think it was Ernie Herrman: combination, but I think a little bit more was due to, yes, some of the pricing, that's gone up, as selectively throughout as other prices have gone up around us. I think you've seen many reports about other retailers talking about having made some price adjustments on certain items, categories Again, we and some of those cases have followed suit. Based on what we've had to pay. In retail. But again, I go back to what I had said to Brooke at the end of that question, her third question, is we are extremely diligent on making sure we're providing in some cases, at least as good a value as we were prior. In fact, our value perception scores, which we are always monitoring, extremely strong. Of course, one would probably guess that when you look at sales, you would say that if the value perception wasn't strong, we probably wouldn't be doing these pump sales. Paul Lejuez: So I think as John said, that was probably the chunk Ernie Herrman: of the reason. But merchandise mix does certainly impact Again, I wanted to emphasize we do not top down drive the retail ticket. We're insisting on the right value. And then our down at the buyer and level, the ones that really determine where the retail should be. Right. There's a John Klinger: a good part of our mix that you know, we're not buying, you know, the same thing over and over Yeah. When when we look at ticket, we're really looking at, it within the department. And so sometimes it can be a little challenging to read. Paul Lejuez: But Ernie Herrman: But Getting back to your income demographics, John Klinger: the vast majority of our geographies, it was it was close. I mean, it's both income demographics that we kind of break it down and how we look at it, we're very, very close. But it was the lower income demographic that was driving the comp in the majority of our geographies. Paul Lejuez: Got it. Thank you, guys. Good luck. Ernie Herrman: Which Paul brings up know, because you hear you're I'm sure all of you have heard many different reports on in some cases articles about the upper end or luxury retail driving some of the, you know, again, I always emphasize the strength in our business model is that we're have a balanced approach. Right. Where we have all we try to appeal to all ages and all in condemn And we never veer off that mission really for times like this and times when things get better or times where people are struggling. We want to appeal to all income demographics. Which is why we're seeing consistent across all the income demographic bands we look at. Paul Lejuez: All right. Just as a follow-up, is that unusual that it would be the lower income demos that are outperforming at the same time that you're seeing ticket go higher? John Klinger: No. It's been like that for the last number of quarters. I mean, because really for quite a long time, we've been seeing strong across all income demographics that sometimes it'll tip one way or the other. That's what we're seeing is just a tipping of of it rather than a trend. Ernie Herrman: It's not a long term trend, yeah. Yeah, so and Paul, we have Paul Lejuez: we have Ernie Herrman: and when John says the strength, you know, all the income demos are healthy. It's just that one's nudging a little bit In other words, a lot of we we are happy with the all the different income groups. That one's just nudged up a bit. In the in the recent. Paul Lejuez: Broadcast. Thanks, Gus. Welcome. Operator: Our next question comes from Alex Straton from Morgan Stanley. Deb McConnell: Great. Thanks so much. I've got one for John and then maybe one for Ernie. Alex Straton: So John, just on the gross margin guidance for the fourth quarter, can you talk about what changes to make that year over year expansion a little bit less than what we've seen in the last couple of quarters? And then for Ernie, a bigger picture question. A lot of discussion around AI disintermediation in retail. Especially with the use of personal digital shoppers. So I'm just wondering how you think about what these developments mean for TJ and what your broader kind of AI strategy might be more generally? Thanks so much. Ernie Herrman: Yes. Go ahead, John. So John Klinger: on the gross margin for the fourth quarter, the reason why is it's really how we are handling our shrink accrual for the year. Because we had a favorable shrink came in last year, so we're up against the adjustment in the fourth quarter that that brought the shrink rate down from our plan. So we have favorable shrink comparison to last year for Q1, Q2, Q3. And in Q4, we're up against a negative comparison last year. Does that make sense? Or I'm sorry. We're up against the positive adjustment last year, this year, which creates a negative compare Paul Lejuez: Is that good, Alex, on that? Yeah. Alex Straton: Yep. It is. Thank you. Okay. Paul Lejuez: So and on the, yeah, the bigger picture AI question, which of course Ernie Herrman: no topic is highlighted more than AI and the world we're in today. Our teams are all over this from a couple's perspectives. But let me emphasize that we're doing it in a TJX approach manner. In terms of where would it dovetail into helping us without us swinging a pendulum and doing something that could be counterproductive. So we are pretty aggressively evaluating and testing and deploying AI really across our business to help us work more efficiently and enhance and augment really the work our associates are doing. So you had mentioned I think, some example, but areas we would look at it right now testing is enhancing our fraud detection and security. There are aspects to that that could work out well. In store analytics, really helping with that process. Enhancing customer service. I'll give you another one. HR, where I think we're going to get some really big benefit. Is in some HR processes. Where there's a lot of information that could be somewhat cumbersome. As big as we are today, I think that's going to help streamline a lot of a lot of work for some of our HR associates there. Enhancing customer service, I think I mentioned. Marketing, a recent discussion we just had is marketing optimization. This is something going on around us. And we are taking a look. It's really at the beginning to see what processes there would benefit from us implementing AI. So we are can't tell you details, but we are taking a hard look and we'll be testing some services there. To see if we can move that further. Obviously it goes without saying we'd be looking at supporting buying and planning in a way, again, in a way that's still allows our merchants to function with the secret sauce that we do not want to be impacted by AI if that's not appropriate. So we're always very careful with that. But of course, we wanna be aware of it and look at it. And then helping IT teams deliver and operate more efficiently that would was one of the first places we were looking at this a number of years ago. And the last thing here, Alex, I would say is are also, the teams are really terrific and are I give our IT area credit that they're always looking at what are other people doing with AI. So that we're always aware competitively speaking so that we don't get blindsided on something we should have been looking at and somebody else is. So that's probably a little more info than you needed. But I think that kind of explains to you we're on John Klinger: Part of that last comment that I already made, you know, have established cross functional governance that process that just ensures that we are thoughtfully proceeding on looking at AI. Alex Straton: Great. Thanks so much. Good luck. Ernie Herrman: Thank you. Operator: Our next question comes from Matthew Boss from JPMorgan. Paul Lejuez: Thanks and congrats on a nice quarter. John Klinger: Thanks, Matt. Thanks, Matt. Paul Lejuez: So Ernie Herrman: Ernie, could you elaborate on just on the overall acceleration Matthew Boss: at Marmaxx, new customer acquisition, relative to expanded basket from your existing core And and if you could elaborate on the strong start to the fourth quarter, have you seen any softening in business or just opportunities that, that you see for holiday this year? Paul Lejuez: So Ernie Herrman: you're you're you're laying it up for me here, Matt. It's a new Always early. John Klinger: Yeah. I appreciate it. Now the new customer Ernie Herrman: acquisition, clearly, we're it's funny. We just talked about this a week ago, I do it my marketing team in the analysis group there. We're clearly capturing new customers consistently and above the balance that we did before. We're getting equal equal momentum from that as well as our infrequent and frequent customer spending. I think we have I give the Marmaxx team credit on just really terrific execution. They have right now, if you look in the store, a very balanced mix across all the families of business. And that's one reason I think we're capturing the market share we're capturing, which is apparel has kicked in. By the way, we sometimes talk when weather has been against us. I would tell you right now weather has helped us recently. So, that certainly is a plus in Marmaxx on certain categories. But when you look at our apparel and non-apparel business there, it's healthy across the board. So yeah, I think you start to touch on this, Matt. There is no area that's really lagging too much. Otherwise, by the way, we wouldn't it's hard to have Marmaxx run a six comp if we did have a high liability department that wasn't performing. So that's been you know, really strong. Their inventory position, now you go to kind of the root of what's going on and why I have the continued confidence back a little bit back to Brooke's first question is the availability in the market is just, I've used this before, the off the charts. I didn't use it in the script, but it's off the charts. So we have so much availability across the brands in many categories. And some more availability in some of the categories that we haven't seen in a while. So I think that is going to bode well for our next quarter. And when you're consumer right now, given the lack of excitement at retail around us, that's making them very open to trying us. Which is why, you know, we have really strong holiday marketing campaigns set up that really talks to our value leadership over next couple of months. And that's why I mentioned on the script, we're so excited about the different marketing creatives, which are really aimed at keeping us top of mind with consumers and are encouraging consumers that haven't tried us to try us for the first time. And that's why I think the new customer and infrequent customers in customers that may have shopped us a year ago and haven't been back That's what our marketing is aimed at, taking advantage in this environment. John Klinger: And then I'll just reiterate what Ernie has said upfront. John Klinger: Earlier in the call that we continue fund payroll appropriately in the stores We continue to invest in remodels in the stores. We've got fixtures that make it easier for customers to shop the stores Operator: Thanks. Good morning. Ernie, are there any categories Morning. Ernie, are there any categories or customer demographics where raising prices has been less successful? And how quickly can you pivot if you see pushback to some of this price over the holidays? David: Yes, great question. We we Ernie Herrman: actually I won't say what it is. We have one category, only one, you know all the categories we have, where we weren't happy. We pivoted back and brought the retails right back to where they were pre the adjustment. Other than that, would say we're 95% successful on the pricing strategy. Again, we don't lead the pricing strategy. We wait for the market around us. So even on that one category, what must my guess is our competitors on that category probably had to adjust their retails too, because we only went up when their retails were going up. And then we found out if it wasn't good for us, there's there's no way it was good for them. So, no, other than the one I'm thinking about, we have been successful across the board Having said that, just on some we've had couple of items. I'll hear it from a couple of the merchants where we tried this one and this one SKU, even though it was in a category where it's worked across the board. We might have a SKU that didn't work because it might just not, it might be bumping up against something or whatever. In our own mix. Because sometimes they have to compete in our own mix And even the pricing, if it went up around us, and we try to take it up because it went up around us it's still hanging with our other goods. Sometimes it doesn't work. So But absolutely, Lorraine, 95% success And very few, we're very careful on it. Which is why not only do we judge it off the actual hard data where we watch selling by SKU, every week. We also use our value perception scores. We keep a constant pulse on that. And the speed at which we turn our inventory gives us the flexibility to react quickly. Great point, John. Yep. Yep. Thank you, guys. Good question, Lorraine. Yeah? Operator: Our next question comes from Ike Boruchow from Wells Fargo. Hey, good morning guys. Congrats Ernie Herrman: Two from me. Similar to Lorraine's question, Ernie, Deb McConnell: are there categories that you've intentionally deemphasized or pushed harder because of tariffs because you look at the economics of each category. Just kind of curious how you think about that. And then, look, clearly, business is not seeing any issues. But you know, very high level, I'm sure you guys have tons of KPIs or markers you look at to kind of judge The U. S. Consumer Is there anything that you've seen over the past couple months kind of going into holiday that at all shows you that The US consumer is under some level of pressure. I think it's still a debate at this point. Just kind of curious how you guys view that at a high level. Ernie Herrman: Sure, Ike. On the first one, the d, you know, the d deemphasizing category, so to speak, if we were running into a tariff We have done that to a little degree. What's happened though, the cycle tends to come back because when they're imported like that, eventually their other accounts kind of back up And so if people back off enough, again, we're not not the importer. So we're able to negotiate through the third party. And we just might have a lag. We don't consciously deem deemphasize over the long term. We just might take what's called our internal sales and inventory plans. They're called ladder plans. We might take those down for a couple of months, but then the market cycles back. We've seen that happen in numerous times. Because you know, we're not ready to take a big price increase if the vendors are coming to own a category if we can't show the great value. So it kind of works its way through the system. So a great question That's in those cases, and yes, we have done it in a couple of cases, we just wait for the cycle to come back to us in a couple of months. Tariffs overall, I mean, we we don't really get different data than what all of you get. We can see that prices have been going up across many retailers and many categories. And it's been talked about as either it's been done or they're looking at doing it. And I would, my barometer for our other retailers struggling a little is the fact that the availability of merchandise across the board is so high across good, better and best that would lead us to believe that other retailers are struggling with some of the impact of the tariffs, I guess. So but again, we don't get any outright. That's just a pulse from what we what we see in the market. Yep. Deb McConnell: Very helpful. Thanks. Operator: You're welcome. Our next question comes from Michael Binetti from Evercore ISI. Deb McConnell: Hey guys, great quarter. Thanks for taking our questions here. Ernie Herrman: I had a couple on the margin. First, on the gross margin, John Klinger: So in third quarter, you'd I think you'd started the guidance at about five to 15 basis points of improvement on a two to three comp. You obviously beat it by a lot. Sounds like freight was a key upside driver. So a couple of questions on that. Just since the shrink dynamic should be kind of contained to fourth quarter, does that freight benefit roll off in fourth quarter? Could you talk a little bit about what's driving freight, if that's something that could contribute after fourth quarter? Secondly, I'm also curious if there was a mismatch of any kind in the quarter between tariff costs and pricing, also what that dynamic looks like in fourth quarter. Sounds like you expect to offset tariffs. But I'm wondering if that if the tariff headwind does get tougher in fourth quarter. And then finally, just on I guess, the pretax margins more broadly, are there any early signals of margin headwinds we should keep in mind as we look at our models for next year, either across the company or at the Marmaxx or HomeGoods divisions. Deb McConnell: Yeah. So Michael, just on the freight piece. So for for freight, it was a combination of favorable ocean rates and efficiencies that we Ernie Herrman: we implemented as far as movement of our merchandise. Deb McConnell: And that's really what drove that freight piece. John Klinger: And then as far as tariffs go, Deb McConnell: I mean, q '2, Q3, Q4, I mean, John Klinger: tariffs are pretty consistent as far as Deb McConnell: what we're seeing. We have every confidence that we can do exactly what we did in the second and third quarter in the fourth. So as I said in my Ernie Herrman: closing comments, Deb McConnell: we are very confident in our ability to continue to navigate the tariff environment. John Klinger: Is that freight dynamic something you think continues after fourth quarter? Or is that something that's just contained? It's really up to the freight Deb McConnell: the ocean freights providers. I mean, John Klinger: if they start taking ships off Ernie Herrman: off offline and try to John Klinger: decrease the surplus or availability, I mean, it's hard for me to answer that. Deb McConnell: It's asking me to look into the future. Can say that what we've been seeing in the John Klinger: third quarter is that we did see a savings in the ocean freight container rate. Okay, so it sounds like it's more related to SPOT than contracts. A little less visibility. And then any other new, headwinds to think about as we look at the models next year? Operator: No. Deb McConnell: Yeah. The what I'm I'm not prepared to talk about next year right now. John Klinger: We're still in the process of Ernie Herrman: of pulling our plans together. Okay. Best of luck in the holidays, guys. Thanks a lot. Thank you. John Klinger: Our next Operator: question comes from Cory Tarlow from Jefferies. Ernie Herrman: Great. Thanks and good morning. Ernie, you commented on the value perception scores Curious how you think about your value gaps today versus historically, within the context of what you've seen from competitors and then also kind of the shape of the comp throughout the year. Given your comp was initially driven very much by traffic to start the year. Deb McConnell: Mhmm. And sort of the commentary has felt Ernie Herrman: a way that it's evolved John Klinger: to be a little bit more driven by price, Ernie Herrman: but not so much so that it's eroded your value gaps is what it I think is is the point, but curious to get your perspective on that. Thanks so much. Yeah, Corey, spot on. That you summed that up, very balanced is the way we would look at. The value gap today, by the way, I would tell you has improved from where it was even a couple of years ago in terms of a couple of things. I still believe part of the value equation, which is kind of evolved, over the last number of years, is the shopping environment that we provide to go along with the merchandise is creating I think an even larger value gap. Between us and the other retailers. And I think if you look at our shopping in our store versus other off pricers or other specialty stores or department stores or larger discount stores. I think you would find a very efficient, clean, organized and then treasure hunt all at the same time. Combined with believe the perceptions are spot on where our values have even improved out the door retail versus others. The gap has improved. So across the board, I would say we have improved there versus historic comparisons on terms of total value The shape of the, I think you were asking about the shape of the comp and that being driven, it would have been a little bit more transactions you were feeling, but part of this is the retail. It was only I think it was only HomeGoods where the right Well, home goods was essentially flat. Right? And the others were still up. Yeah. So that's why I said your comment was spot on where it's kind of an in between, and we're feeling really good about it. Because again, I think there is major value gap between us and everybody else. And as John said, we've had we've had these pricing things, but clearly it does not impact any value per perception at all. Deb McConnell: Exactly. Again, driving a five comp and being strong across Ernie Herrman: every Yes, every bond. Our division. Yes. Deb McConnell: It was was, you know, really positive to see. Ernie Herrman: I would throw in a bigot. Now you can appreciate that this hasn't come up yet, but my biggest challenge, for this organization is when you have such strong sales momentum, which keeps getting better is for us to not get over our skis and buy too much too soon. So I think we've talked about that before, even a year ago. One reason we are delivering the year we're having is keeping a lot of liquidity. And our merchants are able to be very entrepreneurial and very on their buying. And that's when we provide the most exciting value branded off price closeout goods to the consumer. And so that continues to be a focus is to make sure with all this availability that's out there, and combined with our strong sales, we just need to fight urge to buy too much too soon. Know what I mean, Corey? That would probably be our biggest challenge right now because that's the number one way we still can continue to drive our sales. And profitable sales. Yeah, certainly. That makes a lot of sense. And then I just had a quick follow-up for John. You mentioned in Q4 that SG&A was, 30 basis points I believe, favorable or expected to be. Could you just unpack that for us a little bit? Thanks so much, and and best of luck. Yeah, sure. So it's it's gonna be a combination of incentive accrual favorability versus last year and expense savings. So last year we adjusted our our incentive accruals in the fourth quarter So we're comparing to that. So Deb McConnell: have a year over year favorability there. Okay, great. Thank you and best of luck. Ernie Herrman: Thank you. Operator: Our next question comes from Jay Sole from UBS. Ernie Herrman: Great. Thank you so much. Deb McConnell: Ernie, my question is if you just take a step back and think about this has been a year with an unprecedented level of tariffs. And you're talking about availability of inventory. I think you just said it was off the charts. Ernie Herrman: Does it surprise you at all Deb McConnell: that in the year when you would think people would be making less product, importing less product, that you have seen someone should go availability. And if it does, you know, how do you explain it? Ernie Herrman: Yeah. No. Great question, Jay. I have to tell you, yeah, a little surprise on the degree to which the availability is there. Because to your point, back when I go back in the spring, when all of this was just starting to evolve, and we get you know, we there were some categories where by the way, some categories back then, we wouldn't have worried about availability, only because they're they wouldn't have been impacted as much by the tariff. It would have been a more moderate tariff. And then there are others where we might have expected a little less availability. And so, a little bit. We always thought they'd be good availability. Remember, you're never gonna hear from me. A concern about not having enough goods across the board. Maybe in a category at the but you're never gonna hear a concern, even with tariffs. About us not having enough goods the way the model works. And the way, by the way, and the way we have we have seasoned pros in all of these areas in merchandising and planning that can bob and weave to dynamics out there. But yes, to your point, I think the degree to this, how do I explain it? I think part of the reason you explained it is you have public companies that are retailers that still have to bring in, whether it's the e com players, that still have to bring in goods. They're not shutting down their websites. So they're having to buy goods eventually. Maybe they've massaged it and moved from one category or less with one brand or more with another because of the tariffs, but still creates excess inventories. It is still a down the supply chain when things slow up at retail, again, they're public. They just, they can't afford to have a 20% decrease. In their So they're not cutting their spending. Do you know what I mean there, Jay? They can't cut their ordering as a extreme as the tariffs would maybe tell them they do. So I think what happens is they might be less bring in less units but they're gonna bring in the dollars that equate given the tariff. And then if those sales don't materialize, we still end up with the extra supply of closeouts. And that's what I think is, as well as I think retail across the board has been a little choppy and that's creating the excess inventory. So the yeah. Interesting dynamic. Again, this is where I like to give credit to our teams because bottom up the teams assess in each area how much because we buy in a few different ways. So they know how to weigh their core flow is coming from with certain vendors, and yet all the opportunistic side. We wouldn't be in this really good inventory position. We'll still be in liquidity if our teams weren't so good at executing. At that level. So that's where, again, very proud of what they've done in this environment. As you said, very challenging year. Got it. Thank you so much. Thank you. Operator: Our next question comes from Adrienne Yih from Barclays. Good morning. Let me add my congratulations. Ernie, we've been in the store throughout the quarter. And I was wondering I mean, they're extraordinarily long lines. I was wondering if you had been seeing sort of earlier cadence to the holiday shopping behavior and or promotionality Obviously, Walmart pulled forward their Black Friday. Just wondering what you're seeing there and if you expect a shift in the holiday season And then, John, for you on you've done a ton of work on supply chain and transfer transportation logistics over the past couple of years. Outside of the freight tailwind, are you expecting to see sort of a longer term go forward positive impact And does that change the leverage point of on gross margin? Thank you. Ernie Herrman: Questions, Adrienne. Yeah, no, we haven't we don't believe there's necessarily a perp on our part, there's no purposeful shift to thinking we're doing earlier. Again, as we've said, we're off to a strong start. We like the way we're positioned in November. Already. Which obviously indicated we were happy with our traffic, and you've been witnessing it evidently. I think what's also happening is I didn't get to talk about this earlier, but we, every year, our Q4, as you've seen, has been one of our steadiest performing quarters where we have become more of a gift giving destination. And I think that's at the root of it. I think all of the we've also talked about this. The social media, the the coolness of shopping at The TJX Companies, Inc. store, whether it's Marshall's or Sierra or HomeGoods or TJ Maxx, you probably I don't know if you see them. A lot of our reusable bags show up with shoppers that bring them to their supermarkets because we've made such an impact on consumers. And they find us to be a desirable place to show their brand. So I think as they've gotten acclimated and more desirable to shop our brand, I think that makes them think of us more for gift giving than ever before. Which is also a reason I think you're you're seeing that. It's nothing that we purposely did for an event per se or a timing thing. I think it's the nature of the brand equity and the coolness factor that we've developed over the last handful of years. That's yielding a little bit of an earlier earlier shop of us in November. John Klinger: Okay, thanks. Yeah. And so Deb McConnell: getting to the second part of your question, Ernie Herrman: I mean, of all, the leverage point we still see again, just repeating on a three to four comp, Deb McConnell: with no outsized expense increases. We still anticipate being flat to John Klinger: 10 basis points. That's not changing. We don't see that changing right now. As far as the supply chain goes, Deb McConnell: I mean certainly with Ernie Herrman: a higher ticket, we just have to, we Deb McConnell: we were more efficient in our operational areas. There's less units to move to hit the same top line. But, you know, Ernie Herrman: in addition to that, we're always looking for ways to increase the Paul Lejuez: efficiency of our facilities. And John Klinger: looking to Paul Lejuez: rather than open up a new facility as sales go up, which we still have to do. But where we can, if we can expand a facility to increase the capacity, that certainly is something we always look to do as well. Operator: Fantastic. Best of luck for holiday and see you in December. Ernie Herrman: Thanks. Thank you. Operator: Our last question comes from Mark Alschwager from Baird. Great. Good morning. Thanks for taking my question. Paul Lejuez: First, on segment margins, the delta between HomeGoods and Marmaxx is the narrowest we've seen in some time. Just talk about the key drivers to narrowing that gap and whether you expect that convergence to continue? Deb McConnell: Thank you. Paul Lejuez: I mean, so I mean, both divisions are performing, you know, doing outstanding job at driving both the top and bottom line. Certainly some of the freight benefits that we've seen over time, I mean, because of the size and nature of the product have benefited HomeGoods a little bit more. But look, we're very pleased with with both of our US divisions. Both our US segments. But nothing more to add. It's just driving the top line. I mean home goods has been very consistent at driving that top line. And and that's one of the biggest levers we have to increase the pre tax profit. Ernie Herrman: Yeah, Mark, I think I would jump up. Mark, just adding a little flavor to the merchandising to what John was saying is they've also they're constantly creating newness of vendors there. And And always super fast turning business, as you know. And so I think they've been, you know, they're very in terms of the merchandise vendor content. I think has been able to help them on their merchandise margins, which probably is also a big benefit terms of their operating income getting a little closer. To Marmaxx. Paul Lejuez: Excellent. Best of luck this holiday. Ernie Herrman: Thank you. Thanks. I'd like to at this point thank you all for joining us today. We look forward to updating you again on our fourth quarter earnings call in February. You everybody. Operator: That concludes today's conference. Thank you for participating. You may disconnect at this time.

Operator: Ladies and gentlemen, thank you for standing by. Welcome to The TJX Companies, Inc. Second Quarter Fiscal 2026 Financial Results Conference Call. At this time, participants are in a listen-only mode. At that time, if you have a question, you will press star 1. As a reminder, I would like to turn the conference over to Mr. Ernie Herrman, Chief Executive Officer and President of The TJX Companies, Inc. Please go ahead, sir. Ernie Herrman: Thanks, Courtney. Before we begin, Deb has some opening comments. Operator: Thank you, Ernie, and good morning. Today's call is being recorded and includes forward-looking statements about our results and plans. These statements are subject to risks and uncertainties that could cause the results to vary materially from these statements. Deb McConnell: Including, among others, the factors identified in our filings with the SEC. Please review our press release for a cautionary statement regarding forward-looking statements as well as the full safe harbor statements included in the Investors section of our website, tjx.com. We have also detailed the impact of foreign exchange on our consolidated results and our international divisions in today's press release and in the Investors section of tjx.com along with reconciliations to non-GAAP measures we discuss. Thank you, and now I'll turn it back over to Ernie. Ernie Herrman: Good morning. Joining me and Deb on the call is John Klinger. I'll start today with our second quarter results. I am extremely pleased with our outstanding second quarter performance and our above-plan sales, profit margin, and earnings per share results. Overall, comp sales for the second quarter exceeded our expectations, increasing 4% and were strong across all of our divisions. Customer transactions were up at every division and drove our overall comp sales increase. As we have seen through so many retail and economic environments, consumers were drawn to our excellent values in brands. And going forward, we continue to see market share opportunities across each of our U.S. and international divisions. With our profit results in the second quarter also well exceeding our plan, we are raising our full-year guidance for both pre-tax profit margin and earnings per share. John will talk about our results and guidance in more detail in a few minutes. I want to thank our global associates who drove these excellent results. Our teams across the company successfully executed our off-price business fundamentals to deliver an exciting assortment of merchandise at great value to our customers every day. This is a testament to the talent of our teams and the depth of their off-price expertise. Across our company, we saw our associates working together as one TJX to deliver on our value mission for consumers. As we look to the second half of the year, I am very confident in our position of strength in retail. Our teams are energized by the opportunities we see to keep attracting shoppers to our retail brands and to build upon our success of prior years in being a gifting destination for consumers. We see outstanding buying opportunities in the marketplace for quality branded merchandise, which also gives me great confidence in our plans for the fall and holiday selling seasons. The third quarter is off to a strong start. We are confident in our full-year sales and profitability plans. And as always, we will strive to beat them. Longer term, we believe the strength and resiliency of our flexible off-price business model will continue to be a tremendous advantage. We feel great about our core businesses and the opportunities we see for growth with our newer vehicles. We are convinced we have a long runway ahead to capture additional market share worldwide and continue our successful global growth. I'll talk more about our second half opportunities and key strengths in a moment. But first, I'll turn the call over to John to cover our second quarter results in more detail. John Klinger: Thanks, Ernie. I also want to add my gratitude to all of our global associates for their continued hard work and commitment to delivering our customers great value every day. Now I'll share some additional details on the second quarter. As Ernie mentioned, our consolidated comp sales growth of 4% came in above our plan. Further, we saw comp increases in both our apparel and home categories, with home outperforming apparel. Second quarter pre-tax profit margin of 11.4% was up 50 basis points versus last year and well above our plan. Gross margin increased 30 basis points versus last year, primarily due to favorable hedges. Merchandise margin was flat despite higher tariff costs versus last year. Importantly, we are very pleased with our mitigation strategies, which allowed us to offset the tariff pressure we saw in the second quarter. SG&A decreased 30 basis points versus last year. This was primarily due to operational efficiencies as well as a benefit from the timing of certain expenses, some of which we expect to reverse out in the third quarter. Net interest income negatively impacted pre-tax profit margin by 10 basis points versus last year. Second quarter diluted earnings per share of $1.10 increased 15% versus last year and was also well above our expectations. Lastly, we were extremely pleased that our second quarter pre-tax profit margin came in 90 basis points above the high end of our plan. This was due to a combination of items, including lower than expected tariff costs, expense leverage on above-plan sales, and the timing of certain expenses. This was also partially offset by higher incentive compensation accruals and contribution to TJX's charitable foundations. Now to our second quarter divisional performance. Again, this quarter, customer transactions increased at every division. We see this as an excellent indicator of the strength of our value proposition across our retail banners. At Marmaxx, comp sales grew a strong 3%. A combination of a higher average basket and an increase in customer transactions drove the comp increase. It was great to see strength in our store performance across all income demographics, which speaks to our broad-based appeal of our values. Marmaxx's segment profit margin was 14.2%, up 10 basis points versus last year. Our Sierra stores and U.S. e-commerce sites, which we report as part of this division, also saw strong sales results. We feel great about Marmaxx's performance, the initiatives underway for the second half of the year, and our long-term opportunities that we believe will allow us to drive sales and capture additional market share. At HomeGoods, comp sales grew a very strong 5% with strength at both our HomeGoods and HomeSense banners. Segment profit margin grew 10%, up 90 basis points versus last year. Our eclectic assortment of home fashions that we source from around the world are clearly resonating with customers. We are excited about what's in store for the back half of the year, and we're confident our customers will be too. We remain confident that we can continue to capture additional share in the U.S. home market. TJX Canada's comp sales increased an outstanding 9%. Segment profit margin on a constant currency basis grew to a very strong 16%, up 100 basis points versus last year. Our retail banners in Canada, which consist of Winners, Marshalls, and HomeSense, have extremely high brand awareness and customer loyalty. We see great potential for our Canadian banners for the rest of 2025 and long term, and for their continued successful growth across the country. At TJX International, comp sales increased a very strong 5%. Once again, we're very pleased to see sales strength in Europe and outstanding sales in Australia. Segment profit margin on a constant currency basis grew to 5.2%, up 80 basis points versus last year. With our leadership position and decades of international operating experience, we are confident we can continue to be an attractive shopping destination for value-seeking customers across Europe and Australia. Moving to inventory. Balance sheet inventory was up 14%, and inventory on a per-store basis was up 10% versus last year, as we've been buying into the excellent opportunities for quality, branded merchandise we've been seeing in the marketplace. We are confident that availability of merchandise will continue to be outstanding and that we are well-positioned to flow fresh assortments to our stores and online this fall and holiday season. As to capital allocation, we continue to reinvest in the growth of our business while returning $1 billion in the second quarter to shareholders through our buyback and dividend programs. Now I'll turn it back to Ernie. Ernie Herrman: Thank you, John. Now I'd like to take a moment and highlight the opportunities we see to keep driving sales and traffic in the second half of the year. First, I am convinced that consumers will continue to seek out value and that we will remain a very attractive option for consumers seeking great brands, fashions, and quality merchandise at compelling prices. Our customer surveys tell us that our value perception remains strong, and we are laser-focused on keeping it that way. Again, product availability has been outstanding. Our global world-class buying organization of over 1,300 buyers sourced from an ever-changing universe of over 21,000 vendors across more than 100 countries. I'm extremely confident that our buyers will bring consumers the right assortment at the right values throughout the fall and holiday season. Next, we feel great about the product category initiatives underway for the back-to-school and holiday shopping season. Further, we have made our stores a year-round shopping destination for gifts and believe we are becoming more top of mind with shoppers with our consumable offerings. We believe that shoppers will be inspired to visit us frequently to see what's new. Lastly, we are planning exciting marketing campaigns that will continue to reinforce our value leadership. We plan to continue to represent a broad range of shoppers in our advertising and leverage a wide variety of media channels to target a wide customer base. We believe these campaigns will help us continue to attract new shoppers, stay top of mind with our existing customers, and encourage cross-shopping of our retail banners. Beyond this year, we have great confidence in our key success factors that have served us so well through our nearly fifty-year history. We are convinced that these key characteristics of our business set us up extremely well for continued growth around the world over the long term. First, we are convinced that our position as a trusted value leader in the U.S., Canada, Europe, and Australia will continue to be a tremendous advantage. We believe our value proposition of brand, fashion, price, and quality will continue to resonate with consumers. Our commitment to offer great value on every item every day to every customer will always be a top priority. Second, we aim to attract shoppers across a very wide customer demographic with our treasure hunt shopping experience. Our extensive assortments of good, better, and best brands allow us to offer merchandise to a broad range of income and age groups. We believe our strategy of trading across a wide customer demographic differentiates us from many other retailers and is a tremendous advantage. Further, we continue to attract younger customers to our stores, which we believe bodes well for the future. John Klinger: Third, we believe the flexibility of our business will continue to be a significant benefit as we operate through the ever-changing macro and retail environments. The flexibility of our buying, store formats, systems, and supply chain allow us to merchandise stores individually with a rapidly changing curated mix of goods with a wide range of price points. Next, we see the long-term potential to open an additional 1,800 plus stores in just our current countries and Spain. We also see great growth potential with our joint venture in and investment in The Middle East. Importantly, I am extremely confident that there will be plenty of quality merchandise available to support our store growth plans. We believe we can keep delivering the best merchandise values and shopping experience to our customers around the world. Lastly and most importantly is the longevity and knowledge of our talent, which I believe is unmatched. Throughout TJX, our management teams have deep decades-long off-price experience in the U.S. and internationally. We take great pride in our TJX University and other teaching and training programs and are laser-focused on succession planning to ensure we develop the next generation of leaders for our company. Additionally, our deep bench gives us great flexibility to rotate talent throughout the company to further develop our future leaders. I am also very proud of our culture, which I believe is a major differentiator and will continue to be another key component of our success. Ernie Herrman: Summing up, we are extremely pleased to deliver another quarter of strong sales and profitability. We believe our performance and momentum in the first half of the year puts us in an excellent position for continued success for the remainder of the year. We feel great about our value positioning in the current environment and are confident that we will have an appealing assortment of merchandise in our stores and online throughout the fall and winter seasons. We have a strategic vision for long-term success, and I am convinced that we are set up well to capitalize on the opportunities we see to grow our company and capture market share around the world for many years to come. Now I'll turn the call back to John to cover our full-year and third-quarter guidance, and then we'll open it up for questions. John Klinger: Thanks again, Ernie. I'll start with our full-year fiscal 2026 guidance. We now expect overall comp sales to increase by 3%. We are increasing our full-year consolidated sales guidance to a range of $59.3 billion to $59.6 billion. This increase now reflects a significant benefit from favorable foreign exchange rates on the translation of our foreign sales to U.S. dollars, as well as the flow-through of our above-plan sales in the second quarter. We're increasing our full-year profitability guidance to be in the range of 11.4% to 11.5%. This would be flat to down 10 basis points versus last year's 11.5%. Moving to gross margin, we now expect it to be in the range of 30.5% to 30.6%, flat to down 10 basis points versus last year's 30.6%. We now expect full-year SG&A to be 19.4%, flat versus last year. We're now assuming net interest income of about $108 million, which we expect to deleverage fiscal 2026 pre-tax profit margin by 10 basis points. Our full-year guidance assumes a tax rate of 24.5% and a weighted average share count of approximately 1.13 billion shares. As a result of these assumptions, we're increasing our full-year diluted earnings per share to be in the range of $4.52 to $4.57, up 6% to 7% versus last year's diluted earnings per share of $4.26. This EPS guidance now includes our second quarter above-planned sales and a negative 1% impact to EPS growth due to unfavorable foreign exchange, versus a negative 3% impact on our previous guidance. Moving to the third quarter, we expect overall comp sales to increase 2% to 3%, consolidated sales to be in the range of $14.7 billion to $14.8 billion, pre-tax profit to be in the range of 12% to 12.1%, down 20 to 30 basis points versus last year's 12.3%. Gross margin to be in the range of 31.6% to 31.7%, this would be flat to up 10 basis points versus last year. SG&A to be 19.8%, 30 basis points unfavorable to last year. We're also assuming net interest income of about $25 million, which we expect to deleverage third-quarter pre-tax profit margin by 10 basis points. Our third-quarter guidance also assumes a tax rate of 24.7% and a weighted average share count of approximately 1.13 billion shares. Based on these assumptions, we expect third-quarter diluted earnings per share to be in the range of $1.17 to $1.19, up 3% to 4% versus last year's $1.14. Lastly, our implied guidance for the fourth quarter assumes that overall comp sales would be up 2% to 3%, pre-tax profit margin will be in the range of 11.7% to 11.8%, up 10 to 20 basis points versus last year, and diluted earnings per share would be in the range of $1.33 to $1.36, up 8% to 11% versus last year. As for tariffs, our third quarter, fourth quarter, and full-year guidance assumes that we'll be able to offset the incremental tariff pressure on our business this year. We're making an assumption that the current level of tariffs on imports into the U.S. will stay in place for the remainder of the year. In closing, I want to reiterate Ernie's confidence in our plans for the second half of the year and our long-term opportunities. I also want to emphasize that we remain in an excellent position to continue to invest in the growth of the company while simultaneously returning significant cash to our shareholders. Now we're happy to take your questions. As a reminder, please limit your questions to one per person so we can answer as many questions as we can. Thanks. And now we'll open it up for questions. Operator: Thank you. Our first question comes from Matthew Boss. Matthew Boss: Thanks and congrats on another nice quarter. Ernie Herrman: Thank you. Matthew Boss: Ernie, could you speak to the consistency of your comps despite the volatile macro backdrop and elaborate on the strength that you've seen to start the third quarter and excitement around product availability? And then for John, just maybe puts and takes on merchandise margins in the back half of the year relative to flat performance in the second quarter despite the impact of tariffs that you saw? Ernie Herrman: Okay. Sounds good, Matt. Yeah. Consistency, you know, where I give the teams a lot of credit, and, again, we've talked about the broad range of the customer base that we go after. But what I really like to highlight, we mentioned it a little bit in the script, but our categories of business were healthy across all areas, meaning home, apparel, accessories, all of that was good. That, combined with our flexible business model, I think, allows us to execute in a more consistent fashion our comp sales. Because we're able to flex regardless of the and you mentioned availability. Yes. Availability has continued to be fantastic out there. But, again, in terms of demand by family of business, whether you're dealing with, you know, ladies or men's apparel or kids' apparel or our accessories divisions, of which there are multiple families of business in there, our home business, because we're so flexible in the way we buy hand to mouth, we are able to go after the opportunities across all the different families of business, which then results in, I think, a more consistent comp sales performance. So I believe we're sometimes able to escape, Matt, which I think is what you're getting at, is the volatility of, you know, having a quarter where all of a sudden your comps are, you know, four points off the prior quarter or whatever, which is not uncommon in retail. For us, it's less common. As you can see by the way, Marmaxx, you know, got a point better than Q1. As did, you know, a lot of our international division. So I think the flexibility of the business model and at the same time, we're taking advantage, I think, of a marketplace out there where you've had store closures and perhaps less exciting execution across the board in retail brick and mortar specifically. And I think that helps us to bob and weave and take advantage of consistently keeping driving. To keep driving consistency in our sales. By the way, your point B of your first question when you mentioned availability, that is and I did mention that back as you know, a few months ago. It continues to be super strong availability as we go into Q3. Guess I'll hand it over to John then. John Klinger: Yeah. So, Matt, on the merchandise margin, not a tremendous amount to add to what our prepared remarks said. I mean, we still have foreign exchange that is negatively impacting us in the third quarter. And we do feel confident that we can continue to offset the tariff pressures, again, like we said, in the third quarter, fourth quarter, and back half of the year. Matthew Boss: Great color. Best of luck. Ernie Herrman: Thank you. Operator: Our next question comes from Brooke Roach. Brooke Roach: Good morning, and thank you for taking our question. Ernie, as pricing in the industry has begun to increase, are you seeing an acceleration of market share gains as consumers look for value at TJX? What are your latest thoughts on pricing as you move into fall and holiday? Are you looking to maintain the percent gaps? Will you selectively raise prices in this inflationary environment? Thank you. Ernie Herrman: Great questions, Brooke. And obviously, time is quite appropriate based on what's going on in the world around us. We have, you know, again, this is one of those funky situations where we don't top-down dictate prices. So we don't go in with the strategy that we're going to raise price per se. And in fact, and I think I've gone through this a few times, we kind of use other retailers around us to route the door pricing and our buyers work it backwards. So they look at what the out-the-door pricing is around, and then we say, yes. And by the way, this was part of your question. Are we going to our pricing percentage gap, is that going to change or not? So this is where the art form comes in and the secret sauce. We don't go by an exact percentage because sometimes on a say you have a women's top, for example, that's that we think the right phenomenal value on that is $19.99. And that top is being sold. That top's retail went up in another store, their out-the-door sale price is, you know, $35. And, oh, maybe we could go to 25. We may not go because and this is the art form. Because in our mix, we have possibly made so many other great buys with all of the availability that's out there. That we have to now that buyer says, I have to compete in my own mix now for the customer. So then that's why it's absolutely a deal by deal, SKU by SKU, brand by brand situation, I don't know if that pricing in that case, the pricing percent gap might be higher. Or if we had to go up on that retail because of weekend because the retails around us went up, and maybe the percent gap is back to the same as where it was before. So I never broad brush that we have a strategy overall on that because I know our buyers are doing deal by deal. One of the strengths of our buying teams is they are aggressively comp shopping, all of the competition, whether it's online, brick and mortar, vertical brands, department stores, specialty stores. And so, I give them a lot of credit, by the way. We've been navigating in the tariff environment by just staying simple and pure to that model. The other thing I'd point out, it's easy to forget, is that, remember, you know, ninety year give or take, you know, we're dealing the bulk vast bulk of, maybe 90% of what we buy, there's third parties. We're not the direct importer. So, that's why our buyers can really pretty much just off the retail and work it backwards because we're not we're not starting with this is what we're paying, and those goods aren't in other retailers. We have to just mark it up off of what we're paying. So does that make sense? John Klinger: And, Brooke, the other thing I would add to that is that our customer surveys continue to show that we're continuing to offer exceptional value to the customer. Yeah. Very strong percept if anything, our perception on value of our customers has improved over the last couple of years. So, I mean, you're asking are so on to the right question, though, because this is this is really, motherhood and apple pie to us. In terms of what we concentrate on. Ernie Herrman: Yeah. Yeah. Did we answer that, Brooke? Brooke Roach: Yes. Thank you so much. I'll pass it on. Ernie Herrman: Okay. Thank you. Operator: Our next question comes from Lorraine Hutchinson. Lorraine Hutchinson: I wanted to build on Brooke's pricing question. Was pricing a key factor in your tariff mitigation in 2Q in a comp? And how has the customer reacted to some of these higher price points? Ernie Herrman: Sure. Yeah. Lorraine, great great also. It goes hand in hand with that. I mean, overall for TJX, transactions continue to drive the comp. For Marmaxx, it was basket and transactions. I think you're you're finding that, you know, our margins are are healthy. Couple of things. One is to please don't underestimate. I wanna emphasize that tariff costs were higher, and they were a headwind for us. In Q2 and year over year. Just in the end, a little bit lower than we had expected. And so that you know, we had a bit of a bit of a a savings there. We also because of this environment, I would say the retail adjustments based on what the out-the-door happened in pockets I don't think there was as much of that as there was our merchants taking advantage of the market opportunities. Which allowed us to, in many cases, buy better to help offset the tariffs that way on the on the market goods. If that makes sense, Lorraine. In other words, you know, we were getting more hit on the tariffs directly on our own direct imports, but that's a small portion of our total. So our buyers did a very good job on taking advantage of the mark, you know, in terms of market excess inventory by category back to the flexible flexibility there. We're also we manage we're able to manage our markdowns efficiently which also helps with our merchandise margin. And one one team I'd like to give a lot of credit to is our planning and allocation teams. They are sometimes the unsung heroes because I'm always talking about right you know, rightfully so, having the right good. So we we tend to talk I tend to talk about the buyers and the merchandise manager. Who are doing a phenomenal job in this environment. But our planning and allocation division is amazing, and that applies to every division we're in, whether it's Canada, Marmaxx, HomeGoods, Sierra, Europe, Australia, every planning and allocation division is so good at balancing our mixes by category, family of business, by literally by district, by store. And so what happens and we keep getting better and better at so what happens there, we're able to manage our drive our sales. That's back to answering the consistency question that I think Matt had asked. And at the same time, help our merchandise margin by saving on markdowns by flowing the right amount of goods to the right stores. So I think that's been a key component also, but taking advantage of market opportunities, I think, has allowed us to to do the bulk of our dealing with the tariffs. Which are still a headwind no matter what. You know? They're still there. Lorraine Hutchinson: Thank you. Operator: Our next question comes from John Kernan. John Kernan: Hey, good morning. Congrats on a great quarter. Ernie Herrman: Thank you. Thanks. John Kernan: So Ernie, some of the data we look at and other folks look at showed a nice acceleration in traffic. You know, it's back to school picked up in mid to late July and then through August. How would you characterize the comp progression throughout the quarter? I got a quick follow-up. Thank you. Ernie Herrman: Yes. Mean, can take through that. We started the quarter strong, as we said in our opening remarks last quarter. June, there was a little bit of weather that negatively impacted us, but we came throughout of June even stronger in July. And, like we said, and they remarks today, we entered this quarter with strong sales. Yeah. So so, John, to your question, we had a little bit of, I guess, call a little bit of a lull in the middle of the quarter. But other than that Oh, that's remarkable strong. Yeah. If I if I leave everyone with nothing else after this call, it's our balance and consistency, seems to be the hallmark of of this quarter. And, again, the way we try to manage the business, is we we try to avoid any major ups and downs, and, unfortunately, this quarter represented that. John Klinger: Yeah. And then John, just a quick follow-up. Obviously, nice upside to the pretax margin this quarter on on a four comp. Is there any change to the rule of every 100 basis points upside of same store sales can give you ten ten or so basis points through to the bottom line. It seems like you've over the last few years, you've generally outperformed that. Curious if if this becomes just more important what it is. Ernie Herrman: For every point in comp, we would expect to get 10 to 20 basis points on the bottom line, and that's we we we feel that going forward, that's what you should model. John Kernan: Alright. Great. You. Ernie Herrman: John, I want you to know that, John Klinger says that to me all the time. So you know. John Klinger: When I ask certain similar questions, I get the same answer. So. Ernie Herrman: Yep. Good to know. Consistency. John Klinger: Yep. Ernie Herrman: Yeah. Because yes. There you go. Operator: Our next question comes from Paul Lejuez. Paul Lejuez: Ernie, I think you mentioned consistency a couple of times, I think, related to your income demographic performance. Anything else that you can give, any more detail you could share, higher income, demos versus or lower income maybe just to build on that also, just regional differences, There's also a lot of question marks around the board stores. Any comments you can make about how those stores are performing? Ernie Herrman: Yeah. Yeah. Sure. John and I both talked to us, but Paul, I mean, great question. I'll start off with talking about we're very we look at this all of the time consistently because of, a, yes, consistency and balance. Really, here, word is balance across all the different age groups and, income demographic groups. So our marketing team, another team that has really equipped us, I think, to take a strategic approach. Even our creative, by the way, on the marketing campaigns we have going right now is aimed at a wide age and income demographic group, which not all marketing is does for the different retailers. So we have and as also, remember, we do always talk about in our merchandise mix going after good, better, best. Our marketing, we are very good at being balanced across the different age and income groups relative to we won't give you the exact numbers, but relative to The U.S. General population, we are very balanced in that respect. And if anything, our focus has been, and you've heard this before from us, we have had a focus. I think this is one of your questions. On, acquiring the younger age group as we go forward here. And we have been doing that for the last number of years. And even if I look at across our divisions, in the new customer base, which, again, is tends to be a smaller number, but our new customer base skews younger than the current customer base, which is good. And our current customer base also skews a little bit younger than the general population. So, this has been Yeah. John Klinger: I mean, it's it's the the other thing is, I mean, we're giving the more reasons to come into our stores. The the consumables that we offer that give a customer a reason to come in and you know, likely find something else in the store that they like. And as Arne talks about all the time, is the good, better, best mix. And appealing, really, the reason why we appeal to such a broad customer demographic. As far as, the border stores, so we look at our Canadian border. The nice thing is we've got stores on both sides. We we have seen and, not talking about a lot of stores that we have on our borders. So it's it's really hardly any impact, to the total. But we did see a little less cross border shopping So more of the Canadians were staying home and shopping winters versus coming over and shopping TJ Maxx. But again, very, very small impact. Ernie Herrman: We do I'll also see a little little lift on the same side of our Canada stores as you can right? Yeah. Those sales just, you know, they just transferred. They transfer over. Paul Lejuez: Got it. And then on the southern border? John Klinger: Again, we're not seeing a large impact. You look at our sales across the different geographies, it was pretty consistent across all the geographies in the country. So again, we're not seeing a large impact. Ernie Herrman: You know, we see an impact when, if there's some natural disasters, for example, will and even in the news media gets more viewership, in a region, And so, for example, in California, we'd see a little dip on that you know, when that was going on, and that's what John and I typically are seeing. We're not seeing anything really radical along the Mexico border at all. And yeah. And, usually, the weather, like we saw in. John Klinger: In June, I mean, it it when when the weather subsides, we see things bounce back. Bounce back. Yeah. Paul Lejuez: Yep. John Klinger: Yep. Got it. You got it. Good luck. Ernie Herrman: Yeah. Oh, and and also, Paul, to that regional I know you're kind of on the regional question. Is we back to the planning and allocate our planning and allocation division, was they're also good at this, if we end up in a district, an area of, say, a dozen stores or a region, or in a certain geography where there's something going on or it's our planning allocation with our store ops, division, they're fantastic at reacting very Our our field organization if there's something on you this happens. So John and I are talking a high level but there is a lot of work that our teams in the field a planning allocation do to compensate any for any strange regional or local market Yeah. John Klinger: We turn our stores roughly once a month. Right. We we do have the ability to react quickly. Ernie Herrman: Which I think goes back to the, consistent, that all of these things help our consistency. Because we're able to then take goods and say, oh, I'll ship it to these other areas that are doing better. It helps offset the area that's a little weak, but we've been very happy with the balance of healthy business across the entire country and internationally. As you can see, very pleased with, Canada and Europe. Paul Lejuez: Thank you, guys. Good luck. Ernie Herrman: Thank you. Operator: Our next question comes from Dana Telsey. Dana Telsey: Hi. Good morning, everyone, and congratulations on the results. As you think about the merchandise. Ernie Herrman: Oh. Well. Dana Telsey: You hear can you hear me okay? Ernie Herrman: Yeah. Yeah. Yeah. We can. Yep. Dana Telsey: Oh, great. Good after good morning, afternoon. Congratulations on the terrific results. Ernie Herrman: Thank you, Dana. Dana Telsey: Delivering a flat merchandise margin with tariffs is very impressive. And Ernie, as you mentioned the pricing mechanism of not only comparing against competitors, but even within the mix. How are you thinking about the merch margin going going forward given the planning of tariffs? And just lastly, on store openings, closings, relocations, what are you seeing out there given the continued influx of available boxes? Thank you. Ernie Herrman: So on on John, do you wanna? John Klinger: Yeah. I mean, as far as merchandise margin goes, yes, we were pleased that in the third quarter that we were flat given tariff pressures. Markdowns did come in favorable we were happy to see. And going forward, again, we feel confident that we can continue to offset the the tariffs that we have out there based on what Ernie said earlier in the call of how our buyers are are executing. And and and just continue to execute just the overall margin, the the the pretax profit, just by executing the the cost efficiencies that we saw in the second quarter continuing to go after those in the back half of the year as well. Ernie Herrman: Yeah. Dana, I think a couple of highlights why we're feeling bullish on being able to deal with the tariffs as we go forward is the the way we buy with and combined with the, the amount of availability out there right now and right. Which is really going to create more buying opportunities for our teams to even if the retail wasn't changing, they can buy better. Than we did before because of the amount of availability. And, and, yes, of course, the ability to adjust our ticket while maintaining, though, our value gap. Again, back to we look at what the out the door is on the like for like item, and then we say, if that if that has gone up, you know, we will preserve the gap, and maybe we'll go up. And adjust it accordingly. Again, we don't lead the charge on that, though. And then our flexibility, by the way, gives us the ability to diversify our source which I think is another we we are fortunate that we don't have a contract with the customer saying we have to have x amount of people know that when they come to us, we may not have a category in inventory. As much as we did the time before. Or we might have more of something else versus that time. Yep. So that flexibility to diversify in our store just by where the best values are that we opportunistically go after really helps our merchandise margin deal with any tariffs. Because if we run into a say there's a category that's highly tariff driven and we're not happy with the values, we'd be on that. We can just downplay that. Category. Whereas maybe other retailers, they're living off of it. We're we're so diverse in our families of business that we're able to do that. And we can also the last thing I'd leave you with is you know, how we talk about the 1,300 buyers. So, you know, we have buyers. We have all these global buying offices in different locations over in Europe. And the Far East looking for excess inventories that nobody else has that. Nobody else has these satellite buying offices, like we have in all of these different locations that can source easier, flex, and faster sourcing in different different countries. Yeah. Which can also allow us to flex against the tariff situation. So good question. I think that's why we're feeling o okay. And and I'll leave you with it. It's still a challenge, but we feel like we have strategies to kind of deal with the challenge. John Klinger: And then getting to your, your store question, So we're still on track to hit our plan of just over a 130 net new stores. And so we're seeing a lot of great locations available to us. Going forward. That gives us optimism to continue a roughly a 3% net unit opening over the next couple of years. The other thing we're seeing a lot of success in, again, we can continue to see relocations as being a great, opportunity for us to relocate stores that there's a better shopping environment in the area that we can move to. And we're seeing improvement there. And then, of course, close to 500 remodels that we're planning on doing this year. And, again, that makes our stores the older stores, be able to compete similar to our younger stores? Because when the customer comes in, they're seeing a consistent shopping experience no matter what store they go into. And that's one of the things that you know, kind of separates us from some of our competition. You know, where, you know, the product mix just looks better when we maintain our store fit and finish. And so it it all kinda warp walks hand in hand with the merchandise. Dana Telsey: Thank you. Ernie Herrman: Thank you, Dana. Operator: Our next question comes from Alex Straton. Alex Straton: Perfect. Thanks so much. Congrats on another great quarter. Ernie, I had a question on Marmaxx specifically. I know you spoke to categories being super healthy across the business. But I'm wondering if you could kind of break that down for us at Marmaxx and and how you think exposure can change over time. Seems like that's been a part of the the margins story there. And then maybe just one quick one for John. It it seems like that you're embedding more particular, gross margin degradation in the fourth quarter. I'm wondering if there's something specific happening in that quarter or why that's the case? Thanks so much. Ernie Herrman: Yeah, Alex. So on Marmaxx, in terms of the families of it, as I think as I mentioned, our home business was, good there, which is nice to see. And, also, I'm proud of, you know, again, our our HomeGoods and HomeSense businesses across the corporation and the home business within our full family stores across the corporation of Allgoods. So I don't wanna leave that out. But apparel apparel has been, very healthy. And I think relative to the market, specifically in Marmaxx, relative to the market my guess is we're gaining market share. They're just looking at the results of the other apparel players, the way they've been trending over the last six months. And so I'm very proud of in the Pure Apparel, areas. And and then as you know, we have and I I can't give you the details by department, but I would tell you throughout our accessory areas, which, you know, we're an open book. If you walk in the store, we have many different areas and accessories that I believe we are the market in as well. So, you know, Alex, what what I what I like about that is we're not just a, you know, it's not just one story why our business is so healthy. It's it's kind of widespread and that always allows us, I think, to feel good about where we're heading in the future. Because if something slowed up, I can still fuel one of the other areas to take advantage of the market opportunities that are out there. So, you know, again, once once again, our planning and allocation teams work hand in hand with the buyers in developing these plans by family of business, whether it's ladies apparel or, kids apparel or men's apparel. Which families of business in those apparel layers, which in our you know, whether it's in, footwear or our beauty area or handbags, we are very strategic and balanced about the way we plan it, but we can turn on a dime based on what happens in the market. So hope hopefully, that gives you some color there. John Klinger: Yeah. As far as Q4 margins, so we are improving by 20 basis points versus last year. But is your question more comparison to Q3? To Q4 Yeah. Alex Straton: Exactly. So so there's two things that are happening on on the Q3 to q comparison. John Klinger: The first one is that in Q3, inventory levels are probably at their highest during the year. So we've got inventory cap favorability. Then we bring the inventories back down in the fourth quarter. The other piece of it is this year with our shrink a cool. So this year, we've got a favorable comparison Q1, Q2, and Q3 that reverses out in Q4. And it's just the function of of how we accrue versus last year where last year, we had, a favorable impact in Q4. So when when you're when you're planning it, we're planning a shrink slightly favorable this year. So naturally, Q1, Q2, Q3 there's a favorable variance. In Q4, it flips the other way to be slightly up on the full year. Is that clear? Alex Straton: Yep. Super clear. Thanks so much. Operator: Our next question comes from Adrienne Yih. Adrienne Yih: Yes. Good morning and congratulations. The store is both both concepts look fabulous. Ernie, so the last time that we had sort of a path through at frontline of a real significant kind of price inflation was back kind of 2011 for the apparel retailers. And what we're seeing kind of since July, since these apparel retailers have thematically started to raise initial retailers or retails, we don't see a lot of pricing power. I gotta tell you. Like, we see hard pricing that looks really similar, hard prices similar to last year. And so, I guess, kinda if you can give us some perspective, I know what happened in 02/2011. Got the sales, and you didn't get the margins. And then you guys cleaned up. Right right after that, you guys cleaned up and and picked up a lot of the disruption. So Right. You know, like I said, we don't see we see promos out there on fall goods, on apparel specifically. Can you talk about category pricing power? Maybe footwear is better than apparel. Or something like that? I know it. Ernie Herrman: Right. Yeah. So without, telling you, know, again, for competitive reasons, we don't like to give what our strategy is, but let me give you the philosophy of it. Which is that we and and I think apparel in general has been deflationary for years. So when I go back to your spot on when you talk about that it's been promotional for years. And the newness, in the world of apparel, as you if you look at it, it's been very spotty. You know, you have some pockets in ladies' businesses across the industry that have been good. I think men's has been very inconsistent, not great. So long story short, what we do is we look at the pot our pricing I guess you'd call it the pricing power a likelihood of where things might go up around us. Again, it's not us driving the bus on that. Would probably be in other areas. We just won't talk about what those areas are. And so, and it'll vary by items within apparel. That might go up. But in general, what you're hearing and feeling would kinda be in sync with what what I would guess. Again, I I I just cannot give you many specifics on that front. Other than to tell you that we will manage it as I described earlier on, case by case. This is what's great about our model. Our buyers don't have to be, ahead of everybody in terms of deciding what the retail is. We just follow. And then we say, we're gonna follow, but we're gonna have the best value out there. And. Adrienne Yih: And then, John, a quick one for you on the horizon of kind of the flow through of tariffs. There's this kind of grace period. Right? If you ship it before August 9 and get it in before you know, October 5, that it's on the old tariffs. So how should we think about and I know you're not giving guidance, but how should we think about kind of impact probably not to you because of what Ernie just said, but impact to the sector kind of on the spring horizon, prices go up again. Right? Ernie Herrman: At front? I'll jump in on that. I think, Adrian, I think so what's hap the thing I've been seeing across the board, anything we're tariffs are hitting, even if they're changing, is there's a gradual I can some of the retailers seem to be not moving the price directly with the first landing of the tariff. And it's going up its steps. So I think you're gonna see a more of a little bit of a gradual increase in pricing as the tariffs come in. I don't know if that's answering the question. I don't think you'll see step all of a sudden Right. With the tariffs set, because I don't wanna, I think, turn off customers immediately by seeing a dramatic price shift. So I think they might they might they might absorb it initially for a little bit, and eventually, they'll get there. Again, that varies by retailer. And and, again, the the vendors could be negotiating with. John Klinger: Factories to also Not a doubt. Yep. Share share some of the the pressure. Yep. Adrienne Yih: Great. Fabulous. Best of luck. Ernie Herrman: Thank you, Adrian. Adrienne Yih: Impressive as always. Ernie Herrman: Thank you. Thank you. Operator: Our next question comes from Michael Binetti. Michael Binetti: Hey, guys. Thanks for taking our questions. I'll add my congrats on the quarter. Ernie Herrman: Thank you, Michael. Michael, by the way, we liked your your your headline. You had a great headline. Michael Binetti: Oh, thanks. We, we spent a lot of time being creative with the title. John Klinger: Thanks, man. Michael Binetti: When I maybe a few quick ones for the model. When I look at the fourth four comp in the quarter, slightly accelerating from the three in first quarter, did overall traffic accelerate? Or is it it same as 1Q? And then on the merch margin, you said it was flat. With the inventory sorry, with the inventory hedge. Would merch margins have been down excluding that benefit? Or how should I think about the inventory hedge impact rest of the year? John Klinger: So as far as the four comp and what we saw for for transactions, yeah, transactions again, were up across the board. I would say compared to Q1, probably the basket is maybe a little bit more. Particularly in Marmaxx. But then as far as your margin question, can you just ask that one more time? Sorry. Michael Binetti: Yeah. Yeah. You said it was flat. I know the inventory hedge was a component. On the gross margin. I didn't know if merch margin would have been down excluding that benefit. Just to help me think about the merch margin the rest of year. John Klinger: Yes. So the inventory hedge yeah, it was a slight it was it was the the headwind that we did see. Going forward, you know, I think with the way the way you would look at it is is that there probably is a a little bit of a a headwind in in in in the back half, but not significant. Michael Binetti: Okay. And then can I just ask a little bit of a follow-up to another question? A little bit about the margin bridge on pretax expanded 50 basis points in second quarter. Guidance is for a little bit of compression, 25%, 35% in third quarter and then reaccelerate to expansion 10 to 20 basis points in fourth quarter. Can you maybe just help me connect those? Any unusual items to be aware of the rest of the year? Either this year or in the base? John Klinger: So as far as the bottom line pre-tax profit, so Q3 they're we we obviously have some headwinds that average retail being one of them. The reversal of expenses from from the second quarter, you know, mainly into third quarter is another headwind there. And then in the fourth quarter, again, we we we have you know, the benefit from from the higher sales volume that between Q3 and Q4. But again, what we talked about before about Q3 and Q4, Q3 has the benefit from the inventory cap, and Q4 has the headwind from the from the the shrink accrual. Does that make sense? Michael Binetti: Yeah. Couple things to work through. Okay. I appreciate it. We'll talk to you guys later on. Thank you. Ernie Herrman: Thank you, Michael. Operator: Our last question comes from Marni Shapiro. Marni Shapiro: Hey, guys. Congratulations. Great quarter in the store looked beautiful. HomeGoods for back to college. Honestly stunning. I have a quick question for me. You you've mentioned gifting, I think, more than once in your prepared remarks, which which is not always usual for you. So I'm assuming that you feel good about any buys that you've made in advance. In the holiday, and you were able to pack away some of that given how heavily tariffed holiday decor is. But are you seeing a change in consumer behavior in your stores that is kinda shifting your focus a little even more so to gifting? I mean, you guys have done an improved job year after year after year, but has something changed? Because you don't usually mention it this early in the year in your prepared comments. Ernie Herrman: Right. No. Great question, Marni. Well, part of part of what's happened over the last couple of years, we've evolved in terms of actually going after gifting for not just a holiday. We've started going after the gifting seasons, whether it's Mother's Day, Father's Day, And, what's happened is more a lot of our merchants merchandise managers and their and their families of business have figured out product, to go after that's more appropriate to be gifted. I think you combine that with there's been momentum. If you look at Marni, you you know, you shop our stores aggressively. I know you're right commenting on what what you see there. You go to holiday, and we if you look at our results in Q4, they've been, super consistent year after year. And I think what's been building year after year, what we're showing everybody is that we're very fresh as you go into holiday. As you get nearer to Christmas. And back again to our a combination of our merchants and our planning areas given the right product that's very giftable. Where we think where some retailers have vacated some of those items in certain categories, even in apparel, And I think we tend to go after some of the I guess, market share opportunity categories where we feel like other retailers are away, and we can go after those gifting categories more aggressively. And for this back half and holiday, that's what I'm seeing our teams do. And that's across home and apparel and accessories. They're going, strongly after the categories that tend to spike during the gifting category. Combine that with the and you you know this as well. I think you've commented on it. As we've talked about is we're cool we are cool today be a gifting destination, Right? And I think I know you you and I have, joked about that at the time, but true. We are people like giving a HomeGoods or a TJ Maxx or, every place we're in, our our brands have become, very desirable to be gifting destination brands. And I give that's the whole team. That's whether you're up at Winners or in Europe or every every division, marketing wise, store, store execution wise in terms of treating the well and most importantly, the product I think the whole thing is working right now in terms of more consumers wanting to buy gifts from TJX brands. Marni Shapiro: And can I just follow-up on that with the home your HomeGoods your HomeGood back to college was really next level? I've never seen you guys look that cohesive in your storytelling. So I'm listening to you talk about gifting. I'm thinking about what I saw in HomeGoods for back to college. And thinking that you guys from a merchant standpoint are really doing a better job storytelling and merchandising in store, that the buying was always there, but now combining it with the storytelling in store, is that kind of been where the unlock is around all of these holidays and events? Ernie Herrman: Yes, Marni. Yeah. And I should have mentioned that. Our store teams and in conjunction, again, with the merchants executing for these seasonal time periods like a back to college. They're doing a great job in buying the product for those time periods. And then the stores excellent. The HomeGoods, store teams are doing an excellent job on pulling that together to make it really easy to shop. And it you know what that does. Right? Does somebody like you or me equate an impulse to purchase a two or three items instead of just one when you see it all put together that way. Marni Shapiro: I'm going broker [indiscernible] congratulations to you guys. This is a great quarter. Ernie Herrman: Thank you very much, Marni. Really appreciate it. Mhmm. And that that was our, last question. I would like to thank you all for joining us today. We look forward to updating you again on our third quarter earnings call in November. Thank you, everybody. Operator: That concludes today's conference. Thank you for participating. You may disconnect at this time.

Operator: Ladies and gentlemen, thank you for standing by. Welcome to The TJX Companies First Quarter Fiscal 2026 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference call is being recorded, May 21, 2025. I would like to turn the conference call over to Mr. Ernie Herrman, Chief Executive Officer and President of The TJX Companies Inc. Please go ahead, sir. Ernie Herrman: Thank you, Fran. Before we begin, Deb has some opening comments. Deb McConnell: Thank you, Ernie, and good morning. Today's call is being recorded and includes forward-looking statements about our results and plans. These statements are subject to risks and uncertainties that could cause the actual results to vary materially from these statements, including, among others, the factors identified in our filings with the SEC. Please review our press release for a cautionary statement regarding forward-looking statements as well as the full Safe Harbor statements included in the Investors section of our website, tjx.com. We have also detailed the impact of foreign exchange on our consolidated results and our international divisions in today's press release and in the Investors section of tjx.com, along with reconciliations to non-GAAP measures we discuss. Thank you. And now I'll turn it back over to Ernie. Ernie Herrman: Good morning. Joining me and Deb on the call is John. I want to start by thanking all of our global associates for their ongoing commitment to TJX and to our customers. Our talented associates work hard to bring our business to life and deliver great value to consumers every day. Now, to our first quarter results. I am very pleased with our performance in the quarter. Overall, comp sales grew 3% at the high-end of our plan. Every division, both in the U.S. and internationally, drove increases in comp sales and customer transactions. Pretax profit margin and earnings per share both exceeded our expectations. John will talk about our first quarter results in more detail in a moment. During the quarter, our teams delivered an exciting mix of good, better and best brands across a broad range of categories and items to serve our very wide customer demographic. As always, we offered great value to our shoppers every day at each of our retail banners. Looking ahead, we are convinced that our value proposition and the flexibility of our business will continue to be a winning retail formula. The second quarter is off to a strong start, and we are excited about the initiatives we have planned, which we believe will further drive sales and traffic. The availability of merchandise we are seeing is outstanding, and we are in a great position to take advantage of the plentiful opportunities that the marketplace is offering. We are confident in our ability to navigate the current tariff and macro environment in the short-term. Importantly, our vision for long-term growth, profitability and market share opportunities remains the same. Now, I'll turn the call over to John to cover our first quarter results in more detail. John Klinger: Thanks, Ernie. I also want to add my gratitude to all of our global associates for their hard work and dedication to TJX and our customers. Now, I'll show some additional details on our first quarter versus last year. As Ernie mentioned, our consolidated comp sales growth of 3% came in at the high-end of our plan. Overall, comp sales growth was almost entirely driven by an increase in customer transactions. Comps in both our apparel and home categories increased with home outperforming apparel. Pretax margin of 10.3% was down 80 basis points and was above our plan. Gross margin was down 50 basis points, primarily due to unfavorable inventory hedges. SG&A increased 20 basis points due to a lapping of a benefit from a reserve release last year in incremental store wage and payroll costs. Net interest income negatively impacted pretax profit margin by 20 basis points versus last year, due to a lower cash balance and lower interest rates. Lastly, diluted earnings per share of $0.92 were also above our expectations. Now, to our first quarter divisional performance. Across all of our divisions, customer transactions increased once again. We see this as an excellent indicator of the strength of our value proposition across our retail banners. At Marmaxx, comp sales increased 2% and segment profit margin was 13.7%, down 50 basis points. As we expected, Marmaxx's sales accelerated in March and April as the weather improved. Comp sales in both apparel and home categories were up. Also, we were very pleased with the sales growth at our U.S. e-commerce sites and Sierra stores, which we report as part of this division. We remain confident that Marmaxx, our largest division, can capitalize on the opportunities we see to continue gaining market share and further grow our store footprint across the U.S. Our HomeGoods division delivered comp sales growth of 4% with strength at both the HomeGoods and the HomeSense banners. Segment profit margin was 10.2%, up 70 basis points versus last year. We believe our U.S. Home banners offer consumers a highly differentiated mix of home fashions from around the world. We are convinced that we can continue to grow our share of the U.S. Home fashions market. At TJX Canada, comp sales were up 5%. Segment profit margin on a constant currency basis was 10.6%, down 170 basis points last year, primarily due to unfavorable transactional foreign exchange as we expected. TJX Canada is the leading-off price retailer of apparel and owned fashions in Canada. With well recognized retail banners, we see our Canadian business as well-positioned for continued successful growth. At TJX International, comp sales increased 5%. We were very pleased to see continued strength in Europe and outstanding sales in Australia. Segment profit margin on a constant currency basis was 4.2%, up 20 basis points versus last year. We continue to see plenty of opportunities to grow our TK Maxx banner across our existing European countries and in Australia and to bring TK Maxx to Spain next year. I also want to reiterate our excitement for our joint venture with Grupo Axo in Mexico and our investment in Brands For Less in The Middle East. While still early, we're building great relationships with these teams and we see this as a way to participate in the growth of off price in these geographies. Moving to inventory. Balance sheet inventory was up 15% and inventory on a per store basis was up 7% versus last year. We feel great about our inventory levels and have been taking advantage of the excellent deals we have been seeing in the marketplace. Availability of merchandise remains outstanding and we are set up very well to continue to flow fresh assortments to our stores and online. As to our capital allocation, we continue to reinvest in the growth of our business while returning significant cash to shareholders through our buyback and dividend programs. Now, I'll turn it back to Ernie. Ernie Herrman: Thanks, John. I'd like to start with a few comments on the current environment and the reasons for our continued confidence in our business. We have a very long track record of successfully navigating through many types of challenging economic and retail markets. Each time, we've emerged as an even stronger company with greater market share opportunities. We have a very experienced leadership team that has worked together for multiple decades. While we're not immune to tariff pressure, we are laser focused on our initiatives to offset them by remaining flexible and executing our opportunistic buying approach. Long-term, we remain as confident as ever in our strategic vision for future growth. Now, I want to reiterate the key characteristics of our business that give us confidence that we can continue to execute on our growth initiatives through the current environment and for many years to come. First is the value proposition we offer to our customers. For us, value is a combination of brand, fashion, quality and price. Our customer surveys tell us that we have an excellent reputation as a value leader in each of our geographies. As a trusted value retailer, we have historically attracted new shoppers to our stores in many different types of environments. Therefore, we are convinced that we will have an opportunity to gain market share if more consumers seek out value in the current environment. We are confident that our commitment to our shoppers' great value on every item, every day, will continue to resonate with consumers and drive more shoppers to our stores. Next, our team of over 1,300 buyers source goods from an ever changing universe of over 21,000 vendors from more than 100 countries around the world. We have a global buying infrastructure and supply chain that has been in place for multiple decades. Further, we have long standing relationships with many of our vendors and we can offer another avenue for them to grow their business. All of this gives us great confidence that we'll have plenty of merchandise available to support our long-term growth plans. Third, we successfully operate stores across a very wide customer demographic. We offer shoppers a wide breadth of good, better and best brands to appeal to shoppers across a broad range of income and age groups. We believe this is a tremendous advantage and will continue to allow us to attract a wider shopping audience than many other retailers. Next, all aspects of our business model are driven by flexibility. Our global buying, store operations, supply chain and systems are designed to support our flexible business model. This allows us to offer an exciting treasure hunt shopping experience with rapidly changing selections across all categories. We are confident that our flexibility will continue to help us to navigate through many types of environments and allow us to react to changing consumer preferences. Lastly, but most important is our talent. I truly believe that the depth of off-price knowledge and expertise and longevity of our management teams within TJX is unmatched. We take great pride in being a teaching organization, which is a high priority of our managers throughout the company. This is supported with our TJX University and other training programs. Further, our human resource teams are extremely focused on developing talent and succession planning to ensure we develop the next generation of leaders of TJX. Additionally, I am so proud of our culture, which I believe is a major differentiator. I am convinced that our constant focus on talent and culture have been significant keys to our success and will continue to be going forward. Again, we are confident that the combination of these characteristics is why we have delivered decades of sales and profit growth and gives us great confidence that we are set up very well for long-term success. Summing up, we are very pleased with the overall performance of TJX in the first quarter. I truly believe we have one of the best models in retail and that it will serve us well in today's environment. Longer term, we continue to see a long runway for growth. As an up price leader in every country that we operate in, we see plenty of opportunities to further grow our market share in the U.S. and internationally. Lastly, I have great confidence that the flexibility of our business, our relentless focus on value, and very importantly, our talented associates will continue to be major contributors to our success for many years to come. Now, I'll turn the call back to John to cover our full year and second quarter guidance, and then we'll open it up for questions. John Klinger: Thanks again, Ernie. I'll begin with some color on how we're thinking about tariffs. Let me start by saying that we believe we can navigate through the current tariff environment. While we're not immune to tariffs, we feel great about the components of our business that we can control and remain confident in our long-term growth and profitability plans. We're also realistic that in the short-term, we are operating in a highly fluid macro environment. For simplicity purposes, we're making the assumption that the current level of tariffs on imports into the U.S. from China and other countries will stay in place for the remainder of the year. In terms of our guidance, as we noted in our press release this morning, we are maintaining our full year comp sales growth, pretax profit margin and diluted earnings per share outlook. This guidance assumes that we can offset the significant incremental pressures we have seen and expect to see from tariffs on both our direct and indirect imports this year. We believe we can do this primarily through our buying process, our ability to adjust our ticket while maintaining our value gap and our ability to diversify our sourcing. Further, we are focused on cost efficiencies and productivity initiatives. Now to our detailed full year fiscal 2026 guidance, which remains unchanged versus the previous full year guidance we gave in February. We expect overall comp sales to increase 2% to 3%. We're planning full year consolidated sales to be in the range of $58.1 billion to $58.6 billion, up 3% to 4%. With the volatility we've been seeing with foreign exchange rates, we are holding rates at the same level as our previous guidance. We are planning full year pretax profit margin to be in the range of 11.3% to 11.4%, down 10 to 20 basis points versus last year's 11.5%. Moving to gross margin, we expect it to be in the range of 30.4% to 30.5%, a 10 to 20 basis point decrease versus last year's 30.6%. We expect full year SG&A to be 19.3% versus last year's 19.4%. We're assuming net interest income of about $98 million, which we expect to delever fiscal 2026 pretax profit margin by 20 basis points. Our full year guidance assumes a tax rate of 25.1% and weighted average share count of approximately 1.13 billion shares. Lastly, we expect full year diluted earnings per share to be in the range of $4.34 to $4.43. This would represent a 2% to 4% increase versus last year's diluted earnings per share of $4.26. Moving to the second quarter, we expect overall comp sales to increase 2% to 3%, consolidated sales to be in the range of $13.9 billion to $14 billion, pretax profit margin to be in the range of 10.4% to 10.5%, down 40 to 50 basis points versus last year's 10.9%. Gross margin to be 30%, this would be a decrease of 40 basis points versus our last year. This includes incremental tariff costs on the directly sourced merchandise that we were committed to when the additional tariffs went into place in March and April, mostly offset by our mitigation efforts. We are also lapping a benefit from a true-up of a freight accrual last year. SG&A to be 19.7%, down 10 basis points versus last year. This is due to a benefit from lower incentive compensation accruals planned this year. We're also assuming net interest income of about $24 million, which we expect to delever second quarter pretax profit margin by 20 basis points. Our second quarter guidance also assumes a tax rate of 24% and a weighted average share count of approximately 1.13 billion shares. Based on these assumptions, we expect second quarter diluted earnings per share to be in the range of $0.97 to $1, up 1% to 4% versus last year's 96%. In closing, I want to emphasize that we are in an excellent position to continue to invest in the growth of our company, while simultaneously returning significant cash to our shareholders. Now, we are happy to take your questions. As a reminder, please limit your questions to one per person, so we can answer as many questions as we can. Thanks. And now, we'll open it up to questions. Operator: [Operator Instructions] And our first is from Lorraine Hutchinson with Bank of America. Lorraine Hutchinson : I wanted to ask about inventory availability. I think for two decades, I've been asking about inventory availability and you use great adjectives like outstanding, and that's always been the case. But we're in a little bit of a different environment right now. We're hearing about delayed ship sailings, uncertainty around tariff rates for holiday. There's a lot of question marks in the buying offices of the traditional retailers and brands. So, can you just give us a little bit more context on what's changed, how your conversations have gone and what kind of pricing you think you may have to put in place in the back half to offset some of these tariffs? Ernie Herrman: Yes. Very good question, Lorraine. Yes, I remember, many times you've asked about availability. This time, to your point, the environment is so different, totally appropriate question. Shipments, yes, I think we've heard from vendors, especially, pre the adjustment in the tariffs, shipments were being delayed, but things changed a little, when the tariffs were moderated a bit. I believe you have, and I'm kind of talking globally here in the vendor community, you definitely have an uneasiness, I would say, uneasiness on what's going to be happening now and forward because it isn't still crystal clear. The way we approach it though, I think you'll appreciate this. You look at our inventories, they're up a bit. That's reflecting some of the great buys that our teams have really been able to take advantage of in the market recently. We only see that trend going up, in terms of availability as we go to the back half. To your point, when some of the vendors are talking about cutting back or delaying, could we see a category here or there, where there is less availability than we traditionally see from the traditional retailers, potentially cutting back in advance or the wholesaler cutting back? That could happen. The good thing with our flexibility is, we will just take advantage of an adjacent category or something and we'll say, “Hey, we'll give up on the one category that might have a little less.” And we'll just have a little less of it. We won't -- I shouldn't say give up, we'd have a little less inventory on that and we'll go after the ones where we think there's more exciting value to put out there. Our only -- I always emphasize this: our only contract to the customer is that we will have great value on the goods that we put out there, and it will be below the out-the-door price of traditional retailers, specialty retailers, et cetera. So that is always -- you never have to worry about that. In our pricing, yes, do we think we are going to take advantage of the, I guess, the word would be chaos that's out there? And Lorraine, I know you've heard us talk about that in the past. In this type of environment, albeit the tariff situation might make things obviously a little more complicated around the board -- and as you saw on the numbers, we take a little bit of a hit in Q2. Over the back half, we believe there's going to be tremendous opportunity for our merchants to take advantage of it. And then as far as pricing goes -- it's kind of fun, your question there is a few parts. As far as the pricing goes, we will always ensure that we are below -- that we have a gap between us and the out-the-door price at the regular traditional retailers. Having said that, we believe there's opportunity for us to buy better. And if retails do move out there, we will adjust our retails to preserve that gap. That could mean they go up on certain items. If somebody actually adjusts -- this is always the case also, if they adjusted a retail down, we would do that as well. But that's kind of -- I think I touched on all the quite -- great question because it really encompasses a lot of what I think people are thinking right now, Lorraine, in terms of how we're going to approach the buying end of this business. Operator: Our next question is from Matthew Boss with JPMorgan. Matthew Boss: Congrats on the continued consistency. Ernie Herrman: Thank you, Matt. Matthew Boss: So Ernie, maybe first, could you speak to the progression of comp trends that you saw at Marmaxx in March and April maybe relative to the start of the quarter with some of the weather disruption? And maybe if you could elaborate on that strong start to the second quarter. And then one for John. Just gross margin considerations, maybe the balance of the year relative to the contraction in the first quarter. Ernie Herrman: Sure. Yes. Very good, Matt. Actually, John will start off here. John Klinger: Yes. So as far as the sales go, we did see weather early in the first quarter. And once the weather improved, we did see a comp -- our comps improve month-to-month as the quarter went on. And we saw that continue into the second quarter, and that's why we've highlighted a strong start in our prepared remarks. Ernie Herrman: Yes. And Matt, good question. And first of all, I'm very encouraged by the strong start in Q2 as well. And one of the most encouraging things, going back to Q1, and again, happy with this in Q2, is that every division is participating in our comps. And as John said in Marmaxx, which got better as the quarter went on, I think we've been very happy when we saw the more recent Marmaxx comps come out of Q1. And I think -- we have not -- our business, obviously, for years, has been extremely strong. It's just nice to see right now where we have every division participating in that strength, every geography we're in and specifically internationally as well. And obviously, bucking a trend in the home industry right now is our home business, highlighted by HomeGoods. Very proud of those teams and what we're doing there versus the industry and proud of the way they're beginning Q2 as well. John Klinger: Yes. And then, Matt, to answer your second question, so for Q2, Q2 is really our most impacted quarter for tariff pressures as the tariffs were put in place after we had placed the orders for goods that we directly import. So we have significant mitigation efforts in place for Q2, and we expect those mitigation efforts to continue into the back half. But in addition to that, we've also experienced a negative impact on the mark-to-market of our inventory hedges in Q1, and some of that will reverse in the back half favorably. In addition to that, the front half is negatively impacted versus last year from favorable freight accrual reversals last year. So all that adds up to why you're seeing a headwind in the first half and an improvement in the back half. Operator: Our next question is from Adrienne Yih with Barclays. Adrienne Yih: Congrats on the success and continued success. Ernie, I wanted to go back to kind of the era of 2018-'19. Do you recall if vendors did try to pass price through to you and then you negotiated back against them? And then I see 2 different ways that as you described earlier, that you can react here. One, you can obviously -- if prices go up, you can maintain that 20% to 60% off. You can maintain your margin and then hope to get some comp or I think in another call, you said you also have the flexibility, if you chose to do so, take some of the margin hit, hold your pricing 30% to 70% and then go for comp. So it seems like you have so many different routes back to success. I'm just wondering if you can elaborate. Ernie Herrman: Absolutely, Adrienne. Those are -- you touched on some of the levers that we had. In 2018, first of all, yes, we had a case where in that situation, we were able to, in most cases, negotiated out of it so the tariff just didn't mean as much in total. I would tell you, though, back then, yes, we would -- but I would say more rarely than today, we were -- we would grab a little bit of a retail and adjust where possible. This time period we're in now, I think, is a little different, so more widespread in the pure numbers as well as since 2019, you know better than me, inflation overall had hit, started back a few years ago, which only adds into retails over the last few years. And then now you have tariffs on top of that. So a little different. In fact, when those other tariffs happened, you didn't have nearly as much inflation prior to that time period. So back to answering your question, yes, prices -- retails, I'm sorry, retails can be part of the adjustment. But as we did talk about, and you just referred to it, we have other levers, which is the ability to buy in this environment with all the availability that's out there, buy, really, I would say, more profitably and advantageous. The other thing that's happened is we're continuing to be more important to the vendors. And I think that is creating an ability for us to work with the vendors to ensure that we are getting to a price -- tariffs or no tariffs, to get to the price in the retail that is still the significant value. Because they see us as probably one of the more consistent retail outlets. Our buyers are very straightforward with them, and we're very transparent with our vendors. And so I think an advantage that's taking place -- and this could continue to improve as other stores perhaps close. We've had a number of closed prior, obviously, in the last couple of years. I only see those relationships becoming stronger. And those are not about adjusting retails. Those can be about, as you said, driving comps and having retails that create a wow in our mix. Because sometimes we want a customer to actually say that it almost feels too cheap, all right? So that's the art form that we try to bring to the table. Whereas a lot of the other retailers, I think would never even go down that route. We want -- I don't know, 1 out of every 10 hangers, I want a customer saying, "Boy, that almost feels too inexpensive," strangely enough. And that's what creates the wow factor in our business, and that's the art form. So I hope I answered -- but that's, I think, what you were referring to where I've talked before about we'll put it -- sometimes we won't -- we'll just retail the goods at an extremely sharp price. Oh, last thing that hits me is, remember, our buyers are trained to not -- they do not use a markup wheel, so meaning on what item they can pay X. Doesn't mean on that item, they're going to retail it at Y. The next time that's paying X gets retailed at the same Y, that doesn't happen. They're merchants where we go by what is the right value for the out-the-door of that item regardless of the cost. And that's what I think is a different thing where our buyers work retail-backwards and the Y retail-backwards, and don't start with the cost and focus on the cost as much as the other merchants do at other retailers. Probably a little more info than you needed, but it's a good topic. So thanks for asking. Adrienne Yih: John, just a real quick one. From China, are you seeing any redirected China make into the European market yet? John Klinger: Sorry, are we seeing what? Any re-directive of merchandise into the European market? Adrienne Yih: Yes. So China that they don't want to come here from other retailers or vendors that are coming to you in Europe, right? Yes. John Klinger: Yes. So nothing significant that we've seen. I think that the factories were kind of holding off and waiting for a tariff deal to be done or at least lower before shipping the goods. But no, we haven't seen a lot hitting Europe that were destined for the United States. Operator: Our next question now is from Paul Lejuez with Citi. Paul Lejuez: What percent of your product currently is direct-sourced by you? And how might that change, if at all, in response to the current environment? And also curious if you do less upfront in anticipation of maybe better deals that you expect to come in the second half. And then just would also love to hear about anything you can share in terms of income demographics? Any signs that you're gaining share more so with any one specific income cohort? John Klinger: Yes. Let's take that. Ernie Herrman: Yes. We'll have John jump in on the income there. But as far as direct source, it's really less than 10% of our business. And I would tell you that we don't purposely -- we keep that in a balance. We're all about having eclectic, well-balanced mixes and assortments. And so we don't swing the pendulum on those places. So that is not something you'd see us play with a lot because -- obviously, we can move sourcing countries on our direct imports around and we could have China, for example, be less of a percentage. But we tend to hover around that number of the 10% because again we're very brand-driven. So we don't want to have that go out of context. Having said that, on those direct imports, they fill voids and give us great quality and fashion, and we do it differently than others. So on the upfront buying, Paul, that you're asking about, yes, we are viewing this, you're really spot on, as a time to, I would say, buy more close -- hand to mouth, closer in the market and call back our upfront buying to a degree. Again, we're very strategic. That varies by category and that varies by department, literally, and by buyer item and SKU and -- but that would be the lean right now. So you are on the right trend because we do forecast -- again, it's never not happened. Is this -- by the way, and I've heard in the past, going back 30 years, is there's always a reason why people think, well, this time is different. I don't believe this time is different to any large degree that we will come out stronger, and we will really take advantage of the situation as we move throughout the year here opportunistically both from a drive sales and a profitability standpoint. John, do you want to talk about -- John Klinger: Yes. So income down, so again, we are not measuring the actual customer income. We're looking at store performance in certain income demographic areas in lining that up. So what we saw during the first quarter is that across all our income demographic bands that we saw strong sales in all of those bands, leaning slightly towards the lower-income demographic. And again, that kind of speaks to -- when you look at our overall sales driven by -- mainly by transactions is that as there's -- customers are concerned about the economy, many of them are going to look for value. And TJX is one of the companies that -- we're one of the leaders in offering value to those customers. So -- yes, that's -- Ernie Herrman: Yes. I'll also jump in and piggyback on John here a little on this, Paul, is one of the -- and I mentioned it in the script, again, one of our key, key advantages is the fact that we purposely try to appeal to all these demos, just like John said. So we are -- the whole good, better, best aspect of our business, which we believe is an advantage, we are conscious not only in our mixes that we put in the stores, but in the way we model the stores to continue to do balanced business with each income demographic, just like John said. And we think that is one reason we deliver consistent results, whereas we don't tend to have these up and downs as some other retailers do. I think because we're more diversified from the income demographic standpoint. And so even if -- to get off a little bit here off a tangent, even in our marketing, if you look, I think in this environment, indirectly, it's coming up in your questions, how do we take advantage of this environment. Our marketing teams have -- really look at the different programs that we have. So if you look, we have the campaign in Maxx, which is called What Makes You You; in Marshalls, we have the Hustlers campaign, which actually shows you how the buyers work so hard at bringing the best value to the customers. And I think that shows you right now our mindset. And with that marketing, we're hoping to get some of the customers out there that have not engaged with us to get them to shop us because this is a perfect opportunity when some of our competitors have been -- I don't mean off-price, by the way, I mean just total retail competitors, are offering customers the desire to probably try other avenues. So I think our marketing teams are doing a great job with the campaigns of giving them a reason to -- why should I try shopping at Marshalls or at T.J. Maxx. So -- and again, across all income, we -- even our marketing is aimed at all different income demos and the way our creative is placed and as well as the spots that they're placed in digital or TV or radio, et cetera. Operator: Our next question now is from Alex Straton with Morgan Stanley. Alex Straton: Congrats on a great quarter. I wanted to focus on HomeGoods, which had a nice comp and margin expansion. Can you just talk about how you think about the margin trajectory of that business for the rest of the year? I'm curious in the context of the low-teens margin it's done in the past, if you think that's in reach. And then related to that, we know that home and toys tend to be more sourced out of China, super important for holiday. So with the incremental tariff there, can you just talk about how you're managing those categories both near term and then with respect to the holidays? Ernie Herrman: Sure, Alex. Yes, as I mentioned before, we're very happy with the HomeGoods comps because relative -- just as you're feeling, relative to the environment out there, we are certainly outpacing. And I can't be more proud of those teams and really all the merchants across the corporation, Home has performed strong for us overall. Well, we're looking at the margins, yes, I can't -- I won't give you the number, but we are feeling very positive about continued improvement, right, John? John Klinger: Yes. Ernie Herrman: I think that would be the way that I think -- John Klinger: Yes. One of the biggest levers we have to pull in order to improve our margins is through the top line sales. And we think there's a lot of opportunity going forward there as well as expense savings initiatives and productivity initiatives that we've got in place. Ernie Herrman: Yes. So no, feeling good about continued profitability improvement there. Home and toys, both, yes, very China-oriented sourcing, for sure. Home, in our case, even though there's a fair amount of home product there, we're dealing with third-party vendors for the most part in a lot of that in terms of proportion to our mix. So our merchants deal with negotiating with the vendor who's in negotiations really with their factories in China. And again, I'd go back to on that piece, I think the availability will be fine. There's so many vendors that we deal within home. So I don't really get concerned about empty shelf, so to speak, in any of those categories. And if they are, again, I would say we would just shift it to another deck category, for example. We're very fashion- and deck-oriented and more of the categories that would be out of China. On the toy front, a little trickier, not as many branded toy vendors per se as there are home vendors and also, yes, China-based. I think we look at that, could there be a situation where some of those big brands and toys bring in less units because their retail -- their costs are going up? And so there might be a retail -- I think what would happen there is if retails went up around us, we would adjust appropriately, but there might be less units that go on the floor. And we're okay with that because, again, we would have enough other hot hands, so to speak, within the mix that we could drive incremental business there. Because there's always a bit of a yin and yang in our world where we can flex to the other categories, even if one is not panning out is exactly as we would have hoped at the beginning. But I would say for us and the way our model is, those 2 category home -- really don't see any obstacles of substance. And in toys, we're cautiously watching what could happen there. But I think back to our relationships are so good, we will get more than our share of availability there. Operator: Our next question now is from Simeon Siegel with BMO Capital Markets. Simeon Siegel: Ernie, to an earlier point you brought up, and I'm not sure if I'm going to ask this cogently, but I'll try. Do you feel like you can buy backwards for all your product and be somewhat cost input-agnostic? Or is that -- is there a percentage of the business where maybe you have the leverage and permission to pay the goods based on the planned out-the-door AUR, and there's another percentage of the buys where the price you pay actually would be impacted by input costs? I don't know if that's just the direct/indirect question. But I'm curious how you think about that. And then, John, I don't know if I missed this. Can you just elaborate or quantify the mark-to-market inventory adjustment and how to think about that in the gross margin? Ernie Herrman: All right. So Simeon, let me -- I want to make sure I have the question right on this. But you're basically asking, is there a way that we can kind of go back on the price based on what happens? Is that what you're getting at? Simeon Siegel: I'm just trying to think through as we think about the cost inputs going up, how that does impact you given that you are able to generally -- again, the merchants buy backwards and think about the -- to your point about not focusing on the cost input, I'm curious if there's -- Ernie Herrman: Oh, okay. All right. So yes, so how does it impact? So if the costs go up, again, I would go on this one -- I would go back to we start with looking at the retail on those items at the other retailers. And whatever they have done in terms of their adjustments, we then go to -- we have to still have a significant gap in our retail versus their retail. So if we had, say, bought at a certain time and those retails go up, but we were at a certain retail, we might go up on that item. If that's -- if you're saying those retailers don't move, and we were buying it at a slightly increased anticipating a move because we're close in, we would not raise the retail because where our contract to the customer is to stay at the appropriate gap between us and the out-the-door somewhere else. I hope I'm answering the question. And if -- but our buyers are in such a better seat because they're doing it so hand-to-mouth, and we are able to follow what we're seeing around us at all of the different retail formats. And by the way, they're all trained and diligent about looking at all the different formats. And they're pretty educated on when they think some -- they know up from talking in advance to their vendors where the costs are potentially going on an item in a category. And that's -- I think that's a little bit of what you're asking about. That allows them with that information because they're buying so much hand to mouth. They're not buying 6 months in advance. That allows them to be educated when they retail the goods. And really, it does allow us to be more profitable, I think, on buying this type of environment. John Klinger: And then Simeon, just to answer your question on the mark-to-market adjustment in the first quarter. So when we make -- when our divisions make purchases in currencies other than their local currency, we hedge that purchase to ensure that what we agreed to for the cost is what it comes at. So when we have a movement of exchange rates, we have to mark-to-market those at the end of a quarter. So in this instance, the exchange rates improved for those currencies, and that caused the hedge to lose money. When we actually pay the invoice that will be the offset. So when we pay the invoice in second, third quarter down the road, that's when you're going to see the offset to that come in. So it's just -- it's a timing between quarters. Operator: Our next question now is from Michael Binetti with Evercore. Michael Binetti: So gross margin guidance, John, versus 90-days ago, you came in a little lower on 1Q. Understandable, the press release. And today, you mentioned there's some incremental tariff in 2Q versus what thinking. But you're holding the year on gross margin. So is there -- I guess, is there any pricing that's already contemplated in 2H since you -- Ernie commented earlier that you're using this as an opportunity to buy inventory closer to market. You may not know as much of your inventory buying picture yet for 2H as you normally would. I know from your comments, you're leaving some flexibility, but it seems like there's maybe a placeholder in the model for some pricing in 2H, just so we know what's baked in and what's not regardless of what materializes. John Klinger: I mean I would say our mitigation efforts include a number of things, better buying, taking advantage of deals in the market, having the flexibility on our -- how we're buying the goods, but also expense initiatives and productivity strategies that we have in place. So there's a number of things that we have in place currently in the second quarter that we also anticipate to also benefit us in the back half of the year as well. Michael Binetti: Okay. And then if I can just follow up with one. On customer acquisition, obviously, the growth coming from transaction is always good to hear. I know it's hard to measure real-time share gains from other retailers on a traffic basis. But are there any signs of trade-down in the basket, UPT versus AUR, to be aware of that could maybe give us a little bit of a double-click on what's going on with trade-down or the customer inflows that you're seeing potentially from other retailers? Ernie Herrman: Yes. No sign, Michael, of trade-down per se. John Klinger: Yes. Ernie Herrman: And it's interesting because across the board, selling -- our average retails are pretty balanced and we're selling the board. John Klinger: Yes. I mean it's really hard for us to read that. But I think the thing to just take away is that the sales are driven by our transactions, which means that we're getting foot traffic through the stores from our customers. So whether they are giving up a purchase at a different retailer for one for us, it's hard for us to read that. Ernie Herrman: Yes. Michael, one thing I would go back to is -- and I said it earlier, is the -- I mean common sense would tell, I think, all of us that as we look out, I believe some of what's happened is the -- you've had in the past number of -- couple of years, when you have store closures or traffic off in the other stores, we just can't read exactly, like John said, where it's coming from. But we do believe, judging by the nature, if you -- so for example, if you look at our home business and you look at how long -- again, we're a fashion home business. And now we have a fair amount of, I guess, you would call it, consumable product within our home business, which is creating repeat visits. We have to believe -- we can't measure it, but we have to believe that's coming from a variety of other retailers, only because some of these new categories that we've gone on and we're consistently in them now or our home business wouldn't be trending so differently than some of the others, I think. So a combination of other stores may be closing and the different way we're approaching certain categories like our home business. Operator: Our next question now is from Aneesha Sherman with Bernstein. Aneesha Sherman : So I want to focus on margins. I'm curious, John, on your gross margins for the quarter. You had already anticipated some of the inventory hedging headwind. You talked about it last quarter. Did that end-up being a bigger effect than expected? And could you talk through some of the other moving parts in the margin, for example, product margin or supply chain investments and how they might have hit gross margin through the quarter? And then a follow-up on your margin guide on Q2. If I can clarify, is the Q2 margin guide net of the mitigation efforts that you've described? Or is it more that those mitigation efforts are starting in Q2 and it will take some time for them to fully roll out into the back half? John Klinger: All right. So Q2 -- so our Q2 gross margin forecast includes mitigation efforts, as we said in our prepared remarks. As far as our Q1 gross margin, I mean, it was essentially the variance to last year was essentially the hedge and the impact of that, which again is timing between our Q1 to Q2, Q3 mostly as we pay -- again, when we pay the invoices, we'll see the offset to that in the favorability. But yes, the Q1 gross margin is -- it's the hedge that is the variance to last year. Aneesha Sherman: Okay. Sorry, if I can clarify just another way to rephrase my question around Q2 mitigation. So you talked about goods that were already committed to that are going to arrive in Q2 that will drive some headwind on cost. Is that going to go away in Q3? I mean, how -- are you committed to orders that are going to arrive beyond July in terms of second half? Or is that going to -- John Klinger: The thing about after Q2 is that during Q2 or Q1 in the -- for goods in Q2, those were goods that were placed before we knew about the tariffs. So we didn't have an opportunity to negotiate. So moving forward, the deal will include the assumption that there is a tariff in place. Ernie Herrman: So Aneesha, so combined with so what John is saying is, so you don't have that direct import, so to speak, that we were because we didn't know about it when we were doing it. And then added to the other, I guess, tailwind and positive things we have going on, we're able to also not deal with that per se in Q3 and Q4. We know what the tariffs are fundamentally right now. And then that's when the other things kick in -- not just kick in, those are kicking in now, but that's where we're taking advantage of the availability as we -- adjusting retailer selectively where appropriate, the vendor relationships and all the uneasiness that's out there that could create additional cancellations from different vendors, et cetera. So that's why -- that's another reason the Q2 looks -- Q3 looks very different than Q2. Operator: Our next question is from Jay Sole with UBS. Jay Sole : John, you mentioned that part of the mediation efforts involves some expense initiatives, presumably in cost of goods sold. Can you talk about maybe a little bit more what those -- where the opportunities are, what line items within cost of goods sold might you be able to save some money? And then are you also contemplating some SG&A cost savings as you go through the rest of the year to just be able to maintain the EBIT margin guidance that you gave? John Klinger: I mean, yes, the -- in gross margin, they would essentially be centered-around distribution center initiatives, and SG&A would be store initiatives. Q - Jay Sole Is there any way to quantify sort of like what the impact of the expense initiatives were you on -- John Klinger: At this point now, we're not quantifying the impact by category. Operator: Our next question is from Ike Boruchow with Wells Fargo. Ike Boruchow : Congrats. I guess, John, I was hoping you could elaborate a little bit more on freight. What exactly you kind of have been seeing in 1Q and then your forecast for 2Q? And then what's kind of embedded in the outlook, both domestic and ocean? Just kind of your bigger picture thoughts on how to think about the P&L. John Klinger: Yes. So our freight rates are based on what we know today. And again, just to clarify, our ocean freight rates are approximately 20% to 25% of our overall freight. So we're not as impacted on the ocean freight. We have not seen, to the point, costs go up. But again, it's early. The tariffs were just low. We've got excellent relationships with our shipping providers. And we believe that from what we know today our freight is accurately reflected in our forecast. Operator: As time is restrictive right now, I would like to turn it back to management for closing remarks. Ernie Herrman: Okay. Thank you all for joining us today. We look forward to updating you again at our second quarter earnings call in August. Thank you, everybody. Operator: Ladies and gentlemen, that concludes your conference call for today. You may all disconnect. Thank you so much for participating

Operator: Ladies and gentlemen, welcome to The TJX Companies, Inc. Fourth Quarter Fiscal 2025 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session. As a reminder, this conference is being recorded. February 26, 2025. I would like to turn the conference over to Mr. Ernie Herrman, Chief Executive Officer and President of The TJX Companies, Inc. Please go ahead, sir. Ernie Herrman: Debra McConnell has some opening comments. Thank you, Ernie, and good morning. Debra McConnell: Today's call is being recorded and includes forward-looking statements about our results and plans. These statements are subject to risks and uncertainties that could cause the actual results to vary materially from these statements, including, among others, the factors identified in our filings with the SEC. Please review our press release for a cautionary statement regarding forward-looking statements as well as the full Safe Harbor statements included in the section of our website tjx.com. We have also detailed the impact of foreign exchange on our consolidated results and our international divisions in today's press release and in the Investors section of tjx.com, along with reconciliations to non-GAAP measures we discussed. Thank you. And now I'll turn it back over to Ernie. Ernie Herrman: Good morning. Joining me and Debra McConnell on the call is John Klinger. I want to first take a moment to share our care and concern for everyone affected by the wildfires in California. While many of our associates were affected, we are grateful that they are all safe. We have offered resources to our associates and also made emergency donations to World Central Kitchen and the Los Angeles Regional Food Bank to help provide support for people who most need it. Now to our business update. I am very pleased with our outstanding fourth quarter. Our sales, profitability, and earnings per share were all well above our expectations. I am particularly pleased that our overall comp sales growth of 5% was driven by strong consistent comp increases of 4% or above at each of our divisions. Further, our comp sales growth across all of our divisions was once again driven by an increase in customer transactions. Clearly, our great values, gifting assortment, and freshness of our mix resonated with our shoppers during the holiday season. For the full year, overall sales surpassed $56 billion, and we opened our 5,000th store, a milestone for our company. I want to recognize the excellent execution across our company, which led to our above-plan results. Full-year comp store sales growth of 4%, a significant increase in profitability, and a double-digit increase in our earnings per share were all above our guidance for the year. We are confident that we continue to attract new shoppers in every country we operate in and that there are plenty of opportunities to further grow our customer base going forward. I want to thank all of our global associates for their excellent work in 2024. I am extremely grateful for their continued dedication and commitment to The TJX Companies, Inc. and to our customers every day. As we begin 2025, we are excited about the opportunities we see in our business and have many initiatives planned that we believe will further drive sales and traffic to our stores and online. Availability of merchandise is fantastic, and we believe we are in a great position to execute on our merchandising plans and keep delivering our shoppers outstanding values on great brands and fashions throughout the year. A moment. But first, I'll turn the call over to John Klinger to cover our results in more detail. Thanks, Ernie. I also want to add my gratitude to all of our global associates for their hard work and commitment to The TJX Companies, Inc. this year. Moving to our results. As a reminder, last year our fiscal calendar had an extra week in the fourth quarter. Therefore, where applicable, we'll be referencing adjusted numbers for last year's results, which exclude the impact of that extra week. Now I'll share some additional details on the fourth quarter. Net sales grew to $16.4 billion, a 5% increase versus last year's adjusted sales. As Ernie mentioned, our fourth quarter consolidated comps sales increased 5%, which was well above our plan and driven by an increase in customer transactions. Ernie Herrman: We were very pleased to see strong comp sales increases in both our overall apparel and home categories. Pretax profit margin of 11.6% was up 70 basis points versus last year's adjusted 10.9%. Our pretax profit margin was 70 basis points above the high end of our plan. This was primarily due to a benefit from lower shrink as well as expense leverage on our above-plan sales, partially offset by higher incentive compensation accruals. Gross margin was up 100 basis points versus last year's adjusted 29.5%. This was primarily driven by a benefit from our year-end true-up of shrink expense and strong mark on. SG&A was 19.2%, up 30 basis points versus Net interest income was neutral of pretax profit margin versus last year. All this led to a diluted earnings per share of $1.23, up 10% versus last year's adjusted $1.12, and also well above our plan. As for our divisional performance in the fourth quarter, we saw strong comp store sales growth at every division, all driven by increases in customer transactions. We were particularly pleased with the outstanding sales performance at our international divisions, with TJX Canada's comp sales increasing 10% and TJX International comp sales up 7%. Now to our full-year fiscal 2025 results. Net sales grew to $56.4 billion, a 6% increase versus last year's sales. Consolidated comp store sales were up 4%, entirely driven by customer transactions. Pretax profit margin of 11.5% was up 60 basis points versus last year's adjusted 30.6%, up 70 basis points versus last year's adjusted 29.9%. This increase was driven by strong mark on, lower freight costs, and 20 basis points from shrink favorability, partially offset by higher supply chain investments. Regarding shrink, we saw favorability across all our divisions. I want to take a moment to acknowledge the great collaboration and tremendous efforts of our associates who worked extremely hard on our initiatives throughout the year. SG&A was 19.4%, up 10 basis points versus last year's 19.3%. This was due to incremental store wage and payroll costs. Net interest income was neutral to the full-year pretax profit margin versus last year. All this led to a full-year earnings per share of $4.26, up 13% versus last year's $3.76. Ernie will talk about our full-year divisional highlights in a moment. Moving to inventory. Balance sheet inventory was up 8%, and inventory on a per-store basis was up 1%. We feel great about our inventory levels and the outstanding availability we're seeing in the marketplace. We are well-positioned to flow fresh assortments to our stores and online this Right. I'll finish with our liquidity and shareholder distributions. For the full year, we generated $6.1 billion in operating cash flow and ended the year with $5.3 billion in cash. Ernie Herrman: In fiscal 2025, we returned $4.1 billion to shareholders through our buyback and dividend programs. Now I'll turn it back to Ernie. Thanks, John. I will pick it up with some full-year divisional highlights. I am extremely pleased with the consistency of our sales performance across our divisions. Each business delivered comp store sales growth of 4% or above, and importantly, the sales were entirely driven by an increase in customer transactions. We believe this highlights the strength of our value proposition, our ability to gain market share, and the power of our wide customer demographic. At Marmax, overall sales for the full year exceeded $34 billion, and comp store sales increased 4%. Marmax's apparel and home categories both saw comp sales increases. Additionally, comp store sales increased across all of Marmax's regions and income demographics. At Sierra, which is reported with Marmax, we were very pleased with their strong performance for the year. To profitability, full-year segment profit margin increased to a strong 14.1%. With more than 2,500 total TJ Maxx and Marshall stores today, we still see plenty of opportunities to open new stores, attract more shoppers, and further grow our sales. At HomeGoods, annual sales grew to $9.4 billion, and comp store sales increased 4%. During the year, we opened our 1,000th store for this division, a great milestone. We were very pleased to see this division's segment profits surpass $1 billion and see its margin return to double-digit levels at 10.9%. We are by far the largest off-price home fashions retailer in the United States, and we continue to see plenty of opportunities to capture additional market share with both our HomeGood and HomeSense banners. At TJX Canada, full-year sales increased to $5.2 billion, and comp store sales were up 5%. It was great to see consistent performance across all three of our Canadian retail banners, which each delivered similar comp store sales increases. Segment profit margin on a constant currency basis was 13.5%. As Canada's leading off-price apparel and home fashions retailer, we believe our Winners, Marshalls, and HomeSense banners are all on track for continued successful growth. At TJX International, full-year sales exceeded $7 billion, and comp store sales increased 4% with strength in both Europe and Australia. As to profitability, I am very pleased with this division's improvement in 2024. Segment profit margin on a constant currency basis was 5.8%. In Europe, we continue to grow our footprint in our existing countries and announced our plans to open our first stores in Spain in calendar 2026. And Australia comp store sales growth was outstanding, and we can Long term we are confident that we have opportunities to capture additional market share in each country that we operate in. FTE Commerce? Overall sales increased, and we added new categories and brands to our assortment across our sites to further enhance our online treasure hunt shopping experience. Okay. Moving on. I'd like to highlight the key differentiators of our business that give us great confidence in our continued successful growth around the world for many years to come. First is our valued leadership in the United States, Canada, Europe, and Australia. We believe that our relentless focus on value every day through a combination of brand, fashion, price, and quality will continue to resonate with shoppers. Second is our very wide demographic. We want to sell everyone and believe our offerings across good, better, and best brands appeal to shoppers across most income and age demographics. Third, we believe we have one of the most flexible business models in retail. This allows us to buy close to need and adjust our selections as macro trends and consumer preferences change. Next is our differentiated treasure hunt shopping experience driven by our rapidly changing assortment. Our stores receive multiple deliveries a week of fresh branded merchandise to surprise and excite our customers. We believe this can inspire shoppers to visit us more frequently to see what's new. Beth is our world-class buying I believe the depth of experience among our thirteen plus buyers around the world is unmatched and that we have the best vendor relationships in retail. Our merchants source from an ever-changing universe of over 21,000 vendors and from more than 100 countries. Further, we continue to see a significant We are increasing our long-term store potential to a total of 7,000 stores or over 1,900 more stores in just our existing and announced geographies. This now reflects the long-term potential for HomeGoods to expand to 1,800 stores, Tiara to expand to 325 stores, and our base in Spain to grow to 100 stores. In addition to our future store growth opportunities, I want to reiterate my excitement for our newly formed joint venture with GrupoWaxo in Mexico and our recent investment in Brands for Less in the Middle East. We see both of these as a great way to participate in the growth of off-price in different areas of the world. Lastly, I am so proud of our culture, which I am convinced is a key component of our success. We continue to invest in teaching and training to develop the next generation of TJX leaders. Turning to corporate responsibility. We are excited about the progress we have made over many years and the work we have underway. On our conference calls over the past year, I've shared updates on how we support our associates and communities. John Klinger: Our work to mitigate our impact on the environment, Operator: and our commitment to operating ethically. Ernie Herrman: Today, I'd like to share more about some of the remarkable efforts our TJX Foundations and associates made this past year to have an impact on the communities where we live and work. In addition to the support I mentioned earlier for people affected by the California wildfires, Buyers. In 2024, we also helped with the relief efforts for those affected by hurricanes in the southeastern United States and flooding in Austria and Poland. Further, we supported more than 2,500 nonprofit organizations globally through our TJX Foundations, Associates across the globe. Play an important part in this meaningful work by volunteering, running donation campaigns in our stores, participating in our associate-nominated grants program, and more. These are just some of the examples of work our teams are doing in our communities, and we invite you to visit tjx.com to learn more. Before I close, I want to emphasize that our primary focus remains our value gap versus traditional retailers. I am very confident that the key strengths and flexibility of our business will allow us to navigate through the current China tariff environment, just as we have successfully navigated through many other types of retail environments in our nearly fifty-year history. In closing, we feel great about our strong performance in 2024. We are confident in our plans for the year, and as always, we will strive to beat them. Longer term, we remain laser-focused on growing our business and are convinced that we can continue to increase our market share in the United States and internationally. When I look at our growth opportunities ahead, the globalness of our business, our deep talent base, our wide customer base, and the consumers continue to desire for value, I am very excited about the future of The TJX Companies, Inc. Now I'll turn the call back to John Klinger to cover our full-year and first-quarter guidance, and then we'll open it up for questions. John Klinger: Thanks again, Ernie. I'll start with our full-year fiscal 2026 guidance. Planning overall comp store sales growth of 2% to 3%. Starting in fiscal 2026, our comp store sales will include e-commerce sales, which, as a reminder, are a small piece of our total business. We do not expect e-commerce to have a material impact on our comp sales growth. For the full year, we expect consolidated sales to be in the range of $58.1 billion to $58.6 billion, up 3% to 4%. We expect favorable foreign exchange rates to have a 1% negative I'm sorry. We expect unfavorable foreign exchange rates to have a 1% negative impact on consolidated sales growth. We're planning full-year pretax profit margin to be in the range of 11.3% to 11.4%, down 10 to 20 basis points versus last year's 11.5%. This guidance assumes a 20 basis point negative impact due to the unfavorable foreign exchange rates in transactional FX. Moving to our full-year gross margin. We expect it to be in the range of 30.4% to 30.5%. This would be down 10 to 20 basis points versus last year's 30.6% due to unfavorable transactional foreign exchange and inventory hedge. We're also planning for a slight improvement in shrink. We are expecting full-year SG&A to be 19.3%, 10 basis points favorable to last year's 19.4%, driven by a benefit from the annualization of last year's higher incentive compensation accruals. We're planning net interest income of $98 million, which we expect to deliver fiscal 2026 pretax profit margin by 20 basis points. We're currently assuming a full-year tax rate of 25.1% and a weighted average share count of approximately 1.13 billion shares. As a result of these assumptions, we're expecting full-year diluted earnings per share to be in the range of $4.34 to $4.43, up 2% to 4% versus last year's $4.26. This EPS guidance assumes a 3% negative impact to EPS growth due to unfavorable translational and transaction foreign exchange. Lastly, our fiscal 2026 guidance assumes a small from the current China tariffs on merchandise that we were committed to when these tariffs went into place. We have a great team. We have seen tariffs before. And we are confident we can navigate our way through the current China tariff environment on our future buys. Moving to the first quarter, we expect overall comp store sales to increase 2% to 3%. While weather was not favorable to the start of the quarter, we have been pleased with what we've seen recently as weather has normalized. We expect consolidated sales to be in the range of $12.8 billion to $12.9 billion. Pretax profit margin to be in the range of 10% to 10.1%, down 100 to 110 basis points versus last year's 11.1%. Gross margin to be in the range of 29.8% to 29.9%, which will be down 10 to 20 basis points versus last year's 30%. This is primarily due to unfavorable inventory hedges. SG&A to be 20%, up 80 basis points versus last year's 19.2%. This is primarily due to incremental store wage and payroll costs and the lapping of a one-time benefit last year. Net interest income of $27 million, which we expect will deliver our year-over-year pretax profit margin by 20 basis points. Tax rate of 23.2% and a weighted average share count of approximately 1.13 billion shares. As a result of these assumptions, we're expecting first-quarter diluted earnings per share to be in the range of $0.87 to $0.89 versus last year's diluted earnings per share of $0.93. I want to mention that there are several factors causing our first-quarter pretax profit margin and earnings per share to be planned lower than the remainder of the year. This includes a benefit from lower incentive compensation accruals planned in the last nine months of fiscal 2026. The lapping of a benefit from a reserve release in the first quarter of last year and the expected timing of certain expenses. Importantly, this first-quarter guidance implies that the last nine months of the year, we expect pretax profit margin to be flat to up 10 basis points and earnings per share to be up 4% to 6% versus last year. Moving to our fiscal 2026 capital plans. We expect capital expenditures to be in the range of $2.1 billion to $2.2 billion. This includes opening new stores, remodels, relocations, as well as investments in our distribution network and infrastructure to support our growth. For new stores, we plan to add about 130 net new stores, which will bring our year-end total to over 5,200 stores. This would represent a store growth of about 3%. In the US, our plans call for us to add about 40 net new stores at Maramax, 30 stores at HomeGoods, including 9 HomeSense stores. At Sierra, we plan to add about 20 stores. In Canada, we plan to add 12 stores. And at TJX International, we plan to add 22 net stores in Europe and 6 net stores in Australia. Lastly, we also plan to remodel about 500 stores and relocate approximately 40 stores in fiscal 2026. As to our fiscal 2026 cash distribution plans, we remain committed to returning cash to shareholders. As we outlined in today's press release, we expect our Board will increase our quarterly dividend by 13% to $42.5 per share. Additionally, in fiscal 2026, we currently expect to buy back $2 billion to $2.5 billion of TJX stock. In closing, I want to emphasize that we are in an excellent position both operationally and financially, to take advantage of the simultaneously returning significant cash to our shareholders. Now we're happy to take your questions. As a reminder, please limit your questions to one per person so we can answer as many questions as we can. Thanks. And now we'll open it up to questions. Operator: Thank you. We will now begin the question and answer session. Our first question comes from Paul Lejuez. Paul Lejuez: Hey. Thanks, guys. If you can talk about what drove the stronger performance in Canada and international, if there's anything that changed in the macro that you think worked in your favor, or was it simply better execution and also curious if you expect those businesses to continue to outperform this year. Sure, Paul. Ernie Herrman: Yeah. Obviously, very pleased with both Europe and Canada. And the common denominator with both of them was the way we flow. First of all, you're in a gift-giving time period in Q4, and, you know, we've typically done well in Q4. These two divisions specifically executed a flow plan in terms of how late they shipped freshness in prior to Christmas. That it was extremely beneficial to their pre-Christmas, the ten days before Christmas time period, and this applies to both Europe and to Canada, and then even the post-Christmas business in both was exceptionally strong. So I give them a lot of credit on that as well as what they did in addition to going after specific gift categories, which I think was a big improvement in owning those in more depth versus the prior year. It was the balance of good, better, best across the board in Europe and in Canada as well. They also both had healthy home businesses, which helped, you know, help their total because, as you know, home spikes in Q4. And we have certain categories there that are great gift-giving categories. So I think there was a bit of a tactical execution benefit from the way they flowed and then a mix advantage in both. The way it applies to both of them. Thanks for the question. We were very pleased with, you know, both of those divisions. Paul Lejuez: Yeah. And, Ernie, you expect them to continue to outperform? And then I guess, you know, on a related note Yeah. Paul, yes. The yeah. We've Ernie Herrman: seen both of them continuing to very happy with the way they've been performing. And they both have really some seasoned management across those areas. That gives me a lot of space between our over there, they call it merchandise between our planning and allocation area as well as all our head merchants. We have a lot of seasoning there, and people that have gone to some of the new key roles starting about two years ago, so I think is is gonna set them up, I think, for strong execution over the next year. Paul Lejuez: Thank you. Good luck. Ernie Herrman: Yep. Thank you, Paul. Great question. Operator: Our next question comes from Lorraine Hutchinson. Lorraine Hutchinson: Thanks. Good morning. Ernie, I wanted to ask about I wanted to ask about customer behavior on both ends of the spectrum. Operator: Are you seeing trade down at the higher end and then at the lower end of the assortment, how are customers reacting to some of the sharper price value offerings? Ernie Herrman: Yeah. So you know, it's hard for us to really measure on that because part of our success and again, this was an extremely pleasing quarter for us to have division running a four or better when you have Canada at a ten by the way, the other thing to remember is we were up at up against a good quarter the year before. In Q4. So it becomes tough to measure on the good, better, best so to speak, or the demographics. Income because we were pretty much performing at every level across every banner that we have. And we I we've got see we did see when we look at our and again, this is where stores are store performance in different demographic areas. We saw you know, nice increases in both are below a hundred and above a hundred. Income demographic areas. And I think, Lorraine, part of the evening off that happens is with the and you've seen a lot of the write-ups. So you have I know consumer com this is Donald. They have store closures in different pockets of retailers across the US, Canada as well, by the way, Europe as well. And when you have so you you can if the reason it's top of all that noise is because, obviously, in some of those cases, we're picking up the market share. You know, home would be one of the more obvious ones where either business that had a home business as part of it or home only have closed and so there's almost not a demographic issue there, more of a category market share gain, which has been more what John and I would see in the divisions. As we have gained market share not where it's easier to measure is not by income demographic, just across all the income demographics, but in certain categories, we have outpaced. Lorraine Hutchinson: Thank you. Ernie Herrman: Twelve. Operator: Our next question comes from Matthew Boss. Matthew Boss: Great. Thanks and congrats on another nice quarter. Ernie Herrman: Thanks, Matt. So two-part question. Matthew Boss: First, on the continued strength in transactions, the across divisions that you saw in the fourth quarter, maybe could you elaborate on new customer acquisition trends and just how Ernie would you rate the breadth of your product assortment and value proposition into the spring maybe just near term, could you maybe elaborate on the more recent trends you've seen in the business or it fair to say that you haven't really seen any change in underlying business momentum if we parse through the impact of weather. Okay. Yeah, Matt. Great question. I was waiting for you to throw in the part about the weather. So, John, do you wanna talk to transactions, and then I'll talk to the breadth of product? Yeah. And so nice. You know, we've seen you know, again, we we continue to see strong transaction growth, and we are seeing us attracting more customers to our stores and when we look at the age demographic, you know, they tend to skew a little bit more towards that eighteen to thirty-four age range is what we've seen consistently. So we're quite pleased to see the sales growth based on, again, more customers coming to our stores. Which ties in, I think, Matt, with the other part of your question. The breadth of product, because obviously, we're conscious about continually expanding our well, our vendor base, our category of items, base. Probably home goods is one of the I would say that would be the epitome of that in terms of how we're always opening new vendors and new categories. We do it in every division. They just jump out where it's a little more obvious when you walk the store you'll find items and categories that are now expanded versus a week before in a very dramatic fashion. So I would say our breadth of product as we go into spring is, I would say, kicked up a notch from even last year. Again, that's part of our success this past fourth quarter and and the last couple of years is to continually try to bring in new vendors and new product categories while not alienating customers or category purchases on the other side of it, which is one reason we're always talking. I'm always talking about trying to sell as many people as possible. That was in our script. That's what we always talk to, you, Rod. I know we talked many times about it. So our breath we line up our plans for spring and in very wide product breadth, vendor breadth, having said that, when you start to get other than other than the weather, issue, which, you know, John mentioned when the weather was in the areas where it was normal weather, we were pleased with how we were performing. It's just, you know, we had those pockets of weather that, you know, hit a on those spots. But again Right. We're feeling very good. About the normal weather pattern areas, and we will head in the future. So I don't know if I did I answer that about the product breadth? Yeah. You did. Your debt ticked up a notch relative to a a year ago. Yes. I have a direct quote on that. That's very good. Thanks. You. Best of luck. Thank you, Matt. Operator: Our next question comes from Brooke Roach. Brooke Roach: Good morning, and thank you for taking our question. I was hoping we could elaborate on Operator: your your expectations for continued expansion in merchandise margins, can you contextualize what you're embedding in your outlook for merch margin expansion as you contemplate mark on versus tariffs? And then John, on gross margins, can you speak a little bit more about your expectations for shrink for the year? Thank you. Ernie Herrman: So let me so, Brooke, I'll I'll start off with the, you know, our approach on the mark on our merchandise margin. Touch on tariffs briefly in there, and then John can pick up on the on the actual components, financial components. The I thought we would talk about this to really try to keep it crystal clear on our approach, how this works. First of all, on the tariff situation, it's been a little gray. There's a short term you know, keep in mind that the direct imports for China for us are extremely small percentage of our business. And so although that could be in, like, in the short term, a a little bit of a perhaps a little bit of a cost associated there over the medium and long term. That really doesn't become the issue because of the way we approach our buying. So to give you an example, the the I guess, the silver lining is with consumer confidence down and a bit of a rocky environment out there, and the way our buyers operate, which is the buyers go out and they re really assess at the rate retail level what we can retail product for, and then they work it backwards. John Klinger: To what the cost should be. And they really don't Ernie Herrman: This their strategy is not to factor in tariffs or any other cost that actually can play into the picture here. The the way they approach is they're gonna look at what's the outdoor retail on the like item and we need the gap and we tilt between us and they're out the door that's gonna provide the amazing value for our consumer and from there, they work on the plastic and pay it's really not up to them to have to worry about what the vendor is getting you know, caught up with in terms of tariff or inflation or other costs? Because remember, we've been to the movie before recently, a few years ago with extreme inflation, and we navigated right through that at just as we will on this. It's just it's a different headline. It's just the same approach. So whether there's tariffs, no tariffs, our buyers really their focus is on buying the goods, determining the cost based off the retail we can put the goods out. So because of the environment we're in where there's a lot of, I think, consumer confidence stores closing, etcetera. I'm thinking there's more availability out there over the next six months even more than there's been, which is going to create more buying opportunities for our teams. So back to your margin, Quebec. That at a high level, I think, plays into our ability to look at, you know, margin opportunities. I'll give you another thing is we mentioned this briefly. Is the wide demographic which I've talked about a couple times. That also plays into our ability be more flexible. So if our buyers or merchants don't see something in one vendor or one good, better, best range, they can always be more flexible in terms of the way they handle the market. They can move from a a good iron to a better item if that's where the better buy is. And I think we have that advantage versus most of our competition is doesn't have that flexibility. So, again, great question. Where I'm excited about this I'm excited about the sales and margin opportunity in this environment because this is pretty much textbook situation coming up here. John Klinger: Right. And then, Brooke, to answer your question on the shrink, we're very pleased with where our shrink rates came in this year. We are we still have our shrink committee. We're still staying very focused on this. So we do have a small improvement baked into our our plan this year, and it's really centered around the annualization of the initiatives that that from last year, but we're also at this point analyzing data on the shrink results and we will use that data to lean into some of the things that that worked last year. So we're doing a number of things. Again, the the overarching strategy is to you know, is to continue to to maintain a great shopping environment for the customers, a safe shopping environment, for our associates and customers as well. Operator: Great. Thanks so much. Our next question comes from Michael Binetti. Michael Binetti: Hey, guys. Congrats on an awesome quarter. Very happy to see it. Thanks. Okay. Ernie Herrman: Don't ask you this a lot, but flow through for the year on a two, three comp is ten basis points. If we exclude the the currency, Michael Binetti: I'm guessing that's with the less of the lingering contribution from some of those snapback Ernie Herrman: COVID areas like freight and shrink and Michael Binetti: even even your market a little bit for tariff this year. Is four percent Ernie Herrman: the long-term leverage point? Is there anything changing there? Michael Binetti: And then I just wanna I'm just curious about real estate availability. In the US. When we speak to some real estate brokers recently, they said new development is Ernie Herrman: is is almost nothing, so there's a lot of competition for boxes from the retailers that go bankrupt. I'm I'm curious if you see any tightness in the availability of real estate in the US either for getting your boxes in or Michael Binetti: you know, any any reason to think that there could be some rent inflation in years ahead if those dynamics I hope. Thank John Klinger: Yeah. So on the flow through, yeah, we the model still stands where on a three to four comp with no outsized expense increases, we would expect to be flat to up ten basis points. But again, that's that's it overarching model. If we see years where we have an opportunity to you know, to do better than that, we certainly will bake that into our plans. As far as the real estate availability, so we do see a lot of availability going forward. You know, as we've talked about in the past, we we do see an opportunity to expand into some more rural areas where the department store of the area closes and we we can fill that void in that in those areas. Also, you're still seeing, you know, large box closures that we have the opportunity to either go in shop area. So, again, we still see opportunities that's kinda reflected in the, you know, the the the increase to our our sales or our store potential. Michael Binetti: Thanks a lot, guys. Appreciate it. Thanks. Our next question comes from Chuck Grom. Chuck Grom: Hey. Great quarter. Ernie Herrman: Ernie, can you talk about the 5% comp in the context of category performance across apparel, home, footwear, accessories, and gifting? And then when we look ahead to 2026, how you're planning those businesses across those categories? And then for John, on the shrink rate improvement, can you just remind us where where your shrink or cool levels actually are today relative to 2019 so we can get a sense for how much is left to continue to improve I'm on the top Thanks. Yeah. Chuck, obviously, I can't get specifics on some of these categories, but directionally, I can talk to well, we were with that strong comp, you know, we were we were up in in apparel and home, but I would say the the home and some of our accessory businesses excel you know, we're better stronger than apparel. And that would be a similar way that we're looking for those business to perform in FY 2026, if you start getting into some of the know, smaller category breakout type information, you know, we we just don't give those specifics out there. But directionally, obviously, when you run a five, you have to have pretty decent apparel business also. Otherwise, you can't offset it because it's still a significant percentage of our business. The business I continue to be even more bullish on is our home business in total. As you know, it's kind of a third plus of TJX. And if you look at the home domestically here in the United States and you look at how home goods has performed versus the industry I think that's a great sign. And if some of the other, you know, new housing starts and interest rates change to be more favorable. I look at how our teams there are performing now and think that could even be more potential upside. For us. So that's why we're very bullish on home. We're the only ones that do it the way we do it. And that team specifically, what's neat on the way our home business is done, which not many people think about this, you know, there's been there's there's been discussion on, you know, tariffs at China, etcetera. Well, we actually our priority on our home business is to do goods out of Europe. Because that is a differentiator for us and a creates a an umbrella of fashion and brand and quality that other home retailers don't do. So one reason it it performed extremely well in Q4 in our home business. And that whole Europe diff piece of differentiation, I think, is going to help propel us going forward. And by the way, Europe and some of our other accessories categories that I was talking about where we performed better than the store, I think we utilize it there also as a as an offensive sales driver and a cost customers love that piece of our mix. So that is a highlight I can talk about, and and we have that plan be big going forward. Sean? Yes. So Chuck, on your question about the shrink rate, we don't publicly disclose our shrink rate. But but going forward, we still think we have some Chuck Grom: Great. Thank you. Ernie Herrman: Thank you. Operator: Our next question comes from Alex Straton. Alex Straton: Thanks. This is Chad Britton on for Alex. My question is on segment margins. You closed the margin gap John Klinger: between HomeGoods and Marmax quite a bit in the back half of 2024. So with this recent move lower in ocean freight rates and home goods higher exposure there, it seems like the setup to close that gap even further in 2025 is is pretty favorable. Alex Straton: Is there anything structural keeping HomeGoods from running at or closer to Marmax levels John Klinger: over the long term? And then any color you can provide around the moving pieces of margin in both segments of 2025 would would be helpful. Ernie Herrman: Alex, I mean, if you look at one of the major moves was obviously the HomeGoods dot com closure. I mean, that was something that was significant But, Ernie Yeah. I think we can Alex, directionally keep moving and, you know, closing the gap. Our expectations aren't that it would ever necessarily get there on because you have some categories that are innately higher margin in versus a home business on the flip side. I think our home business The way we track is probably one of the most profitable home businesses in the country or the world at the margins we're at. We did if we didn't own the T. J. Maxx and Marshalls, we'd probably be saying, wow. Look how high this is. But we do. We have the higher bar to your point. So we think we'll we think part of that is the nature of some of the some of the, you know, apparel closeout businesses that are in a Marmax are very profitable margins. But our goal is to obviously and trying to close the gap between the two. So, I mean, it's a good call out. Talk for us to kinda look and be that firmer specific in the future on it, but good call out. Alex Straton: Thanks. I'll pass it on. Operator: Our next question comes from Adrienne Yih. Adrienne Yih: Great. Thanks. Thank you very much. Can you hear me? Ernie Herrman: Yep. Yes. Oh, okay. Great. Adrienne Yih: It's music to my ears. The it's setting up to be textbook off-price environment. So with that, my focus is really on kind of a long-term John Klinger: store growth. So you talked about kind of this incremental nineteen hundred That's probably No. About eighteen hundred, seventeen hundred for each of the divisions at Marmax. When you're going into these kind of next eight hundred stores, how are you selecting locations you know, differentiate between TJX NMR Max. And is there an opportunity even in the US to do smaller footprint stores beyond that? The follow-up would be for Pupupo and Brands four Less. They're both two adventures. I remember you doing trade secret and buying that outright. What's the revenue sharing model there, and what's the plan for both of those? Thank you. Ernie Herrman: Hey, Adrienne. So let let me talk to John and I will both jump in here. So the the smaller first of all, when it comes to the stores, we take every deal separately. And John's involved here as well. So when we look at potential site we're opportunistic. We're opportunistic. We look at what other brands we have see in which vicinity, we measure potential transfer sales. However, to your point, what we're seeing is some smaller markets and smaller footprint store, which I think you brought up when you were asking a question. We do see that So a good call do see that as an opportunity because there are other areas in the country where we can put in a smaller format store which won't create too much transfer. And as you know, we've had stores. We have a store a group of stores where we have all five brands down the street here. Nearest, and they all work extremely profitably. As you know, we've put in home sensors in our home goods, with minimal minimal transfer sales and in some cases have actually increased our sales. So You know, we're we're bullish on being able to add those stores in different areas Something like Sierra or HomeGoods. We were probably again, as we grow in Home HomeGoods, we were pretty conservative in our fifteen hundred number, which was the more recent number. And so the teams have looked at different different locations, different demographics, population density, and I feel it's very realistic to go the other three hundred stores, which is a bigger probably the biggest change that you're seeing incrementally. Right. And we added we added Sierra Sierra. And then Spain as well. Yep. To the to the store opportunity list. Just to talk about your question about Brands four Less, and Axo. So Brands four Less is an investment. Okay? That's not a that's not a joint venture. Axo is a joint venture. And I'd say it's early days to be talking about, you know, the long-term opportunities other than to say that, you know, we are very optimistic about what what that promote of brand can do down in Mexico in the long term. Adrienne Yih: Fantastic. Great job. Best of luck. Ernie Herrman: Thank you. Thanks, Adrienne. Our next question comes from Marni Shapiro. Marni Shapiro: Hey, guys. Congrats on a great year. And congrats on being part of what I thought was one of the best social media trends during the holiday season. Oh, thank you, Marnie. I'm glad you enjoy. We the social Ernie Herrman: media was very very beneficial even though, you know, again, we weren't behind a lot of it. So I know you weren't, but it was Marni Shapiro: stunning. And then I was actively seeking it out when the algorithm wasn't feeding it me on a regular basis. Exactly. It was brilliant. Two quick ones. One big one, one smaller. Just Can you repeat, because you walked through them pretty quickly, the store openings for fiscal year 2026 across the globe? John Klinger: Yeah. Certainly. Ernie Herrman: Let me pull that out. John Klinger: So we've got a total of 130 net new stores. Mhmm. The plan calls for 40 net new stores in Maramax. 30 stores in HomeGoods, which includes 9 at HomeSense, At Sierra, we're adding 20 stores in Canada, we're adding 12 stores. Ernie Herrman: In Europe, we're adding in 22 net new stores. John Klinger: And Australia, 6 net store openings. Marni Shapiro: Perfect. And then, Ernie, this is kind of a bigger picture question, but I'm curious what your thoughts are here. You know, there's been a lot of consolidation on the brand side, some companies that have taken the IP or just, you know, have just a lot of brands within the one big company. So on that side is kind of the bulk of the business, and I'm curious or the bulkiness of the business, I'm curious if this benefiting you guys as a company because you could match their size. And then conversely, on the flip side is you have so many of these much, much smaller brands that are really popping up doing well, making some noise. Is your team having success breaking into these smaller brands as well? Because you know, it's it's obviously, it's hard to know which one of those smaller brands is going to be the next big thing So developing those relationships early. I'm I'm curious if you could talk about that in the market. Ernie Herrman: Absolutely, Marnie. Well, first of all, both both of those situations are priorities for us. And the teams. The the buyers and the merchandise managers Even top to top management with some of the brands that have consolidated under one house even though they wanna keep as many brands as they they don't lose their business to the private label retailers per se. They're they're good at wanting to consolidate that way. We're always trying to nurture those relationships, and they know that we're probably their best outlet to have goods in an eclectic mix non-visible manner, so it you know, those those relationships are actually extremely desired on both sides of the equation. For all of those obvious reasons. What you're talking about on the second one is the more interesting because you know, we salivate over that because we like a lot of new, niche but we call them little nichey brands that keep popping up year after year, which is really what generates our Our you know, when we give you that 21,000 vendor list, it's actually it's it's not a stagnant list, meaning we have vendors a couple thousand that fall off every year, and then we're adding couple thousand new every year. And because we want all these new vendors typically, oh my gosh, ninety plus percent of them are anxious to have us in their back pocket because they know they're relying on, say, a specialty store business and they know they're gonna have x amount of leftover inventory, then they they need to have a home for even though they're not big to your point, Marty. Yeah. So and, you know, our buyers are trained on we want we wanna look at all desirable product, whether it's with a little vendor or a big vendor, and that's what makes our treasure hunt shopping experience more exciting. We don't want narrow vendor narrow big vendor assortments. We want eclectic mixes So that's why I I I love your question and that we we see that as more and more happening to your point. We often spot these little niche vendors online. They'll start some of them just start online strangely enough without a store. Marni Shapiro: Great. That's fantastic. I'll let leave it to somebody else. Thanks, guys. Alright. Thank you, Bonnie. Thanks. Our next question comes from Laura Champine. Laura Champine: Thanks for taking my question. A follow-up on the Q1 guide, just trying to get to the underlying profitability. How much I think you mentioned that the timing of expenses John Klinger: I'm not sure what you said there, but if I look at the Laura Champine: timing of the expenses and the reversal of the reserve release a year ago, what would kind of apples to apples Pretax profit margin fee. John Klinger: So, I mean, the way to look at it is is that Laura Champine: I mean and and these are John Klinger: these are pretty equal. We had we had a one-time item, which is we had a CARES Act benefit last year that benefited us. So we're up against that year over year. Interest is negatively impacting us by 20 basis points as we said in the call. We've got, you know, a timing of hedge, inventory hedge we had a benefit Q4 that reversed in Q1. Laura Champine: And then wage and payroll, so John Klinger: mean, that that kind of explains why we have a hundred basis points of of deleverage. Laura Champine: Okay. John Klinger: Can you quantify the wage and payroll piece or talk to us about inflation you're seeing year on year just on that one line? John Klinger: No. We don't get into the details of our our you know, specific wage. But but again, we we you know, we see John Klinger: legislative increases come pretty much John Klinger: every January. Laura Champine: Understood. And then small one. So the TK Max business adding 22 stores, pretty significant step up. Any markets to call out or better real estate available there as what's driving that? John Klinger: Yeah. So the the opportunities in in Europe are are largely in Germany. Although, we do have opportunities in Austria the Netherlands, Poland, in the UK. But in Ireland as well. But the But the large majority of them opportunity is is in the UK. Excuse me, in Germany. Laura Champine: Got it. Thank you. Operator: Our final question of the day comes from Mark Alschwager. Mark Alschwager: Good morning. Thank you. I don't think I heard this, but John Klinger: how are you thinking about AUR in 2026? And the strong mark on performance, what's driving that? How should we think about the further opportunity on Marcon? Wanna do the AUR. Well, again, we we don't we we I think when we talk about the opportunity, it's a combination of, you know, what the there there are a number of things that go into the the benefit that we see in our gross profit, whether it comes from higher higher price or a better buy. So we haven't been parsed Mark Alschwager: Yeah. Ernie Herrman: And then, Mark, on the I think you're asking about the mark on as we look forward on on the buying So the way we're looking at is, again, this environment, which as you can see, we've made healthy progress in the last couple of years on that front. I feel I feel as though, you know, some of those situations slow up a little bit, obviously. I think the environment right now, however, is a bit of as I said earlier, it is textbook. With more availability, I think heading It's almost every one of the divisions that we have because of the environment. And I I believe a consumer confidence slowdown as well as you have again, a lot of public companies are aggressive on cutting merchandise in advance. Because they have to, you know, grow their earnings. So no reason to believe that our our buyers aren't going to have additional Chinese too? You know, bit by bit, get more merchandise margin as we move forward here. The environment's just kind of set up for that. Mark Alschwager: Fortunately. Ernie Herrman: So although, like, you know, challenging environment overall, but those those tend to work. Pretty well for The TJX Companies, Inc. Great. Thank you. Best of luck. Thank you, Mark. And thank you all for joining us today. We look forward to outstanding you again on our first-quarter earnings call, which will be in May. Operator: Thank you. Operator: Ladies and gentlemen, that concludes your conference call for today. You may all disconnect. Thank you for participating.

Operator: Ladies and gentlemen, thank you for standing by. Welcome to the TJX Companies Third Quarter Fiscal 2025 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions]. As a reminder, this conference call is being recorded, November 20, 2024. I would like to turn the conference call over to Mr. Ernie Herrman, Chief Executive Officer and President of the TJX Companies, Inc. Please go ahead, sir. Ernie Herrman: Thanks, Sheila. Before we begin, Deb has some opening comments. Debra McConnell: Thank you, Ernie, and good morning. Today's call is being recorded and includes forward-looking statements about our results and plans. These statements are subject to risks and uncertainties that could cause the actual results to vary materially from these statements, including, among others, the factors identified in our filings with the SEC. Please review our press release for a cautionary statement regarding forward-looking statements as well as the full Safe Harbor statements included in the Investors section of our website, tjx.com. We've also detailed the impact of foreign exchange on our consolidated results and our international divisions in today's press release and in the Investors section of tjx.com, along with the reconciliations to non-GAAP measures we discuss. Thank you. And now I'll turn it back over to Ernie. Ernie Herrman: Good morning. Joining me and Deb on the call is John. I want to begin our call today by saying that our hearts go out to all of our associates, their families and everyone who has been affected by Hurricane Helene and Milton. To help with relief efforts, we made essential emergency supplies and resources available to our associates in the impacted areas. We also made emergency donations to the World Central Kitchen and the American Red Cross through our TJX Foundation. We take our commitment to supporting communities seriously and try to help local communities during times of need through our longstanding relationships with organizations that provide critical support. Now to our business update and third quarter results. I am very pleased with our third quarter performance. I want to personally thank all of our global associates for their continued hard work and commitment to TJX. Comp store sales growth of 3% came in at the high end of our plan. I am particularly pleased with the operational execution across all of our divisions as each delivered comp store sales increases entirely driven by customer transactions. I want to specifically highlight our European team for their efforts and strong results, which drove the 7% comp increase at our TJX International division. Clearly, our terrific assortment and great values across our retail banners resonated with many of our shoppers when they visited our stores. In terms of profitability, pre tax profit margin and earnings per share both well exceeded our plans. With our third quarter performance, we are once again raising our full year outlook for pre tax profit margin and earnings per share. John will talk to our profitability performance and guidance in more detail in a moment. Looking ahead, the fourth quarter is off to a strong start. We continue to see outstanding availability of goods across a wide range of brands, which gives us great confidence in flowing fresh, exciting assortments to our stores and online this holiday season and beyond. Longer term, we are excited about the opportunities we see to gain additional market share and continue our successful growth in the United States and internationally. I'll talk more about our holiday plans and our opportunities for global growth in a moment. But first, I'll turn the call over to John to cover our third quarter results in more detail. John Klinger: Thanks, Ernie. I also want to add my gratitude to all of our global associates for their continued dedication to TJX. Now I'll share some additional details on the third quarter. As Ernie mentioned, our consolidated comp sales increased 3%, which is at the high end of our plan and entirely driven by customer transactions. Once again, both our apparel and home categories saw comp sales increases this quarter. Pre tax profit margin of 12.3% was up 30 basis points versus last year. Pre tax profit margin was 40 basis points above the high end of our plan, primarily due to a benefit from the timing of certain expenses, most of which we expect will reverse out in the fourth quarter expense savings and higher net interest income. Gross margin was up 50 basis points versus last year. This favorability was primarily due to an increase in merchandize margin. SG&A increased 10 basis points versus last year. This increase was due to incremental store wage and payroll costs, which largely offset the year-over-year benefit from closing HomeGoods e-commerce business last year and lower incentive compensation expense this year. Lastly, we're very pleased that diluted earnings per share of $1.14 were up 11% versus last year and also well above plan. Now to our third quarter divisional performance. Again this quarter across all of our divisions, the comp increases were entirely driven by customer transactions. We see this as a great indicator of the strength of our value proposition. At Marmaxx, comp store sales increased 2% and segment profit margin was 14.3%, up 30 basis points versus last year. During the third quarter, Marmaxx's sales were negatively impacted by store closures due to the hurricanes. Marmaxx's apparel and home categories, both saw comp sales increases. We are excited about the initiatives we have planned to drive sales and customer transactions at T.J. Maxx and Marshalls this holiday season. Further, we have some great merchandize plans for our U.S. e-commerce sites in our Sierra business. Long term, we remain confident that Marmaxx, our largest division, can further grow its customer base and increase its market share. HomeGoods comp store sales increased 3%. Segment profit margin grew to 12.3%, up 200 basis points versus last year. As a reminder, last year we had a significant negative impact from the costs associated with the closing of our HomeGoods online business. During the third quarter, we were proud to open our 1,000 store in our HomeGoods division, a terrific milestone. With a highly differentiated mix of eclectic merchandize from around the world, we believe that both HomeGoods and HomeSense are well positioned to capture additional share of the U.S. market over the long term. At TJX Canada, our comp store sales were up 2%. Segment profit margin on a constant currency basis was 15.2%, down 170 basis points versus last year. I want to mention that most of the year-over-year decline in Canada's margin was due to some non-recurring items last year and this year that impacted our year-over-year comparability. That along with increased freight costs due to the rail shutdown. We are the only major off-price retailer in Canada. We have a very loyal customer base and our offering well recognized retail brands across good, better and best categories. We believe that this sets us up well to attract even more customers to all three of our Canadian banners. At TJX International, comp store sales increased 7% with strong increases in both Europe and Australia. Segment profit margin on a constant currency basis improved 7.2%, up 180 basis points versus last year. As Ernie said, we are very pleased with our European results, which drove this division's overall performance. Going forward, we are confident that we can gain additional share of both the European and Australian retail markets and increase this division's profitability. Ernie will have more to say on our international growth opportunities in a moment. Moving to inventory. Balance sheet inventory was up 1% and inventory on a per store basis was down 2%, driven by lower holdings at our distribution centers. We feel great about our liquidity and the outstanding availability we're seeing in the marketplace. We are very well positioned to flow fresh assortments to our stores and online throughout the holiday season. I'll finish with our capital allocation. We were very pleased to generate another quarter of strong cash flow while also reinvesting in the growth of our business and returning cash to shareholders through our buyback and dividend programs. Now I'll turn it back to Ernie. Ernie Herrman: Thanks, John. Now I'll highlight the opportunities we see that give us confidence that we can keep driving sales and customer transactions in the fourth quarter. First, and most importantly, we remain committed to delivering outstanding value to our shoppers every day. This holiday season, consumers can expect to see great value throughout our stores every time they shop us. We see this as a meaningful advantage as consumers can shop our excellent values every day and not have to wait for sales or promotional days elsewhere. Second, with the outstanding availability we have been seeing in the marketplace, we are well positioned as a destination for gifts this holiday season. Each of our banners are set up extremely well to offer shoppers across a broad range of income demographics and exciting selection of gifts at price points that can meet their budgets. With gift offerings in every department, we believe our stores are an appealing one-stop shopping destination for consumers to buy for everyone on their list. Further, after the holiday season, we'll continue our focus on being a year-round gifting destination. Next, as we do all year long, we plan to flow fresh merchandise to our stores and online multiple times a week, which we believe is a key differentiator of our business. With our ever-changing assortment of merchandise, we are confident that shoppers can see something new every time they visit. In addition, we feel great about our plans to flex our stores after the holidays, to the categories and trends we believe consumers will be looking for to start the new year. Lastly, we feel great about our holiday marketing campaigns, which launched earlier this month. Each of our brands are emphasizing gift giving and reinforcing our value leadership. We plan to showcase a wide selection of quality products to highlight that there is something for everyone and demonstrate that our great values are available to everyone, every day. Further, we plan to advertise through a variety of media channels with an emphasis on digital to reach consumers across a wide age and income demographic who are seeking gifting inspiration. Moving on, we believe we are in an excellent position to continue capitalizing on the growth of off-price around the world and further grow our leadership position. giving me confidence is our very long track record of executing our flexible business model and our value leadership. We strongly believe that our decades of off-price expertise and knowledge is a tremendous advantage and will allow us to continue delivering comp store sales growth, driving customer transactions and attracting new shoppers. Next, we continue to see a significant opportunity to follow -- to further grow our store base in our existing countries. With over 5,000 stores today, we continue to see the potential to open another 1,200-plus stores with just our current retail banners in our current countries. Beyond this, you've heard me say before that we believe our off-price model can work wherever consumers seek fashion and brands at great prices. With that said, I'm excited to announce today that we are planning to expand our T.K. Maxx banner in Spain. We've been looking at the Spanish market for quite some time and are confident that the timing is right. And that we have a strong understanding of the marketplace and the consumer. Importantly, other than a small field office in Spain to effectively serve the local market, we plan to leverage our existing European infrastructure and organization. We expect our first stores to open in early 2026 and long term. We see the potential to open more than 100 stores in Spain. In addition to our current countries and our planned expansion in Spain, we are extremely pleased to gain off-price exposure in new markets as well. Through our JV with Grupo Axo and our investment in brands for less, we'll now be participating in the growth of off-price in Mexico the UAE, Saudi Arabia and beyond. We are always looking for ways to increase shareholder value, and we see these two investments as a good use of cash with an attractive growth and return profile over the long term. All of this gives me confidence that even as a $50 billion-plus global retailer, significant opportunities remain to capture additional market share around the world going forward. Summing up, I am very pleased with our third quarter performance, and we feel great about our initiatives for the holiday selling season. I want to reiterate that we are always looking at ways to increase both our top line and our profitability. Longer term, we are confident that our value leadership treasure hunt shopping experience and flexibility will continue to be key advantages and allow us to increase our market share. Further, I'm convinced that our global talent is unmatched and that our focus on culture, teaching and training will continue to be major contributors to our success for many years to come. Finally, we have many initiatives underway in our corporate responsibility programs, and I encourage anyone to learn more about our efforts on our corporate website, tjx.com in the Responsibility section. Now I'll turn the call back to John to cover our fourth quarter and full year guidance, and then we'll open it up for questions. John Klinger: Thanks again, Ernie. As a reminder, adjusted numbers for last year's fourth quarter and full year exclude the benefit from the extra week in our fiscal calendar last year. Now I'll start with the fourth quarter guidance where we are expecting overall comp store sales growth to be up 2% to 3%, consolidated sales to be in the range of $15.9 billion to $16.1 billion pre tax profit margin to be in the range of 10.8% to 10.9%, down 10 basis points to flat versus last year's adjusted 10.9%. And gross margin to be in the range of 29.4% to 29.5%. This will be down 10 basis points to flat versus last year's adjusted 29.5%. As a reminder, this year's fourth quarter gross margin assumes a negative impact from our year-over-year shrink accrual. SG&A to be 18.8%, which would be 10 basis points favorable to last year's 18.9%, net interest income of $35 million, which we expect to deliver pre tax profit margin by 10 basis points. Our fourth -- our fourth quarter guidance also assumes a tax rate of 26.0% and a weighted average share count of approximately 1.14 billion shares. Lastly, we're expecting fourth quarter diluted earnings per share to be in the range of $1.12 to $1.14 versus last year's $1.12 -- adjusted to $1.12. Moving to the full year. We continue to expect overall comp store sales to increase 3%. We expect consolidated sales to be in the range of $55.9 billion to $56.1 billion. We're increasing our pre tax profit margin guidance by 10 basis points to 11.3%. This would be up 40 basis points versus last year's adjusted 10.9%. We now expect gross margin to be 30.3%, a 40 basis point increase versus last year's adjusted 29.9%. We expect this increase to be driven by a higher merchandise margin, partially offset by higher supply chain costs. We continue to plan shrink to be flat versus last year. We continue to expect SG&A to be 19.3%, flat versus last year's 19.3%. We're planning incremental store wage and payroll costs to be offset by lower incentive compensation costs and a benefit from items that negatively impacted us last year. We're now assuming net interest income of $174 million, which would have a neutral impact on our year-over-year pre tax profit margin. Our full year guidance assumes a tax rate of 25% and a weighted average share count of approximately 1.14 billion shares. We now expect fully diluted earnings per share to be in the range of $4.15 to $4.17. This would represent an increase of 10% to 11% versus last year's adjusted diluted earnings per share of $3.76. It's important to note that we are not flowing through the entire third quarter earnings per share beat of $0.06 to the full year as we expect $0.02 of timing expenses benefit in the third quarter to reverse out in the fourth quarter. In closing, I want to reiterate that we are very pleased with the execution of our teams across the company in the third quarter. We are confident in our plans for the fourth quarter and always will strive to beat them. We have a very strong balance sheet and are in an excellent position to continue investing in the growth of TJX while simultaneously returning significant cash to our shareholders. Now we're happy to take your questions. As a reminder, please limit your questions to 1 per person so we can answer as many questions as we can. Thanks. And now we'll open it up for questions. Operator: [Operator Instructions]. Our first question will come from Matthew Boss with JPMorgan. Your line is open. Matthew Boss: Thanks and congrats on another nice quarter. So Ernie, could you speak to the cadence of comps at Marmaxx or maybe outside of hurricane and weather disruption any change in business or market share momentum in the holiday in 2025? And then, John, if you could just outline or elaborate on the drivers of the third quarter merchandise margin expansion. Maybe just walk through continued drivers of merchandise margin looking forward? Ernie Herrman: Yes. So good question, Matt. Yes, we were actually starting off stronger than where we ended up in Marmaxx at the beginning of the quarter. And in addition to the hurricanes that hit us later, it was really some unseasonably warm weather in Marmaxx that kept pulling us down. In fact, we pretty much rounded down to the two. We were heading in a good place. And I'll tell you this, I'm extremely happy with where Marmaxx is starting off, starting off strong as we enter November here. And I know you're not asking about Europe, but this is where the weather and you've probably seen all the different reports of the unseasonably warm weather has affected other retailers and shopping patterns beyond just the hurricanes, our Europe business had a benefit weather. So the 7 comp that we have there, that team over there who did a great job on executing, I think, would tell you though that they were helped by some favorable cooler weather actually in Europe. So it's a tale of two cities. And again, the cadence was kind of like that, the way Marmaxx went. So we're ultimately feeling very good about the Marmaxx business. and where we're headed for Q4. John Klinger: Yes. And as far as your question about the gross margin, most of it was in the merchandise margin line. We also had some expense savings in the DC line. And that's really from, as we said, that the inventories, I mean, they were on an average per store basis were down in the DCs and up in our stores. We're very comfortable with where the inventory is landed. So the DCs were processing closer to need, and that gives us savings in our DCs on the processing side. Matthew Boss: Great. Best of luck. Operator: Next, we will hear from Brooke Roach with Goldman Sachs. You may proceed. Brooke Roach: Good morning and thank you for taking our question. With tariffs and supply chain top of mind, I was hoping you could elaborate on how you're thinking about your current exposure to direct imports from certain countries such as China. And what impact a potential tariff scenario could have on your business, both in terms of inventory availability, but also costs to merchandise sourcing? Ernie Herrman: Sure, Brooke. Obviously, something we're aware of potential situations out there and all along we watch these things. As you remember, we've dealt with this before a number of years ago. I would tell you this is one of the places where our model is such a benefit because our priority is maintaining our value gap, right, on our goods relative to the out-the-door retail that competition. So while we won't speculate on exactly what will happen with certain items or certain categories, if it does happen, we are set up to ensure that we maintain our value gap between us and the out the door at no matter what those categories are that could get hit with tariffs. Everything is relative. We will make sure our values are proportionately below them as they always have been. Again, we have the flexibility that we're not buying so far early and out. The other opportunity, ironically, that tends to surface in times like this is we could have other manufacturers or retailers that do more of their own direct imports. And I know you mentioned our direct imports that's a very small portion of our business. And we've already a number of years ago, started diversifying out of China. As an aside, by the way, on this topic, as you know, the bulk of our inventory is bought from brands. So we don't even have visibility into where those goods are from, nor do we actually want to get involved in that. It's back to the value gap that we retail those goods out relative to competition. So if a brand were to get hit with tariffs increased tariff on a category, and that brand had to raise their price and then that price gets carried on to another retailer. Could that price on that one SKU for us be up a little? It might, but it will never be at any issue with the value gap that we have relative to the competition. On the direct back to the imports, that's such a small number for us that we're really not concerned on that piece, same idea. I would say, what was the last part of your question there for? Brooke Roach: Just whether or not there was any benefits or opportunities that tariffs could present to your buying…? Ernie Herrman: Oh, yes. I'm sorry. So with the vendors could bring in good manufacturers could bring in goods early and this is what happened last time, that could create actually even additional availability of goods at advantageous prices for us because we can take advantage of that opportunistically. And that's as likely a scenario as anything. So once again, this is where the model when, when there's chaos out there in the market a little, if that happens a little bit on certain categories, ultimately, usually, that's an opportunity for us. John Klinger: And then, Brooke, just to add on, you had questioned the supply chain. So we are anticipating a little bit of freight headwind in the fourth quarter, which we have reflected in our forecast. Brooke Roach: Great. Thanks so much, I’ll pass it on. Operator: Our next question will come from Lorraine Hutchinson with Bank of America. Your line is open. Lorraine Hutchinson: Ernie, the comp continues to be driven by transactions. Can you talk to the composition of the new customers that you're gaining by age and income level and any changes you've seen in recent quarters or signs of trade down in that customer cohort? Ernie Herrman: Right. No, great question, Lorraine. It's interesting, John, the team and marketing team, we look at this all of the time. We have, over the last few years, started to more of our customers are skewing a little bit younger as consistent we've talked about age 18 to 34 has been a growing segment for us. This is good based on where we have kind of skewed our business, but I would like to emphasize interestingly Lorraine. One thing I always talk about is how we trade broadly. That's in terms of income and age, all right? And we recently have looked at our breakdown by the age groups and the income groups. And again, it's a competitive advantage for us. We love the way we are balanced by age and income across every one of our banners. And we've recently looked at the new data on it. And yes, on the on some of the younger that's moved that way a little bit, it's still extremely in proportion to the different age groups balance across -- against the general population. We love that because it allows us to continue to keep growing our customer base on all incomes and demographic as well as you know this, we're all about good, better, best in our product. And so we continue to emphasize that with our merchants with the way we do our store formats, we want to appeal to all different incomes and age groups. And so -- I think I answered your first part about where the growth has been on the customer. But what I would tell you is our objective is to continue, yes, to get younger customers on the same time, unlike other retailers that kind of narrow in on their customer base from a demographics perspective. We are not doing that. We want to continue to trade broadly. So if we get more younger, I still don't want us to give up the older age customers or the in between. And so John, anything else you want to add to that? John Klinger: With our good, better, best strategy, we trade across all income demographics. And last quarter, we saw positive performance across all the income demographics categories that we track. Ernie Herrman: And you know what, I think neat and again, for the future, as we continue to expand, is there is a convenience benefit -- not only do we create more of a treasure hunt by going after this wide range of wider than our competition, and I don't mean just off price competition. I mean all competition that tends to trade -- now you and we've spoken about this many times. I think for the future, it continues to allow us to differentiate ourselves from the other retailers and to when we enter our market, it creates convenience not creating treasure hunt entertainment type of shopping experience, it creates convenience because when somebody is shopping in their stores, especially for gifts even you're having different levels of gifts, not just not a one age group, one income group. It allows somebody to have a convenient shopping experience as well as an unexpected what are you going to find shopping experience. Lorraine Hutchinson: Thank you. Ernie Herrman: Thank you. Operator: Next, we will hear from Paul Lejuez with Citi. Please go ahead. Paul Lejuez: Hi, guys. Two quick ones. I'm curious if you can talk about whether your view of the consumer has changed versus the last time we heard from you, three months ago, just given there have been some things that have changed on the macro sense. Just curious if you're seeing anything on the consumer? And then second, if you can just talk at a high level, about how you're thinking on margin expansion opportunities or challenges in 2025, if you can give us an early peek into how you're thinking? Thanks. John Klinger: I'll start, and then I'll let Ernie chime in on the merchandise margin question. As far as the consumer goes, there's really no change in how we're viewing the consumer either by income demographic or by age. We -- again, as Ernie just mentioned, we're attracting more customers that are in that 18 to 34 age range, which we think is a definite plus when you think of the long-term health of the business. But again, the merchandising strategies that Ernie has talked about over and over again, we feel that, that, again, differentiates us from a lot of competitors and really gives a broad cross-section of the population and interest to shop us. Ernie Herrman: Paul, I'll throw in two other things. I think this might also be helpful based on your question is what's changed since last quarter per se and the view on a macro scale, I don't know if this is a one-quarter thing or over the last few quarters. But as you can see, the health of our home business makes me continue to be very bullish on where we're headed in home. And I don't know if that's a macro trend. I know it probably is inconsistent when you look at the results in the home industry. But I think on our end, we're seeing for our customer, obviously, you can see from the build. In fact, I am thrilled with what HomeGoods did this past quarter against a very big comp last year. I would say, for our customers, and by the way, we believe there we gain additional customers. There's a bit of a -- an open to look for fun, I would say, eclectic fashion home merchandise and an ever-changing home assortment that, that seems to be picking up over the last few quarters, I would say, not necessarily Q2 to Q3, but I would say our Q3 versus three quarters ago. And you can see, we talked about that a bit on the last call. But I'm feeling even more bullish quarter-by-quarter. We've been -- and I've been talking about it for a year now. And that team, I'm very proud of our home teams across the corporation. I'm talking to stores the way they put out the goods, but also our merchants have been so collaborative in the way they've executed from HomeGoods to Marmaxx, to Europe, Canada, all the merchants at our home businesses have really been doing a nice job taking advantage of what I think is a bit of a shift. Paul Lejuez: And then on the margin for next year, any thoughts? John Klinger: We're not giving guidance today on the -- we're not prepared to give guidance for next year. I mean, we've been very consistent in saying that on a 3% to 4% comp, again, assuming no outsized expense increases and some merchandise margin improvement, we can be flat to up 10 basis points. But the biggest lever we have is our top line growth. When customers are searching for value, we believe our execution and the value we offer will continue to resonate with those customers. So we think that driving that top line is something that we will continue to do. So again, we'll give guidance on the fourth quarter call for FY '26. Paul Lejuez: Thanks. Those were my points. John Klinger: Thank you. Operator: Our next question will come from Michael Binetti with Evercore. Your line is open. Michael Binetti: Thanks guys. Great quarter. Thanks for taking our question. Maybe just to double click on Paul's question a little bit. As we think about the typical algorithm you guys speak to, I think last year was two to three comps with flat to 10 basis points of pre tax on PAT. I know you don't want to get into guidance, but any items or puts and takes we should start thinking about qualitatively to consider with respect to what would be a normal year tariffs, labor or just the mix of business. I don't know, John, you mentioned maybe there was a few thoughts that the international margins improvement you've been seeing lately could be more durable. I'm curious what you thought there. And then, Ernie, glad to hear your confidence on Marmaxx here in November. If you would mind just double clicking on it for a minute. What do you think is working? Is that weather just getting out of the way and it always should have been better or are you seeing the weather-sensitive categories improved or are these early reads from the holiday categories? Ernie Herrman: Although it will start, I know that's your last part there, Michael. But yes, I think more of that, again we - I think Marmaxx would have tracked better if the weather wasn't unseasonably warm. And so now I think we're getting that weather picture out of the way here a bit and that's helping as well as I think I talked about in the script, we have so many of our gift giving categories that are now hitting the stores. And if you look -- I think now is a place if you look typically in our Q4, where we gained market share pretty steadily over a number of years. And I think there's a combination of the weather getting out of the way as well as Marmaxx is looking particularly strong from a mix perspective with gift-giving and fresh goods that have been hitting. So I think it's both. But thanks for that. Thanks for -- we don't mind double clicking on that one. John Klinger: Yes. And then just to get back to the first part of your question, last year, we did have a number of onetime items that gave us a little bit of a tailwind this year. So that's why this year on a two to three comp we've been able to be, excuse me, on a three to four comp, we've been able to be higher or flow more there really isn't a lot this year that's impacted us. We don't see Spain next year as being a large headwind -- we're trying to be as cost-effective as we can going into that market, leveraging as much as we can that European business. So again, I'd just go back to my upfront comment of what we see until we have more detail for you on the fourth quarter. Michael Binetti: Thank you. Operator: Next, we will hear from Alex Straton with Morgan Stanley. You may proceed. Alex Straton: Perfect. Thanks for taking the question. I wanted to focus in on HomeGoods, again, those initial comments were super helpful. Can you just talk about the profitability improvement there and how you guys have been able to drive that to such a nice level after a number of years of pressure? And then just on the international kind of announcements and a number of entries or changes this year. Has something changed in terms of strategy or how are you guys thinking about that? Thanks a lot. Ernie Herrman: All right, Alex. Let me start with and then John will probably jump out on the HomeGoods margin. But if I can get to you on what you're asking, which I would figure this would be a question. The international expansion is we're at a bit of a junction here of where we have talent and you've heard me talk about this before. We've always have this great business model, but I wanted to be very careful and strategic about when we roll it out to not dilute our core businesses. And so what's happened is the time -- so the timing of our model, along with entries into markets where nobody is doing a good job or even doing a job on off-price has been surfacing at a time when we -- because of all of the tenure that we have in TJX, which I have to emphasize, again, our management team's experience at all different levels from managers all the way up to top executives, we have tenure and experience across this corporation, really like never before. So that's allowed me to really work with the teams and identify opportunities and then have a handful of people that were either coming out of their jobs. They could have been nearing retirement or wanted to do something a little different. And we've been able to utilize them to actually help us make these, I guess, joint ventures or investments or new businesses like in Spain. So what really Alex has happened is we have more talent where I don't have to risk the core businesses to allow us to entertain and then actually get involved with these opportunities than we've ever had before. And so that's why you're seeing us do three different things internationally without taking away any focus or execution risk in our core businesses. Does that make sense? So that's a conscious really a conscious point of where we're at today. And I go back to not just the benefit, obviously, for these new business ideas, there's the benefit for our core businesses that this corporation has so much talent across the board. I think that's a differentiator for us from other retailers is the longevity that we have. John Klinger: And then getting back to getting to your -- the beginning of your question, which is on HomeGoods giving you a little more color on the 200 basis point improvement. So the biggest thing I said in my talking points was the closure of homegoods.com last year. That we weren't up against that we didn't have this year. But other pieces, we had some expense efficiencies that we saw in the division along with some freight favorability. And this was, again, partially offset by supply chain wage and some inventory cap expense in the inventory cap is one of the pieces that we're seeing as reversing next quarter. Ernie Herrman: One other thing I would jump in with there also, Alex, as you're asking about that home margin. And as I talked before, we're bullish on home in total, but our home margins are healthy across the board. So we're always feeling good and especially directionally, as you can see, where you and John just spoke about how the last quarter was a nice margin in HomeGoods. We're feeling good about our home business margins in general. So just it's -- that's another positive which is also in an industry where oftentimes margins are challenging at home, some of that has to do with those categories that other retailers do more of their business. And obviously, we're more fashion driven and eclectic, but thanks for the question. Operator: Our next question will come from Ike Boruchow with Wells Fargo. Please go ahead. Ike Boruchow: Hi, good morning everyone. Just wanted to kind of dig in a little bit more on the overseas comp. One of the best performances you guys have put up in a few years, I think, just maybe just -- could you talk to the macro in both of those key regions, Australia and Europe kind of curious if anything is changing for the better at a higher level when you look at it? And then just a follow-up to that is -- should we expect a kind of similar dynamic with Marmaxx where you kind of talked about the weather was unfavorable, it shifted Marmaxx improved? Is it kind of the same thing with Europe, weather it was very favorable? I assume things have normalized, like kind of in terms of the comp should the comp be kind of normalizing as well after a really robust 3Q? John Klinger: I mean our international comp, I mean, we had a strong comp both in Europe and in Australia. And it's the international comp is -- it's a portion that excellent execution, but also weather that Ernie had called out. So nothing more to add on that. As far as the Marmaxx comp, again, we continue to execute well there, and we're confident in our plans for the fourth quarter. Ike Boruchow: I guess what the question is, have you seen a normalization in the comp trend as the seasonal benefit, I assume it's kind of waned a bit just like with Marmaxx, the seasonal headwind has waned trajectory-wise for that business? Ernie Herrman: Right. So I think what you're getting -- so you're getting a yes, we would not plan to assume we're going to run at 7 comps all the time because, again, part of that was a benefit from the weather change and that goes away. Just by the way, yes, you're exactly right. Just as in Marmaxx that kind of went the other way and could go the other way. You also asked, I think, about the macro environment. I think the macro environment has not really changed much in Europe. That's still about the same. This was more about our own execution and the weather. And then obviously, here in the States, same thing. Ike Boruchow: That’s helpful. Thank you, Ernie. Appreciate it. Ernie Herrman: Welcome. Operator: Next, we will hear from Bob Drbul with Guggenheim. You may go ahead. Bob Drbul: Hi good morning. Following up on the home business, can you spend some time just on HomeSense sort of how you're doing in the various regions, U.S., Canada, Europe? Thanks. Ernie Herrman: Yes. So HomeSense, we've been very happy with. And in fact, as I was really trying to hint at earlier is our home business across the Board has really been healthy. We're liking what we're seeing for the most part, some exceptions throughout every geographic area that we're in. John Klinger: Yes, we are positive across all the geographic areas that we have in these home businesses. And again, that includes the apparel stores where we have home as well. Ernie Herrman: That's right, the full family stores, right? And by the way, in Europe, that was part of our strong performance, right, John, last quarter, so HomeSense there as well. We're also -- we've had a pickup recently in our HomeSense in the U.S. business as we've been playing with some execution issues there. not trouble per se, but ability to, we think, do more business going forward by tweaking the mix. So we don't say what that is, but we've done some good things in the teams. I give them a lot of credit that HomeSense business, but no feeling really good across them. Obviously, in Australia, we do home in our -- within our -- there is no separate home business versus in the other geographies. Having said that, that has also been healthy. Yes. So yes, again, all the indicators are in, I go back to we do our home business differently. Our merchants there collaborate and are creative, and I think all of you have seen this, what we give to the consumer in our home area is very different than what any other retailer does. Even though in some categories, we're overlapping, the approach is so much more eclectic. And by the way, good better best throughout the entire home area just as in the rest of our stores. So couldn't be happier where we're headed there. Bob Drbul: Great. And just within the Marmaxx business, the runway piece of the business, are you seeing sort of better availability in some of the luxury goods areas for some of your stores? Ernie Herrman: We usually don't comment on anything like that specific, but I mean availability has been okay there. That's -- it's such a limited -- we don't really use that as a bellwether for availability for us because it's only a limited store base. And that kind of moves because of the smaller resource structure there, it's a bit more up and down, and it could literally change week-to-week. So that's why we don't comment on availability in that business. But -- as you can see, the nature of the product that we have there is really what sets us apart and helps us with our mission of good, better, best. And in that case, it's probably best plus, I guess, you would call it. Bob Drbul: Great. Thank you. Ernie Herrman: Thanks. Operator: Our next question will come from John Kernan with TD Cowen. Your line is open. John Kernan: Good morning, everybody. Thanks for taking our question. A lot of questions on home here. I would also like to focus in on a few of the other categories like beauty, consumables, footwear, accessories you go into stores, it looks like these categories continue to be elevated and some of them seem like they're getting floor space. So maybe just any commentary on some of the categories outside of home and then some apparel [ph]? Ernie Herrman: Yes. No, John, great observation and a great question. Obviously, yes, you can see some of the other businesses. I guess you would -- you're calling them consumables. Obviously, you can see we're doing a great job and things like that or beauty or there's many categories throughout the store that you would call consumables. I believe that those businesses are part of -- every one of our brands right now is doing a lot in that because we do, a, a good consistent flow of freshness there. And we talk about an area we kind of crush competition on value, our value and whether you look at the beauty business you looked at or if you look at our pet business, which is a consumable, really, for the most part, or many of the other areas, some of them are in home. Some of them are not there by our line up at the front of the store. You know many of those, even though you wouldn't think of them, everyone needs to replenish their -- their ear pods very often are the phone cases or right? And so all of the things that you just called out very strong, and we continue to have it be there. We believe their traffic -- I believe they're traffic builders and frequency of visit builders. As well as they are a form of extreme value because most of those categories, when you go to buy them and other retail or online, I believe the initial markups on those in the retails are pretty high. And so we show exceptional value in those consumable areas, which, obviously, the customer appreciates because the customer is getting something that they know they're buying often and they're saving money every time in a great way. So I'm glad you actually called that out because we don't really talk about that is we don't really talk about that as much. Wasn't there -- there was another piece where you're asking about apparel or something? John Kernan: I wanted to talk on the other categories outside of core ladies... Ernie Herrman: Yes, outside of home… John Kernan: I think follow up to John might be just on the gross margin question you got asked a few different ways. What would be the long-term driver of further merchandise margin expansion? Is it as simple as full price sell-through, mark it up, mark on? Like how do we think about the long-term merchandise margin opportunity outside the leverage on 3 to 4 comps? John Klinger: Yes. Obviously, if there was a change in expense base, I mean, if -- because as we say, no outsized expense increases, if we started to see some expense decreases in certain areas, I mean, that could change the model. But the number one lever that we have to pull is the top line growth. And that's really where we see the opportunity going forward of just continuing to grab market share and continuing to grab that top line. John Kernan: That’s great. Thanks guys. Best of luck. John Klinger: Thank you, John. Operator: Next, we will hear from Adrienne Yih with Barclays. You may proceed. Adrienne Yih: Great. Thank you very much. Let me add my congratulations. So Ernie, we always say all very lead to off-price. So here's a little bit of a conundrum for you. Would you rather be in a backdrop that is pressured where you are taking share and getting trade down? Or would you rather be in a healthier environment stimulated maybe by demand in the back half of next year where you can raise prices relative to the market, but maybe inventory is a little bit cleaner. I think the latter... John Klinger: In any kind of economic time. I mean we've consistently shown that that if times are good, we trade well, if times are troubled, people are looking for value, we tend to be a retailer that customers look for. I don't know if you have anything to add Ernie. Ernie Herrman: I do, Adrienne. I favour the -- I like them both scenarios for different reasons. The only thing is on the second one, and I think your guess for me is I would slightly favour the a little healthier environment. But you said a little cleaner, the only thing we have -- I haven't witnessed that. So meaning when the environment is healthier strangely enough, what ends up happening is you have this initial lag, but when retailers get healthier, the wholesalers and those retailers tend to cut, meaning place more -- a little bit more goods more aggressively to chase what they believe is going to be a healthier trend, which ultimately doesn't lead to cleaner it might be cleaner for like a quarter or something. Do you know what I mean? So I like the healthier because it generally also even though innately first blush, you would think it would -- it would lead to leaner excess inventories, our experience has been that hasn't happened. So -- but then for the original reasons you were saying, I think it's good, where prices are up and then everyone can just -- we can maintain our gap. And meanwhile, you have to John's point, we do well in the other environment too so. So I just personally like what you were saying on the second one. Adrienne Yih: And then my second follow-up is you're camping a really heroic home comp. Are you seeing a little bit of kind of movement, housing has started to move a tiny bit with rates coming down a bit? How does that work sort of in a Fed cutting cycle? I would imagine the horizon for the next year looks pretty good for HomeGoods and you're already starting to see that come through. So comment on that, Ernie or John? Ernie Herrman: Yes. I think, Adrienne, right now, I know what you're getting at. We think there might be a little bit of that starting. I think that would be more next year where we believe there's a tailwind a little bit to your point, to help because home starts. If interest -- if mortgage rates did come down a notch, maybe you get more of that, even if it's not home starts, people are more willing to now go by fresh accessories or the core for their homes. And I think that's probably the play. Right now, I believe this is more of our own internal strong execution by the team that drove more of that comp against the big comp. And I believe it's also the environment where a lot of the competition has really looked stale. And so I think it's allowing us to even more shine. And so some of the things that -- if you walk in a HomeGoods right now, if you look at our holiday from our holiday signing package to all of the giftables to the different food categories that we have that are extremely gift oriented. I think the biggest thing right now is setting HomeGoods apart from all the other competition out there right now is, I believe, the biggest thing -- and then I think to your point in the spring, I believe we might get a little bit of a tailwind help by what could potentially be more of what you are talking about, new home or new purchases for your current on, given the economics. Adrienne Yih: Thank you so much, well done to the team. Ernie Herrman: Thank you, Adrienne. Operator: And our final question of the day comes from Dana Telsey with Telsey Group. Your line is open. Dana Telsey: Hi, good afternoon everyone. Congratulations on the nice results. I would say that your marketing journey of HomeGoods, what you had in Madison Square Park with the HomeGoods house look terrific in New York a couple of weeks ago… Ernie Herrman: You saw that, yes, that's great. Dana Telsey: Not only I have pictures too. It looks terrific. And it was a traffic driver. Yes. So the other thing, just as you think about marketing, how do you think of marketing as a percent of sales going forward? How is it different this holiday season from last -- and on the other note of Real Estate, what are you seeing in terms of new store performance of relocations and remodels, any shifts in store size? Thank you. Ernie Herrman: Yes. Well, first of all, on our marketing, our attitude is to play a little bit of offense. So we're spending a little bit more and our creative, which I would love to we have groups coming up, but we'd love you guys to see the marketing campaigns. If you haven't seen some of the TV spots that have already been playing we think they're just terrific. And I think also the geared educating consumers that haven't shopped us to understand the value and what it is to shop us. And that's going to be playing out really strong, I think the teams have -- so we always look at marketing in terms of the -- what we're spending, obviously, to your first part of your question, but what is the creative one we're spending it on and because you need that to be breakthrough and then to -- you're trying to get an additional visit from either your infrequent shoppers or grab new customers. And the campaigns we're running really are geared at really going after a lot of consumers that have even entertain coming to us. So really feeling good about that. John, do you want to... John Klinger: Yes. So your question around the relocations and remodels -- as far as the remodels go, we're ensuring that we're staying -- keeping the estate fresh. And so that when a customer comes in, no matter what store they come into they get the same shopping experience and maintaining that just means that we're not going to start to lose sales due to a poor shopping environment. And then the relocations, where we can where we see the opportunity to move into a better retail area, we see definite positives in the relocations that we've done over the last number of years. Dana Telsey: Thank you. Ernie Herrman: Thank you, Dana. And I would like to thank everyone for joining us today. We look forward to updating all of you again on our fourth quarter earnings call in February. And again, thanks for your time. And everyone have a safe holiday. Operator: Ladies and gentlemen, that concludes your conference call for today. You may all disconnect. Thank you for participating.

Operator: Ladies and gentlemen, thank you for standing by. Welcome to The TJX Companies Second Quarter Fiscal 2025 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference call is being recorded August 21, 2024. I would like to turn the conference call over to Mr. Ernie Herrman, Chief Executive Officer and President of The TJX Companies, Inc. Please go ahead, sir. Ernie Herrman: Thanks, Amanda. Before we begin, Deb has some opening comments. Deb McConnell: Thank you, Ernie, and good morning. Today's call is being recorded and includes forward-looking statements about our results and plans. These statements are subject to risks and uncertainties that could cause the actual results to vary materially from these statements, including, among others, the factors identified in our filings with the SEC. Please review our press release for a cautionary statement regarding forward-looking statements as well as the full safe harbor statements included in the Investors section of our website, tjx.com. We have also detailed the impact of foreign exchange on our consolidated results and our international divisions in today's press release and in the Investors section of tjx.com, along with reconciliations to non-GAAP measures we discussed. Thank you, and now I'll turn it back over to Ernie. Ernie Herrman: Good morning. Joining me and Deb on the call is John. I want to start by thanking all of our global associates for their ongoing commitment to TJX. Thanks to their hard work and collective efforts, we continue to deliver an excellent shopping experience and outstanding value to our shoppers every day. Now to our business update and second quarter results. I'm extremely pleased with our second quarter performance and the terrific execution of our flexible off-price business model by our teams. Sales, profitability and earnings per share all exceeded our plans. I am particularly pleased that our comp sales increases across all of our divisions were once again entirely driven by an increase in customer transactions. We believe this is an excellent indicator of the strength of our business as our exciting merchandise assortment, great brands and outstanding values continue to resonate with consumers across our geographies. I also want to highlight the strong performance of our largest division, Marmaxx, which drove mid-single-digit increases in both comp sales and customer transactions. As to profitability, with our second quarter outperformance, we are once again raising our full year guidance for both pretax profit margin and earnings per share. John will talk to our profitability performance and guidance in more detail in a moment. Also, during the second quarter, we were thrilled to open our 5,000th store!, making another milestone for our company. This is a terrific achievement for TJX. We see plenty of additional store growth opportunities for our current retail banners in our existing geographies over the long-term. Additionally, with our recent announcements with Grupo Axo and Brands for Less, we expect to participate in the growth of off-price in several additional countries around the world. As we look at the remainder of the year, I am excited about the opportunities we see for this business. The third quarter is off to a strong start, and we have numerous plans underway to drive traffic and sales. Availability of quality branded merchandise is excellent, and we are confident we will have an exciting assortment of fresh goods across all of our stores and online throughout the fall and holiday selling seasons. I'll talk more about our second half opportunities in a moment. But first, I'll turn the call over to John to cover our second quarter results in more detail. John? John Klinger: Thanks, Ernie. I also want to add my gratitude to all of our global associates for their continued hard work. Now I'll share some additional details on the second quarter. As Ernie mentioned, our consolidated comp sales increased 4%, which was above our plan entirely driven by customer transactions, both our apparel and home categories saw comp sales increases. Pretax profit margin of 10.9% was up 50 basis points versus last year. Pretax profit margin was 40 basis points above our plan. This was primarily due to lower freight costs, which includes a benefit from a true-up of our freight accrual and lower operational freight costs as well as stronger sales. These benefits were partially offset by higher incentive compensation accruals and a contribution to The TJX Foundation. Gross margin was up 20 basis points versus last year. This increase was driven by strong mark-on and a benefit from freight, partially offset by higher supply chain costs. SG&A decreased 30 basis points versus last year. This decrease was primarily due to a benefit this year from lapping a reserve related to a German government COVID program receivable last year as well as expense favorability. These benefits were partially offset by incremental store wage and payroll costs. Lastly, we were very pleased that diluted earnings per share of $0.96 were up 13% versus last year and also well above our plan. Now to our second quarter divisional performance. Again, this quarter across all of our divisions, the comp increases were entirely driven by customer transactions, which we see as a good indicator of the strength of the business. At Marmaxx, comp store sales increased 5% and segment profit margin was 14.1%, up 40 basis points versus last year. Marmaxx's apparel and home categories both saw strong comp sales growth, and we saw comp strength across all regions. We were also happy with the strong sales performance of our U.S. e-commerce sites in Sierra stores, which we report as part of this division. We are very pleased with the momentum at Marmaxx and continue to see numerous opportunities to keep growing our largest division. HomeGoods comp store sales increased 2%. Segment profit margin grew to 9.1%, up 40 basis points versus last year. We see HomeGoods and HomeSense as highly differentiated from other retailers in the home fashion space. We focus every day on bringing customers eclectic assortment sourced around the world at exciting values. We continue to see significant opportunity to open new stores and capture additional share of the U.S. home market. Moving to our international divisions. At TJX Canada, comp store sales were up 2%, segment profit margin on a constant currency basis was 15%, down 70 basis points versus last year. At TJX International, comp store sales increased 1% and were up in both Europe and Australia. Segment profit margin on a constant currency basis was 4.3%, up 230 basis points versus last year. With our leadership position in decades of international operating experience, we are confident we will continue to be an attractive shopping destination for value-seeking customers around the world. Moving to inventory. Balance sheet inventory and inventory on a per store basis were both down 2% and driven by lower inventory at our distribution centers. We feel great about our inventory levels and believe we are well positioned to take advantage of the outstanding availability we're seeing in the marketplace and flow fresh assortments to our stores and online this fall and holiday season. As to our capital allocation, we were pleased to generate another quarter of strong cash flow while also reinvesting in the growth of our business and returning cash to shareholders through our buyback and dividend programs. Now I'll turn it back to Ernie. Ernie Herrman: Thanks, John. Now I'll highlight the opportunities we see that give us confidence that we can continue to drive sales and customer transactions in the second half of the year. First, we're convinced that consumers will keep seeking value. We believe our strategy of trading across a broad range of income and age demographics differentiates us from other retailers and remains a tremendous advantage. I am confident that our value proposition will continue to resonate with shoppers when they visit any one of our retail banners. Second, we feel great about our product category plans and have exciting initiatives planned for the fall and holiday selling seasons. Further, we have made our stores a year around shopping destination for gifts and believe we are becoming more top of mind with shoppers with our consumable offerings. We believe that all of this will create an even more exciting shopping experience and encourage consumers to visit our stores more frequently. Third, as I said earlier, availability of quality branded merchandise is outstanding. I want to emphasize that we consistently have access to more goods than we could ever buy. Overall, I believe our vendor relationships are as good as ever. Some have been getting even stronger as vendors see us as an attractive way to grow their business. This gives me great confidence that we can bring shoppers the right assortment at the right values throughout the remainder of the year and for many years to come. Next, the flexibility of our buying and planning and allocation teams allows us to go after the hottest categories and trends that drive customer excitement with the flexibility of our supply chain, I am confident that we can merchandise each of our stores with a curated assortment of good, better and best brands that will excite and inspire our shoppers. Lastly, we feel great about our marketing plans. Our campaigns will reinforce our value leadership and focus on capturing additional visits from our existing customers, attracting new shoppers and encouraging cross-shopping of our retail banners. Additionally, we plan to showcase a wide selection of products to highlight that there is something for everyone and demonstrate that our great values are available to every shopper every day. Further, we plan to continue to represent a broad range of shoppers in our advertising and leverage a wide variety of media channels to target a wide customer base. Also giving us confidence is that our customer surveys continue to tell us that our value perception and overall satisfaction scores remain strong. Further, each of our divisions continue to attract an outsized number of younger customers to its stores, which we believe bodes well for the future. Beyond this year, I am confident that TJX has significant opportunities to capture additional market share over the long term. Let me quickly reiterate why we believe we are so well positioned. First is our reputation as a value leader in the United States, Canada, Europe and Australia. Second, we believe we are the only global brick-and-mortar off-price retailer that's able to take brand, fashion and quality and put it all together in a differentiated treasure hunt shopping experience for consumers across a wide demographic. We also offer a wide fashion assortment, which we believe will appeal to a broad range of shoppers. Third, all aspects of our business model are driven by flexibility, which allows us to constantly pivot to take advantage of market trends. Next, we see the opportunity to grow our store base to nearly 6,300 stores with our current retail banners in just our current geographies. Again, I am extremely confident there will always be plenty of quality merchandise available to us to meet our store growth plans. Lastly, I truly believe the depth of off-price knowledge and expertise within TJX is unmatched. We are laser focused on teaching and training to develop the next generation of leaders. Finally, I am so proud of our company culture, which I believe is a strong contributor to our success and a major differentiator. Now moving to our investment in Brands for Less, which we detailed in our press release, as we continue to pursue our global growth vision, we are excited for our plans to have a minority ownership position in a profitable off-price retailer based in Dubai. As with our planned joint venture in Mexico, which we announced last quarter, this investment represents another opportunity for our company to expand our global reach with an established off-price retailer. In addition to BFL's strong financial profile, I have personally met with the management team and feel really good about our investment and the strong business they have built to date. We are always looking for ways to increase value for TJX's shareholders, and we see this transaction as a good use of cash that we expect to be slightly accretive to earnings per share beginning in fiscal '26. Moving to corporate responsibility. We are looking forward to the annual release of our global corporate responsibility report this fall. Our teams have been hard at work on our corporate responsibility initiatives. For example, in fiscal 2024, we helped provide more than 2 million young people in our communities with access to educational opportunities. Additionally, in support of career development, we continue to create learning opportunities for our associates, including formal training classes online, in-person learning opportunities and formal mentoring and direct training. We have also continued to make progress against our global environmental sustainability goals. Further, we remain focused on our social compliance program and operating responsibly as a business. You can read about our progress in our upcoming report. I am proud of the work our teams across the globe continue to do on corporate responsibility, and I hope you'll take some time to learn more about what we are doing in this area. Summing up, we are extremely pleased with our sales and profitability performance in the second quarter. The third quarter is off to a strong start, and we are excited about the initiatives we have planned during the second half of the year. As an off-price leader in every country we operate in, we believe we are in an excellent position to take advantage of the market share opportunities we see over the long term in those geographies. Additionally, I want to reiterate that we will not be complacent and we remain laser focused on increasing the overall profitability of TJX. I truly believe we have one of the best retail models in the world with the best associates in retail. Going forward, I have confidence that the flexibility of our business, the talent of our associates and our relentless focus on value will continue to serve us well and allow us to navigate through the ever-changing retail and economic landscapes. Now I'll turn the call back to John to cover our full year and third quarter guidance, and then we'll open it up for questions. John? John Klinger: Thanks again, Ernie. I'll start with our full year fiscal '25 guidance. We now expect overall comp store sales to increase approximately 3%. We are increasing our consolidated sales guidance to a range of $55.8 billion to $56.1 billion. This change reflects the flow-through of the stronger sales in Q2. We're increasing our pretax profit margin guidance to be approximately 11.2%. This would be up 30 basis points versus last year's adjusted 10.9%. We now expect gross margin to be approximately 30.2%, a 30 basis point increase versus last year's adjusted 29.9%. We expect this increase to be driven by a higher merchandise margin, which includes favorable mark on as well as a benefit from lower freight costs, partially offset by higher supply chain costs. We continue to plan shrink to be flat versus last year. We continue to expect SG&A to be approximately 19.3%, flat versus last year's 19.3%. We're planning incremental store wage and payroll costs to be offset by lower incentive compensation costs and a benefit from items that negatively impacted us last year. We're now assuming net interest income of about $160 million, which would have a neutral impact on our year-over-year pretax profit margin. Our full year guidance assumes a tax rate of 25.2% and a weighted average share count of approximately 1.14 billion shares. As a result of these assumptions, we now expect full year diluted earnings per share to be in the range of $4.09 to $4.13. This would represent an increase of 9% to 10% versus last year's adjusted diluted earnings per share of $3.76. It's important to note that we are not flowing through the entire second quarter earnings per share beat of $0.06 to the full year because we're now planning higher incentive compensation accruals and higher freight expenses for the second half of the year versus our previous guidance. Moving to our third quarter guidance. We're expecting overall comp store sales growth to be up 2% to 3%, consolidated sales to be in the range of $13.9 billion to $14 billion. Pretax profit margin to be in the range of 11.8% to 11.9%, down 10 to 20 basis points versus last year's 12%. Gross margin to be in the range of 31.1% to 31.2%. This would be flat to up 10 basis points versus last year. SG&A to be approximately 19.5%, an increase of 10 basis points versus last year. Net interest income of about $34 million, which would delever third quarter fiscal 2025 pretax profit margin by approximately 10 basis points. Our third quarter guidance also assumes a tax rate of 26% and a weighted average share count of approximately 1.14 billion shares. Based on these assumptions, we expect third quarter diluted earnings per share to be in the range of $1.06 to $1.08, up 3% to 5% versus last year's $1.03. Lastly, our implied guidance for the fourth quarter assumes that overall comp store sales would be up 2% to 3% and pretax profit margin would be in the range of 11% to 11.1%, and earnings per share will be in the range of $1.14 to $1.16 per share. When comparing this implied guidance to last year's results, it's important to remember that last year, we had an extra week in the fiscal fourth quarter that benefited pretax margin by 30 basis points and earnings per share by $0.10. We plan to provide more detailed guidance for the fourth quarter on our third quarter earnings call. In closing, we are confident in our full year plans and as always, we will strive to beat them. We have a very strong balance sheet that continues to allow us to invest in the growth of TJX while simultaneously returning significant cash to our shareholders. Now we're happy to take your questions. As a reminder, please limit your questions to one per person so we can answer as many questions as we can. Thanks, and now we'll open it up for questions. Operator: Thank you. [Operator Instructions] Our first question comes from Lorraine Hutchinson with Bank of America. Your line is open. Lorraine Hutchinson: Thank you. Good morning. Can you talk about AUR in the quarter, the balance between category mix shifts and like-for-like price increases? And then also any changes you might be seeing in customer behavior around value? Ernie Herrman: Yes. So Lorraine, good talking to you. AUR has been pretty, pretty consistent, right, John, through the... John Klinger: It has been, yes. Ernie Herrman: It didn't move much. I think it went up a little. John Klinger: It's slightly up, yeah. Ernie Herrman: And obviously, the comp was driven mostly by transactions, right, because it's not up as much as the comp. The balance in like-for-like goods were still continuing. If Lorraine getting at what are we doing as far as pricing on goods, we still have been selectively throughout the business. Again, bottom-up, we do not manage this top down. We have been bottom-up still adjusting retails where appropriate. I think if you look at our merchandise margin, though, the story is becoming more and more about the buying better and not just the retails, and I think it's more of a combination of those things as well. Even though I'm sure you've been seeing all the talk about as inflation subsides, that we'll be, and I'll get right to it. I'm sure there'll be a question going with that in terms of the AUR and the balance on the like items. What could happen in the market if retails come down on certain categories, et cetera? We always -- and our merchants are excellent at this. Our retails are dictated by what's happening around us. That's in the current and in the future what we predict. So we're always retailing the goods based on the out-the-door retailer that we see at the competition. So we feel as though we will have that covered, could that have retails come down, too soon to say on which categories. A lot of those discussions, by the way, have been kind of grocery-oriented and not necessarily marrying up with our business. So right now, we haven't been seeing anything significant like that at all, which is why our AUR is where John had just said slightly up. So I think there still exists opportunity as we move forward to address retails internally based on more of a significant gap between our retail and the out-the-door, which is still going to create opportunities there. Having said that, we're always extremely aware of what's going on around us. We don't know the timing of when that could start to moderate a little. But I think we're in a really healthy position, especially when you go to point number three is the availability of growth just creating an unusual ability to buy goods and retail goods extremely profitably, as you can see from this quarter. John Klinger: And then as far as the customer, we see positive results from all the income demographics we look at. And again, that speaks to the good, better, best product mix buying close to need. So if a certain customer category is driving the comp, we can easily go back and repurchase those goods and get them back into the store quickly. So for us, it's about making sure that we're appealing to all customer demographics, which this quarter appears we have. Ernie Herrman: One thing, Lorraine, and I know we have a lot of questions we need to get to, but you're asking one that touches on so much. The marketing -- if you noticed in my script, I talked about our marketing, how lining up with what John just said as far as how we treat the merchandise mix, which we've talked about for years. I don't think I've given as much air time the fact that we market so appropriately to the good, better, best spectrum ensuring that, and I mentioned it in the script, is that we are - if you look at who we use in our marketing, we're trying to test more channels to apply to all, again, all age groups. We try to go to all the different channels to evolve with where the consumer is going. We have different media channels. Each brands campaign has a differentiated and broad invitational message really that expresses the benefits of our business model to every customer. So also in my script, you heard me saying, we want to sell everybody, every day. And our marketing is lined up with that same is consistent with that strategy. So just so, we haven't talked about the marketing as much. But when you watch our spots, whether it's HomeGoods or Marshalls or Maxx or Sierra, it is aimed at not being narrow. It is a wide audience that we're going after. Lorraine Hutchinson: Thanks so much. Ernie Herrman: Thank you. Operator: Thank you. Our next question comes from Alex Straton with Morgan Stanley. Your line is open. Alex Straton: Perfect. Just a couple from me. Just first on the Grupo Axo JV and then now that's invested in Brands for Less. Can you just elaborate a little bit more on the strategic rationale between those two and what they uniquely add? And then just honing in on the international business came in a little bit weaker than consensus expecting even though Marmaxx was completely enough to offset it. I'm just wondering if you can talk about what you're seeing in the international business. Any additional color there would be super helpful. Thanks a lot. Ernie Herrman: Yes, very much, Alex. Again, good questions, Grupo Axo. So these two opportunities -- here's the big strategic thing that we're trying to do here. So we have this great -- at a high level, you can picture this happening. We have this great business model. And as I've also emphasized and everyone on the team knows it here, we have a long tenure, some of the best -- certainly, in off-price. Of course, I'm not objective, but I would say the best talent in retail and certainly in off-price. And what happens is we have a seasoned, very seasoned management group that you get to a point we have some bench strength. So we're able to now more readily than we would have a number of years ago, where I would have been reticent to pull from the core business, we are able to take advantage of expanding globally in a manner that has really no risk to the core and at the same time, takes advantage of additional geographies. So that's why you're seeing - we really realized and we're able to orchestrate these from a couple of years ago, we started to say this is a good mission for us to take advantage of a great business model. And now that we have the talent where -- and John does this in his world in the finance world, we do it in every -- whether it's operations or merchandise, we want to make sure if we're going to give up a few people that we have the right replacement. So Mexico, obviously, is a market we've looked at for a while and we know there's business to be done there. We felt it was right to do it as a private -- I'm sorry, as a joint venture. And we also now have the talent to have people get involved to do that. That's a very appropriate one. We own almost half the business. BFL is a little different, but same idea where we can -- and they're terrific, by the way. We have really enjoyed our meetings with them, they are culturally very similar. They are also -- they have a lot of retail experience, a little younger on the off-price side, but we have that secret sauce merchandising talent and now again, back to the original point, we can afford to have people be involved to help them, which helps them and it helps our investment. And so we're excited because in terms of going to new geographies and new markets with a model, we have the talent now to do that under the big picture of the growing -- continuing to grow TJX. Does that make sense or... Alex Straton: Yeah, that's great. Thank you. Ernie Herrman: And then the other question was on the international margin. Yes, the international, do you want to say something John, and then I'll jump in or you want me to... John Klinger: So let me explain what we're seeing here. So we obviously had a -- we're lapping the German write-off, the receivable write-off that we had last year. But the other thing that's affecting us the other way is that last year, we also had a transactional FX gain that we're up against. So that's what's driving the margin. It's up to 230 basis points versus last year, which we're pleased with, given those two things. Ernie Herrman: From a -- Alex, from a sales perspective, we were a little disappointed in our Europe business, specifically on the international piece. And that was more from a combination of the environment, a little bit of weather, but I would tell you there is a decent size of that's our own execution. And what's good with this company, culturally, in every division we're in, that team has really done a good job. We started talking about this two or three months ago, and we are already seeing the benefit in the numbers over there, over the last few weeks of the adjustments we've made and some of the merchandise mix and the way we have shipped the stores, specifically in the U.K., I would tell you, it was not really a Germany issue. It was more of a U.K. issue. And so we would tell you we were disappointed in the performance in Europe, and that's what was affecting that international number and specifically the U.K., but we believe we're on the right path going forward. Alex Straton: Thanks a lot. Good luck. Ernie Herrman: Thank you. Operator: Thank you. Our next question comes from Matthew Boss with JPMorgan. Your line is open. Matthew Boss: Thanks and congrats on another nice quarter. Ernie Herrman: Thank you. John Klinger: Thank you. Matthew Boss: So Ernie, could you speak to the cadence of same-store sales that you saw during the second quarter? Maybe elaborate on recent trends supporting the strong start that you cited for the third quarter. And just maybe what you're seeing across categories or divisions and if you see this as a positive lead indicator for holiday? Ernie Herrman: Yes. No, great. Great Well, kind of parts three, A, B and C. Very good, Matt. Yes, Matt, I can start off. John will start with the case. John Klinger: Yeah. Obviously, we saw positive comps across all of our divisions. The other important thing to note is that on a 2-year stack basis, we did see an improvement each month of the quarter, which is also important to note. Ernie Herrman: Yes. And then dovetailing into that, you're asking about the strong start to Q2. What's been nice about that is we're happy with our strong start to Q2 on the sales line, and it seems to be healthy across the board. So that is something that we're feeling good about. And do we think that is a -- of course, first of all, Q3 is for many retailers that have an apparel component to their business can often be with the transitionalizing coming out of spring, summer goods and going into the fall goods can be a little treacherous. You have weather dependency, et cetera. We have strategies we try to mitigate that as well as the way we plan and ship by regions within the United States, not as much of an issue in Canada and Europe. But our team's planning on allocation and buying have done a great job, I think, on buying the right transitional goods. So we feel really -- this is another indicator I'm mentioning that makes us feel good about where we're heading in Marmaxx and the apparel ends of the business as we head into Q3, in addition to what we've been seeing in sales for the last couple of weeks as we started the quarter. Yes. And then the last thing I'll say, which I did mention in the script, Also, John and I talked about this all the time is since we have year after year, our store experience, as you know, has gotten better and better. With that, our merchandise mix, good, better, best, but a lot of more giftable brands that we carry, I think, bodes well because we're always more gifty to a wider range of customers year after year, I feel as though we improve on that year after year. And so I'm bullish on Q4 upside because my first comments were really oriented to Q3. Q4, I believe we're going to be well positioned for gift giving across many of the families of business in the store. John Klinger: I mean I'd just add on to that, that our strategy with consumables in the stores definitely gives customers a reason to shop if the weather is not compliant. And that goes both with the apparel businesses and the home businesses. Matthew Boss: It's great color. Best of luck. Ernie Herrman: Thank you. Operator: Thank you. Our next question comes from Paul Lejuez with Citigroup. Your line is open. Paul Lejuez: Thanks, guys. Can you really talk a little bit more about apparel versus home within the Marmaxx business. I think you said both were up. So I was curious how the home business within Marmaxx performed relative to HomeGoods and the drivers of the home business in each if they were different at all. And then just curious, a very high level, I'm curious what surprised you the most in the first half of the year and now that might have influenced how you're thinking about the second half? Thanks. Ernie Herrman: Okay. Well, let's -- so on the part about the home versus the apparel, this won't be really a surprise when you think about it. So the Marmaxx home really outpaced, I'm not going to give you the exact numbers, but outpace [ph] the HomeGoods home, large, really, what you sum it up to? I would sum it up to like big, big ticket that we stand for at HomeGoods as an industry, as you know, furniture, and that business industry-wide is slower and also that would apply in HomeGoods. So the business -- even though the Marmaxx slightly outpaced it wasn't by a lot, but that was the driver of the difference. We're very happy with the way -- and I can specifically say very happy with the continued improvement in HomeGoods across the store and where we're seeing HomeGoods going for the start of Q3. John, did you have... John Klinger: Yes. I would just add that where we see departments that line up between Marmaxx and HomeGoods, we saw similar... Ernie Herrman: Very similar trends, yeah. John Klinger: So... Ernie Herrman: That's a good point. It was really when you get to the big ticket that made the difference. Your other question, Paul, is about that. I want to make sure I get this right. Was it on the -- any surprises in the first half? Is that what you - in that half, how does that impact the way we look at the back half the... Paul Lejuez: Yeah. I guess, for surprise first time. And how does that influence the back half thinking? Ernie Herrman: Yes. I guess the only -- the surprise -- a little bit of a surprise to us is we know there's always going to be a lot of availability of goods and the amount of tough environment surprise us even a little and I think I alluded to this, there's even more -- we're a little surprised by the amount of goods that is off the charts, even a little bit more than we would have thought. So that's taught us. So how does that affect your back half? So what we do is we look at what categories is there even beyond the normal phenomenal about, whatever the word we always use different words, about availability. And we actually -- what that affects is how we - how much we leave open in those categories for and more of the close-out, hand-to-mouth buying in the back half. And so as you can imagine, it had us for the back half and even through Q1 to leave more liquidity because clearly, there's no lack of availability. If anything, it surprised us on the amount of increased availability. So that's probably the biggest surprise. Paul Lejuez: Got it. Thank you. Good luck. Ernie Herrman: Thank you. Operator: Thank you. Our next question comes from Brooke Roach with Goldman Sachs. Your line is open. Brooke Roach: Hi. Good morning. Thank you for taking our question. My question is on margin. Can you elaborate on your view for further margin expansion opportunity on a multiyear basis? And then on near-term trends, can you speak to what's changed in your freight forecast versus your prior thinking? And any other puts and takes that we should be thinking through on supply chain and merchandise margin into the back half of the year? Thank you. Ernie Herrman: Do you want to start or you want me to start with... John Klinger: I can start with... Ernie Herrman: The freight forecast. John Klinger: Yes, the freight forecast that we're seeing. So we did add some expense to our forecast in the back half of the year to take care of some additional ocean freight increases that we're seeing. We're seeing ocean freights per container rise. So we did take that step to add something in our forecast there. Ernie Herrman: On, Brooke, on looking forward, I think you're asking about -- do we see margin opportunities, is that it kind of as we look out? Brooke Roach: Yes. That's right. Ernie Herrman: Yes. Okay. So -- well, that's a very -- when you say -- are you talking merchandise margin? Brooke Roach: Sure. We can talk merchandise margin, but also a... John Klinger: I mean the bottom line margin is consistent with what we've said in the past, right. The bottom line that on a 3 to 4 comp, we could be flat to up 10 basis points, again, assuming no outsized expense headwinds. That message is still consistent. Ernie Herrman: Yes. Obviously, this year, we have raised that now where our margin for the year is going up from where we planned for a lot of reasons. But one of the reasons I think if I'll go to the merchandise margin, which we were starting to talk about is the situation of all these -- the stars keep aligning with our opportunities and gaining market share, we mean more to vendors than ever before. Our relationships should continue to bode well in terms of us continuing to buy goods more favorably as we move forward. Another place where I think our merchandise margins have upside is where -- the way we manage our flow, every division has gotten -- continues to get even better. This is why in the last couple of -- which helps our markdowns and our merchandise margin directly when you put the right goods into the right clusters of stores, you obviously end up with a reduced markdown rate in an increased sales because our planning systems over the last couple of years and are planning associates are getting better and better at this. Another place in Marmaxx specifically in and HomeGoods domestically, we are able to now tailor the mix, and we've done a better job at putting together Sunbelt strategies and different region strategies across the different climate zones in the United States, which also is a huge benefit to our merchandise margin. I think what we're going to also see is when you look at total margin, we've talked about this before, is our Europe business. John and I have talked about this for a few years now. We're seeing that our goal there is to get to an 8% bottom line versus where we were, and we're doing that in pretty short order over a few years. And I think that is also going to bode well for the -- obviously, that's going to help our total TJX margin. And then we still see in different markets, Canada is obviously continue to be very profitable. But I think we're going to see our home business specifically, which is big throughout TJX. We're feeling good about the margin opportunities there beyond just the freight savings because of our fashion component where we are able to still provide great value. Our sourcing is excellent, and we can still value and make good margins at a business. So as that business continues to grow, just feeling big upside and excited about the opportunities for year after year on the margin side. Great question. Brooke Roach: Thanks so much. I'll pass it on. Ernie Herrman: Thank you. Operator: Thank you. Our next question comes from Adrienne Yih with Barclays. Your line is open. Adrienne Yih: Great. Thank you very much. And let me add my congratulations, super well done. Ernie... Ernie Herrman: Thank you, Adrienne Adrienne Yih: You're very welcome. The first question is, can you talk about for the macro consumer health backdrop today versus when we were at the last quarterly call in both the U.S., Canada and then Europe. Obviously, the overall sentiment is the consumer backdrop has worsened, but your -- obviously, your model is prepared for that. So that's number one. And then, John, can you just talk about where are those store payroll investments going? What do you expect to get in terms of the return? Is it hours? Is it employees? Thank you so much. Ernie Herrman: Hey, Adrienne. Great question on the landscape and what's happening to kind of get at where the trends could be going. The macro health situation does vary, I think, by country also a little bit. We see - I would say the U.S. versus in the first quarter is similar macro environment, at least for us, for our experience. I know everything you read is we always wait. We have some of the same information that you have. So we wait for a lot of reports to come out to kind of adjust. All I know is the availability seems to keep growing, which makes me wonder if certainly at our supply - the brands that we deal with, are they running into a little tougher situation. So that could be, again, tough for me to answer that versus just a quarter ago. We also don't tend to see the movement by quarter. It seems to be over 6 months or 12 months. Canada, pretty challenging up there. Europe, more challenging, I would say, both are challenging environments from maybe 6 months ago. The difference in our comps there, I think, is we've had weather in both those areas. Canada was hit with some weather situations. Canada did a little better than Europe and is up against tougher numbers. Europe, I would say, again, our performance probably had half of it was due to our own execution, which -- not that we like it, but we like it because we can adjust that and we know what to do and you followed us for years. You know that whenever we identify execution issues, we address it. And that team has been great, and they already have really addressed a lot of the things that we think we could improve on, which is why we're already seeing that improvement as we start Q3. I'd say the environment there is challenging, though economically in Europe. So I can understand why you would ask the question and probably a little bit more so than, again, 6 months ago. John, did you want to talk about it? John Klinger: Yeah. So on the wage, we continue to see wage increases across all of our geographies. You'll remember, we talked, I think, on the first quarter call about Europe announced a -- or excuse me, the U.K. announced a 10% increase in wage. We've seen some of the provinces, I think most recently, Ontario announced a minimum wage increase. And of course, we've seen that as well in the U.S. Our strategy still holds that we are increasing, obviously, where the legislative increases have gone, but also where we have competitive reasons to increase our wage. We also keep something in our budget for that as well. So if we see either higher attrition rates or some challenges hiring. We have the ability to go in pointedly and increase wages. Adrienne Yih: Very helpful. Best of luck for back to school and holidays. John Klinger: Thank you. Ernie Herrman: Thank you, Adrienne. Operator: Thank you. Our next question comes from Michael Binetti with Evercore. Your line is open. Michael Binetti: Hey, guys, congrats on a great quarter. Ernie Herrman: Thank you. Michael Binetti: You mentioned earlier the 2-year stack accelerating through 2Qs [ph] kind of wondering looking at the model here. HomeGoods has very tough compares coming up in the third quarter and the back half, I guess. Is there a scenario where the 2% to 3% total company comp for third quarter allows for a negative comp in HomeGoods like the stacks might imply just against that big plus 9 a year ago? And then on the margins, since you spoke a little bit about flow-through in the normal framework, the 3 to 4 comp and flat to 10 basis points of leverage. You've been outpacing that for a while. Is there anything on the horizon that would cause that to slow back down to the normal framework that we should think about? Ernie Herrman: Well, so two things. I'll jump on the HomeGoods. So yes, we don't feel HomeGoods would run a negative... John Klinger: We're not anticipating.. Ernie Herrman: We're not anticipating that. So good question. That is not what we would be planning. John Klinger: On the margin, so obviously, we've been pretty consistent about the 3 to 4 comp being flat to up 10 basis points. But what we saw in this year is that we had a number of onetime items that allowed us this year to leverage on a 2 to 3 versus that 3 to 4, and that's really the reason. Michael Binetti: Okay. Does that change as you look out next year? Or is it -- you think about the same framework? John Klinger: Like I said, next year, I would place it that, again, that model of a 3 to 4 comp being flat to up 10 basis points at this point is what we would be consistent with. We're not giving FY '26 guidance just yet, but that's what we've said and that's what still holds. Michael Binetti: Okay, guys. Best of luck into the holidays. Thank you. John Klinger: Thanks, Michael. Ernie Herrman: Thank you. Operator: Thank you. Our next question comes from Mark with Baird. Your line is open. Unidentified Analyst: Good morning. Thank you for taking my question. Just maybe first for Ernie, I was hoping to get some perspective on the market share gains. Marmaxx comps obviously compare very nicely to what we've seen out of the department store channel and others thus far. But at the same time, we are seeing some of the mass retailers report some better results in general merchandise and including some more positive commentary on apparel. So could you just speak to how you're protecting your flank when it comes to some of the mass discounters that are also competing for that trade down consumer? Ernie Herrman: Yes. Great question, Mark. We -- by the way, to your point, we've been looking at the same numbers. We track all of this as we continue to monitor our market share gains. And by the way, we -- as best we can, some countries that we don't have. But in the U.S., as you just stated, there's a lot of good information out there. So we track -- well, when you look at the total, so first thing we do is we look at the Marmaxx total with new stores, and you can see clearly, we're gaining market share in total. Now as to where it is, we have some information that shows in the apparel and in home, I would say we're picking up market share in both. It depends on how you slice out some of the discounters that have home in it because if they're not -- if they have general home and you throw all the families of business in there, you can look at one number, but if it's more home furnishings driven, which is what we are with some other things that make it a little fuzzy, for example, we have a pet business in our home area. We have a lot of consumables that John talked about, like the gourmet food that we carry, where does that-- that's in our home business. John Klinger: Greeting cards. Ernie Herrman: Greeting cards. John Klinger: Wrapping paper. Ernie Herrman: Yes, yes, wrap. Where is that in those businesses. So that's where it gets really funky. So as best we can and some of the reports that are written in your industry, on the sell side will show us that - it will show that we're picking our home business clearly against the direct competition. But I do like your wording on protecting your flank because what we look for is any sign of in total on those groups that we look at for competition, are they getting close? Are there promotional retails? Are we feeling that their sales -- comp sales are any healthier than ours were? Right now, we haven't seen it, and we're clearly gaining market share in home as well, but to your point, we're always trying to protect our flank by being aware of where they are. And then one of the things our merchants do is whoever is doing better business when their business -- we shop them very aggressively to look at our values in the categories from a fashion perspective that they carry that, a, should we have more of it? Are we selling it? Should we be retailing it differently? Because again, our first priority is to offer value that's better than everyone else around us. So that's kind of all that goes into kind of protecting the flank, so to speak. I love the terminology you use. John Klinger: I guess, just being on top of it every day. Unidentified Analyst: Thank you. Ernie Herrman: Yeah. Thank you. Operator: Thank you. Our next question comes from Corey Tarlowe with Jefferies. Your line is open. Corey Tarlowe: Great. Thanks and good morning. Ernie, I was wondering if I could give a perspective on opening price points. So other retailers have talked about cutting prices. They've also highlighted more promotions. You -- and you also, I think, mentioned in your prepared remarks that you're seeing, I think, flattish ticket, maybe it has a little bit of a plus sign on it. How do you think about the trajectory for AUR and opening price points going forward within the context of the broader environment? Ernie Herrman: Yes. Great question, Corey. So start with that we won't top-down manage it, so which is why we're always reluctant on a top-down average ticket, average unit retail, giving a projection too far out because we can -- sometimes the market moves fast. We go after -- oftentimes, and John often talks about this, it's the mix of our departments. So we could have an accessories area or a gourmet food area that's at a low ticket, but we're driving, sales are hot there just by the fact that we're going to drive that a little disproportionately than something else that could lower our ticket temporarily. John Klinger: But we normally see units go up when we see... Ernie Herrman: Right. We see the units in the basket go up. John Klinger: Right. Ernie Herrman: Right, so -- but on opening price point specifically, which is at the beginning, we -- so -- and if you look at what we've talked about really more in depth, the last few calls and meetings we've had is we believe strongly in having opening price point goods, ensuring they're at the right value, but this is why we are all over having a balanced good, better, best mix throughout all of our brands and banners in all of our markets. So we are always passionate about opening price point goods in balance, though, and we're always up against it being balanced, which is why you're not seeing our ticket move around that much because as much as we're passionate about, we have it in ratio to our better brands and better retails and our best brands. And that hasn't moved a lot. Again, we don't top down, tell the merchants that we let nature take its course a little. The only thing we insist on is that every merchant have a balanced mix of good, better, best. And we let that fluctuate a little bit, but we never get away from it. So I hope that answers that opening price point question. And on the cutting prices, well, again, that back to the original thing at the beginning of this call is we don't cut -- we do cut prices when we see our price on an item is coming down around us because we're going to ensure that our value is proportionately significantly better going out the door than they're out the door. But that's when we would cut the price or we cut the price if we're not selling something as well regardless of what's happening around it because that happens as well. John Klinger: And we do that through the markdown process. Ernie Herrman: Right, which is very automated and the merchants initiate and we continue to slash and we can take a markdown, we can take a price adjustment where we just adjust it to what we think is the new right retail. Again, remember, we will never ever be undersold. So -- but that's what drives us cutting prices when we do cut prices. I hope that answers it. Corey Tarlowe: Thank you. Ernie Herrman: Yes, welcome. Operator: Thank you. Our final question comes from Jay Sole with UBS. You may proceed. Jay Sole: Great. Thank you so much. I just want to ask another one more question about Brands for Less. Ernie, you talked about the strategic rationale. Can you just help us understand sort of the financial rationale, why take a 35% stake. Why not more, why not less? And how do you... Ernie Herrman: That's very good, Jay. Well, some of that - John and I will both jump up in on this. But -- so these -- I won't get into the specifics, but sometimes when you start with these negotiations, one site could be looking for a couple of investors, and they actually might be looking for us to be less of an investor than 35. Sometimes after you start exploring, you see a good number, sometimes, I would say it's kind of a meeting of the minds to sum it up that we don't always -- you have to come out with the proportional amount that the founders, the owners there that are great and us, where we all feel we're at the right level. And there isn't as much -- I mean there's some science, but then there's a bit of the qualitative discussion about how much we think they want us to own, how much we think we should own. And we ended up in what we thought was a sweet spot given their feelings and our feelings. John... John Klinger: They weren't looking for a complete buyout. They were looking for a minority investor. Ernie Herrman: They weren't looking for a 50%... John Klinger: Right. And at a 35%, it gives us enough skin in the game that makes us - makes it worthwhile. Ernie Herrman: And Jay, what is neat about it, though, at the same time, the 35%, the way it works with us, it stays a very -- it's a healthy investment as you can see based on the number that we put in. We believe it's accretive in a couple of years... John Klinger: Next... Ernie Herrman: Next year. And if we plan to add the value that we think we can, we still have a -- we own 35%. So if it grows like we think it can. And we, at our secret sauce, so to speak, are in terms of the buying and they're excellent at, they really want to collaborate, and we're very impressed with what they've done. I think it's a great marriage, yet they didn't want to buy out, and we wanted to own a decent insurance. So you end up kind of in that middle zone. Jay Sole: Makes sense. Ernie, thank you so much. Ernie Herrman: You're welcome, Jay. That was our last call. I would like to thank you all for joining us today. We look forward to updating you again on our third quarter earnings call in November. Take care, everybody. Thank you. Operator: Ladies and gentlemen, that concludes your conference call for today. You may all disconnect. Thank you for participating.

Operator: Ladies and gentlemen, thank you for standing by. Welcome to the TJX Companies First Quarter Fiscal 2025 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference call is being recorded, May 22, 2024. I would like to turn the conference call over to Mr. Ernie Herrman, Chief Executive Officer and President of TJX Companies, Inc. Please go ahead, sir. Ernie Herrman: Thanks, Cordi. Before we begin, Deb has some opening comments. Deb McConnell: Thank you, Ernie, and good morning. Today's call is being recorded and includes forward-looking statements about our results and plans. These statements are subject to risks and uncertainties that could cause the actual results to vary materially from these statements, including, among others, the factors identified in our filings with the SEC. Please review our press release for a cautionary statement regarding forward-looking statements as well as the full safe harbor statements included in the Investors section of our website, tjx.com. We have also detailed the impact of foreign exchange on our consolidated results and our international divisions in today's press release and in the Investors section of tjx.com along with reconciliations to non-GAAP measures we discuss. Thank you. And now, I'll turn it back over to Ernie. Ernie Herrman: Good morning. Joining me and Deb on the call is John. I want to start by thanking all of our global associates for their ongoing commitment to TJX and for delivering great value to our customers. I especially want to recognize the hard work of our store distribution and fulfillment center associates across the Company. Now to our business update and first quarter results. I am very pleased with our first quarter performance. Overall, comp store sales were up 3%, which was at the high end of our plan. Again, this quarter, the comp increase was entirely driven by customer transactions. We see this as an excellent indicator of the strength of our business. As to first quarter profitability, both pretax profit margin and earnings per share came in well above our plans, which was terrific to see. John will talk to the drivers of this profit outperformance in a moment. Our first quarter results are a testament to the sharp execution of our teams who focused on offering our shoppers excellent value on every item every day. Our results also highlight the benefits of our flexible business model. Throughout the quarter, we flexed our store assortments and leaned into categories that many consumers were looking for. Further, we remain disciplined in managing our buying, inventory and expenses and remain focused on driving profitability. Looking ahead, our value leadership in retail gives us great confidence in TJX. The second quarter is off to a good start, and we are excited about the opportunities we see for our business. We are very happy with our inventory levels and are in great position to capitalize on the outstanding buying opportunities that we see in the marketplace. We plan to flow fresh assortments to our stores and online, the spring and summer and throughout the year. Longer term, we remain convinced that we are well positioned to grow our global footprint, gain market share in our geographies around the world and increase the profitability of TJX. Before I continue, I'll turn the call over to John to cover our first quarter results in more detail. John Klinger: Thanks, Ernie. I also want to add my gratitude to all of our global associates for their continued hard work. Now I'll share some additional details on the first quarter versus last year. As Ernie mentioned, our consolidated comp was at the high end of our plan and entirely driven by customer transactions. Comps in both our apparel and home categories increased with home outperforming apparel. Pretax profit margin was 11.1%, was up 80 basis points. This was 50 basis points above our plan, primarily due to a larger-than-expected benefit from lower freight costs, a reserve release and higher net interest income. Gross margin was up 110 basis points. This was driven by a benefit from lower freight costs and favorable mark-on, partially offset by the timing of capitalized inventory cost and supply chain investments. SG&A increased 20 basis points due to incremental store wage and payroll costs, partially offset by the reserve release. Net interest income benefited pretax profit margin by 10 basis points. Lastly, we were very pleased that diluted earnings per share were up 22%. This was well above our plan due to our pretax profitability outperformance and a lower-than-expected tax rate that benefited first quarter diluted earnings per share by $0.03. Now to our first quarter divisional performance. Across all our divisions, our comp increases were entirely driven by customer transactions, which again is such a great indicator of the strength of our value proposition. At Marmaxx, comp store sales increased 2% and segment profit margin was 14.2%, up 20 basis points. Despite some periods of unfavorable weather, both Marmaxx's apparel and home categories saw positive comp store sales with home outperforming apparel. Further, we were very pleased to see comp sales increases at stores in demographic areas with average household incomes above and below $100,000. At our U.S. e-commerce sites and at Sierra, which we report as part of this division, we were happy with their strong sales performance. HomeGoods comp store sales increased 4% and segment profit margin grew significantly to 9.5%. This was a 220-basis point improvement versus last year. HomeGoods and HomeSense offer customers a differentiated shopping experience for home fashions. Our buyers source products from around the world to bring customers eclectic selections and affordable ways to upgrade their home decor. Moving to our international divisions. At TJX Canada, comp store sales were up 4% and segment profit margin on a constant currency basis was 12.4%, up 110 basis points. At TJX International, comp store sales increased 2% and were up in both Europe and Australia. Segment profit margin on a constant currency basis improved significantly to 3.9%, up 120 basis points. We believe we are performing better than most other major retailers in Canada and Europe. We are confident we will continue to be a leading shopping destination for value-seeking customers in Canada, Europe and Australia. Moving to inventory. Balance sheet inventory was down 3% versus the first quarter of last year. Inventory on a per-store basis was down 5% and driven by the lower inventory at our distribution centers. Importantly, in-store inventory was in line with last year's levels. We feel great about our inventory levels and are in a great position to take advantage of the outstanding availability we are seeing in the marketplace. As to our capital allocation, we were very pleased to start another year generating strong cash flow, reinvesting in the growth of our business and returning cash to shareholders through our buyback and dividend programs. Now I'll return it back to Ernie. Ernie Herrman: Thanks, John. I'd like to highlight the reasons we have great confidence in the near- and long-term growth opportunities for TJX. We have a long track record of success through many kinds of retail and macro environments, and our value proposition has always served us well. Our off-price business model is extremely flexible and resilient and I believe we are set up for a long runway of exciting growth in our geographies around the world. First is our wide customer demographic reach. We want to sell everyone. With our flexibility and opportunistic buying, we offer expansive assortments of good, better and best merchandise for shoppers across a broad range of income and age groups. We continue to attract new Gen Z and millennial shoppers to our stores, which we believe bodes well for our future growth. It's really great when we see multiple generations shopping our stores together. Second, we are convinced that significant market share opportunities remain across the U.S., Canada, Europe and Australia. Over the long term, we see potential to further expand our store footprint by at least another 1,300-plus stores with our current retail banners in our existing countries alone. Third, with our more than 1,300 global buyers sourcing from a universe of more than 21,000 vendors and from over 100 countries, we are confident that there will be plenty of quality branded merchandise available to us to support our growth plans. Throughout our history, availability of inventory has never been an issue. In fact, in recent years, we have seen availability become even better as vendors look for additional ways to grow their businesses. We've opened thousands of new vendors, which keeps our store assortment fresh and fuels the differentiated treasure hunt shopping experience for our customers. Our stores receive multiple deliveries each week of fresh branded merchandise to surprise and excite our customers. With our rapidly changing assortment, shoppers are inspired to visit us frequently to see what's new. Lastly and most importantly, are the talented associates who do an exceptional job executing on our initiatives. I truly believe the level of off-price knowledge and expertise within our organization is unmatched. We have a highly differentiated global business, and we have developed the specialized talent and teams to support it. We have many leaders across TJX with decades of off-price experience. Additionally, we focus on developing newer associates and the next generation of leaders within our organization. We take great pride in our TJX University and other training programs. Our very deep bench gives us the ability to rotate talent between divisions and geographies and to deploy teams where needed. All of this strengthens our company as we pursue our goals for growth and is a tremendous advantage for TJX. I am also very proud of our culture, which I believe is another key differentiator and a major component of our success. For our corporate responsibility update, I'll share more about our culture, which includes supporting our associates and making TJX a terrific place to work. Our associates bring our business to life and we strive to foster workplace where they feel welcome, valued and engaged. A key priority is helping our associates grow and develop at TJX, which we support both through formal and informal training. Our associate resource groups, or ARGs, and our inclusion and diversity committees have played an important role in creating an inclusive workplace. Within the last year, both the number of ARGs and the number of associates participating in them have continued to grow. As always, you can read more about our corporate responsibility work on tjx.com. Summing up, we are very pleased with the overall performance of TJX in the first quarter and that the second quarter is off to a good start. We feel great about our positioning in today's consumer environment and we'll continue to emphasize our value proposition to consumers through our marketing initiatives. Longer term, I am confident that the characteristics of our business set us up extremely well to capitalize on the market share opportunities that we see out there. Lastly, I want to reiterate that we will not be complacent and are committed to looking at ways to further increase the profitability of TJX over the long term. Now I'll turn the call back to John to cover our full year and second quarter guidance, and then we'll open it up for questions. John Klinger: Thanks again, Ernie. I'll start with our full year fiscal '25 guidance. We're now planning consolidated sales to be in the range of $55.5 billion to $55.9 billion. This is about $200 million lower than our previous guidance due to the impact of foreign exchange. We continue to expect overall comp store sales to increase 2% to 3%. We're increasing our pretax profit margin guidance to a range of 11% to 11.1%. This would be up 10 to 20 basis points versus last year's adjusted 10.9%. We continue to expect gross margin to be in the range of 30% to 30.1%, a 10 to 20 basis point increase versus last year's adjusted to 29.9%. We expect this increase to be driven by a higher merchandise margin, which includes a small benefit from freight, partially offset by our supply chain investments, we continue to plan shrink to be flat versus last year. We continue to expect SG&A to be approximately 19.3%, flat to last year's adjusted SG&A. We're planning incremental store wage and payroll costs to be offset by lower incentive compensation costs and a benefit from items that negatively impacted us last year. We're now assuming net interest income of about $156 million, which will have a neutral impact on our year-over-year pretax profit margin. Our full year guidance assumes a tax rate of 25.4% and a weighted average share count of approximately 1.14 billion shares. As a result of all these assumptions, we now expect full year diluted earnings per share to be in the range of $4.03 to $4.09. And we would represent -- this would represent an increase of 7% to 9% versus last year's adjusted diluted earnings per share of $3.76. Moving to our second quarter guidance. We're expecting overall comp store sales to be up 2% to 3%, consolidated sales to be in the range of $13.2 billion to $13.3 billion pretax profit margin to be in the range of 10.4% to 10.5%, flat to up 10 basis points versus last year. Gross margin to be approximately 29.8%. This would be a decrease of 40 basis points versus last year. This is primarily due to the lapping of a significant freight accrual benefit last year in supply chain investments, partially offset by an increase in merchandise margin. SG&A to be approximately 19.6%, a decrease of 50 basis points versus last year. This is primarily due to a benefit from lapping higher incentive accruals and a reserve related to the write-off of a German COVID program receivable last year. Partially offset by incremental store wage and payroll costs. Our second quarter guidance also assumes net interest income of about $42 million, a tax rate of 26.3% and a weighted average share count of approximately 1.14 billion shares. Based on these assumptions, we're expecting second quarter diluted earnings per share to be in the range of $0.88 to $0.90, up 4% to 6% versus last year's $0.85. Lastly, our implied guidance for the second half of the year assumes that overall comp store sales will be up 2% to 3%. Pretax profit margin will be in the range of 11.3% to 11.5% and earnings per share will be in the range of $2.22 to $2.26. In closing, I want to emphasize that we are in an excellent financial position to continue to invest in the growth of our company while simultaneously returning significant cash to our shareholders. Now we are happy to take your questions. As a reminder, please limit your questions to one per person so we can answer as many questions as we can. Thanks, and now we'll open it up to questions. Operator: [Operator Instructions] Our first question comes from Matthew Boss from JPMorgan. Matthew Boss: And congrats on another nice quarter. So, Ernie, could you elaborate on drivers of the market share gains across both apparel and home that you cited? And just your confidence in the multiyear runway for continued gains maybe near term, have you seen any change in business momentum here in May? And then, John, just speaking of runway, how best to think about merchandise margins multiyear, just given the structural changes on the buying front that you've discussed? Ernie Herrman: So Matt, let me start. Well, obviously, we don't give category-specific information on which categories we're driving the comps. But one thing I can tell you was pretty balanced across the board. It wasn't one -- any one area that was driving our total any more than we planned on it. We did feel a little bit of a weather pattern hit that during the quarter, and it was kind of an on and off thing, which you probably read about and heard about from other retailers talking about it. So, in our case, those type of patterns can impact us in areas just like it does anyone else in terms of what traffic tends to impact or apparel layers, but our apparel ended up healthy for the quarter. So, whether it was home apparel, accessories, everything kind of was in line with the way we thought it would have been for the quarter. The confidence in the -- I think your second part of the question was about -- and again, I can't give you specifics on the categories. The second part of the question, I guess, is about what gives us confidence in the future, right, on how we're going to continue to drive this. And am I getting that right, Matt on the second? Matthew Boss: Yes. Continued drivers of market share gains and just business momentum. Have you seen any change? Ernie Herrman: Yes. No, the momentum is really consistent with where it's been the last few months. And the -- I think what gives us a lot of confidence is we are the only retailer right now that I see that is able to take brands and fashion and quality and put all of that together in this treasure hunt format, remember, I'm talking about having good, better, best good, better, best, our range of all income and age groups, whereas all the other retailers, and I know, Matt, we've talked about this before, I really don't know of any other retailer brick-and-mortar oriented that is creating a treasure hunt of this excitement level and entertainment level because they're trading so broadly as we are. And so that is extremely differentiated in this environment. Fortunately for us, we're able to take advantage of the excess inventories across the e-com business as those flex and some of those, as you know, some of the vertical players as well as the full-line players. They've had spill off of goods. That has been a supplier of extra inventory for us. As always, we see availability to continue to propel us because we are now becoming more and more important to our vendors which has -- we were important in the middle of COVID, pre-COVID. Now we're at a different level, I believe, of importance to our vendors. And the neat thing with that is the vendors have figured out ways to work with us even more consistently than in the past. So, your question, by the way, as you can imagine, as I'm going on here, it's just -- it really encompasses all the reasons why we're so bullish. I mean we have the value leadership positioning right now. And another thing that's happened as we become a cooler place to shop. So, the other thing giving us confidence is we are now more gift-giving-oriented all year long. So now we're starting to get a greater consumer traffic for coming to us for a gift giving, whether it's at holiday, and we've delivered strong fourth quarters. But even in the other time periods, Mother's Day, Father's Day, Valentine's Day, whereas a handful -- I don't know, 10 years ago, maybe we weren't the place on X percent of gifts that people were comfortable with giving. So sorry for the long-winded answer. I could keep going, but I think that's enough to give you the confidence of why I think we're going to continue on a healthy trajectory here. Matthew Boss: Yes. Ernie Herrman: John, did I leave anything for you? John Klinger: No. I think right now. Ernie Herrman: No, but I think you had. John Klinger: What was the question for me, Matt? I think Ernie might have answered it. Matthew Boss: Runway multiyear with merchandise margins, just given the structural changes that you made on the buying front. John Klinger: That's back to me probably. Ernie Herrman: I just wanted you to know, Matt, John is looking back at me. So, the -- Wow, I say we just started to touch on that. So, as you can see from the healthy merchandise margin, we just delivered, and we believe there's still an opportunity in our pricing as we go forward to continue to selectively raise our prices as well as what's happened is buy better. It's kind of a 50-50 right now. We're winning on both fronts in terms of buying better in retailing goods and I have to tell you, one team, our marketing teams measure our perception of value with the consumers regularly and what they would tell you is that our surveys tell us our customer perception on our values that we offer continues to show us as being stronger than the competition really overall through the business. So, we're always monitoring that in addition to looking at the true numbers, but our customers perceive our values as extremely strong relative to competition, which I believe gives us a merchandise margin to your question, the ability to continue to leverage our pricing and our buying power. I always keeping a pulse on that, which our buyers are excellent at monitoring where our retails are versus the competition. Hopefully, that answers that. Matthew Boss: Great color. Best of luck. Operator: Our next question comes from Lorraine Hutchinson from Bank of America. Lorraine Hutchinson: My question is around new customer acquisition. Are you still attracting a younger customer to all of the banners? And are you seeing any increased signs of trade down from a higher income demographic? Ernie Herrman: Yes, Lorraine, so we do continue to attract more new customers that are skewing to a younger age as well as we've seen for the last number of quarters. And what was -- I'm sorry, what was the second part of your question? Lorraine Hutchinson: Signs of trade down. John Klinger: Oh, the trade down, no. So again, it's hard for us to see specific customer data because we don't -- our credit card isn't as penetrated as other retailers. But what we are seeing, when we look at our sales by stores that are in different demographics. Like we said in the call, we're seeing above and below $100,000. They were both positive -- now this quarter, it skewed a little bit more towards the lower income customer. But again, it was strong on both sides of that point, that $100,000. Ernie Herrman: Lorraine, I would just also jump in on one of the things that we believe is healthy for us, again, as we talked about in the beginning of the way we trade to good, better, best on the age demos, where we have been appealing to more younger customers, it -- what's been great is we also track the age group and the income groups like John is saying, and we are pretty balanced. So also, we have desired to not as much as appeal to younger customers -- we don't want to swing a pendulum on any age group because we want the customer to vote, and we try to drive across as many income and age demographics. At the same time, planting the seeds, as you know, our emphasis has been younger customers. So, once you know that we're always keeping a pulse though on as best we can on measuring -- having a balance, I guess, you would call it, across age and income. Operator: Our next question comes from Brooke Roach from Goldman Sachs. Brooke Roach: Can you speak to your outlook for further market share capture and momentum in the HomeGoods segment and the home segment in aggregate? As you begin to cycle the step-up in sales and profit trends from last year, do you think that you can continue the momentum? And where do you see the biggest opportunity for further gains in comp and margin improvement? John Klinger: Yes. I'll start with this question, Brooke. Yes. So, when you look at our comps going forward, let's say, on a two-year stack basis, we do have a large fourth quarter. But the one thing to note is that when we came out of COVID, first of all, if you look at the history, it's been somewhat choppy as we've guided towards more of a normalization. But when you look at our comps on a stack versus our last base year, which is FY'20 pre COVID, you'll see that they are very consistent quarter-to-quarter. The other thing is we're seeing our sales growth through transaction growth, which is very healthy. It's a healthy way to grow your top line. So that, again, gives us confidence that we're still appealing to a lot of customers still picking up a lot of customers that are new to us. So that gives us the confidence to, again, be confident about the 2% to 3% comp we have going forward for the remainder of the year. Ernie Herrman: I think, Brooke, the industry, as you know, has had a lot of upheaval and inconsistent results and whether interest rates and big picture with housing slowdown, et cetera, reiterating what John said, I think there's this continued market share opportunity though. And when you look at the -- we look at where our volume was pre-COVID to now, that way you get rid of all the ups and downs and all the noise that happened in that time period. And we have averaged very healthy comps, which I think bodes well for the future. Obviously, the industry -- you can see it out there. The furniture business in the industry, that has been rather soft across the board everywhere. But what we're happy, the reason we don't take a hit as hard as others as we're able to flex this is our flexible business model comes into place. And whether it's in HomeGoods or in HomeSense, we're able to flex the categories to where the action is more and the demand is more happening. As well as the other thing we've been doing there is going after consumables, things where they are driving repeat traffic in the HomeGoods. So that's another place we think we'll continue and I won't get into those specific categories. But it's in the place, I think we're going to continue to gain market share. Operator: Our next question comes from Ike Boruchow from Wells Fargo. Ike Boruchow: I guess I wanted to talk about the HomeGoods business. I assume you're not going to give us specifics on the outlook on either comp or margin. But I guess if I'll kind of frame it as a high-level question, how are you thinking about the business as you balance the solid recovery in margin against what seems like it's becoming a little bit more competitive or tougher in the furnishings and furniture space, just as you kind of like look out to the rest of the year. If you want to give specifics on guidance, that's also okay. Ernie Herrman: It's very nice of you. John Klinger: Look, I think we're confident in HomeGoods as we are in our other divisions. Ernie talked about the replenishment business that we've increased in our home, both in home and Marmaxx and Home & HomeGoods. That gives the customer a reason to come to HomeGoods that's outside of maybe decor and big-ticket items. And when they're in the store, a lot of times, they will find things else things other that they can put in their cart. So, giving the customers more reasons to shop all of our stores is a key to us driving that top line. Ernie Herrman: Yes. And I think even given what's going on in the environment, you can see these ups and downs where they don't go picture perfect. But you remember, not long ago, I think it was three quarters ago, we were talking about making incremental improvement and we've exceeded it at times and then we come in now a little bit more kind of in line with where we might have thought we've been and we're not exceeding at the moment. But we always have faith that the model is so different than everybody else and where fashion and utilitarian driven and the impulse nature of HomeGoods, I'm just not concerned about where we're going to be as we move forward over the next nine months. Operator: Our next question comes from Paul Lejuez from Citigroup. Paul Lejuez: Can you talk about the competition for deals and whether you've seen any changes within the good, better and best opportunities and maybe where you're seeing better deals in IMUs within that good, better, best? And then second, just curious how you characterize the promotional landscape that you're playing in now. Ernie Herrman: Sure, Paul. So on the competition for deals, you're talking about kind of at the market vendor level could be other retailers competing with us. Is that? Paul Lejuez: Correct. Yes. Overall. Look at the deals. Ernie Herrman: Yes, yes, ironically, of course, there's competition. The only thing that's happened is first of all, our buyers that are extremely well trained. And I don't know if I say this enough. Our part of their training is to be easy to deal with and be courteous and respectful you have to be demanding on price to get to the right value, which is what they do. Now you take that training and where they are with the fact that the market has, as you know, has consolidated a bit in terms of all the amount of brick-and-mortar stores. And we have continued to grow our brick-and-mortar stores so more and more vendors, they have even more reasons to want to sell us versus others because their goods in our store now hang with the best. They hang even more assorted than ever before. They're part of a very eclectic mix even more so than ever before. They're dealing with a buying team that's very straightforward and a company that has cash and we'll be paying. So, the competition is there, like competition has always been there. But I would say, like I said earlier on the call, we're more important today to the vendors. And probably the vendor relationships are even better than they've ever been due to that. I'm sure you can always find an exception here or there because we sell thousands -- we deal with thousands of vendors. But overall, the relationships are just fantastic. And so, our competition, some vendors want to split up goods. And no matter who they are, they're going to allocate goods to certain retailers. Most, I would say, want to deal with us because they -- it's the best thing for them to know where the goods are going and they're getting spread out dramatically. The promotional environment that you're asking about I would say is, to me, very similar to what -- I don't see any noticeable difference. The only thing as you probably read -- there's more word in the media more describing of pricing being adjusted more than necessarily promotions and we've taken a look at that in most of those situations and the retailers talking about it tends to not be in the categories that we're dealing with where our emphasis is in. So, I think that's a form of if and many retailers have been soft on traffic and transactions. I think we're going to see more -- my prediction would be we're going to see more of that talk about lowering prices on certain commodity items for them to try to get customers back. Fortunately, for us, it tends to not be in the -- with the vendors or the categories that we actually do business in. John Klinger: And just to add on to what Ernie was saying, in promotional environment, the fact that we buy so close to need, our buyers oftentimes are able to react to those promotional times in price to goods competitively you. Operator: Our next question comes from Michael Binetti from Evercore. Michael Binetti: Congrats on the quarter. I have a few I guess, John, I know you guided on pretax margin, but the implied EBIT margin you expect for the year is up about 10 to 20 basis points. It's a little better than it was 90 days ago, that's 10. So, it's moving up, but you said a few times you need 4% comp to lever the business. You've held the 2% to 3% here, but the margins keep getting better. Any reason to think you're having some successes in moving the leverage point down into this comp range, if this is the new normal for a while. And then I'm curious, California has had some very good changes fairly recently in the hourly wages over on the restaurant side. I mean I assume your teams there are thinking about that and how we will radiate out to your hiring and retention and hopefully, comps. Any thoughts you have early days on the changes in California? John Klinger: Yes. So, I'll start with the two to three, the fact that we're levering on a two to three. So, our leverage point continues to be flat to up 10 basis points on a three to four comp with no outsized expenses. What you're seeing in our guidance is that we had a number of onetime items last year that are benefiting us. So, we had incentive accruals German reserve accrual that we wrote off. And on a full year basis, there's homegoods.com that we shut last year. So, when you look at that, that gives us the ability to leverage the business. Now one of the other things, if you look at our, let's say, our Q1 versus our guidance that we had. One of the areas that we did outperform was in freight. So, our freight was -- we were more efficient on how we were moving our goods in the first quarter. So, we benefited there. And then, of course, the mark-on was also favorable in the first quarter. So, both of those things also support our ability to leverage on a comp that's lower than that three to four. And then wage, sorry, wage in California, we see wages going up in different geographies. And one of the things that we've talked about is that, we're not looking to do across-the-board wage increase, rather, in our plans, we have funds available to be able to adjust on a market-by-market basis where we need to. So, we track very closely our attrition rates, our ability to hire and where we see the need, we have the ability to increase wages pointedly, which we have in -- as part of our guidance. Operator: Our next question comes from Adrienne Yih from Barclays. Adrienne Yih: Great. Ernie, this is a follow-on something you said earlier. So last year, you had some strategic pricing very specific to particular categories you were looking at. It sounds like the environment is maybe not meaningfully more promotional, but we've seen a definite uptick in April and May and then the target announcement yesterday about sharpening those price points. So, I guess my question is, do you think about taking -- how do you think about your pricing strategy in light of kind of new information and sort of the dynamic environment and then for John, my question for you is, can you continue to run sort of negative low to mid-single-digit per store inventory and drive a positive comp? Ernie Herrman: All right, Adrienne. So yes, on the first one, shares the crux of the most important thing to always remember is, and you mentioned the right word, which is a dynamic environment in terms of the pricing, which is I think how you said it, which is spot on to what can happen here. And our buyers comp shop weekly of what the out-the-door retail is on the exact SKUs or the like SKUs that we carry to ensure that we always maintain a gap between our out-the-door retail and any retailer’s retail. In fact, I think we've talked about this before, we will not be undersold. So that's the first thing to always know is that is a foundational key point that all our merchants live off. We will not be undersold by any retailer. Sometimes we could be at the same price if it's another off-price retailer or another format, nobody is ever below us knowingly and then we adjust if that was the case. Then we always look at our gap between the out-the-door what we're selling for. And this is embedded in the way our merchants are trained and the way they operate all the time. So, we would react if there were categories that, that started to happen, and we would react quickly to those. I still believe from what the categories I know that the retailers are talking about adjusting, it would not be in the categories for the most part that we're in. So, I believe we're going to be fine in terms of overall, I would say, in all of our families of business. However, if we run into items or specific SKUs, we will adjust I don't see. Which is different than when we talk promotion, sometimes that sale promotions at department stores are percentage off on a website, an e-com player, those are really never concerned because we're always below those out-the-door promotional prices. So even though there might be more of that activity, it doesn't take away from our value difference. And at the same time, we measure -- just so you know, we measure statistically our turns by area to make sure we are spinning in the stores appropriately, which would be a sign of if we weren't the value equation as well as the survey, which I talked about in the beginning. So again, we take this all extremely seriously. But right now, no signs of impact, but we'll adjust if there ever were. Adrienne Yih: That's very helpful. John Klinger: So, the inventory, so as we said in our release, on an average per-store basis, inventories are down 5%. However, store inventories are in line with last year. And that's the important point to note. When you look at our inventory as far as our distribution center inventory, in FY '22, excuse me, FY '23, our inventory levels were higher than what we wanted as the logistics networks sped up and the outsized comps from FY -- we were coming down from the outsized comps in FY '22. So, in FY '24, we packed away or FY '23, we packed away a lot of inventory that we start. That we bled through in FY '24. So, in the first quarter, you have that pack away inventory that was much higher than we would normally want to carry and pack away in the first quarter. So, when you back out that pack away difference our inventories are in line in total on an average per store basis with last year. So, it's just really the timing of the pack away from the previous year. Adrienne Yih: Excellent. Best of luck. Operator: Our next question comes from Jay Sole from UBS. Jay Sole: Great. Ernie, I heard you mentioned in the prepared remarks that you see a lot of store growth potential just in your existing banners in existing countries. I was just wondering if that was sort of a that maybe there's even potential to grow outside of your existing countries. I'm just wondering if there's anything any new developments over the last 90 days that you see in terms of TJX's potential to grow beyond maybe where you are today? Ernie Herrman: So, Jay, first of all, great question. Unfortunately, this is one of those things we just -- we don't talk externally about it until we're at a point where we think we could announce. We're always looking, by the way. And I think what you're getting at is other markets, correct? Potentially? Yes. And we're always looking -- but at this point, we can't really say which has typically been our posture when and where as this. John Klinger: And we're confident in our store plans -- or store growth plans that we have in our existing markets. We still see ability to grow our store base in the U.S. and Canada. And in Europe, also in -- particularly on the continent, particularly in Germany, we still see opportunity to grow our store base. Jay Sole: Got it. And maybe can you give us an update then on HomeSense and Sierra how those performed in the quarter? John Klinger: We're pleased with how -- we don't break them out, but we're pleased with how they performed. Operator: We have one more question. Our next question comes from Aneesha Sherman from Bernstein. Aneesha Sherman: My question is a follow-up on the comments on international. International has been growing slightly in the mix the last two years, but the margins remain pretty low. It was 4% this quarter. I know a couple of years ago, you talked about high single digits as being the kind of long-term target for margins. Is that still the case? Or has that view evolved? And then a quick follow-up, John, on the gross margin comments you made earlier. You talked about freight becoming more efficient, which sounds different from kind of recapturing the headwinds that you've had the last two years, and you also talked about mark-on. Would you say it's fair that you think there's going to be a structural improvement in gross margins beyond the kind of recapture of headwinds for the last two years? Is the business actually becoming more efficient? John Klinger: Well, I'll start with that question there. Yes, the freight itself. So, we -- when the freight rate was going against us, we dropped 300 basis points, and we -- last year, we clawed back $200 million in my comments, then we said that going forward, it's about -- so we don't see -- we see a stickiness in the freight where driver salaries, there was a trained strike that caused higher wages, higher benefits. So those kind of increases to the cost structure of freight are sticky. And we don't see that those are necessarily going to go away. For the first quarter, we were able to shift some of our inbound product a little bit more towards the intermodal versus truck, which is more cost effective. That's kind of what we're looking to do going forward, which is try to be as efficient as possible as both inbound and outbound of how we move the goods. And as far as the international segment, yes, we are still very confident in our ability to approach the 8% that we've said. And we are -- that division is working very hard on that as well. Ernie Herrman: Yes, Aneesha, I think you had pointed out that the first quarter was a four. John Klinger: Yes, but that was up from last year. So, we continue to… Ernie Herrman: I just saw your -- right. Traditionally, that first quarter internationally is always a low quarter. This first half is low -- and then -- so -- but you could see it's incrementally up from a year ago. So directionally, we're heading in the right place as we look out for the back half. Operator: Our next question comes from Laura Champine from Loop Capital. Laura Champine: We thought the execution was so strong that you might comp up better than 2% in Marmaxx in this quarter. So, I'm wondering, if you could comment on what you think the macro backdrop is that you face now? And whether or not you actually do see any pressure on market share from the Chinese discounters like Temu and Shein? John Klinger: Yes, I'll start with this one. So, in Marmaxx, we did round down to a 2% comp. But when we look at the business itself, the departments that aren't weather dependent performed much better. And the regions that didn't experience as much unfavorable weather also performed better. So that tells us that where we saw the regions in the departments that were strong, that tells us that, okay, that's leaning more towards weather. And I'm very confident on our comps from Marmaxx going forward. Ernie Herrman: And the teams there, we do -- John's team does a bit of analysis to kind of right to look at control groups as such to figure that out. So yes, it feels like weather did hit us and resulted in us rounding down to two, right? Laura, on the question about some of those online players you were talking about, we feel just as similar -- they're so commodity-driven and so not the brands that we would carry very much not the good, better, best type of branded mix that we would go after. We see very little issue with them taking market share from us. I could see that their business model could overlap with some other brick-and-mortar guys or some other online guys for sure. But we just don't see that as bumping up with our customer base or end use. Operator: Our next question comes from Dana Telsey from Telsey Group. Dana Telsey: As you think about the pace of remodels, I think you mentioned 450 remodels this year on the last call. How are they going? What are you seeing? And any details on any of the banners and how the performance is different. And then also on shrink, are you still looking at shrink being flat this year? Or any changes to what you're seeing in shrink? John Klinger: Yes. On the remodels, again, remodels are more about making sure that our stores maintain an excellent fit and finish and so when we do the remodels, what we see is that stores that are much older are able to compete or I should say, comp as good as, let's say, a store that's 10 years old. And so, it's about maintaining the base and making sure that you don't get into a situation where now your sales start to falter and you have to start to really invest in them and catch up. So, for us, it's about maintaining and making sure that when the customer comes in, that it's a pleasant shopping experience no matter what store they come into. Now on the remodels, we always try to make sure that we're putting fixtures in that make it easier for the customers to shop. When you look at our remodels, as far as the beauty department, it's better lighting, it's a cleaner look. And all those things, we think, do add to the top line. As far as shrink goes, we're still highly focused on shrink. As I said in my comments, we're planning shrink to be flat year-over-year. But we still have a high focus on making sure that we balance protecting the goods with making sure that the customers can shop easily and get -- and be able to buy the goods while also maintaining safety in our stores. So, one of the things that we've added, we started to do last year, late towards the year, we're body cameras on our LP associates. And when somebody comes in, it's sort of -- it's almost like a de-escalation where people are less likely to do something when they're being videotaped. So, we definitely feel that that's playing a role. Also, during the end of the year, when we look at our shrink results, we're able to then set our plans for the following year and seeing what worked, what didn't and so it's about continuing to lean into the strategies that worked last year. But again, a position to give guidance. Operator: Our final question of the day comes from Marni Shapiro from Retail Tracker. Marni Shapiro: Above closing out the call. Congratulations on the nice quarter. The stores look great. Can we talk about your shopper just a little bit? It's been a couple of years now. You've been talking about getting the younger shopper in, they've been coming in. Traffic has been up. I guess a couple of things. Does this younger shopper open credit cards? Is it something that is -- that you guys are pushing them to do? And are you finding that they shop across the different brands? And are you marketing to them to shop across the different brands? Because arguably a shopper that shops both TJX or T.J. Maxx and HomeGoods is going to be a more loyal shopper to the Company in total. Can you just talk a little bit about what that younger shopper looks like internally for you guys? Ernie Herrman: Yes. So, Marni, let me start and John will jump in as well. He's very -- also we're both kind of involved in all of the opening credit cards and loyalty, you're touching on a whole loyalty cross shopping. And by the way, you're spot on when you do get the customer that you build loyalty, if they open at TJX rewards even a younger customer. Ideally, we'd like them to open the credit card, and then they cross-shop more, John, right? John Klinger: Yes. But again, the credit card is not as penetrated as it is with a lot of our competitors. So, a lot of our read that we get on the customers comes from customer surveys, and we do get credit card information that is available to us that we partner with organizations that pull that information together. And that's where we're getting the large majority of the comments that we make as far as being able to -- that we're attracting these younger shoppers. Ernie Herrman: So that has been a pretty much a steady increase over the last handful of years, attracting a larger percent of our new customers in the lower age in the younger age demographic. John Klinger: So, we are looking at a large data pool when we're making those comments. That's beyond just our credit card. Marni Shapiro: And are they -- do you see the data that they are already cross-shopping the departments? And I guess, what are you guys doing on the marketing side to really push that? Because it feels like a real opportunity as these people come into your brand. It's different for somebody like me who is old and has been shopping there forever versus somebody who's new, who came in with mom and maybe is now buying their first house or by their new apartment. Ernie Herrman: So, we tried to use our digital marketing is really aimed at trying to go out -- when we get e-mails, okay, we are able to drive the other brands with the customer. We have also done things in store as well. I think the measuring of it is where, I think, John and I would say it's -- we can't measure a lot of this as well as we would like. Marni Shapiro: Understood. Well, best of luck for the next quarter. Ernie Herrman: All right. In closing, I want to emphasize that we are really in an excellent financial position to continue to invest in the growth of our company. while simultaneously returning significant cash to our shareholders. Now, we will thank you for joining us today and we look forward to updating you again on our second quarter earnings call in August. Thank you, everybody. Operator: Ladies and gentlemen, that concludes your conference call for today. You may all disconnect. Thank you for participating.

Operator: Ladies and gentlemen, thank you for standing by. Welcome to The TJX Companies Fourth Quarter Fiscal 2024 Financial Results Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded as of today, February 28, 2024. I would now like to turn the conference call over to Mr. Ernie Herrman, Chief Executive Officer and President of The TJX Companies, Inc. Please go ahead, sir. Ernie Herrman: Thanks, Ivy. Before we begin, Deb has some opening comments. Deb McConnell: Thank you, Ernie, and good morning. Today's call is being recorded and includes forward-looking statements about our results and plans. These statements are subject to risks and uncertainties that could cause the actual results to vary materially from these statements including, among others, the factors identified in our filings with the SEC. Please review our press release for a cautionary statement regarding forward-looking statements as well as the full safe harbor statements included in the Investors section of our website, tjx.com. We have also detailed the impact of foreign exchange on our consolidated results and our international divisions in today's press release and in the Investors section of tjx.com, along with reconciliations to non-GAAP measures we discuss. Thank you, and now I'll turn it back over to Ernie. Ernie Herrman: Good morning. Joining me and Deb on the call is John. I want to start today by recognizing all of our global associates for their excellent work in 2023. I truly appreciate their continued commitment to TJX and their focus on our customers. I especially want to thank our store, distribution and fulfillment center associates for their hard work and dedication to our company every day. Now to an overview of our results beginning with the fourth quarter. I am extremely pleased with our very strong finish to 2023. Our fourth quarter sales profitability and earnings per share all exceeded our expectations. Overall comp sales were up a strong 5% and were entirely driven by growth in customer transactions. This is great to see as it underscores our ability to continue gaining market share in all of our geographies. I am particularly pleased that our U.S. businesses, Marmaxx and HomeGoods, continued their very strong sales momentum. Also, it was great to see comp sales growth accelerate versus the third quarter at our Canadian and international divisions. We are confident that our exciting assortments and excellent values resonated with shoppers across all of our retail banners this holiday season. We believe our gift-giving selections offer customers something for everyone on their list, and we see being a gift-giving destination as a year-round opportunity for our business. For the full year, overall sales surpassed $50 billion, marking a milestone for our company. Even more exciting, we still see plenty of opportunities to continue our growth in our markets around the world. For the full year, consolidated comp sales increased 5%. Profitability increased significantly and earnings per share grew double digits, all well above our initial guidance for the year. Importantly, we saw comp sales growth across each of our divisions, again, all driven by increases in customer transactions. We are confident that we gain market share in every geography that we operate in. Our outstanding performance in 2023 is a testament to the sharp execution of our talented associates around the world and their relentless focus on delivering excellent value to our customers every day. Looking ahead, the first quarter is off to a good start. In 2024, we have many initiatives planned that we believe will keep driving sales and to attract more shoppers to our stores. Availability of quality branded merchandise in the marketplace continues to be outstanding. We are in a terrific position to continue flowing a fresh assortment of goods to our stores and online this spring and throughout the year. Longer term, we see many opportunities to capture additional market share across our geographies, and we are laser focused on increasing the profitability of TJX. We are convinced that our flexibility and commitment to value will continue to be a winning retail formula for many years to come. Before I continue, I'll turn the call over to John to cover our fourth quarter and full year financial results in more detail. John Klinger: Thanks, Ernie. I also want to add my gratitude to all of our global associates for their continued hard work. Now I'll share some additional details on the fourth quarter. As I recap the fourth quarter results, I'm going to speak to everything on a 13-week basis, which excludes the extra week in the quarter. Reconciliations detailing the impact of the extra week on our results and other adjustments can be found in today's press release and on the Investors section of our website. Adjusted net sales grew to $15.5 billion, a 7% increase versus last year. As Ernie mentioned, consolidated comp store sales increased 5%, above the high end of our plan and were entirely driven by an increase in customer transactions. A quick note that on prior calls, we have referred to customer transactions as customer traffic. But for the sake of clarity, we'll use the term customer transactions going forward. Back to the results. In the fourth quarter, our consolidated comp sales increased in both our apparel and home businesses. In terms of divisional sales performance for the fourth quarter, we were pleased to see strong comp sales increases at every division, all driven entirely by customer transactions. At Marmaxx, I also note that we saw comp increases in both our apparel and home categories. Fourth quarter adjusted pretax profit margin of 10.9% was up 170 basis points versus last year. Our adjusted pretax profit margin came in well above our plan primarily due to a higher merchandise margin. This includes a larger-than-expected benefit from shrink and freight, lower markdowns and better mark on. We also saw some expense leverage on our above-plan sales. Adjusted gross margin for the fourth quarter was up 340 basis points versus last year. This was driven by a higher merchandise margin, including a significant benefit from lower freight costs and shrink strong mark-on and lower markdowns. Fourth quarter adjusted SG&A increased 190 basis points versus last year, primarily due to higher incentive accruals and incremental store wage and payroll costs. Adjusted net interest income benefited fourth quarter adjusted pretax profit margin by 10 basis points versus last year. Lastly, we were very pleased that adjusted diluted earnings per share of $1.12 were well above our expectations and up 26% versus last year. Now to our fiscal '24 results. Once again, for the full -- for our full year financial results, I'm going to speak to everything on a 52-week basis, which excludes the extra week in the fiscal year. Adjusted net sales grew to $53.3 billion, a 7% increase versus last year. Full year consolidated comp store sales were up 5%, entirely driven by customer transactions. We were very pleased to see mid-single-digit comp sales increases in both our apparel and home businesses. Adjusted pretax profit margin of 10.9% was up 120 basis points versus last year's adjusted 9.7%. Adjusted gross margin for the full year was 29.9%, up 230 basis points versus last year's 27.6%, primarily driven by a significant benefit from lower freight costs as well as strong mark-on and 10 basis points of shrink favorability. Shrink was an area that we were laser focused on as an organization all year long. I want to recognize and thank all the associates who worked extremely hard on our initiatives throughout the year. Importantly, we managed our in-store initiatives while delivering a very strong top line and providing a pleasant shopping experience for our customers. We remain focused on shrink and continue to look for ways to improve this area going forward. Full year adjusted SG&A was 19.3%, up 140 basis points versus last year's 17.9%. This was primarily due to incremental store wage and payroll costs and higher incentive accruals. Adjusted net interest income benefited full year adjusted pretax profit margin by 30 basis points versus last year. Lastly, full year adjusted earnings per share were $3.76, up 21% versus last year's adjusted $3.11. Moving to inventory. Balance sheet inventory was up 3% versus fiscal '23. We are happy with our inventory levels and the plentiful availability we see in the marketplace. We are well positioned to flow fresh assortments to our stores and online this spring. I'll finish with our liquidity and shareholder distributions. For the full 53-week year, we generated $6.1 billion in operating cash flow and ended the year with $5.6 billion in cash. In fiscal '24, we returned $4 billion to shareholders through our buyback and dividend programs. Now, I'll turn it back to Ernie. Ernie Herrman: Thanks, John. I'll pick it up with some full year divisional highlights. As we saw with our strong fourth quarter sales, every division delivered comp increases for the full year, with customer transactions driving the increases across the businesses. Again, we believe this is a strong indicator of our ability to continue gaining market share and it underscores our wide customer demographic. Beginning with Marmaxx. Overall sales well exceeded $30 billion. Comp store sales increased a very strong 6%. We also surpassed 2,500 total T.J. Maxx and Marshalls stores. Marmaxx's apparel and home categories, both comp up for the year. Further, we saw consistently strong comp sales increases across regions and income demographics. As to Marmaxx's profitability, we were extremely pleased to see full year adjusted segment profit margin improved significantly to 13.7%. As we look ahead, we are very excited about the opportunities to see -- that we see to grow our customer base, drive sales, open new stores and increase the profitability of our largest division. At Sierra, which is reported with Marmaxx, we were pleased with the continued sales growth. At our online businesses, we added new categories and brands throughout the year to deliver the same freshness and excitement online as we do in our stores. At HomeGoods, annual sales grew to nearly $9 billion and comps grew 3%. It was great to see the home business return to positive comp sales trends. We are particularly pleased with the acceleration we saw in the second half of the year, with comp sales increasing high single digits. Similar to Marmaxx, we saw consistent performance across regions and income demographics. HomeGoods adjusted profitability also improved significantly to 9.4% and getting closer to our goal of returning this division to a double-digit profit margin. During the year, we opened a combined 34 HomeGoods and HomeSense stores. Long term, we see exciting potential to bring our eclectic mix of home fashions to even more consumers across the United States. Moving to TJX Canada. Full year sales were $5 billion and comp store sales increased 3%. Adjusted segment profit margin on a constant currency basis was 14%. With more than 550 stores across Canada, we are one of the largest apparel and home retailers in the country. We are a top destination for consumers seeking branded merchandise at amazing value. We continue to see opportunities to expand our footprint across Canada and attract new shoppers to all 3 of our banners. At TJX International. Full year sales approached $7 billion and comp store sales were up 3%. Adjusted segment profit margin on a constant currency basis was 4.6%. As a reminder, in the second quarter, this division's profitability was significantly impacted by a reserve related to a German government COVID receivable. In Europe, we believe our sales growth outperformed many other major brick-and-mortar apparel retailers in a difficult economy. Australia delivered very strong sales growth, and we continue to open stores in new markets. Going forward, we are confident that we can grow our retail banners in each country that we operate in and are highly focused on improving this division's profitability. Going forward, I am confident that we are well positioned to continue our growth around the world and in many kinds of economic and retail environments. Let me briefly remind you of the key characteristics of our business that we believe are tremendous advantage. First is our relentless focus on offering our shoppers great value on every item every day. For us, value means delivering consumers the right combination of brand, fashion, price and quality as always. Second is the flexibility of our business model that allows us to shift our buying, distribution and store mix to quickly react to the hottest trends in the marketplace and changing consumer preferences. Further, the globalness of our business allows us to create a differentiated treasure hunt shopping experience in every country that we operate in. Third, we successfully operate stores across a wide customer demographic. Our ability to offer a differentiated mix of good, better and best merchandise at each of our stores allows us to appeal to value-conscious shoppers across a broad range of income demographics. Further, each of our divisions continue to affect an outsized number of younger customers to its stores, attract an outsized number of younger customers to our stores, which we believe bodes well for the future. Next, we are extremely confident that there is more than enough inventory available in the marketplace to support our growth plans. In 2023, our more than 1,300 buyers source goods from a universe of more than 21,000 vendors, including thousands of new ones. As we continue to grow our top line, we believe we become even more appealing to vendors as we offer them an attractive way to grow their business. Fifth, we continue to see opportunities for store growth around the world. We believe we can grow our global store base by at least another 1,300-plus stores over the long term with just our existing banners in our current countries. Last, but certainly not least, is our exceptional talent and strong culture. I truly believe the depth of off-price knowledge and expertise and the longevity of our talent within TJX is unmatched. We continue to invest in teaching and training our associates to develop the next generation of leaders within our company. Finally, I am so proud of our culture, which I believe is a major differentiator and another key component of our success. Turning to corporate responsibility. Our teams across the company did great work on our initiatives in each of our 4 pillars: workplace, communities, environment and responsible business. Our 2023 global corporate responsibility report summarizes our efforts and progress within this work, as I shared last quarter. Our value mission extends to our corporate responsibility efforts, including supporting our associates, giving back in our communities, helping mitigate our impact on the environment and operating our business ethically. I'm pleased to share that in fiscal 2024, we supported more than 2,000 nonprofit organizations globally through our TJX foundations including nonprofit partners in all 50 states within the United States. Through our grant funding and in partnership with our generous customers, we provided more than 30 million meals through our nonprofit partners that people experiencing food and security. And our associates across the globe continue to be engaged in this work, running give a dollar campaigns in our stores, participating in our associate nominated grants program, helping to build homes for those in need, serving his career coaches for students and more. These are just some examples of work our teams are doing in our communities, and we invite you to visit tjx.com to learn more. Summing up, we are very proud of our team's performance in 2023 and are in a great position as we enter 2024. We are confident in our plans this year, and as always, we'll strive to beat them. We remain committed to investing in our business to support our future growth. Longer term, we believe that the combination of our key strengths and history of strong execution sets us up extremely well to continue our successful growth around the world. I am convinced that plenty of opportunities remain to drive sales increased profitability and capture additional market share going forward. Now, I'll turn the call back to John to cover our full year and first quarter guidance. And then we'll open it up for questions. John Klinger: Thanks again, Ernie. Now to our fiscal '25 guidance beginning with the full year. We are planning overall comp store sales growth to be up 2% to 3% in fiscal '25 over a 5% comp increase in fiscal '24. For the full year, we expect consolidated sales to be in the range of $55.6 million to $56.1 billion. We're planning full year pretax profit margin to be in the range of 10.9% to 11%. This would be flat to up 10 basis points versus fiscal '24 adjusted pretax profit margin of 10.9%. Moving to full year gross margin. We expect it to be in the range of 30% to 30.1%, a 10 to 20 basis point increase versus fiscal '24 as adjusted gross margin of 29.9%. We expect this increase to be driven by a higher merchandise margin partially offset by our supply chain investments. We're planning for both freight and shrink to be flat versus fiscal '24. For full year SG&A, we're expecting it to be approximately 19.3% and flat to last year's adjusted SG&A. We're planning incremental store wage and payroll costs to be offset by lower incentive compensation costs and a benefit from items that negatively impacted us last year. We're planning full year net interest income of about $118 million, which would delever fiscal '25 pretax profit by about 10 basis points. For modeling purposes, we're currently assuming a full year tax rate of 26.0% and a weighted average share count of approximately 1.14 billion shares. As a result of these assumptions, we're -- we expect full year earnings per share to be in the range of $3.94 to $4.02. This would represent an increase of 5% to 7% versus last year's adjusted earnings per share of $3.76. Moving to our first quarter guidance. We are planning overall comp store sales growth to be up 2% to 3%. We expect first quarter consolidated sales to be in the range of $12.4 billion to $12.5 billion. We're planning first quarter pretax profit margin to be in the range of 10.5% to 10.6%, an increase of 20 to 30 basis points versus last year. Next, we expect first quarter gross margin to be approximately 29.8%. This would be an increase of 90 basis points versus last year's -- last year primarily due to a higher merchandise margin which includes the annualization of lower freight costs from last year and favorable mark-on, partially offset by supply chain investments. We're expecting first quarter SG&A to be approximately 19.5%, up 50 basis points versus last year. We expect this increase to be primarily driven by incremental store wage and payroll costs. For modeling purposes, we're currently assuming a first quarter tax rate of 25.8%, net interest income of about $37 million and a weighted average share count of approximately 1.14 billion shares. As a result of these assumptions, we expect for our first quarter earnings to be -- earnings per share to be in the range of $0.84 to $0.86, up 11% to 13% versus last year's $0.76. Moving on to our fiscal '25 capital plans. We expect capital expenditures to be in the range of $2 billion to $2.1 billion. This includes opening new stores, remodels and relocations as well as investments in our distribution network and infrastructure to support our growth. For new stores, we plan to add about 141 net new stores, which would bring our year-end total to almost 5,100 stores. This would represent a store growth of about 3%. In the U.S., our plans call for us to add about 45 net new stores in Marmaxx and 40 stores at HomeGoods, including 17 HomeSense stores. At Sierra, we plan to add 26 stores. In Canada, we plan to add 10 stores. And at TJX International, we plan to add 15 net stores, in Europe and 5 net stores in Australia. Lastly, we also plan to remodel about 480 stores and relocate approximately 40 stores in fiscal '25. As to our fiscal '25 cash distribution plans, we remain committed to returning cash to our shareholders. As we outlined in today's press release, we expect our Board of Directors will increase our quarterly dividend by 13% to $0.375 per share. Additionally, in fiscal '25, we currently expect to buy back $2 billion to $2.5 billion of TJX stock. Looking beyond FY '25, we continue to believe that on a 3 to 4 comp increase, our pretax profit margin can be flat to up 10 basis points. As I've said before, this assumes no outsized expense headwinds. Also, our plans do not contemplate assumptions for macro factors such as geopolitical events, foreign exchange volatility or consumer behavior. In closing, I want to emphasize that we are laser-focused on growing our top line, increasing profitability and will strive to exceed our plans. We are in an excellent position, both operationally and financially to take advantage of the opportunities we see to further grow our business while simultaneously returning significant cash to our shareholders. Now, we are happy to take your questions. As we do every quarter, we're going to ask that you please limit your questions to 1 per person so we can keep the call on schedule and answer as many questions as we can. Thanks, and now we'll open up for questions. Operator: [Operator Instructions] Our first question comes from the line of Paul Lejuez from Citigroup. Paul Lejuez: You've got your margin guidance overall for the year, but I'm curious how you're thinking about profit margins at each of the segments this year? Where do you have the most opportunity? And what is assumed in your guidance, which segments are up, which are down? And then, Ernie, just having quick comments on the Macy's news yesterday, how you're thinking about the store closure opportunity, what that might mean for you guys? John Klinger: Yes. Paul, to start off, on this call, we're not going to get into the detail by division, just to say that we're very confident in the plans we have to execute them, and we're pleased to be increasing 10 basis points on a 2% to 3% comp. Ernie Herrman: Yes. Yes. Paul, on the interesting, the Macy's store closure. This is a little similar to some of the other closures we've talked about over the last few years. Obviously, with the Macy's store closures, you do have a lot of overlap in categories that marry up, which marry up to the businesses that we run. So we would think that would be an additional, and it's probably what you're getting at. I'm guessing an additional market share opportunity depending on the categories and the locations they're in. So not that we would -- not that we would get all of that, but we would get some of it is what we always figure. And again, we've looked at that with any of the other stores over the last 18, 24 months that have closed, and we look at it similarly. I also think where our teams, I like to give is -- I like to give our planning and allocation organization, a lot of credit because they look for trends and our system is sophisticated enough to look for the trends in nearby store closures and how they affect our store in a HomeGoods or a Marmaxx store, and then we're able to watch that trend and ship back and capitalize on the market share opportunity. One indirect byproduct and I know you're not asking this, but I would like to mention to everyone on the call, one of the things that's happening with all the store closures is the importance to the vendor community keeps rising for our merchants amidst less brick-and-mortar competition, so to speak. So one of the -- that hasn't been a question yet because we're not there in the order. But merchandise margin opportunities, I think one of the benefits as we look forward is the importance that our buyers have to the vendor community. And that is one of the things that probably will continue to allow us to buy a little bit better on an ongoing basis. So it's indirectly related to the store closure question. I thought I'd point that out. Operator: Next, we'll go to the line of Brooke Roach from Goldman Sachs. Brooke Roach: Ernie, you talked a little bit about this already about the opportunity for better buying which could help merch margin. But I was hoping you could contextualize the drivers of merch margin expansion that you're forecasting this year as well as the drivers of expansion that you see on a multiyear basis, is this year a function of mark on markdown or further price increases, where do you see the most opportunity? Ernie Herrman: Yes. Great, question, Brooke. And John, are you going to... John Klinger: Yes. I mean we see a combination of both mark-on and markdown favorability in FY '25. So we're quite pleased to see that. Ernie Herrman: I would tell you, Brooke, getting even a little more specific for your question is where the mark on, I think, comes which is still your, I guess, most important component here because we can kind of control that is it's a combination. What I just started to touch on with Paul's question on the buying better. Also linked with that, I didn't get to mention is clearly availability, which I did mention in the script, is outstanding across the board, as always, it varies by category and vendor. But at the end of the day, there's more goods out there than we can handle, and we're still holding our merchants back. What I like that happened, and it's been -- this is a new thing. It's been happening over a number of years now is the importance that our buyers are to the vendor community. And the way they handle the vendors in a very courteous manner, but straightforward is allowing them to continue to buy better season after season. And I think as we continue to gain market share and the vendors see that they're just being placed in our store and an eclectic mix with even more and more better brands has been an incentive for them to continue to want to work with our buyers even more so than in the past. And obviously, this has been evolving over a number of years now. So we feel good about the mark on from the buying better perspective. And then I think you touched on this on the retailing of the goods, we still feel there's opportunity. Again, we've just started over the last few years on as we used to call it, selectively adjusting retails where it was appropriate, and we still think there's a lot of opportunity there. Our perception on value is at a very high level across all of our brands. And as you can see from our sales momentum, the customers are responding extremely well to the values that we have in the store. So I would tell you on the -- John mentioned the markdowns, so that's one thing. I think the mark on opportunities still exist because of both buying better and retailing goods. And I think, again, continues to be midterm and longer-term opportunity. I hope that answers that. Operator: Next, we'll go to the line of Matthew Boss from JPMorgan. Matthew Boss: And congrats on another great quarter. So Ernie, with holiday comps driven by transactions, could you elaborate on new customer acquisition and market share opportunity that you see. And just how do you think your apparel and home assortments are positioned in the spring, given the good start that you cited? And then maybe, John, on the margin side, just a follow-up. I mean, with margins now exceeding pre-pandemic is there any change to the historical margin flow-through on incremental of plan sales? It sounds like Ernie walked through a number of drivers, but just thinking about incremental sales and flow through in the model? Ernie Herrman: Yes, Matt, great question. Well, first, let's deal with the first one, which is the new customer acquisition. We've been very happy. We are skewing -- we continue to skew with new customers, we continue to skew a little younger, which is what we wanted. It bodes well for the future. I think I also mentioned that in the script. One other focus, though, and I think we had this recently hit the meeting up what we talked about is we also are trying to acquire new customers, but we're trying to, in our market and create additional visits out of our existing customers because that is still a huge driver of market share is if we could get one additional visit out of only 10% of our customers, that is a monster. So yes, we are obviously looking for new customers and happy that they're skewing younger and where -- we've been happy with the acquisition of new customers. But just we equally. We are -- we have challenged the organization to try to increase visits. And our marketing team, we just had a bunch -- and I'm thrilled with what our marketing team has done on their creative for this coming year. We have some great creative and great messaging plans across each brand. I recently had marketing meetings for a couple of weeks with every division, and we love the messaging where we're going out. And in some cases, appealing to what you just mentioned, new customers, some of our messages are really geared at educating a customer what our price is in the messaging so that we can try to get those new customers. One other thing I'd like to point out on this, that's really encouraging. We always talk about how we trade broadly. And in the call here, we've talked about different income demographics. A really neat thing, I think, for everyone to remember is we are very balanced actually relative to the population of the United States we are balanced on age and income demographics in a very appropriate manner. We're not -- as some retailers can skew towards different categories, we actually are at the point now where we over-index in the age 18 to 34. So we're slightly over the population average with those shopping our stores, which I think bodes really well for the future. And then on income demographics, we're very balanced by category under $50,000, $50,000 to $99,000 over $100. We skew a little bit more to the -- over the $50,000 and above that. So great question. Obviously, we spent a lot of time on it. So the second part... John Klinger: Yes. I would just say on the income demographic, when you look at our sales performance in the fourth quarter was very consistent across our income demographic bands that we look at, particularly in the U.S. divisions. But yes, as far as the sales incremental flow through, I would say that we -- it's very consistent with what we've been saying all along. We see our lever point somewhere between the 3% to 4% comp, as we said in the script. And I don't think anything has changed on that. Ernie Herrman: And Matt, what was the last part of your question? Was that about our go forward? Was it about the home business? Matthew Boss: Yes, just opportunities. You mentioned spring off to a good start. Just any elaborating on your assortments in apparel and home into the spring. Ernie Herrman: Their apparel at home, you had said right. So yes. I have to tell you, though, we did not -- we were not -- at the beginning of February, we were getting here with the weather that I think many of you know across the country. So we -- that was holding back our comps a little in the first couple of weeks of February even though we were -- it's in our guidance range. And then over the last -- really the last couple of weeks, our business got stronger when the weather was more normalized. From week 3 on, we were we were much happier with our comps. So that's why we're off to a good start. And by the way, I would say that we when -- the weather is like that, it can affect your apparel, but we were still pretty pleased with where we were trending given the weather. And our home business, I would tell you, again, I don't want to take up too much more time on this section, but our home business as you could tell from Q4. And as we go into spring and this year, as I mentioned in the script, we just feel just a massive opportunity in market share because our home business, we do it so differently than really anybody else. We don't have competition the same way, whether it's all the fashion aspects of what we do in our home, some of the categories that are more replenishment, where we increasing our steady traffic in home goods because we have items that customers replenish. And then you have utilitarian items that we sell. So HomeGoods is such an eclectic treasure hunt that it's really a special place in terms of impulse buying and I think just a huge market share opportunity there. And we're positioned -- I love the way that team is positioned. And that isn't just -- I'm not talking just about HomeGoods. I'm talking about the home area in Marmaxx has been really strong home area over in T.K. Maxx and in winners, Marshalls in Canada, all the full family stores have been running a strong home business, and it's also continuing that way as we enter spring. . John Klinger: Yes. And Matt, let me just add on to what I was talking about as far as the incremental sales flow-through. So as we said in the past, it's for every point in comp, 15 basis points. And again, unchanged from what we've been saying. Operator: Next, we'll go to the line of Lorraine Hutchinson from Bank of America. Lorraine Hutchinson: Ernie, I was hoping to get your outlook for pricing for this year. Do you still see an opportunity for like-for-like price increases throughout the assortment? And then also, how will mix factor into your outlook for total AUR in fiscal '25? Ernie Herrman: Sure. No, both on point there, Lorraine. Yes. No, we feel there's still opportunity on the like-for-like pricing. As we look -- we comp shop so regularly, our buyers are so good at that. And we can see specific items here and there where we could be going up a price point. Again, it's -- you would never notice it because we're not -- we're doing it so sparingly throughout the assortment. It isn't -- it isn't a widespread thing, but there's enough that there's opportunity to be doing it surgically in different places throughout the store. We can just see because other retailers have had to go up, and they aren't coming down even though inflation has moderated. So much cost, John and I talk about all the time cost is embedded in all of the businesses out there. So I think that, Lorraine, is going to still continue for a while. This isn't just a season or this year thing. Yes. And then the -- I'm sorry, the second part was the mix is real. With the mix related? Yes. So the mix is always -- we are always going after the hottest trending mix. I don't -- in our plans right now on our AUR, we don't see the AUR changing that much. We've been kind of going after some of the hotter categories and taking down some of the ones that aren't. And as you know, you know us well. We move very fast to the trends. So we still see some of those categories that were looking good that we were trying to maximize last year continuing this year. And in our plans right now, we're looking at the AURs is not changing that much, actually. We can always go. We don't top -- that's one -- as we talk about this all the time, we do not top-down manage that. But for what we see, our visibility right now looks like they won't change much. Operator: Next, we'll go to the line of Jay Sole from UBS. Jay Sole: I'd like to ask about maybe some of the smaller banners. Just on HomeSense, there's a lot of talk in the market that some home categories broadly across the U.S. aren't doing that well. But I've said a couple of times, Home is doing really well. Can you just talk about HomeSense? How that's doing, what your store opening plans for next year are? And also just because you mentioned on the script, this Sierra Trading Post, do you plan to open more Sierra Trading Post? And can you give us a little bit more color on what you're seeing in that banner? Ernie Herrman: Definitely. So John is looking at the stores. One thing I'll go -- I'm going to tell you one thing on the HomeSense mix. We make adjustments just -- it's interesting. Just similar to what I was just saying to Lorraine, we will go with where the customer is voting. Again, our model allows us to do this, and our teams are experienced. So we are in the process and actually they started in the fourth quarter. The HomeSense team has started modifying the mix to go to what's more happening than some of the other categories that have not been -- that are big in HomeSense but that haven't been trending as strongly, and we started shifting and shoring up our HomeSense trend now has picked up dramatically since we made those adjustments. So -- by the way, in our Sierra sales trend all last year was strong, and we've been thrilled with where we're heading there, which is why in both of these situations where pretty aggressive on store comp. John Klinger: Yes. I mean we're really pleased with what we're seeing in our -- we'll call them their seed businesses that we're adding 17 HomeSense stores. We're adding 26 stores in Sierra. And we're also very pleased with what we're seeing in Australia as well, where we're adding five stores down there. So we're really quite pleased with what we're seeing with the performance of these businesses. Ernie Herrman: I will add that Jay, because we don't get to talk about the small businesses often, so that's good. Operator: Next, we'll go to the line of John Kernan from TD Cowen. John Kernan: John, you talked about unit growth within the guidance in fiscal '25. And just within the context of your long-term store targets and also some of the trends within new store productivity as you open new Marmaxx and HomeGoods stores. How should we think about real estate availability also the long-term outlook for stores? John Klinger: Yes. I mean -- so right now, the what we see in total is unchanged. It's just almost just under 6,300 stores we see as the potential. And as far as store availability, we play -- we want to make sure that the stores that we're opening across all our banners are the right stores for what we -- for us. So we're not necessarily going to pick a number and then shoot for that number. We make sure that the stores we're looking at fit right within our store mix. And we're quite pleased with the performance when they do open. So when we see these store openings performance, we're quite pleased with that as well. The other thing that gives us that really works well with us are the relocations that we do. So this year, we're planning 40 relocations. And here, we're actually finding better locations in the store trading areas that we're in for stores that are coming due as far as leases. So we're able to relocate those stores to the better shopping pitch in the area. So we see a definite improvement in the performance as we do move those stores. In Europe, we see more opportunity in Germany to open up stores in the U.K. for more of our relocations. And in the U.S. and Canada, we're also -- as we see more department stores close we see the opportunity to -- if we don't have stores in those areas to put stores in some of those areas to be the department stores of that. So we're seeing opportunities there for new store growth. So that's kind of what we're seeing for the strategy. John Kernan: Understood. I guess 1 quick follow-up would be just on other categories outside of apparel, home, you spoke about quite a bit on the prior question. Just what about beauty. It feels like it's much more elevated in-store than has been in the past. What's the opportunity within beauty and the elevation of that category? Ernie Herrman: Yes, I'll jump in here, John. Yes, the beauty business is obviously, you can see from the presentation in the store that's been very healthy for us. And I would tell you, we see big upside there, obviously. And we're continuing to go after that. We have done something with the presentation, but you've seen the assortments expand as well. So as you can imagine, that's one of the businesses we feel has a lot more upside. If you look at things that go along with that health and wellness and beauty thing, some of those other categories in the store, obviously kind of go along with that, if you know what I mean. So beauty is the more noticeable one you're calling out, but that trend kind of spills over, I would say, to some other categories in the store that we're going after. And I think we've talked about this before. We don't just do it we love that our stores are very flexible. So you're bringing out beauty. One thing you probably noticed is the way we've done the beauty thing we still can flex the departments around it. And so that is an advantage. Again, as always, I'd like to point that out, when our buyers are able to -- in our planning organization, we're able to go after the HUD business and flex it in the store very quickly, and it doesn't take as much labor or capital to redo the stores because there aren't any walls, et cetera. So great question now. Operator: Next, we'll go to the line of Alex Straton from Morgan Stanley. Alex Straton: Perfect. I wanted to focus on the HomeGoods real quick here. So ended the year at just under a 10% margin. I was wondering if you could speak to kind of what's constraining that business below your long-term goal of low double digits and when you think it gets there. And then secondly, just on the ability to take market share over time. Just wondering if there's any color you could provide on particular categories or changes in the market landscape that are going to enable that going forward. Are Yes. So I mean I'll start off. Ernie Herrman: Yes. So with Home Goods, I mean it's a couple of things. I mean HomeGoods was impacted by freight more than some of the other divisions. But for HomeGoods, it's about continuing to drive that top line sales growth, while well, looking at the cost structure of that freight and continuing to try to be as efficient as possible on that freight line. The HomeGoods team executes very, very well, and it's just about continuing to focus on execution, drive that top line and be as efficient as we can. John Klinger: And Alex, if you look when you're asking about one of the things that's going to also help with the margin is the market share and sales growth opportunity that we strongly believe that we have there. If you look at -- if you look at the year that we had there in HomeGoods, dramatic first half to second half. And then even as you went to Q4, you could see how powerful the HomeGoods sales trend is relative to competition. And so it's an unusual thing when the whole business years ago, we've had really strong home goods and home trends for years. Typically, yes, we'd be outpacing competition, but not as dramatically as recently. And so that just shows you that the market share, which is, I think, like a third part of your question, the market share is really up for grabs. And fortunately, what's going on, I think, in the landscape is you have the e-com players on home as well as the brick-and-mortar are creating additional opportunity for our home business because of their execution and the lack of excitement. We do believe -- like our Marmaxx, we believe HomeGoods is one of the most exciting store shopping experiences on the planet, really. And you've seen whether you look on TikTok or any of the -- with third-party endorsements that come out on different talk shows and had segments on home goods lately. It's become a it's become a bit of a cult because people know that you can't go in there and spend less than a couple of hundred dollars, even though you're planning on doing it just for a bed pillow. So it's -- that's why we're so bullish. We also corporately, it's one of our most collaborative arenas. Our home merchants are so linked up across all the organizations, which is why we're bullish on total TJX Home business which, as you know, we've talked in the past, over 1/3 of our business will be home business in TJX this year, heading to a higher percentage over the next few years, that's what we believe. So you're touching on it, what I think is a competitive advantage and future continuing to be traffic driver for TJX. Operator: Next, we'll go to the line of Michael Binetti from Evercore ISI. Michael Binetti : Congrats on a great quarter. I just want to ask a little bit on the margins. I know you've talked about it a little bit today, but it's remarkable to see the profitability you guys are putting up, particularly when competitors are looking at stores and saying, look, the economics are going the other way, and we're going to close a few stores. So as we think about Marmaxx, that was a 14% to 15% margin business at its peak with labor and supply chain stabilizing a bit now and you have you have this pricing lever that you didn't really have or flex before COVID or are there any reasons why Marmaxx is in a structurally higher business in the long term, given it's now above 2019 levels? And then I guess as a follow-up, John, you did mention earlier that the long-term 3% to 4% same-store sales growth is flat to 10% -- or sorry, flat to 10 basis point leverage algo. But this year is flat to 10 basis points on a 2% to 3% comp something is a little better this year and then it normalizes next year. And if we get out to the middle of the year and you're running above the 2% to 3% again any reason it wouldn't flow through at a better rate on a point of comp than the 15 basis points that you mentioned? Ernie Herrman: Yes. I mean -- so I'll pick up the last part of your question first. Yes, we had some onetime headwind. So whether it's the incentive accruals or homegoods.com that negatively impacted us last year that helped us to offset what we see as continued wage pressure. So we were able to be at flat to up 10% on a 2% to 3% versus a 3% to 4%. Does that make sense? Michael Binetti: Yes, it does, yes. In this year, does it -- in this year, is the flow-through still the same though on a point of upside? Or is it also different margin profile? Ernie Herrman: That's 15 basis points holds true in FY '25 as well for every point of comp opportunity. And then as far as Marmaxx goes, a 13.7% pretax profit. Yes. I mean, obviously, we had a huge improvement during the year, up 100 basis points. And a lot of that has to do with, again, the lower freight rates. Even though freight is not back to where it was in FY '20, we're still 100 basis points off where we were. So we've had to -- through the merchandise margin has been able to offset some of that headwind. And again, we've talked about this in the past, we don't anticipate freight to come back all the way just because of the wage increases that we've seen in particularly domestic freight, whether it's people that work on the rail or in trucks. But we are looking for -- we continue to look for ways to be more efficient on how we move our freight, and that's really where we see the opportunity moving forward. But again, similar to when we talk about HomeGoods, with Marmaxx, it's -- again, it's about that strong execution, driving that top line and continuing to improve the merchandise margin through better buying. Operator: And for our final question, we'll go to the line of Marni Shapiro from Retail Tracker. Marni Shapiro: Congrats on a fantastic year. And a lot of my questions have been asked. I do want to dig into 1 smaller part of your business. Can we talk a little bit about your credit card business lately as I've been in your stores, I've had some associates asking me if I want a credit card. I'm curious what percentage of your business is done on your own store credit cards? Is there an opportunity there? Is there a data capture that has been helpful to you? Is there an opportunity or a loyalty? Or does that just not really matter because everyone's so addicted, they don't need to actually -- you don't need to do loyalty because it's a physical addiction? Could you just dig into this part of the business a little bit? It's not something you guys usually talk about. Ernie Herrman: Yes. As far as our credit card goes, we don't get into the amount that goes through on our credit card. But I will say this that it's our penetration is not as high as some of the other retailers that offer incentives to use the card, our everyday value is our everyday value, and we don't want to train the customers into waiting on a discount day to use the credit card. So we're highly focused on making sure that the messaging for our -- the model itself is not affected. That being said, the -- it is the one way that customers can get. When they use the credit card, they get coupons back and that drives volume back into our stores. So we definitely see it as a positive for our driving customers back to our stores. And let's face it. It pleases with the customers when they get that coupon, they -- so -- but everybody's read the reports about whether it's delinquencies or the potential for having the late fees reduced that will impact us, but not as much as some of the other retailers that rely much more heavily on the credit card. Marni Shapiro: Is there an opportunity to grow that penetration? Is that something you guys would look to do? Because I would think there's probably some level of loyalty and increased visitation with those customers. Ernie Herrman: So, Marni, just -- we have been growing that penetration over a number of years or so. So as much as -- yes. As much as John pointed out, we're not at what other retailers doing their -- almost their credit card programs, but we are -- their amount higher than we were a handful of years ago. So, yes. Rightfully so. And those shoppers, right, John tend to also cross shop our different brands more and retain more. And so there's a lot of benefits in our sales, and as John said, when they do, it is the only way to get any type of a rebate from us, and it does create that extra visit. So yes, you're right. And we still -- by the way, that's why you get asked in the store. We're trying to still grow that percentage. Ernie Herrman: All right. Well, I think that was our last question. Thank you all for joining us today. We look forward to updating you again on our first quarter earnings call in May. Thank you, everybody. Operator: Ladies and gentlemen, that concludes your conference call for today. You may disconnect at this time, and thank you for participating.

Operator: Ladies and gentlemen, thank you for standing by. And welcome to The TJX Companies Third Quarter Fiscal 2024 Financial Results Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded as of today November 15, 2023. I would now like to turn the conference over to Mr. Ernie Herrman, Chief Executive Officer and President of The TJX Companies Incorporated. Please go ahead, sir. Ernie Herrman: Thanks, Ivy. Before we begin, Deb has some opening comments. Debra McConnell: Thank you, Ernie, and good morning. The forward-looking statements we make today about the Company’s results and plans are subject to risks and uncertainties that could cause the actual results and the implementation of the Company’s plans to vary materially. These risks are discussed in the Company’s SEC filings, including, without limitation, the Form 10-K filed March 29, 2023. Further, these comments and the Q&A that follows are copyrighted today by The TJX Companies, Inc. Any recording, retransmission, reproduction or other use of the same for profit or otherwise without prior consent of TJX is prohibited and a violation of United States copyright and other laws. Additionally, while we have approved the publishing of a transcript of this call by a third party, we take no responsibility for inaccuracies that may appear in that transcript. We have detailed the impact of foreign exchange on our consolidated results and our international divisions in today’s press release and the Investors section of our website, TJX.com. Reconciliations of other non-GAAP measures we discuss today to GAAP measures are also posted on our website, TJX.com, in the Investors section. Thank you. And now I’ll turn it back over to Ernie. Ernie Herrman: Good morning. Joining me and Deb on the call is John. I want to start by recognizing our global associates for their continued hard work and dedication to TJX. Again, I want to give special recognition to our store, distribution, and fulfillment center associates for the commitment to our company. Now, to our business update and third quarter results. I am extremely pleased with our third quarter performance as sales, profitability, and earnings per share all exceeded our expectations. Our 6% overall comp sales increase was entirely driven by customer traffic, which was up at all of our divisions. Marmaxx, our largest division, continued its strong momentum by once again delivering terrific increases in both comp sales and customer traffic. In the third quarter, our apparel sales remained very strong and sales for overall home were outstanding, accelerating sequentially versus the second quarter, particularly at HomeGoods. We also saw comp sales and traffic increases at our Canadian and International divisions. Importantly, overall merchandise margin remains very healthy. Our excellent third quarter results are a testament to the strong execution of our teams across the Company and their continued focus on growing both, our top and bottom lines. With our above-plan results in the third quarter, we are raising our full year outlook for comp sales and earnings per share. John will talk to this in a moment. The fourth quarter is off to a strong start and we continue to see outstanding availability of merchandise across a wide range of brands in the marketplace. This gives us great confidence that we can keep flowing a fresh assortment to our stores and online throughout the holiday season and beyond. Longer term, I am convinced that the flexibility of our business model, our wide demographic reach and our differentiated treasure hunt shopping experience will continue to serve us well and allow us to keep growing successfully in the United States and internationally. Okay. Before I continue, I’ll turn the call over to John to cover our third quarter financial results in more detail. John Klinger : Thanks, Ernie, and good morning, everyone. I also want to add my gratitude to all of our global associates for their continued hard work. I’ll start with some additional details on the third quarter. As Ernie mentioned, our overall comp store sales increased 6%, well above the high-end of our plan and were entirely driven by an increase in customer traffic. We saw continued momentum with our apparel comp sales, which includes accessories with a mid-single-digit increase. Overall, home comp sales accelerated and were up high single digits. TJX net sales grew to $13.3 billion, a 9% increase versus the third quarter of fiscal ‘23. The third quarter consolidated pre-tax margin of 12% was up 80 basis points versus last year. Our pre-tax profit margin came in above our plan, primarily due to expense leverage on our stronger than expected sales and a benefit of approximately 40 basis points from the timing of expenses. As we stated in our press release this morning, we expect this benefit from the timing of expenses will reverse out in the fourth quarter. Third quarter pre-tax profit margin was negatively impacted by approximately 30 basis points of cost from the closing of our HomeGoods online business which was not contemplated in our previous guidance. All the costs associated with the closing of our HomeGoods’ e-commerce business are reflected in our Q3 results, and there are no further write-downs expected going forward. Third quarter gross margin was up 200 basis points versus last year. This increase was driven by a higher merchandise margin due to the significant benefit from lower freight costs. Gross margin also benefited from expense leverage on the 6% comp sales increase. Supply chain investments and our year-over-year shrink accrual were headwinds to gross margin in the third quarter. Third quarter SG&A increased 140 basis points, primarily due to incremental store wage and payroll costs, higher incentive accruals due to above-plan results and approximately 30 basis points of cost related to the closing of our HomeGoods online business. Net interest income benefited pre-tax profit margin by 30 basis points versus last year. Lastly, we were very pleased that diluted earnings per share of $1.03 were also above our expectations and up 20% versus last year’s adjusted $0.86. This includes an approximately $0.03 negative impact due to the closing of our HomeGoods online business which was not contemplated in our previous guidance. This also includes approximately $0.03 of unplanned benefit from the timing of expenses that we expect will reverse out in the fourth quarter. Moving to our third quarter divisional performance. At Marmaxx third quarter comp store sales increased a very strong 7% entirely driven by customer traffic. Marmaxx’s apparel and home categories both saw significant comp sales increases. Further, comp sales increases were very consistent across low, mid, and high income demographic areas and was strong across all regions. Marmaxx’s third quarter segment profit margin was 14%, up 50 basis points versus last year. This was driven by a benefit from lower freight costs as well as expense leverage on the strong sales, partially offset by incremental store wage and payroll costs and higher incentive accruals. We are convinced that T.J. Maxx and Marshalls will continue to be gift giving destinations this holiday season. Long-term, we remain confident in our ability to capture additional market share in the U.S. At HomeGoods, third quarter comp store sales accelerated to an outstanding 9% increase, entirely driven by customer traffic. Comp performance was very strong across each region in the U.S. and across stores in different income demographic areas. We were very pleased to see HomeGoods third quarter segment profit margin return to double-digits, increasing 140 basis points to 10.3%. This increase was due to a benefit from lower freight costs and expense leverage on stronger sales, partially offset by costs related to closing our HomeGoods online business. With more than 900 stores today, we continue to see a significant opportunity to open up more HomeGoods and Homesense stores around the country. We’re excited about our market share opportunities and bringing our eclectic home assortment and great values to even more shoppers. At TJX Canada, comp store sales growth was 3% and was also driven by an increase in customer traffic. Segment profit margin on a constant currency basis was 17%, up 120 basis points. We have a very loyal shopper base in Canada and are convinced that we can capture additional market share through all three of our Canadian banners. At TJX International, comp store sales were up 1% and customer traffic was up. Comp sales and traffic increased in both Europe and Australia. In Europe, we were pleased with our performance given the high inflation impacting customer discretionary spend in the unseasonably warm weather. Segment profit margin for TJX International on a constant currency basis was 5.3%, down 140 basis points. We are confident that we can keep growing our footprint across our existing European countries in Australia and improve the overall profitability of this division. As to e-commerce, overall, it’s a very small percentage of our business and remains complementary to our very successful brick-and-mortar business. As to homegoods.com online business, when we looked at our long-term projections, we did not see a path to profitability over the long term like we do for our other banners. In terms of our other e-commerce sites, we were very pleased with their sales trends in the third quarter. Moving to inventory. Balance sheet inventory was essentially flat versus the third quarter of fiscal ‘23. We feel great about our inventory levels and the outstanding availability in the marketplace. We are very -- we are well positioned to flow fresh assortments to our stores and online this holiday season. I’ll finish with our liquidity and shareholder distributions. For the third quarter, we generated $1.2 billion in operating cash flow and ended the quarter with $4.3 billion in cash. In the third quarter, we returned $1 billion to shareholders through our buyback and dividend programs. Now, I’ll turn it back to Ernie. Ernie Herrman: All right. Thanks, John. Now, I’d like to highlight the key opportunities we see to keep driving sales and traffic in the fourth quarter. First, as always, offering outstanding value is our top priority for the holiday selling season, especially in an environment where consumers’ wallets are stretched. The marketplace continues to be loaded with quality merchandise and we are set up extremely well to offer a wide range of good, better and best brands to consumers. Second, we believe our strongly positioned -- we are strongly positioned to be a top destination for gifts this holiday season. Our buyers have done a terrific job selecting the best merchandise available for our global vendor base to surprise -- from our global vendor base, to surprise and excite our customers. We are confident that shoppers will find an eclectic assortment of guests to choose from for everyone on their list. In addition, we will remain focused on being a gifting destination throughout the year. Next, we will be following fresh product to our stores and online multiple times a week throughout the holiday season, which we believe differentiates us from many other major retailers. With our ever-changing mix of merchandise, shoppers can see something new every time they visit. Further, we feel great about our plans to transition our stores post-holiday and offer consumers the categories and trends they want to start the year. Lastly, we feel great about our holiday marketing campaigns across all of our brands, which launched earlier this month. Each of our brands are emphasizing our value leadership and our great assortment of quality gifts for the whole family. We believe we are set up very well to be top of mind for consumers and drive shoppers to our stores this holiday season. Additionally, we feel great about our in-store shopping experience as our customer satisfaction scores remain very strong. Moving on, I’d like to spend a moment and list off the key characteristics of TJX that give us confidence that we can continue our successful growth around the world for many years to come. First, we are the largest brick-and-mortar off-price retailer in the world. We leverage our global infrastructure and share best practices across all of our divisions so that we can deliver the best merchandise values and shopping experience to our customers. Second, we have one of the most flexible business models in retail. This allows us to buy close to need and quickly adjust our store assortment to meet changing consumer preferences and offer the hottest trends. Third, we successfully operate stores across a very wide demographic and we curate our store mix to appeal to shoppers across all income demographics. Importantly, we continue to attract an outsized number of Gen Z and millennial shoppers to our stores, which we believe bodes well for the future. Next, we source from an ever-changing universe of approximately 21,000 vendors in more than 100 countries. As a growing retailer with almost 5,000 stores, we believe many vendors want to work with TJX because we offer them a very attractive way to grow their business. All of this gives us great confidence that there will be plenty of quality branded merchandise available for us. Fifth, we believe our best-in-class buying organization is a tremendous advantage. Many of our more than 1,300 buyers have multiple decades of off-price buying experience, which we believe has allowed us to establish some of the best mutually beneficial vendor relationships and all of retail. Next, we continue to have a significant opportunity to grow our global store base. Long term, we see the potential to open an additional 1,300-plus stores with just our current banners in just our current countries. Lastly, but most important is our talent. Throughout TJX, our management teams have deep decades-long off-price expertise in the U.S. and internationally, which we believe is unmatched. Additionally, we are laser-focused on teaching and training to develop the next generation of leaders for our company. Finally, I am so proud of our culture, which I believe is a major differentiator and another key component of our success. We believe that the combination of all these characteristics is why we have such a long history of successful growth in many types of economic and retail environments. We are convinced that these aspects of our business are a tremendous advantage and will allow us to continue offering shoppers inspiring merchandise, outstanding value, and an exciting treasure hunt shopping experience every day. Turning to corporate responsibility. I am pleased to share with you that we recently published our 2023 Global Corporate Responsibility Report. The report summarizes our fiscal 2023 initiatives and progress within the four areas we focus on: workplace, communities, environmental sustainability, and responsible business. We are proud to continue to make progress in our programs and initiatives, and we aim to provide our stakeholders with relevant information through our report and website. I’m grateful to our teams around the globe for the work that they do to support our global priorities. As always, we invite you to visit tjx.com to read our full report and our updates throughout the year. Summing up, we were very pleased to deliver another quarter of strong sales and profitability. The fourth quarter is off to a strong start, and we are excited about the initiatives we have planned to drive sales and traffic this holiday season. Going forward, I want to assure you that we are laser-focused on further improving the profitability of TJX over the long term. Further, I am convinced that the key characteristics of our business have set us up extremely well to take advantage of the market share opportunities we see ahead in the United States and internationally. Now, I’ll turn the call back to John to cover our fourth quarter and full year guidance, and then we’ll go on to open it up for questions. John Klinger: Thanks again, Ernie. Before I start, I want to remind you that our fiscal ‘24 calendar includes an extra week in the fourth quarter. Now, starting with our fourth quarter guidance. We will continue to expect overall comp store sales growth to be up 3% to 4%. As a reminder, our comp guidance for the fourth quarter excludes our expected sales from the extra week in the quarter. For the fourth quarter, we expect consolidated sales to be in the range of $15.9 billion to $16.1 billion, which includes approximately $800 million of revenue expected from the extra week. We now expect fourth quarter pretax profit margin to be in the range of 10.4% to 10.6%. Excluding an expected benefit of approximately 40 basis points from the extra week, we expect adjusted pretax profit margin to be in the range of 10.0% to 10.2%. On a 13-week basis, this would represent an increase of 80 to 100 basis points versus last year’s pretax profit margin of 9.2%. The decrease in the fourth quarter pretax profit margin guidance is due to the expected reversal of the approximately 40 basis-point benefit we saw in the third quarter from the timing of expenses. Next, we expect fourth quarter gross margin on a 13-week basis to be in the range of 28.2% to 28.4%, up 210 to 230 basis points versus last year. We’re planning a significant benefit from lower freight costs as well as a benefit from our year-over-year shrink accrual, partially offset by headwinds from our ongoing supply chain investments. On a 13-week basis, we’re planning fourth quarter SG&A to be approximately 18.5%, up 150 basis points versus last year. This expected increase is primarily driven by incremental store wage and payroll costs and higher incentive accruals. For modeling purposes, we’re currently assuming a fourth quarter tax rate of 26%, net interest income on a 13-week basis of about $49 million, and a weighted average share count of approximately 1.15 billion shares. As a result of these assumptions, we now expect fourth quarter earnings per share to be in the range of $1.07 to $1.10. Excluding an expected benefit of approximately $0.10 from the extra week, we expect fourth quarter adjusted earnings per share to be in the range of $0.97 to $1. On a 13-week basis, this will represent an increase of 9% to 12% versus last year’s earnings per share of $0.89. I want to be clear that our assumptions for comp sales, pretax profit margin and earnings per share for the fourth quarter are unchanged versus our previous guidance. The decrease in the fourth quarter pretax profit margin and earnings per share guidance is due to the expected reversal of the approximately 40 basis points and $0.03 benefit from the timing of expenses that we saw in the third quarter. Now, to the full year. We are now expecting overall comp store sales increase of 4% to 5%. As a reminder, our comp guidance excludes our expected sales from the 53rd week. For the full year, we now expect consolidated sales to be in the range of $53.7 million to $53.9 billion, which includes approximately $800 million of revenue expected from the 53rd week. We expect full year pretax profit margin to be approximately 10.8%. Excluding an expected benefit of approximately 10 basis points from the 53rd week, we expect adjusted pretax profit margin to be approximately 10.7%. On a 52-week basis, this would represent an increase of 100 basis points versus fiscal ‘23 pretax profit margin of 9.7%. Regarding shrink, our indicators are still leading us to believe that we can continue to plan shrink flat for fiscal ‘24. As a reminder, we will not know the full effect of our shrink initiatives or the accuracy of our indicators until we do a full annual inventory count in January. Moving to full year adjusted gross margin on a 52-week basis, we now expect it to be approximately 29.6%, a 200 basis-point increase versus last year. We expect virtually all of this increase to be driven by a benefit from lower freight costs. This guidance also assumes a continuation of headwinds from our supply chain investments. We are very pleased with the level of freight recapture we’ve seen so far this year and remain focused on looking for ways to reduce our freight costs going forward. For the full year, adjusted SG&A on a 52-week basis, we are now expecting it to be approximately 19.2%, a 130 basis-point increase versus last year. This expected increase is primarily driven by incremental store wage and payroll costs, and higher incentive accruals. For modeling purposes, we’re currently assuming a full year tax rate of 25.7%, net interest income on a 52-week basis of about $165 million, and a weighted average share count of approximately 1.16 billion shares. As a result of our above planned third quarter earnings performance, we are increasing our full year earnings per share guidance to a range of $3.71 to $3.74. Excluding an expected benefit of approximately $0.10 from the 53rd week, we expect adjusted earnings per share to be in the range of $3.61 to $3.64. On a 52-week basis, this would represent an increase of 16% to 17% versus fiscal ‘23’s adjusted earnings per share of $3.11. It’s important to understand that we did not flow through the entire third quarter earnings per share beat to the fourth quarter because of the $0.03 of costs related to closing of the e-commerce business. In closing, I want to reiterate that we are very pleased with the execution of our teams across the company in the third quarter and are confident in our plans for the fourth quarter. Long term, I want to reiterate that we will not be complacent when it comes to looking at ways to improve our profitability. We have a very strong balance sheet and are in an excellent financial position to invest in the growth of our business and simultaneously return significant cash to our shareholders. Now, we are happy to take your questions. As we do every quarter, we’re going to ask that you please limit your questions to one per person, so we can keep the call on schedule and answer as many questions as we can. Thanks. And now, we’ll open it up for questions. Operator: [Operator Instructions] Our first question comes from the line of Lorraine from Bank of America. Please go ahead. Lorraine Hutchinson: Your gross margins are now trending nicely above pre-COVID levels. You just said you won’t be complacent about finding opportunities for margin expansion. So, can you talk about the two or three factors that you’re most excited about to expand your gross margin in the coming years? John Klinger: Yes. I mean, the top thing is continuing to drive our top line sales is important. And where we see opportunities as other retailers increase their average retails, we can hold our 20% to 60% value gap and raise ours as well. Ernie Herrman: Yes. Lorraine, it’s obviously top of mind for all of our merchant teams in terms of how we’re retailing the goods and managing our inventory flow. And like anything else, those teams have -- just continuing to get better and better in terms of how we flow the merchandise. And one reason our merchandise has been a healthy margin year-to-date and last year is not only because of the way we bought it. It’s also the way our planning and allocation teams have flowed the goods, which has helped with our sales, of course, having the right goods in the right stores at the right time, but also in the way we float it. We have saved markdowns appropriately in categories. So we’re very bullish on that. I think, the -- we mean more to the vendors today than ever before. And I think that’s another facet of why we’re very bullish on where our merchandise margins can go. And I think John, when he’s mentioning that, you’re ultimately talking about market share with store closures, et cetera. But even if those fall off, we’re not anticipating stores close at the same rate. We still have a base now of customers and a value umbrella, which I think what John was talking about is, we are positioned with tremendous opportunities to still show our 20% to 60% off and still retail goods advantageously, I would say, and then still buy better with all of the availability that’s out there. So multiple factors going on. All going back to why I would say we are always happy to see a seasoned buying team like we have with such consistency and tenure over the years, this is what allows you to sleep at night and know you’re going to take advantage of those opportunities with the vendor community. Operator: Next, we’ll go to the line of Paul from Citigroup. Please go ahead. Paul Lejuez: Just a little bit more on gross margin. Curious on freight if you got back all of what you lost in 3Q last year, was it even more than that? And where is the upside coming from within the freight line? And I’m also curious, can you talk about the pure merch margin excluding freight, just considering your average unit cost and average unit retail? Thanks. John Klinger: Yes. So on freight, so compared to FY20, we lost 300 basis points, and so we’ve gotten back about two-thirds of that. We’ve done it through -- obviously, the rates that we’ve negotiated, have been favorable. And we had some benefit from our year-over-year accrual, but we’re also implementing a lot of initiatives to try to be as efficient as we can in our freight. So, some of those initiatives are how we move the merchandise from ports to our DCs, from the DCs to stores. So, that’s where we’ve seen a lot of benefit as well. Going forward, so there’s a bit of stickiness in the freight costs. As we’ve seen this year, there was a rail strike. So, wages went up on rail salaries, truck driver salaries have gone up. So, there’s a bit of stickiness in the domestic freight, which is the lion’s share of our freight rate. So, we don’t believe at this point now that we’ll get back all of the freight, but we’ll continue to look at ways to be as efficient as we can on the freight rate going forward. And just to remind you, a lot of the freight benefit that we’re seeing this year has been a pull forward of what we expected to see in FY25. So, we’re seeing a lion’s share of that coming in FY24. And so, for FY25, again, it’s about looking for ways to be more efficient with initiatives internally. Paul Lejuez: Thanks, John. And the pure merch margin and FX rate? John Klinger: So the underlying merch margin, so Marmaxx was up. We did see a bit of headwind in FX rates for Canada and Europe. But we’re seeing a benefit in the Marmaxx division. Ernie Herrman: Yes, Paul. And I’ll jump in there as well. I’ll tell you another place where I think we have an advantage on merchandise margin going forward is in our home business. So our home business, as you can tell from these results, which we are very bullish on, we feel is going to be very contrarian to the marketplace and much healthier than the marketplace. And with that, based on the momentum that we’ve seen -- you could see it improving every quarter. John and I have talked about it every quarter. And then coming out of this quarter with a 9 comp and HomeGoods is just way above the market. But our Marmaxx home business is very healthy. And our other home business and the other divisions have improved as well. That is an area where we think there’s specifically a margin opportunity because some of our margin is on the mix of departments within TJX. And as home now going forward over the next couple of years, we’re anticipating that to kind of grow in percent of total for us. I think that’s going to help our merchandise margin in total TJX. So, just that’s why that’s another bright spot in terms of merchandise margin directly. Operator: Next, we’ll go to the line of Adrienne from Barclays. Please go ahead. Adrienne Yih: Ernie, I guess, my question is on -- we’re hearing -- we had a wholesale report, and they talk about kind of the spring season and the end channel retail department stores buying down for the first half. How do you think about that in terms of availability for next year and the continuation of this kind of great buying environment? I know it’s always great. But it seems like there’s a disconnect between their plan right now and maybe what’s actually kind of being realized as we hear from the wholesalers. Thank you very much. Ernie Herrman: Sure, Adrienne. It’s ironic that the two people sitting here with me, we’ve talked about this yesterday as we were kind of talking -- prepping for the call. Ironically, when we’re always saying there is a -- I don’t know, we’ve used all different types of words, phenomenal availability. I don’t know if we used plethora of stores [ph] out there. We haven’t used that one yet. But then we keep getting pleasantly surprised because the world -- how do I put this, a world that has a lot going on in terms of instability and trends in different retail around domestically and globally just continues to create more spill-off. Part of that is a lot of these companies that would like to -- they’re public companies. They cannot back off trying to push the envelope to grow. And so, for whatever reason, I understand how one might one season be able to cut back successfully. But over the course of multiple seasons and in total, with the 21,000 vendors, where it always ebbs and flows by vendor, there’s just always more. And I can’t picture in this environment where the sales projections are so erratic that there won’t be more. And I’ll go to one other key point, which is the e-com business. So the e-com business, we’ve talked about this before, Adrienne, not with just yourself but the group, is that e-com has created more spill-off. Well, the e-com, if you look at the volatility in e-com trends over the last 12 months, some of the -- especially in apparel, their forecasts have been way off from where they’re trending because I think the e-com business is a little bit more fickle. So I think that’s going to actually spill off more than what some of the more traditional brick-and-mortar vendors might be able to pull back on. So, I just see it staying at similar levels of tremendous availability. John Klinger: Yes. And Ernie talked about the importance we have with our vendors. We add thousands of vendors every year. So again, we’re just becoming that more important to the marketplace. Operator: Next, we’ll go to the line of Matthew from JPMorgan. Please go ahead. Matthew Boss: So Ernie, with the continued strength in apparel and now it’s complemented by the acceleration in home, is there a way to speak to maybe the scale opportunity to drive market share across the wider demographic reach? And then, John, could you just help elaborate on pretax margin puts and takes to consider multiyear or maybe relative to the historical model flow-through if comps were to remain consistent going forward? Ernie Herrman: Yes, great questions, Matt. Let me -- I’ll go to the scale of the model, specifically in apparel, and then I’ll let John take the other part. But the -- yes, we do look at it that way because also some of the competitors, specifically brick-and-mortar out there have not done a good job in apparel. And we have had a consistently pretty healthy apparel business that makes us feel like, again, market share opportunity, which is what you’re talking about. We have looked -- we’ve already started looking at our apparel plans for the spring season in identifying which pockets of apparel and which areas -- in which parts of the country, by the way, we think, have opportunities for us to almost take the market share from items and categories that aren’t being serviced by the competition anymore as much as they used to. So, I don’t want to give you the exact categories, but there’s a handful of categories, by the way, which happen to skew a little younger in our customer audience, so we get a bit of a win-win there, Matt, in terms of the categories we go after. But that is our objective, not just in home but to continue to exploit the apparel opportunity that’s out there. The other neat thing that’s happening is because of department store and specialty store and online business not being as healthy in apparel, some of those key brands are more interested in doing more additional SKUs with us than in the past. So, we’re getting wider assortments in some of the brands that we’ve always had, but we’re able to get wider assortments there, which also helps our treasure hunt and our ability to do more business there and keep the turns healthy. So John, on the... John Klinger: Matt, so just to answer your second part of your question, I’d say we’re -- first of all, we’re very pleased to get back to really -- we’re forecasting to be beyond where we were in FY20 pretax profit margin. And again, that’s with approximately 100 basis points of more freight headwind. As I said earlier in the call, we’ve probably gotten back two-thirds of our freight from where we were. So, that really speaks to the performance of our merchandise margin versus FY20. But going forward, we are not going to be complacent. We’re always going to strive to improve our profitability. And again, the best way to improve our profitability is with our outsized sales and controlling our costs. So, that’s -- we’re laser-focused on that part of it. Operator: Next, we’ll go to the line of Chuck from Gordon Haskett. Please go ahead. Chuck Grom: Just wondering if you guys talk about the cadence of sales in the quarter, particularly in October, the temperatures were a bit higher nationally, and in some pockets actually been very warm. Just curious if there’s any discernible slowdown during this time period. And if you’ve seen that demand capture so far in November as temperatures have normalized? John Klinger: Yes. So, the cadence of the quarter, August and September were strong. The October, when the warmer weather did set in, and I’ll add in there, the geopolitical events that are also taking place, we did see our trend a little bit of a drop from our August, September trend. But when we saw the weather cooled down, towards the end of October, we saw our sales trends return, so. And again, we’re -- our fourth quarter is off to a strong start, as we said in our -- not only our earnings release, but also our prepared remarks this morning. Operator: Next, we’ll go to the line of Brooke from Goldman Sachs. Please go ahead. Brooke Roach: Can you elaborate on your outlook for comp growth between traffic versus ticket as you look forward? Did you happen to see any shifts in ticket this quarter versus your expectations? And how much more opportunity do you see to continue with the pricing strategy that has been successful year-to-date? Thank you. John Klinger: So, as far as what we saw in tickets, so again, our sales were driven by transactions. As expected, we did see a drop in our ticket that was offset by -- partially offset by additional units as we’ve seen historically. But again, the important thing is driving that top line through transactions we feel is a very healthy way for us to drive our business. And again, that ticket drop is due to mix. It’s mix related within category, so. Ernie Herrman: And Brook, to remind you, we don’t drive -- and I think John started to touch on it. We don’t drive our ticket -- our average -- we don’t have a top-down strategy to drive our average ticket up or down. We let the -- it really starts at the buyer, merchandise manager levels when they’re saying these are the right values and having a good, better mix -- good, better, best mix. And it translates into, hey, these are the right values and it could, if there’s a hot category like John said and it happens to be a lower ticket, we’re going to not go after that because our market share gain is still the priority in driving sales and top line. In terms of your -- second part of your question, the opportunity on continuing the pricing strategy. Yes, we feel like we’re in a good place on that. I think that will be a consistent opportunity as we look forward. We kind of monitor it as we look -- as we go into first quarter of next year at this point. And I would say we’re positioned right where we would think we would be. And there’s a lot of -- there’s a combination in this environment with so much goods and we’re always wary of where other retailers are going to potentially promote. So again, we’re very selective on where we do it, but we have been seeing us the ability to continue to retail grab where appropriate, at the same time, actually buy a little better, and that’s where we get some of the merchandise margin mark-on benefit. So, again, feeling good about it, but we’re always watching it very, very balanced, I would say and surgically. John? John Klinger: And look, our customers are telling us that their value perception of us remains very strong, which is -- again, is key. Ernie Herrman: Yes. We do surveys and we get data on perception. Our perception right now is actually -- has improved on their perception of our values relative to others. Operator: Next, we’ll go to the line of Alex from Morgan Stanley. Please go ahead. Alex Straton: Congrats on a great quarter, guys. I wanted to focus on Marmaxx. Its operating margin has been at about 14% almost all year compared to slightly below that pre-COVID. So, I’m just wondering how do you think about that. Are we at peak, or are there still headwinds hurting that segment? And how do you think about it from here? Thanks a lot. Ernie Herrman: I mean, yes, look, we’re very pleased about driving a 7 comp entirely through traffic. We’ve seen nice benefit from the freight. But look, we have -- we’re continuing to see this year. I mean we’ve had headwinds on supply chain and wage, so. But we feel really good about where we are, as far as a pretax profit margin being up 50 basis points versus last year. Operator: Next, we’ll go to the line of Michael from Evercore ISI. Please go ahead. Michael Binetti: Congrats on a nice quarter. Can you help us think about what flow-through will look like on the SG&A side as we think about potential for comp upside in the fourth quarter and maybe some thoughts on SG&A growth or leverage for next year? I know this year is largely defined by some structural labor issues that you’ve spoken about and then restoring incentive comp. But maybe you could help with some thoughts on the go-forward leverage point on SG&A as we kind of transition off of that kind of year this year into next year? And then, I have a follow-up. John Klinger: I mean, so SG&A for the fourth quarter is primarily due to incremental store wage and payroll costs and higher incentive accruals. When we look out next year, while we haven’t completed our planning process, we would expect that we would not see the increases that we saw this year. And again, we’re not giving guidance, but that’s what we would expect. And I would say that as far as the leverage point, I would say that that’s unchanged from what we’ve said. Michael Binetti: And as you look at -- I guess, thinking about Alex’s question, as you look at where HomeGoods margins are today, still below 2019 levels. I know there’s a lot of freight impacting that business, and you told us that’s still behind versus 2019 now, you don’t expect to get it all back. But if you take out freight in that business, do you still see opportunities to kind of get back to where you were in 2019, like you have at Marmaxx or maybe some thoughts on some of the differences in the structural I guess, the cost structure for that business as we kind of come out of some of these moving parts? John Klinger: I mean, look, the cost structure, as we’ve said before is -- it has a higher freight rate. So, when we talk about getting back only two-thirds of the freight, HomeGoods is going to be a little bit more impacted on the freight line. But again, it’s similar -- the headwinds are similar when we talk about store wage and payroll costs and supply chain investments. So look, we’re really pleased with the improvements we’ve made to HomeGoods bottom line throughout the year. And looking out, we’re focused on continuing to drive that bottom line. Operator: Next, we’ll go to the line of Dana from Telsey Advisory Group. Please go ahead. Dana Telsey: Congratulations on the nice results. As we continue to hear about department stores ordering spring down even in some instances, down high single digits. How do you see your merchandising opportunity to take on better brands going forward? And do you see this reduction in orders from other wholesale accounts as a market share tailwind for you to gain share? Thank you. Ernie Herrman: Yes. Dana, that was a classic -- right in the sweet spot of a merchant question right there. Strategically, I would say, yes and yes. The reduction and their ordering just -- it’s a little similar to what we spoke about earlier, where we’re becoming a little more important to most of the brands. And I think with a lot of them talking about cutting back, I think they’re going to look to us as a way to kind of even off that up and down roller coaster ride, which they don’t want to typically see in their business. So, we buy in a lot of different ways. And our teams right now and many of those pockets of businesses are in talks with some of these vendors to figure out how to do what’s a mutually beneficial, as we actually said in the script, what’s been really neat to see, ever since -- it was true prior to COVID, but I think even more so post-COVID, that our buyers are great at figuring out the mutually beneficial way to work with a vendor. And the vendors love our buyers for that reason because we figure out opportunities that are good for them and good for us. And that’s -- this is a classic case where this is happening to many pockets of business around it. We think it better positions us. And it also -- we’re allowed to kind of more tailor it to the brands that we think work to balance off our good, better, best, which I think is also what you’re touching on there, indirectly. Dana Telsey: Do you see new category opportunities too, Ernie? Ernie Herrman: Yes. I think -- well, probably a couple new or more of expanding ones that have been not nearly as big as they could have been. So, what we see probably -- yes, we always see new ones. But Dana, what we’re seeing now is we’ve had some -- again, we don’t talk publicly -- we don’t announce to competition what are really helped driving our comps because obviously, they’re very healthy. But what we’re seeing is there’s a few categories that have been so good. We are just looking at now in terms of moving even more staff into them, how to even explode them to a much larger degree. And that’s how we’re -- so I would say that is more of what’s going on right now. It’s a little what you’re talking about, but it’s more about these big families of business that we are really driving increases with. We think we can do even more, by making sure we have the right buying team as I can get market coverage. And by the way, again, I mentioned it earlier on the call, our planning teams are essential. When we explore a category in a department, they’re the ones that help the store, and the stores get it all set up appropriately. They are the ones that really help the stores and the buyers get the goods to the stores in the right manner, to actually drive those sales. So, we have -- two or three categories at a high level, I’m thinking of that are going to be huge impact for us for next year. Again, ones we’re already doing, but nearly not up to the degree we can drive. So, big opportunities. Operator: Next, we’ll go to the line of Simeon from BMO Capital Markets. Please go ahead. Simeon Siegel: I just wanted to clarify a prior point, if I could. The HomeGoods e-com costs that you called out, were those costs to close the business in more onetime or were they an impact from losing the volume? I think you had suggested it was the former, but I wanted to confirm that. Because if so, excluding those costs, wasn’t HomeGoods margins already up pretty nicely, weren’t they above pre-pandemic? So I just wanted to check on that. And if that is the case, any reason the HomeGoods margin shouldn’t maintain this underlying expansion? Thank you. Ernie Herrman: Yes. So the costs associated with that were mainly cost to shut the business down. And moving forward, we would expect next year that this would be slightly accretive. I mean, don’t forget, the homegoods.com was not a big portion of our overall business, so. But yes, the pace that it is, it would be accretive. Simeon Siegel: And then, Ernie, any color on where the customer traffic is coming from, any general views on -- again, it’s hard to do, but segmenting the traffic growth between new and returning customers? Ernie Herrman: Yes, very broad. In fact, we talk about those. So one of the things that we’re very bullish about is how broadly and diversified our traffic is from income and age groups, and it’s very balanced where it’s been. Obviously, we’ve had a greater percent of younger customers growing over the last, I don’t know, three to five years, I guess, you’d say. But of recent, we’re very happy with how broad the customer traffic draw has been. John Klinger: Yes. We believe we’re attracting newer customers to our business, just generally speaking. Ernie Herrman: Yes, which I think you were just asking about as well. So very -- also a great barometer that we’re reflecting the younger demos, but in balance, it’s grown, but it’s all very balanced by group and income demographics. Operator: And for the final question today, we’ll go to the line of Ed from Piper Sandler. Please go ahead. Ed Yruma: It seems like you guys have been expanding square footage in category like beauty. It seems like that’s getting some traction. I would love to just kind of think broadly about the opportunity there, if you’ve been kind of making some of those explosions, as you’ve called them within the category. And kind of what the relationship has been like with those vendors, given that that hasn’t historically been an area of focus for off-price? Thanks. Ernie Herrman: Ed, you guys are full with good merchant questions and observations today. This is very good. Yes. That’s a good example. You can visibly see it, obviously, right? And what happens in a situation like that is we do show -- it’s not typical off-price. But as you know, if you walk that area, we’re showing very strong values and an eclectic mix and one that’s changing its classic treasure hunt. And we have a few of those type of businesses around the store. That’s one that you’ve probably walked in and seen some new fixturing, et cetera. And so, you are touching on the type of business where we really go after it. Those vendor relationships are great. We have buying teams in the beauty area that have really worked well with the market. And they’re always looking for new items and/or SKUs and/or categories within that whole family of business, to continue to do more. I won’t talk about the couple of others because we have others within the store that we can explode as well and go after very aggressively. So, I hope that answers your question, though. We have a lot. This is how we look where there’s demand and where we can really take market share and offer tremendous value in brands, and that is one of them. Operator: And that was our final question for today. Ernie Herrman: Okay. Ivy, thank you. Thank you all for joining us today. And we look forward to updating you again on our fourth quarter earnings call in February. Everybody, take care. Bye. John Klinger: Thank you. Operator: Ladies and gentlemen, that concludes your conference call for today. You may all disconnect, and thank you all for participating.

Operator: Ladies and gentlemen, thank you for standing by. Welcome to The TJX Companies Second Quarter Fiscal 2024 Financial Results Conference Call. [Operator Instructions] Call is being recorded, August 16, 2023. I would like to turn the conference call over to Mr. Ernie Herrman, Chief Executive Officer and President of The TJX Companies, Inc. Please go ahead, sir. Ernie Herrman : Thanks, Sheila. Before we begin, Deb has some opening comments. Debra McConnell : Thank you, Ernie, and good morning. The forward-looking statements we make today about the company's results and plans are subject to risks and uncertainties that could cause the actual results and the implementation of the company’s plans to vary materially. These risks are discussed in the company's SEC filings, including, without limitation, Form 10-K filed March 29, 2023. Further, these comments and the Q&A that follows are copyrighted today by The TJX Companies, Inc. Any recording, retransmission, reproduction or other use of the same for profit or otherwise without prior consent of TJX is prohibited and a violation of United States copyright and other laws. Additionally, while we have approved the publishing of a transcript of this call by a third party, we take no responsibility for inaccuracies that may appear in that transcript. We have detailed the impact of foreign exchange on our consolidated results and our international divisions in today's press release and the Investors section of our website, tjx.com. Reconciliations of other non-GAAP measures we discuss today to GAAP measures are also posted on our website, tjx.com, in the Investors section. Thank you. And now I'll turn it back over to Ernie. Ernie Herrman : Good morning. Joining me and Deb on the call is John Klinger. I'd like to begin today by once again recognizing our global associates for their dedication to TJX. It is their hard work that brings our business to life every day for our customers. I want to extend a special thank you to our store, distribution and fulfillment center associates for their continued very hard work and commitment to our company. I want to comment on the wildfires in Maui. We are grateful that our associates in Maui and the rest of Hawaii are safe. And at the same time, are deeply saddened by the devastation and loss. To help with the relief efforts on the ground, we have made a donation to the Maui Food Bank and our local teams are donating essential supplies. Now to our business update and second quarter results. I am extremely pleased with our second quarter performance as sales, profitability and earnings per share were all well above our plans. I want to highlight that customer traffic drove our 6% overall comp sales increase, and it increased at all of our divisions. As a reminder, for us, customer traffic represents the number of customer transactions. I am particularly pleased with the performance of our largest division, Marmaxx, which delivered high single-digit increases in both comp sales and customer traffic. Our overall apparel and accessories sales were very strong. And our overall home sales significantly improved and returned to positive comp sales growth. Clearly, our terrific mix of branded, fashionable merchandise and great values resonated with shoppers when they visited our stores. In terms of profitability, both pre-tax profit margin and earnings per share increased significantly versus last year. Importantly, merchandise margin continues to be very healthy with our above-plan sales and profitability performance in the second quarter, we are raising our full year outlook for comp sales, pre-tax profit margin and earnings per share. John will talk to this in a moment. We are very pleased with the continued momentum of our business and the excellent execution of our teams across the company. They have been laser-focused on driving sales and traffic and improving profitability. The third quarter is off to a very strong start, and we feel great about our plans for the remainder of the year. The marketplace is loaded with outstanding buying opportunities and we are confident that we will continue to offer a terrific mix of brands and an outstanding assortment of gifts to our shoppers during the fall and holiday selling seasons. We are convinced that our differentiated treasure hunt shopping experience and excellent values will continue to serve us well and allow us to capture additional market share across our geographies for many years to come. Before I continue, I'll turn the call over to John to cover our second quarter financial results in more detail. John Klinger : Thanks, Ernie, and good morning, everyone. I also want to add my gratitude to all of our global associates for their continued hard work. I'll start with some additional details on the second quarter. As Ernie mentioned, our overall comp store sales well above the high end of our plan and were entirely driven by an increase in customer traffic. We were very pleased to see that both comp store sales growth and customer traffic improved sequentially each month of the quarter. As we expected, average ticket was down due to merchandise mix, the impact of the lower ticket on sales was largely offset by an increase in units with shoppers putting more items into their cart. This is in line with what we have seen in our business historically. Our overall apparel business, including accessories, continued its momentum with high single-digit comp increase. Overall, home comp sales were up mid-single digits. TJX net sales grew to $12.8 billion, an 8% increase versus the second quarter of fiscal '23. Second quarter consolidated pre-tax margin of 10.4% was up 120 basis points versus last year. This was well above our plan due to a bigger benefit than we expected from lower freight costs as well as expense leverage on our above-plan sales. Gross margin was up 260 basis points. This increase was driven by a higher merchandise margin due to the significant benefit from lower freight costs. This year-over-year freight benefit was primarily driven by lower rates as well as a benefit from our freight initiatives and the remainder of our year -- in the remainder of our year-end accrual adjustment. Gross margin also benefited from our inventory and fuel hedges, and expense leverage on a 6% comp increase. Our year-over-year shrink accrual and supply chain investments were headwinds to gross margin in the second quarter. Second quarter SG&A increased 170 basis points due to a combination of factors. These include higher incentive accruals and due to above planned results, a reserve related to a German government COVID program receivable, incremental store wage and payroll costs and a contribution to The TJX Foundation. Net interest income benefited pre-tax profit margin by 40 basis points versus last year. Lastly, we were very pleased that earnings per share of $0.85 were up 23% versus last year and also well above our expectations. Now moving to our second quarter divisional performance. At Marmaxx, second quarter comp store sales increased an outstanding 8%, entirely driven by customer traffic. Marmaxx's apparel and home categories both saw high single-digit comp increases. Further, it was great to see comp sales and traffic increases accelerate every month throughout the quarter. Comp sales were very strong across each of Marmaxx's region. We also saw consistent performance across low, mid- and high-income store demographics. Marmaxx's second quarter segment profit margin was 13.7%, up 80 basis points versus last year, primarily driven by a benefit from lower freight costs as well as expense leverage on the strong sales and strong mark on. We continue to be pleased with the momentum at Marmaxx and are excited about the initiatives we have planned to help us drive sales and traffic for the remainder of the year and beyond. At HomeGoods, we were very pleased to see second quarter comp store sales increased 4% and a significant increase in our end customer traffic. HomeGoods comp sales and traffic increases also accelerated every month throughout the quarter. I also want to note that our full year plans assume that HomeGoods will continue to comp positively for the second half of the year. HomeGoods second quarter segment profit margin was 8.7%, up 600 basis points and entirely due to benefit -- a benefit from lower freight costs. We remain confident in the long-term opportunities we see to grow both our HomeGoods and HomeSense banners and capture additional share of the U.S. home market. At Canada, comp store sales were up 1% and customer traffic increased. Segment profit margin was 15%. As the only major brick-and-mortar off-price retailer in Canada, we have a very loyal shopper base in many value-conscious shop customers. We are confident that we are set up well to continue growing our footprint across Canada and attract more customers to our banners. At TJX International, comp store sales increased 3% and customer traffic was also up. It was great to see comp sales and traffic increases at both our European and Australian businesses. During the quarter, we also launched online shopping in Germany and Austria. Segment profit margin for TJX International on a constant currency basis was 2.1%, which was negatively impacted by over 300 basis points due to the reserve related to the German receivable I spoke to earlier. We are very happy with our overall performance in this division and are confident we can continue to grow our banners in our existing countries and improve profitability. As to e-commerce, overall, it remains a very small percentage of our business. We continue to add new merchandise to our sites so that shoppers can see something new every time they visit. Moving to inventory. Balance sheet inventory was down 7% versus the second quarter of fiscal '23. Similar to the first quarter, the year-over-year decline was primarily due to the elevated levels we saw last year from the early arrival of merchandise and a larger in-transit balance as a result of supply chain delays at that time. We feel great about inventory levels in the outstanding buying environment. As Ernie said, the marketplace is loaded with merchandise, and we are well positioned to flow fresh assortments to our stores and online this fall and holiday season. I'll finish with our liquidity and shareholder distributions. For the second quarter, we generated $1.3 billion in operating cash flow and ended the quarter with $4.6 billion in cash. In the second quarter, we paid down $500 million of maturing debt and returned $932 million to shareholders through our buyback and dividend programs. Now I'll turn it back to Ernie. Ernie Herrman : Thanks, John. I will start by highlighting the key strengths that have allowed TJX to grow successfully through many kinds of retail and economic cycles for nearly five decades. I'm convinced that these core strengths set us apart from many other retailers and will continue to be a tremendous advantage going forward. First is our value leadership. Our goal has always been to offer great value on every item, every day to every customer. At TJX, value is more than just offering consumers a great price. For us, value also means delivering desirable brands, fashionable merchandise and great quality to our shoppers. We believe our value proposition is one of the best in all of retail, and will continue to attract consumers to our retail banners all around the world. Second, we have developed one of the most flexible brick-and-mortar retail models in the world. The flexibility of our close to need opportunistic buying allows our merchants to quickly react to the hottest trends in the marketplace and adapt to changing consumer preferences. The flexibility of our supply chain and store formats allows us to ship to our stores multiple times a week, merchandise stores individually and flex our floor space to support our ever-changing assortment. Third, we successfully operate stores across a wide customer demographic. We want to sell to everyone, and we aim to appeal to all value-conscious shoppers and inspire and excite them every time they visit us. The flexibility of our business allows us to curate an assortment of good, better and best merchandise across our stores, and to appeal to shoppers across all income demographic areas. Next, we have built an expansive vendor universe over many decades and believe we have some of the best relationships in all of retail. This vast network of changing vendors, which numbered approximately 21,000 over the last year, is the reason why we are so confident that there will always be more than enough inventory in the marketplace for us to buy. Our best-in-class buying organization of 1,200-plus merchants does a terrific job selecting the right mix of categories and brands for the right stores to create our fun treasure hunt shopping experience. We also see the globalness of our business as a tremendous strength. We have built a highly integrated global infrastructure, supply chain and buying organization that we believe would be difficult to replicate. This allows us to leverage our global presence to create a differentiated treasure hunt shopping experience in each country we operate in. Last, but certainly not least, is our talent. Teaching and talent development have always been priorities at TJX. Through our organization and management teams, we have deep decades-long off-price experience in the U.S. and internationally. I believe that our global talent base will continue to be a tremendous advantage as we continue our growth around the world. I truly believe that the combination of these key strengths and the execution of them, is why we are one of the strongest companies in all of retail and have a very long history of successful performance. Now I'll briefly highlight the opportunities we see to keep driving sales and traffic in the second half of the year. First, as I said earlier, we are seeing phenomenal product availability across all categories and a wide range of brands. This gives us great confidence that we can bring consumers the right assortment at the right values throughout the fall and holiday season. Second, we feel great about our store merchandising initiatives that we have planned. We are particularly excited about our gifting initiatives as we continue to focus on being a destination for gifts throughout the year. With our rapidly changing assortment, we believe shoppers will be inspired to visit us frequently to see what's new. And third, we have very strong marketing campaigns planned. Each of our brands will continue to reinforce our value leadership position through a combination of channels, including digital, television and social media. We believe our compelling campaigns will capture the attention of new consumers while keeping us top of mind with our existing customers. Moving to profitability. We are extremely pleased that the high end of our adjusted pre-tax profit margin plan for fiscal 2024 now exceeds our previously announced target of 10.6% for fiscal 2025. This is a testament to the hard work and commitment of the entire organization. I want to assure you that we did not be -- that we will not be complacent and we'll strive to continue improving our profitability over the long term. Before I close, I'd also like to reinforce our deep commitment to acting as a responsible corporate citizen, and I am proud of the work our teams across the globe continue to do. We expect to publish our annual global corporate responsibility report this fall. And I hope you'll take some time to look at our website to learn more about what we are doing. Summing up, we are very pleased with the momentum we are seeing across the business and the very strong start to the third quarter. We've had excellent performance in the first half of the year, and our teams have put us in a great position for continued success for the remainder of the year. I'm convinced that the characteristics of our flexible off-price business model and the operating expertise within our organization are unmatched. I am so proud of our culture, which I believe is a major differentiator and a key component of our success. I am extremely confident about the future of TJX and I'm excited about the opportunities we see to capture additional market share and improve profitability in the long term. Now I'll turn the call back to John to cover our full year and third quarter guidance, and then we'll open it up for questions. John Klinger : Thanks, again, Ernie. Before I start, I want to remind you that fiscal '24 calendar includes a 53rd week. Also, as we stated in our press release this morning, we have offered eligible former TJX associates who have not yet commenced their pension benefit, an opportunity to receive a lump sum payout of their vested pension benefit. We anticipate that the impact of this pension payout offer, primarily a noncash settlement charge, could negatively impact fiscal '24 EPS by approximately $0.01 to $0.02, but could be higher or lower depending on participation rates and other factors. To be clear, any of the guidance we are providing today does not include the potential impact of this pension payout offer. We expect to exclude the impact of this potential settlement charge from our adjusted pre-tax profit margin and EPS results in the third quarter. Now to our full year guidance. We are now planning an overall comp store sales increase of 3% to 4%. As a reminder, our comp guidance excludes our expected sales from the 53rd week. For the full year, we now expect consolidated sales to be in the range of $53.5 billion to $53.8 billion. This guidance includes approximately $800 million of additional revenue expected from the 53rd week. As Ernie said, we're increasing our full year profitability guidance. We're now planning full year pre-tax profit margin to be in the range of 10.7% to 10.8%, excluding an expected benefit of approximately 10 basis points from the 53rd week, we now expect adjusted pre-tax profit margin to be in the range of 10.6% to 10.7%. On a 52-week basis, this would represent an increase of 90 basis points to 100 basis points versus fiscal '23's adjusted pre-tax profit margin of 9.7%. Regarding shrink, we continue to be laser-focused on our in-store initiatives while making sure we maintain an enjoyable shopping experience for our customers. At this time, our shrink indicators are leading us to believe that we can continue to plan shrink flat in fiscal '24. As a reminder, we will not know the full effect of our shrink initiatives or the accuracy of our indicators until we do a full annual inventory count at the end of the year. Moving on, we're planning full year adjusted gross margin on a 52-week basis in the range of 29.4% to 29.5%, a 180 basis points to 190 basis point increase versus last year. We expect virtually all of this increase to be driven by a benefit from lower freight costs. We are also planning a benefit from merchandise margin. This guidance also assumes a continuation of headwinds from our supply chain investments and incremental distribution center wages. We are very pleased with the level of freight recapture we are seeing given the significant pressure we saw over the prior three years. Our expected freight benefit this year includes a pull forward of most of the benefit we were expecting in fiscal '25. We remain laser-focused and looking at ways to reduce our freight costs. Moving on, we're expecting full year SG&A on a 52-week basis to be approximately 19.1%, a 120 basis point increase versus last year. This expected increase is primarily driven by incremental store wage and payroll costs and higher incentive accruals. For modeling purposes, we're currently assuming a full year tax rate of 26%, net interest income on a 52-week basis of about $157 million, and a weighted average share count of approximately 1.16 billion shares. As a result of these assumptions, we're increasing our full year earnings per share guidance to a range of $3.66 to $3.72. Excluding an expected benefit of approximately $0.10 from the 53rd week, we expect adjusted earnings per share to be in the range of $3.56 to $3.62. On a 52-week basis, this would represent an increase of 10 -- excuse me, 14% to 16% versus fiscal '23's adjusted earnings per share of $3.11. Lastly, we now expect to open about 125 net new stores in fiscal 2024, an increase of approximately 3%. This reflects a shift of some of our planned fall openings into next year. Moving to the third quarter. We're planning overall comp store sales growth to be up 3% to 4%. Similar to the second quarter, we expect the comp increase to be driven by customer traffic. We're planning for average ticket to be down less than it was in the second quarter, again, due to merchandise mix. We're also expecting an increase in units sold. We expect third quarter consolidated sales to be in the range of $12.9 billion to $13.1 billion, a 6% to 7% increase over the prior year. We're planning third quarter pre-tax profit margin to be in the range of 11.3% to 11.5%. We're expecting third quarter gross margin in the range of 30.3% to 30.5%, up 120 basis points to 140 basis points versus last year. We're planning a significant benefit from lower freight costs partially offset by headwinds from supply chain investments, inventory cap and our year-over-year shrink accrual. We're planning third quarter SG&A of approximately 19.3%, up 130 basis points versus last year. This expected increase is driven by incremental store wage and payroll costs and higher incentive accruals. For modeling purposes, we're currently assuming a third quarter tax rate of 25.3% and net interest income of about $40 million and a weighted average share count of approximately 1.15 billion shares. We expect third quarter earnings per share to be in the range of $0.95 to $0.98, up 10% to 14% versus last year's adjusted $0.86. For the fourth quarter, on a 13-week basis, we're planning comp store sales to be up 3% to 4%, adjusted pre-tax margin in the range of 10.3% to 10.5% and adjusted earnings per share in the range of $1 to $1.03. We will provide more detailed guidance for the fourth quarter on our third quarter earnings call. Before I close, I want to echo Ernie's comments that we continue to see opportunities to further improve profitability over the long term. As always, the best way for us to drive profitability is with outsized sales. We continue to see opportunities to grow sales and traffic and capture additional market share. Further, we remain laser-focused on being even better on buying and retailing the goods and driving merchandise margin. At the same time, we expect to continue to face headwinds from incremental wage costs and supply chain investments. As usual, we'll give you a detailed annual guidance beyond this year on our February -- on our call in February. In closing, I want to reiterate that we are very pleased with our -- with the execution of our teams across the company and are confident in our sales and profitability plans. Further, we have a strong balance sheet and are in an excellent financial position to simultaneously invest in the growth of our business and return significant cash to our shareholders. Now we are happy to take your questions. As we do every quarter, we are going to ask that you please limit your questions to one per person, so we can keep the call on schedule and answer as many questions as we can. Thanks, and now we'll open it up for questions. Operator: [Operator Instructions] Our first question will come from Matthew Boss. Matthew Boss : Congrats on a really nice quarter. So Ernie, you cited the third quarter off to a very strong start and tremendous off-price buying opportunities. Could you just elaborate on how traffic and demand progressed over the course of the second quarter, maybe what you've seen in August, across both apparel and home? And then, John, could you just elaborate on the improved bottom line full year outlook as we think about AUR and freight relative to shrink and wages? Ernie Herrman : Sure. Matt, good question. Obviously, looking at as the indicator I gave when I said very strong for the Q3 start, which is coming out of Q2 where each month got a little stronger. So we were sequentially stronger throughout Q2 as the quarter went on. And that momentum has now continued into Q3. And I think you were asking about any differentiator between apparel or home, I would tell you when it well. When you have comps like this and you have Marmaxx running such a high comp as they did, as you can imagine, we are we are experiencing health across just about every category in the store. And in fact, the parallel across the board has been very healthy as has the home area. And I'm talking within Marmaxx because you've seen that HomeGoods from -- remember, Q1 in HomeGoods, we were down 7%, and now we were up 4% in HomeGoods for Q2, which is really a terrific. We had signaled to all of you that we thought there'd be incremental improvement. Clearly, it was even exceeded our expectations. And we are feeling very good about that business also as we go into Q3. So I hope that answered your question. John Klinger : And Matt, just to answer the question you had for me. I mean, as far as the back half and full year guidance. We continue to see freight opportunity in our initiatives, obviously, increasing our -- the confidence we have to increase our top line sales gives us the confidence to increase our back half guidance. As far as AUR Look, as far as pricing and merchandise margin, they were in line with our expectations. In the buying environment, it's fantastic. As Ernie said, we continue to see opportunities to take price in certain areas and merchandise margin improvement. We're really pleased at how our strategies this quarter drove our top line and again, gave us the confidence to increase our full year comp. Ernie Herrman : John, as I was touching on it in your question, as we talked -- remember, there was a little bit confusion on the last call, and we talked about how our ticket might be down slightly and pretty much it was on our expectations, right in line. And as a result, we drove our top line as we had explained to you in some of our meetings about you can't judge the average ticket and its sales relationship because some of the categories that we were growing in the mix of departments create multiple purchases. And so we're pleased to see it all really went along the lines of what we had discussed back at the end of Q1. Operator: Our next question comes from Lorraine Hutchinson. Lorraine Hutchinson : I just wanted to confirm what I think you just said, which was the like-for-like price increases are working and the ticket decline was just mix. And then my question is if you think you're seeing any signs of a trade-down customer coming into any of your banners? Ernie Herrman : Lorraine, so we got it. So yes, the like-for-like pricing continues to work. We continue to see opportunity there as we move forward. And again, we do that, as we said from the very beginning, we do that very selectively in certain areas and certain categories and certain items as witnessed by our performance as well as we have another data point, which we measure qualitatively where we measure customer perception of our values. First of all, we can talk from our turns as well as our sales. But we have another perception point where consumers right now are actually seeing our value perception versus a year ago has actually ticked up a couple of launches. So we're viewed against ourselves as value perception has improved, which tells you it's working. And then a second thing ironically is against the category average, we have improved. So those are good barometers. We can see it in the metrics though, Lorraine, when you look at our turns and our sales. And where, again, as we've also said, is where we have ever founded an item where it didn't work, we adjust and then we bring that item back to where we think if it needs to work. But our hit rate has been 90-plus percent. So the second part of your question, again, Lorraine was on the... Lorraine Hutchinson : Any signs of a trade down consumer? Ernie Herrman : Trade down, which hard for us to measure trade down. What I think we would say is store closures as well as, I would say, because in some cases, it's not a trade down or it's a trade over based on the category. So hard for us to measure trade down. What we can feel is capturing market share from other retailers that have closed or downsized in some of their store counts. And I am sure we are getting increased market share because we can see it in some of the categories that we carry. John Klinger : Yes. I mean there's been a lot of volatility in the retail environment for a while. And we think we've got strong execution. We feel that we continue to gain that market share. Operator: Next, you will hear from Brooke Roach. Brooke Roach : With greater visibility to your previous long-term 10.6% FY '25 margin target, can you help contextualize the key drivers of future profit improvement? How are you thinking about the rate and pace of that potential improvement beyond some of these freight recapture opportunities that you've seen this year? John Klinger : Yes. Brooke, we're not giving guidance long term right now. But I can say that, as always, we strive to improve all the time, whether it's better buying or expense control, we continue to strive to do better. Ernie Herrman : Brooke, I would just also jump in what John said earlier in his notes, is that sales have been a driver in helping us to also leverage. And so as we are capturing the sales, we do believe because we've tried to make our store environment sticky for the customer in terms of here, she really having a great experience there as well as the merchandise. These are the two primary components of get customers while it captures new customers and get customers back. So we believe momentum doesn't just turn off overnight. So I think part of what we're all feeling internally here is as we've captured new and increased additional visits amidst the market share gain we're getting that, that will be also a margin driver for us as we move forward. Operator: Our next question will come from Mark Altschwager. Mark Altschwager : Great. So maybe just first for John. With respect to the margin guide, if we look at the high end of the guide for Q3 and Q4, it does seem to imply a nice acceleration in Q4. Now I know you've got the benefit from the extra week, you're cycling the shrink accrual so those are some big factors. But I guess, beyond that, maybe what are some of the other factors that we should be mindful of there? John Klinger : Yes. So as you saw, we did increase the comp. We feel confident about continuing to drive that top line. The other thing that is benefiting us -- so in the second quarter and third quarter, we comment on the shrink. So we have just in line with how we accrue, there's an unfavorable impact in the second and third -- first, second and third quarter, and then we have a favorable impact in the fourth quarter. That, along with -- we continue to work on our freight initiatives and continue to try to control those costs as much as we can. Mark Altschwager : And maybe a follow-up for Ernie. This is the first quarter in a while where both Marmaxx and HomeGoods are contributing to the positive comps. I know there's some noise still with the comparisons in HomeGoods in the back half. But just bigger picture, how should we be thinking about the contribution from HomeGoods versus Marmaxx and a normalized comp algorithm moving forward? Ernie Herrman : Yes. So Mark, obviously, we won't give the exact comp we're thinking further out. However, we do feel we are really hitting pretty much an inflection point in the HomeGoods business, and we're pretty bullish on the back half here that home will continue to improve on the trend versus the trend that you just saw. We're feeling good about the opportunity to continue to improve in our home mix. And to your point, will continue to contribute to the TJX with a combination of -- with HomeGoods and Marmaxx. Also, just, again, we tend to talk about HomeGoods, specifically, but our home business within our full family stores -- so that's whether in Europe or in Canada and then clearly in T.J. Maxx and Marshalls, our home business there has also -- and those businesses has also improved, also good indicator because we used to talk a few years ago about the fact that home when you roll it all up is a key component of the TJX business. So again, another reason why John and I have talked about as we move forward, that home will continue to be a traffic and sales driver for us over the long term. Operator: Our next question will come from Marni Shapiro. Marni Shapiro : Congratulations on a great quarter. If you could just talk a little bit, traffic remains your biggest driver and your marketing has been very, very strong. Can you talk a little bit about has it changed the frequency of how often the shopper is coming to your stores? And are you seeing an increase in your shopper shopping across your different your different boxes. I know you continue to co-locate, but I'm curious if you're seeing that shopper really move from one concept to the next more than usual? John Klinger : Yes. It's hard for us to read that in detail. Just generally looking at the transaction increases that we have, we believe that we are attracting more new customers to our brands. And when you look at how we're attracting those customers. They tend to be more younger customers, the more Gen Z customers that we're attracting, which we're really excited about because that speaks to the longevity that we see, so. Ernie Herrman : Yes, Marni, the thing I can tell you, even though we can't get some of that in for -- the ones that are cross-shopping do spend more. So it is a goal of ours to go after that. As John said, we have been attracting a disproportionate number of new Gen Z and millennial shoppers, which is what we really look at in terms of future growth because that's the future higher spend. So when we look out on our strategies for five to seven years, that -- and by the way, we purposely go after that. We do compare -- what we do get at, we can compare our shoppers against some of the competition. There's some general data on that, that we look at. And we've been feeling really good about all gender and age groups to our stores and all the customers that are skewing younger, and that includes in Europe, Australia, domestically. Marni Shapiro : And then just a quick follow-up, though I do John must be watching Alabama Rush on TikTok because you guys are all over it, and they all shop there, those Gen Zers. But could you just clarify the 53rd week revenue number? I think you said it pretty quickly. I want to make sure I got it down right. John Klinger: Yes. So the 53rd week is worth 10 basis points to our pre-tax profit $0.10 to our earnings per share, and it's about $800 million on the top line. Operator: Our next question will come from Alex Stratton. Alex Straton : Congrats on another great quarter, Ernie and John. I think just starting with the guidance from like zooming out here, it looks like you're improving the full year by more than what you guys just beat by. So it seems like you're more optimistic on the back half than maybe you were when we spoke a few months ago. So can you just talk about what the key drivers are there to that increased optimism? John Klinger : We beat Q2 by $0.10, and we're beating -- we're increasing the back half by $0.04. And that's on increasing the comp from a 2% to 3% to 3% to 4%, given the strength we see in our sales. And then as far as our freight initiatives, we feel we -- the opportunities that we took in Q2, we're assuming that we continue in the year. And again, we're pulling forward a lot of what we -- within FY '25, but we're really happy to be gaining that benefit this year. Operator: Our next question comes from Bob Drbul. Robert Drbul : Just a couple of questions. On apparel and accessories, in terms of what you're seeing and sort of what the consumer is responding to, is there a big good better best mix that is sort of helping you throughout this quarter and then the rest of the year? Ernie Herrman : Great question, Bob. Not really a big change again, there has been an amazing -- what I used to script phenomenal availability across really all the areas. I would tell you there are pockets sometimes in categories where we don't get good, better, best as proportionate, but that's our business. So we always know that we're not going to be exact because we're opportunistic in our buying -- our buyers are great on -- in terms of strategically and knowing that they want their mix to be a certain balance depending on the category, by the way. So for example, our buyer and handbags doesn't necessarily want the same ratio of good, better, best, determined by brands, et cetera, the buyer and women's tops, okay? So that varies, but we have been pretty healthy, I would say, other than in certain pockets of certain areas and accessories. It's been a little bit more of an up and down and an imbalance. So we always look at that as an opportunity for the following year because when we have those pockets, as you can see, we just ran a 6 comp. And we still have those pockets of opportunity where we don't have the mix balanced exactly the way we want it to be, and even in some apparel areas. We ran into that in the second quarter that they weren't as strong as they could be if the mix was more balanced and good, better, best, the way that we want it to be. So it's funny, your question brings we could spend a couple of hours on it because we -- and the merchants, we love to talk about how we go about doing that. And we also know that certain quarters, we look better than other quarters. But as you can see in the total picture, we look really strong and the merchants have done across a vast array, and you could never find a quarter where there isn't one area that doesn't have a little imbalance. For the most part, really strong balance of good, better, best. Nothing's really changed strategically on that front just a great question you asked. John Klinger : And by the way, I'll just add to what Ernie said. Our ability to offer good, better and best, I mean, really differentiates us from our competition, and we feel it's a real competitive advantage. Ernie Herrman : That's a great point. I didn't get into that as much on the script. And I know it sometimes in our different investor meetings, we get to talk more about it. But it is I think one of the most key strategic advantages we have. A, the fact that our organization is set up to deliver a good, better, best scenario. And if you look, most retailers around us, very few do that. They're not -- they're zeroing in on certain demographic segments or certain, which could include age or fashion looks or different price levels. And we don't do that. And I think that will continue to be a benefit to us over the next five to 10 years, huge. Operator: Next, you will hear from Dana Telsey. Dana Telsey : Congratulations on the terrific results. As you think about the real estate profile of the store, have you been a beneficiary of any of the Bed Bath & Beyond locations? And is there at all a difference in performance of the stores, suburban or urban? And then lastly, with the improving trend in HomeGoods, how much of that? Or is anything you can green from the elimination of the departure of Bed Bath & Beyond, that's also an additive and share enhancement for your home results? John Klinger : Yes, Dana, thanks for the question. As far as the real estate opportunity, we've been -- we've been on this from the beginning of when retailers start to close stores, and we take the best locations that fit our profile. And we'll continue to do that as we see stores close. As far as the sales and what we've seen, particularly for Marmaxx, we saw very consistent sales performance across income demographic, across geography. And we see ourselves, especially in some of these markets that are more rural is the -- as you see more and more closures as the department store of those areas and see opportunity. So as far as the Bed Bath & Beyond gaining market share, they've been losing market share for quite a while, and we think we've gained it along the way. So it's sometimes a little bit hard to read that, but we feel that our execution in home has been outstanding, and we've been able to take that market share as it comes up. Ernie Herrman : Yes. So Dana, we think, to John's point, tough to measure, but we feel as though, yes, we are getting from a Bed Bath & Beyond or -- but not just those guys, even some of the I believe we're getting some business from the online home retailers as well that have been a little inconsistent in their execution. I think that just creates other opportunities. And then everyone -- that's at the store end for demand, we're talking. The other great -- not great. The other good thing is it creates additional supply of buying opportunities. We've been talking today about at the retail level, customers need another place to shop. But for our merchants, they get to take advantage of additional supply and we mean even more now to certain vendors because now they have less places for them to sell their goods. So that's been equally, I guess, beneficial. Operator: Our next question comes from Corey Tarlowe. Corey Tarlowe : I had a follow-up on the AUR commentary or ticket I know that it moderated a little bit this quarter. Is the expectation in the guide that it should moderate throughout the rest of the year or perhaps inflect positively as we head into the fourth quarter? And then just as a follow-up on wages. How are you thinking about wages, John, in the outlook throughout the remainder of this year? Ernie Herrman : Do you want to take -- I'll start with actually wages. I'll start with wage. Wages, we continue to see that as a headwind in our wages. We're going to be competitive in our wages in every market that we're in. And when we look at our attrition rates, our attrition rates are in line or improving with where they were last year. So we feel really good at where our wage is right now and our ability to attract associates to our company. John Klinger : On the ticket query. So yes, in Q2, we actually didn't moderate. It kind of came in pretty much where we expected. It's as we move to the back half, the ticket, we think, is going to moderate, which is to be down a little less than we were in Q2. However, I always like to qualify this that we do not -- and again, I've talked this way for years, we do not top down, drive our average ticket. So the average ticket, which is really ultimately voted on by the customers, who determine which categories we need to drive hard in the store by supplying them. And we can tell by the way they're selling. And by the way, the market looks so that we'll go after them. It's driven by down at the buyer and merchandise manager level, which is where we really generate. We don't dictate to those teams which categories to have more or less of. That's really driven by consumer demand, which then drives our ticket sometimes because of the mix of the apartments. So right now, we look like we're moderating based on the on order. But if certain opportunities or certain categories get hotter, that could be lower or higher ticket, that could move a little on us. Obviously, Q3, we can project a little better than Q4. So it's always a bit of a touchy one where we don't want to overcommit how firm we are and where the AUR is heading because it's so bottom up by customer demand and buyer driven. Does that make sense? Dana Telsey : Yes. That's very helpful. Ernie Herrman : Yes. But we -- right now, it looks like it is moderating or certainly Q3. John Klinger : And what we mean by moderating, mean down less. Ernie Herrman : Is down less. John Klinger : And you can see the impact of our top line on the strategy that we've had. I mean, we're offering the customers what they want, and they're coming back. Operator: And our final question of the day comes from Adrienne Yih. Adrienne Yih: Great. And it's great to see the acceleration in all divisions actually. So Ernie… Ernie Herrman : Thanks you. Adrienne Yih : You're welcome. Obviously, my question is, talking about inventory. So I actually want to ask not so much about the composition of it, but the buying strategy, off-price buys little bit upfront. We've got great visibility on the open to buy forward looking and then you do a lot of buying sort of intra-season. And so just can you contextualize sort of how that is so different from last year and the advantageous position that is putting you in as you headed to holiday? Ernie Herrman : Sure, Adrienne. I like the way you framed it all up. So we do not -- obviously, we won't give the percentages by those types of buying pours the way we buy by each one, however, we do buy all those different ways. Right now, we are mission as always, is to pace ourselves on the buying of the in-season closeouts because the market is so loaded. So as we move forward, right now, what we're thinking, Adrienne, is we will pull back even a little bit more on any of the buys that we tend to buy earlier or upfront because all indicators are there will be a continued additional supply, at least over the next six to 12 months of what you were just referring to as the in-season closeout type of situation. The packaways is kind of varied. That has become a smaller percent of our business only because, in many cases, the fashion there, if it isn't right, we don't tend to pack it away. But the pattern of what we're seeing right now would tell us we're going to be even a little bit -- and now I'm talking massaging these by just a couple of points. We don't do pendulum swings on our open to buy or how much we do upfront versus leaf for closeouts. Again, the closeouts and the opportunistic side of our business, that's the bulk of our business, and that's what we prioritize. And we see that, I would think, kicking up a notch over the next six to 12 months. I hope that answers your question. Operator: That was our final question of the day. Ernie Herrman : Okay. Thank you. I would like to thank everybody for joining us today. We look forward to updating you all again on our third quarter earnings call in November. Take care, everybody. Operator: Ladies and gentlemen, that concludes your conference call for today. You may all disconnect. Thank you for participating.

Operator: Ladies and gentlemen, thank you for standing by. Welcome to the TJX Companies First Quarter Fiscal 2024 Financial Results Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded as of today, May 17, 2023. I would now like to turn the conference call over to Mr. Ernie Herrman, Chief Executive Officer and President of the TJX Companies, Inc. Please go ahead, sir. Ernie Herrman: Thank you, Ivy. Before we begin, Deb has some opening comments. Debra McConnell: Thank you, Ernie and good morning. The forward-looking statements we make today about the company’s results and plans are subject to risks and uncertainties that could cause the actual results and the implementation of the company’s plans to vary materially. These risks are discussed in the company’s SEC filings including, without limitation, the Form 10-K filed March 29, 2023. Further, these comments and the Q&A that follows are copyrighted today by the TJX Companies, Inc. Any recording, retransmission, reproduction or other use of the same for profit or otherwise without prior consent of TJX is prohibited in the violation of United States copyright and other laws. Additionally, while we have approved the publishing of a transcript of this call by a third-party, we take no responsibility for inaccuracies that may appear in that transcript. We have detailed the impact of foreign exchange on our consolidated results and our international divisions in today’s press release and the Investors section of our website, tjx.com. Reconciliations of other non-GAAP measures we discuss today to GAAP measures are also posted on our website, tjx.com, in the Investors section. Thank you. And now, I’ll turn it back over to Ernie. Ernie Herrman: Good morning. Joining me and Deb on the call is John Klinger. I’d like to begin today by recognizing our global associates for their continued hard work and dedication. It is our associates who bring our business to life everyday for our customers and I want to thank them for their strong commitment to our business especially our store, distribution and fulfillment center associates. Now to our firs quarter results. I am very pleased with our strong sales and are well above planned profitability. Our 3% overall comp sales growth was at the high-end of our plan and driven by an increase in customer traffic. I am particularly pleased with the performance at Marmaxx, which delivered mid single-digit increases in both comp store sales and customer traffic. Further, we saw comp sales and traffic increases at both of our international divisions. I also want to highlight the continued strength of our apparel and accessories businesses across the company. In terms of profitability, both pre-tax profit margin and earnings per share increased versus last year and well exceeded our expectations. Importantly, merchandise margin was very healthy. With our strong profitability performance in the first quarter, we are raising both our full year pre-tax profit margin and earnings per share guidance. John will talk to this in a moment. Our first quarter results are a testament to the strength and resiliency of our flexible off-price business model. I am very pleased with the excellent execution of our teams across the company whose collective efforts brought our shoppers great values and a compelling treasure hunt shopping experience everyday. Our buyers took advantage of amazing deals in the marketplace and the organization flowed product to the right stores at the right time and did a great job of merchandising the product, delivering on customer satisfaction and marketing. We are happy with our good start to the second quarter and are in a great position to take advantage of the phenomenal buying environment and ship fresh selections to our stores and online. Going forward, we are excited about the opportunities we see to gain market share in the U.S. and internationally and continue to improve the profitability of TJX. Before I continue, I will turn the call over to John to cover our first quarter financial results in more detail. John Klinger: Thanks, Ernie and good morning everyone. I also want to add my gratitude to all of our global associates for their continued hard work. I’ll start with some additional details on the first quarter. As Ernie mentioned, our overall comp store sales increased 3% at the high end of our plan. This comp sales increase was driven by customer traffic, with average ticket up for the quarter. Again, our overall apparel business, including accessories, continued its momentum with comp growth up mid single-digits. Overall, home sales were down as we continue to cycle the outsized sales we saw during the pandemic. TJX net sales grew to $11.8 billion, a 3% increase versus the first quarter of fiscal ‘23. On a constant currency basis, first quarter sales were up 5%. First quarter consolidated pre-tax profit margin of 10.3% was up 90 basis points versus last year’s adjusted 9.4% and well above our plan. Gross margin was up 100 basis points and driven by an increase in merchandise margin. The benefit from lower freight cost was significantly more than we expected. Once again, mark-on was strong due to better buying. Unfavorable hedges, our year-over-year shrink accrual and supply chain investments were headwinds to the gross margin in the first quarter. As a reminder, we are planning to shrink flat in fiscal ‘24 versus fiscal ‘23. Our plans this year assume an expected headwind in the first, second and third quarters and an expected benefit in the fourth quarter. SG&A increased 60 basis points. Less than half of this increase was due to incremental store wage costs. And net interest income benefited pre-tax profit margin by 50 basis points. I want to note that our above plan pre-tax profit margin performance was primarily driven by an unanticipated benefit from a freight accrual adjustment, better-than-expected freight rates in our freight initiatives as well as the timing of some expenses. Lastly, we are very pleased that earnings per share of $0.76 were up 12% versus last year’s adjusted $0.68 and also well above our expectations. Moving to our first quarter divisional performance. At Marmaxx, first quarter comp store sales increased a very strong 5% over a 3% increase last year. We are very pleased to see a mid single-digit increase in Marmaxx’s customer traffic. Once again, Marmaxx’s apparel business, including accessories, had a high single-digit comp increase. Marmaxx’s first quarter segment profit margin was 14%, up 80 basis points versus last year. We are extremely pleased with the momentum of our largest division as sales and traffic were consistent across each of Marmaxx’s regions. We continue to see an excellent opportunity for Marmaxx to capture additional market share across the U.S. HomeGoods’ first quarter comp store sales decreased 7% as it continues to cycle the outsized sales we saw during the pandemic, specifically fiscal 2022’s first quarter 40% comp sales increase. HomeGoods’ first quarter segment profit margin was 7.3%, up 130 basis points. We expect HomeGoods’ year-over-year comp sales to improve for the remainder of fiscal ‘24. We continue to see a terrific opportunity to capture additional share of the U.S. home market. In the first quarter, we opened our 900th HomeGoods store and continue to see excellent opportunities to grow both our HomeGoods and Homesense banners. At TJX Canada, comp store sales were up 1% and driven by customer traffic. Segment profit margin on a constant currency basis was 11.2%. As the only major brick-and-mortar off-price retailer in Canada, we benefit from excellent customer awareness of our brands. We continue – we are confident that we are set up extremely well to continue our growth plans and attract even more shoppers to our banners. At TJX International, comp store sales increased 4% and customer traffic was also up. It was great to see strong sales in our European business especially in a challenging macroeconomic environment. In Australia, comp store sales were outstanding and continue to grow, and we continue to grow our footprint in that country. Segment profit margin for TJX International on a constant currency basis was 2.7%. Going forward, we continue to see a path to improve profitability for this division as we plan to grow our footprint in our existing countries and leverage our infrastructure. As to e-commerce, overall, it remains a very small percentage of our business. We continue to add new brands and categories to our sites, so that shoppers can see something new every time they visit. Moving to inventory. Balance sheet inventory was down 8% versus first quarter of fiscal ‘23. Importantly, this year-over-year decline is primarily due to the elevated levels we saw last year from a larger in-transit balance as a result of supply chain delays. We feel great about our balance sheet and store inventory levels. We are confident that we are strongly positioned to take advantage of the outstanding buying environment and flow fresh assortments to our stores and online this summer. I’ll finish with our liquidity and shareholder distributions. For the first quarter, we generated $745 million in operating cash flow and ended the quarter with $5 billion in cash. After the quarter ended, we paid down $500 million of maturing debt. In the first quarter, we returned $841 million to shareholders through our buyback and dividend programs. Now I’ll turn it back to Ernie. Ernie Herrman: Thanks, John. Today, I’d like to highlight our confidence in our growth plans and why we are convinced that we are in a great position to capture additional market share in the U.S. and internationally. First, we are confident that the appeal of our value proposition will continue to resonate with consumers. Over the past 46 plus years, our continued focus on value has served us extremely well through many kinds of economic environments, including periods of inflation and through recessionary times. In an ever-evolving retail landscape, we believe our commitment to offer great value every day will continue to attract shoppers to each of our retail banners. Second, we see our differentiated treasure hunt shopping experience as a tremendous advantage. Our stores receive multiple deliveries each week of fresh, branded merchandise to surprise and excite our customers. With our rapidly changing assortment, shoppers are inspired to visit us frequently to see what’s new. Third, we see ourselves as leaders in flexibility. The flexibility of our buying allows us to seek out the best opportunities and hottest trends in the marketplace. Our store formats and fixtures allow us to flex our floor space to support our opportunistic buying. Further, our systems and the flexibility of our supply chain allow us to merchandise stores individually with a curated mix of good, better and best brands with a wide span of price points. All of this allows us to attract consumers across wide income and age demographics in each of the countries that we operate in. Our broad demographic reach across income levels can open up even more opportunities for us in the product marketplace. Further, we continue to attract an outsized number of younger customers to our stores including many Gen Z and millennial shoppers, which we believe bodes well for the future. We believe our ability to flex our product offerings across a vast array of category brands helps us attract a wider shopping audience than many other retailers. Next, we see the potential to grow our global store base by more than 1,400 additional stores over the long term with just our current banners in our current countries. Giving us confidence are the opportunities we see for real estate and our disciplined approach to selecting locations. Next and I can’t emphasize this enough, we are extremely confident that there will be more than enough inventory available in the marketplace to support our growth plans. Over the last year, our more than 1,200 global buyers have sourced merchandise from a universe of approximately 21,000 vendors, including many new ones. Overall availability of quality branded merchandise has never been an issue for us throughout our history as vendors and brands continue to produce goods from multiple channels, including in-store, online and direct-to-consumer. In fact, many vendors want to work with TJX due to our size, scale and buying power. As a growing global retailer with nearly 5,000 stores, we offer vendors a very attractive way to grow their business and clear their excess inventory quickly and discretely. Lastly, I truly believe that the depth of our off-price knowledge and expertise within TJX is unmatched. We have a highly differentiated global business and have developed a specialized talent and teams to support it. We have many leaders with decades of off-price experience and remain focused on developing newer associates and the next generation of leaders within our organization. We take great pride in our TJX University and other training programs. Our deep bench allows us to deploy teams where needed and rotate talent between divisions and geographies, all of which strengthens our company as we continue to pursue our goals for growth. As I look at the retail industry today, I believe our best-in-class organization is a major advantage. Moving to profitability. Again, we are extremely pleased with our well above planned first quarter performance and have increased our pre-tax profit margin expectations for fiscal 2024. We are confident about our ability to achieve our 10.6% pre-tax profit margin target by fiscal ‘25 and we will continue to strive to exceed it over the long term. Turning to corporate responsibility. We continue to focus our global corporate responsibility reporting under 4 key pillars: Workplace, communities, environmental sustainability and responsible business. We recently updated our corporate website, TJX.com, with our 2022 efforts across several of these areas. We encourage you to look more on our website, and we expect to release our updated global corporate responsibility report later this year. I am also proud to share that TJX was recently named to Newsweek’s list of America’s Greatest Workplaces for Diversity for 2023 as well as Forbes Magazine’s list of America’s Best Employers for Diversity. As always, I’m grateful to our teams around the globe for the work they do to support our global corporate responsibility efforts. Summing up, our strong first quarter results highlight the continued appeal of our branded merchandise, terrific values and the excellent execution across the organization. I want to again recognize and thank all of our global associates whose collective efforts drove our strong performance. We feel great about our plans for the remainder of the year. While our business is not immune to macro factors, I am convinced that the characteristics and flexibility of our off-price business model and the depth of our organization’s expertise will remain important advantages. Looking ahead, I am convinced that we have a long runway for growth and are set up well to capitalize on the opportunities we see to drive sales and traffic, improve profitability and capture market share going forward. Now, I’ll turn the call back to John to cover our full year and second quarter guidance, and then we’ll open it up for questions. John Klinger: Thanks again, Ernie. Before I start, I want to remind you that fiscal ‘24 calendar includes a 53rd week. Also, as we stated in our press releasing, we will be offering eligible former TJX associates who have not yet commenced their pension benefit an opportunity to receive a lump sum payout of their vested pension benefit. We anticipate that the impact of this pension payout offer, primarily a non-cash settlement charge, could negatively impact fiscal ‘24 EPS by approximately $0.01 to $0.02, but could be higher or lower depending on participation rates and other factors. To be clear, all of the guidance we are providing today does not include the potential impact of this pension payout offer. We expect to exclude the impact of this potential settlement charge from our adjusted pre-tax profit margin and EPS results in the third quarter. Now to our full year guidance. We continue to expect an overall comp store sales increase of 2% to 3%. As a reminder, our comp guidance will exclude expected sales from the 53rd week. For the full year, we expect consolidated sales to be in the range of $52.7 billion to $53.2 billion, a 6% to 7% increase over the prior year. This guidance assumes approximately $800 million of additional revenue expected from the 53rd week. As Ernie said, we are increasing our full year profitability guidance. We’re now planning full year pre-tax profit margin to be in the range of 10.3% to 10.5%. Excluding an expected benefit of approximately 10 basis points from the 53rd week, we now expect adjusted pre-tax profit margin to be in the range of 10.2% to 10.4%. On a 52-week basis, this would represent an increase of 50 to 70 basis points versus fiscal ‘23 adjusted pre-tax profit margin of 9.7%. Our full year pre-tax profit margin guidance assumes that we will now see a benefit of more than 100 basis points from lower freight expenses. Our current freight assumption includes a pull forward of some of the benefit we previously – we expected in FY ‘25. This includes favorable freight rates and benefits from some of our freight initiatives. These, along with the freight accrual favorability in the first quarter that I mentioned earlier, is driving the increase in our full year freight benefit assumption. Our full year pre-tax profit margin guidance also assumes that we will see a continued benefit from better buying and that we continue to have in that we will continue to have headwinds from incremental store and distribution center wages and supply chain investments. Further, this pre-tax profit margin guidance continues to assume that shrink will remain similar to last year. In the first quarter, we took actions to secure more of our store merchandise through tagging, tethering and casing. We also increased our loss prevention presence more broadly across our banners. We are laser-focused on our shrink initiatives and continue to look for additional ways to mitigate the impact. As a reminder, we won’t know the full effect of these actions until we do a full annual inventory count at the end of the year. For modeling purposes, we’re currently assuming a full year tax rate of 26%, net interest income of about $135 million and a weighted average share count of approximately $1.16 billion. As a result of these assumptions, we’re increasing our full year earnings per share guidance to a range of $3.49 to $3.58. Excluding an expected benefit of approximately $0.10 from the 53rd week, we expect adjusted earnings per share to be in the range of $3.39 to $3.48. On a 52-week basis, this would represent an increase of 9% to 12% versus fiscal ‘23 adjusted earnings per share of $3.11. Moving to the second quarter. We are planning overall comp store sales growth to be up 2% to 3%. We expect second quarter consolidated sales to be in the range of $12.3 billion to $12.4 billion, a 4% to 5% increase over the prior year. We are planning second quarter pre-tax profit margin to be in the range of 9.3% to 9.5%. This guidance assumes a significant benefit from lower freight costs as well as a benefit from better buying. It also includes ongoing headwinds from incremental wage costs and supply chain investments. When looking at our second quarter pre-tax profit margin guidance sequentially versus the first quarter, I want to remind you that our first quarter pre-tax profit margin benefited from a favorable freight accrual adjustment that won’t repeat in the second quarter. Further, in the second quarter, we are expecting a reversal of most of the first quarter timing of expense benefit that – as well as a bigger impact from wage costs and supply chain investments. For modeling purposes, we are currently assuming a second quarter tax rate of 26.2%, net interest income of about $37 million and a weighted average share count of approximately $1.16 billion. We expect second quarter earnings per share to be in the range of $0.72 to $0.75, up 4% to 9% versus last year. Lastly, on a 52-week basis, our implied guidance for the second half of the year assumes that pre-tax profit margin will be in the range of 10.6% to 10.8%. Our outlook also implies that overall comp store sales growth will be up 2% to 3%, and on a 52-week basis, earnings per share will be in the range of $1.91 to $1.97 for the second half of the year. In closing, I want to emphasize that we are in a great position, both operationally and financially to take advantage of the opportunities we see to grow our business. We plan to continue making important investments in our business while simultaneously returning significant cash to our shareholders. Now we are happy to take your questions. As we do every quarter, we ask that you please limit your questions to one per person so we can keep the call on schedule and answer as many questions as we can. Thanks, and now we will open it up for questions. Operator: Thank you. [Operator Instructions] Our first question comes from Lorraine Hutchinson. Pease go ahead. Lorraine Hutchinson: Thank you. Good morning. I was hoping you could walk through some of the specific pressures that you’re seeing on SG&A this year? Any quantification would be helpful because the growth rates a little bit higher than normal. And then if you could perhaps comment on which of these expenses will continue into next year versus some more one-time type of investment? Thank you. John Klinger: Yes. Thanks, Lorraine. So we’re not giving guidance, but I will walk you through some of the components. As I said in my prepared comments, we continue to have incremental store wage, but for the full year, we expect this incremental wage pressure to be less than half of our anticipated SG&A increase. The rest of the cost is in a number of smaller headwinds such as general cost inflation, return to normal cost that includes such things as increased travel, and investments in loss prevention. Lorraine Hutchinson: Thank you. Operator: Thank you. Next, we will go to the line of Matthew Boss. Please go ahead. Matthew Boss: Great. Thanks. And congrats on a really nice quarter. John Klinger: Thank you. Matthew Boss: [27:20]brawning: Ernie Herrman: Yes. Traffic – Matt, great questions. Traffic has been healthy overall. It was pretty consistent, and one of the things we’re looking at, and this is a good opportunity for me to give you a heads up, is our ticket has started to moderate a little bit. And so we can – we’re doing this business off of our traffic, which we said in the release, and it’s not being driven as much by ticket when we had our average ticket being up. It’s also encouraging when we look at the way our HomeGoods business is starting to rebound a little bit, we’re seeing relative to the trend we had before where traffic was down quite a bit, we’re seeing the traffic kind of pick up there more recently as well. So these are healthy signs. We’re very bullish on these signs. We do not manage average ticket by the way. Obviously, we’ve talked about that, Matt. I know we’ve talked in the past where we bottom up that in the company, and that we want to just drive it off of the exciting values that are in the store and the traffic, for what you were talking about. New customers, I think that was kind of part B of your question, new customer, talking to like new customer acquisition that we’re getting in this environment. Is that what you’re getting at? Or… Matthew Boss: Yes, exactly. If you could just elaborate on new customer acquisition, who you’re seeing as new, I think you cited a younger customer, and a broad… Ernie Herrman: Yes. And then I think you were talking about the demos, how I had talked about the different good, better, best and income levels, right? So – but we’re getting a good amount of younger customers or a percent of our new customers are on the younger age group. That’s been going on for a while now. We’re also – we don’t want to be – we really don’t want to be pigeonholed into any group of income demographics or how this fashion looks, whether conservative, traditional. We want customers from all demographics, income and even fashion looks. The one thing that’s a constant denominator which all our merchants go after is quality. So we consistently talk about the quality level of the goods that our buyers buy and what we put on the floor that we never give up on that. What does fluctuate is the fashion and the income, good, better, best. Which I think has been competitive advantage to us in gaining new younger customers, yes, but also customers across the board. When you look at the competition around us, and I’m not talking just off-price, many of them don’t trade broadly like us. So they are very narrow in the scope of what they go for either in the looks of the goods or in the price bracket that they are in. They either go after a lower, better demographic/price point range or they are more fashion-driven or more – they are never all of it. And our strategy and we believe, by the way, that this is linked with us driving more traffic, is to have good, better, best to capture more of the potential customers that are out there. And then I would throw in one of the things – you didn’t ask about it, but our marketing teams, as you know, specifically and consciously do that in our marketing approach where, of course, we have upped our digital media to a much greater degree over the last handful of years which gets across many demographics. But they are actually going for different looks of customers, and the placement of the working media that we do is meant to go after different customers as well where I saw the retailers purposely place their working media in segments that are going after a certain customer base. We are very strategic and conscious and purposeful about where we go with our media spend. So great question. Sorry, I’ve given you a lot of information there, but you were getting to some of the meat of why we have a lot of confidence in our top line going forward. Matthew Boss: It’s great color. Best of luck. Ernie Herrman: Thank you, Matt. Operator: Next, we will go to the line of Paul Lejuez. Please go ahead. Paul Lejuez: Hey, thanks, guys. Just a follow-up on that last bit, Ernie, can you talk about the performance of your higher-income demographic stores versus your lower-income demographic stores? And I’m curious if you would say that you are seeing a trade down customer at this point? And then just anything you could add on regional performance, any differences there? Thanks. Ernie Herrman: Yes. Paul, what we’re seeing in the first quarter is what we were seeing similar to the first quarter of last year. So through the first three quarters of last year, as we said, we were seeing stores in higher demographic areas being more of the driver of our comp. As we – and that’s what we’re seeing in the first quarter as well. As far as by geography, Marmaxx by geography was pretty consistent, so it was really nice to see the consistency that we’re seeing in the business. Paul Lejuez: Any more – any detail you can give by state, like some of your larger states in terms of outperformers or underperformers? Ernie Herrman: By geography, it was pretty consistent. And again, it’s hard for us to read into trade down and what we’re seeing. There is just so many moving things that are going on right now that it’s just tough to read. But like I said, we are seeing the higher demographic stores, stores in higher demographic areas performing – being more of the driver of our comp in Marmaxx. Paul Lejuez: Got it. Thanks, guys. Good luck. Ernie Herrman: Thank you, Paul. Operator: Next, we will go to the line of Alex Straton. Please go ahead. Alex Straton: Great. Thanks so much for taking the question. Congrats on the quarter. I wanted to zoom in on Marmaxx here. It looks like the margin outpaced expectations. Also, looks like it was one of the highest you guys have delivered there for a first quarter in a number of years. So I’m just wondering, is that a function of some of the price increase strategy flowing through? Or what would you attribute that result to? Thanks. Ernie Herrman: Well, I’ll start off, and John will jump in as well. I think it’s multipronged. We’ve had a pricing strategy, sales being healthy, markdowns certainly are part of that margin. John, do you want to jump in? John Klinger: Obviously, lower freight cost… Ernie Herrman: Lower freight favorability, yes, freight cost favorability. John Klinger: That’s essentially… Ernie Herrman: Yes, that’s it. John Klinger: Honestly, and we will reiterate, we feel good about the expected level of freight expense recapture and the continued opportunity we have in better buying. Ernie Herrman: Yes. Alex, I’ll throw something else. And on Marmaxx is, as you could see by the strong performance, we – on sales, we show it as a 5. It was a very strong 5. And we really like the positioning on open-to-buy. They are the big ships. We like the open-to-buy that we have there and the liquidity because the markets as we talked about, have been – they are just really flooded with a lot of inventory across many brands. And so that, combined with the fact of the good, better, best advantage that we have and our teams are – we have so much long-tenured merchants in that world and planning and allocation teams that were really able to leverage the market, I think, better than a lot of other retailers to achieve some of these merchandise margins that are driving their profit performance. Again, a lot of the other retailers can’t bob and weave as much because they are not as broad as we are. So it gives us more retailing play, I think, in surgically addressing the retails as we do. Alex Straton: Thank you. Operator: Next, we will go to the line of Brooke Roach. Please go ahead. Brooke Roach: Good morning. And thank you for taking our question. I was wondering if you could provide a bit more color on the drivers of the freight outperformance and what you’re seeing between ocean and domestic freight as you enter the new contract year? How much of this better freight outlook for the fiscal year is a pull forward from FY ‘25? And how does this impact your view on the recapturability of the approximately 300 bps of freight pressure versus pre-COVID levels? Thank you. John Klinger: Yes. So we’re not going to get into the detail of the pull forward other than to say that we did have some operational initiatives that gave us some benefit earlier than expected. But basically, where we’re seeing the freight favorability versus last year is primarily in ocean rates. So the ocean rates have come down significantly, the freight initiatives that we’ve implemented such as more intermodal, more premier carriers on our roots, and we’re seeing less port congestion as well. And we’re seeing – at the beginning of the year when we did our plans, we put something in our plans on the – as I said in the fourth quarter, the domestic contracts. But honestly, the majority is coming from the ocean. The domestic, the costs are a little stickier. The wage rates that have been implemented particularly in rail and truck, those aren’t going to come back out. So we don’t anticipate, at this time, huge domestic freight favorability. But again, the initiatives that we’re putting in place to mitigate our freight expenses, we’re very happy with. So as far as the recapture, we don’t expect to recapture the full 300 basis points of incremental faith that we saw over the last 3 years. Brooke Roach: Thank you very much. Operator: Next, we will go to the line of Laura Champine. Please go ahead. Laura Champine: Thanks for taking my questions. I wanted to get a little bit of clarity on the expense shift given that Q1 margins were better, but the Q2 guide is a little bit lighter. So can you help quantify the drivers that are just timing-related? John Klinger: Yes. So as far as Q2, so we did have a favorable timing of costs in the first quarter. And those – the majority of those will reverse out in the second quarter. We are planning 330 basis points improvement over last year, and again, the lower freight – we anticipate lower freight benefit in the second quarter because the first quarter, we had the accrual reversal that benefited us in the first quarter. And then of course, higher wage and supply chain investment costs start in the second quarter. So those are the main reasons for the – when you look at Q1 versus Q2. Laura Champine: And did you quantify what the Q1 impact was from the freight accrual reversal? John Klinger: No, we did not. Laura Champine: Okay, got it. Operator: Next, we will go to the line of Aneesha Sherman. Please go ahead. Aneesha Sherman: Thank you. I want to ask a little bit more about your traffic patterns through the quarter. I know you talked about overall seeing an increase and not seeing differences by geography. What about through the quarter and your exit rates at the end of the quarter? Did you see it pick up throughout the quarter? And last Q2, you talked about traffic being down and basket being up. It sounds like now, you are seeing those trends reverse where your traffic is up and your basket is coming down a little bit where ticket is starting to moderate. Is that consistent into Q2 as well? Thank you. John Klinger: Yes. We haven’t given any guidance on Q2 as far as what we are seeing other than where we have got a good start. And we have said that the sales in Marmaxx were pretty consistent by month. Does that answer your question? Aneesha Sherman: Yes. Well, could you give a bit more color on the components of that? The traffic and the basket through, are those all consistent by month as well? John Klinger: No, we are not giving that detail other than to say, on the quarter, the transactions drove the comp. Aneesha Sherman: Got it. Okay. Thank you. Ernie Herrman: Yes. I think Aneesha, maybe part of this question is related to one before I have talked about. We could have – I guess I am giving you a little preview that we could have our ticket coming down a notch from where it’s been a point or 2 points, but that’s related – that’s going forward, and that’s just a bit of a heads up for everybody. The ticket could come down, I don’t know, a couple of points, and that’s really more based on a merchandise mix variance within the store. So, when our mix is certain mixes, we get more growth in a lower ticket area, which is happening. And again, that’s what I was trying to say before. We don’t drive the bus on. We don’t determine that. We want to do whatever drives our top line sales the most. That’s our priority. And the pricing throughout the store is a bottom-up pricing strategy where our buyers, literally, they make the deals at the right and they assign the right value there. But I understand the question because we were talking about the traffic and then the ticket. The ticket is really just me giving you a heads up that it could come down a couple of points. Based on what we are seeing in some of our hotter businesses are tending to be our lower ticket, and that mix just could bring our ticket down a little over the next quarter or two quarters. Aneesha Sherman: Very helpful color. Thank you. Operator: Next, we will go to the line of Chuck Grom. Please go ahead. Chuck Grom: Hey. Thanks for that. Great quarter. Just wanted to focus on HomeGoods a little bit, you talked about a recovery throughout the quarter there. So, I just wanted to if we could dive into that a little bit? And then given the pending closing of some of these Bed Bath stores, wondering if you decide to reposition the business to pursue that market share opportunity in greater quantity going forward? Ernie Herrman: Okay. So, yes, so the – Chuck, what’s happening is we are seeing an improvement in the business here as we were coming out of Q1 and going into Q2 on a year-over-year comp basis. And if you look, we actually commented on seeing that – seeing continuous improvement there as the year goes on over the next three quarters. And so we do feel that opportunity based on what we are actually experiencing with our sales more recently. Again, we don’t give out exactly what we did by month in the quarter, but I can only say that as we got to the end of the quarter and as we started off this quarter, it was improving, the trend. In the Bed Bath & Beyond situation, what’s interesting is a lot of articles, many of you have probably seen them, that have come out that are referring directly to us has been in HomeGoods as being beneficiaries. We believe, and we always talked, we never like to name the other retailers where it’s happening. But we do strongly believe that that creates market share opportunities and market grab for us. And I think what you are talking about is are we – you are asking about, are we doing anything in our stores to capitalize, what we do within our own systems here, and HomeGoods is very diligent on this. Strategically, we will go in and we are able to do this with our planning and allocation system where we can look at which categories in Bed Bath & Beyond store, obviously, we know what they did for category business, and we can go in and re-rank our HomeGoods stores and inventory at the nearby location where they have just vacated. And that’s how – we don’t artificially change proactively without knowing. We don’t just go in and say, oh, we should do more of this category of business because that’s what Bed Bath & Beyond did. We did it by location and by the category of businesses we think they stood for. And we say, yes, there is more market share opportunity for us in those categories. So, we are taking advantage of that situation, to your point, so great question. We – but we do it very select – we do it very strategically like that. We don’t just broad brush it across the HomeGoods store, so to speak. Chuck Grom: Great. Thank you. Ernie Herrman: You’re welcome. Operator: Next, we will go to the line of Dana Telsey. Please go ahead. Dana Telsey: Good morning everyone and congratulations on the nice results. As you think of the international business where you had talked about strong sales in Europe and very good sales in Australia, how does that business compare to the U.S. and what you are seeing, anything by category to note? And just lastly, on the shrink side, keeping it flat for the year, how much of a benefit are you seeing – do you expect to see in Q4 versus the first three quarters? Thank you. Ernie Herrman: Alright. Dana, so I will start off with the merchandise category thing and then John and I will get into the shrink after that a little bit. So, the – clearly, what we have been seeing is Marmaxx has been the most consistent sales performer. But internationally, we are seeing strong – and by the way, we get data on market share. We are picking up major market share across the board in actually, all three of those geographies. If you mention Europe or Australia or Canada, we are outperforming by my guess, on average, hundreds of basis points. So, it’s not just a little outperformance. There is also – helping that a little is the store closure – all those geographies, I don’t know as much about Australia, but Canada and Europe have a fair amount of store closures going on. So, that will play and they are not necessarily like a Bed Bath & Beyond, but they have other store closures that will create ongoing tailwind, I think for market share grab. Little tough to read on the ups and downs because of those areas having – our compare ads are a little funky as to when they were opening, right, John. Opening up, coming out and then there were some shutdowns and so when we look at our 1-year or 2-year stacks, it gets a little funky when we look at it. John Klinger: Correct. The timing of the openings and closings were not consistent by geography. Ernie Herrman: Yes, to your point, the pure numbers aren’t – well, aren’t as good as Marmaxx. Obviously, HomeGoods is a whole different animal. But Europe in the first quarter was – well, it was very close. John Klinger: Yes. It was a strong quarter. Ernie Herrman: Strong quarter, yes. And so we are excited about the – and by the way, the way they are positioned in terms of liquidity and the branded market availability in both those regions is also going to bode well, I think for the balance of the year. Shrink? John Klinger: As far as shrink goes, we didn’t give guidance on shrink for the full year. But just to remind, we are laser-focused on our shrink initiatives which are the increasing tagging, tethering, the using – uses of hard cases and increased loss prevention presence. We are continuing to look for newer ways to protect our merchandise. And then, of course we are also very focused on the employee and customer safety in our stores, that along with the customer satisfaction. So, anything we do, we want to make sure that our customers and employees are protected and that the customers, it’s an easy experience for them to shop in the store. Ernie Herrman: Dana, I am going to just jump back in also as we are talking about the international and we have been talking about ticket, etcetera. I want to make sure everybody is clear that we have – we are still extremely bullish on our ability to do our pricing strategy. The ticket – the whole ticket discussion, which is going to have a slight amount of risk [ph], has nothing to do with our pricing strategy. That is really just based on the mix of categories within the store that could affect that. Our pricing strategy where we have been selectively addressing prices and retails on certain items here or there is continuing in full force, and one is not connected with the other actually. They are two different things. So, I just want to make sure that’s clear there. And by the way, internationally, which you were talking about, they have been having terrific success on the pricing strategy in Canada and in Europe. And domestically, we continue it from our e-comm business through our Marmaxx, through our HomeGoods businesses. So, I wanted to make sure that was clear. Dana Telsey: Very helpful. Thank you. Ernie Herrman: Thank you. Operator: Next, we will go to the line of Adrienne Yih. Please go ahead. Adrienne Yih: Great. Thank you very much. Congratulations. Tremendous execution. Ernie, on the last call, you had… Ernie Herrman: Thank you. Adrienne Yih: You’re welcome. Well deserved. You had mentioned that sort of the Chase capacity of the model is sort of now fully functional and really allowing the off-price model to shine. So, can you just go into kind of some more detail about how much better kind of this year is from an open-to-buy, and how that gives you tremendous visibility for the buyers? And then kind of just a follow-on to that, we get a lot of questions about availability, which you addressed. But as the inventory at frontline cleans up, can you then explain the next phase, right, the longevity of the off-price comparative advantage as AURs at frontline move up and then the value shines through on off-price? Thanks. Ernie Herrman: Okay. Very good, Adrienne. You are going right to – well, you are hitting right on the crux of what we do here. So, the Chase, the first thing you were talking about is the Chase culture, so to speak, of what we have going here versus a year ago. Well, we are coming, as witnessed by some of these inventories. You can see – and last year, part of what was happening last year is it was a bigger challenge for the merchants to kind of guesstimate our sales trends and the timing of availability that was going to be in the market. And we were finding that the transportation, inbound transportation was moving faster than we thought it would be. So, all of those dynamics were intersecting, which for a period of time had us chasing a little bit less. Whereas this year, we are in, I would call it a textbook situation to take advantage of the “phenomenal availability” that’s out there. So, I think that’s what – that’s why we feel great about it. And I do feel we are in more of the Chase mode in, actually, every division. And that combined – it’s not tricky to picture why that combined will help our profits, by the way. And we mean the other dynamic going on with – in terms of our buyers who are so talented and so experienced, again, we have very little turnover in that group. As we mean more to – and I think I have talked about this before, we mean more to vendors today than we did a few years ago. And we mean a lot of them a few years ago. It’s just since COVID has gone this way, and as you can imagine, the decrease in branded retail out there, whether it’s online or at brick-and-mortar, has created more of a reliance on a partnership on the key brands in the market to want to do more business with us. So, add that into the Chase and it has allowed us to make sure we have a lot of open-to-buy, and we have a vendor community that is loaded with merchandise that also knows we are more important to them today than we have ever been. So, that’s why excited about where we are currently, excited about the potential of future increase in profitability as we move forward and continued top line market share grab, I hope. So, I think that answers that first part. Then I think are you asking on availability where there – where the vendor community talks about maybe cleaning up their inventories. Adrienne Yih: Yes. Exactly. And I think I have mentioned that… Ernie Herrman: So, that has been said for years and years and years, decades. And what happens now is, again, no matter who they are, we are dealing with 21,000 vendors. But even if you would look at our top couple of thousand vendors, think about that. Yes, one vendor, one year could have less. But most of them are public companies that certainly and rightfully still need to grow their earnings and show growth. So, they are almost – no matter what they do, they have to still chase inventory or drive an inventory situation a little to try to get reorders to maximize their business. So, that’s always going to be there. I see no signs of that changing. To your point, I know certain vendors will come out and say they are going to clean up their inventory, but it – what typically happens is they are clean for a season or two seasons and that the other vendor in a similar category just happens to have more at that time, and it all dovetails rather nicely. So again, I see zero issue in a constant availability of desirable merchandise. Adrienne Yih: Super helpful, great to get your insights and best of luck. Ernie Herrman: Thank you. Operator: Thank you. And our final question comes from Ike Boruchow. Please go ahead. Ike Boruchow: Hey guys. Let me add my congrats. Just two modeling questions, I am sorry if I missed this. Can you give us the freight benefit you got in the first quarter? I know you said – you are saying 100 bps for the year, 100 bps plus for the year, but what was it in Q1? And then, Ernie, you are taking the pre-tax margin up 20 basis points. I think on the last call, you said gross margin’s up 140 bps. Should we assume that that now means gross margin is up 160 bps? Is that where that upside comes from? Just kind of curious on the gross margins for the year, what the thought – the plan is? Ernie Herrman: Okay. We will answer both. So, on the gross margin, Ike – and John, I will let John jump in here as well. On the gross margin, you are talking about where we guided for the year. Now, we are raising it, I said the operating margins at 10.4%, is that? Ike Boruchow: Yes. I was trying to understand, is that upside to the gross margin you gave prior, like what is that new annual plan on gross margin? John Klinger: Yes. We didn’t give guidance on a full year gross margin just to say that we had a significant benefit, right. Ike Boruchow: Okay. Ernie Herrman: Does that make sense, Ike? Ike Boruchow: I guess I thought on the prior call, you guys had said 140 basis points of gross margin for the year. John Klinger: Yes. We are not giving freight or gross margin other than to say that we feel good about the freight benefit that we have gotten and the better buying that we are seeing as well. Ike Boruchow: Got it. Okay. Thank you. Ernie Herrman: And then what was the other question? John Klinger: The other question, Shrink? Ike Boruchow: Tailwind. Ernie Herrman: We are doing shrink in the first quarter? Ike Boruchow: Freight tailwind. Ernie Herrman: Freight, we talked about that, right. So – but you had a two-part question. One was on the gross margin. I think one was on something else. Ike Boruchow: Yes. I was just asking if you could tell us the freight tailwind to margin in the first quarter, and then if you could give us a gross margin guide for the year. But it sounds like we are not going to do the second part of it. Is the first part possible? John Klinger: Yes. I mean as far as the first quarter goes, I mean we had a benefit from unanticipated freight accrual. And then we had – some of our freight initiatives were coming – we were getting a benefit earlier than we anticipated, and those are the real two items. Ike Boruchow: Okay. Thank you. Ernie Herrman: And we are – Ike, so the one thing we would like to leave you with on that is we are feeling very confident about the 10.4% for the year though, which I think was the original catalyst of why you are asking. So, we are feeling good about where we are heading on achieving that for the bottom line pre-tax profit margin. Ike Boruchow: Okay. Got it. Thank you. Ernie Herrman: Thank you. Okay. That was our last question. And I would like to thank you all for joining us today. We will be updating you again on our second quarter earnings call in August. Everybody, take care. John Klinger: Thank you. Operator: Ladies and gentlemen, that concludes your conference call for today. You may all disconnect. Thank you for participating.

Operator: Ladies and gentlemen, thank you for standing by. Welcome to the TJX Companies Fourth Quarter Fiscal 2023 Financial Results Conference Call. [Operator Instructions]. As a reminder, this conference call is being recorded as of today, February 22, 2023. I would now like to turn the conference over to Mr. Ernie Herrman, Chief Executive Officer and President of The TJX Companies, Inc. Please go ahead, sir. Ernie Herrman: Thanks, Ivy. Before we begin, Deb has some opening comments. Debra McConnell: Thank you, Ernie, and good morning. The forward-looking statements we make today about the company's results and plans are subject to risks and uncertainties that could cause the actual results and the implementation of the company's plans to vary materially. These risks are discussed in the company's SEC filings, including, without limitation, the Form 10-K filed March 30, 2022. Further, these comments and the Q&A that follows are copyrighted today by The TJX Companies, Inc. Any recording, retransmission, reproduction or other use of the same for profit or otherwise without prior consent of TJX is prohibited and a violation of United States copyright and other laws. Additionally, while we have approved the publishing of a transcript of this call by a third party, we take no responsibility for inaccuracies that may appear in that transcript. We have detailed the impact of foreign exchange on our consolidated results and our international divisions in today's press release and the Investors section of our website tjx.com. Reconciliations of other non-GAAP measures we discuss today to GAAP measures are also posted on our website, tjx.com, in the Investors section. Thank you. And now I'll turn it back over to Ernie. Ernie Herrman: Good morning. Joining me and Deb on the call is John Klinger. As we announced last quarter, John has been promoted to CFO. John will be covering the financials on the call and taking your financial questions today and going forward. continues in the SVP role [indiscernible] of Finance role with more of a focus on corporate areas like business development and real estate. I'm very pleased that our company will continue to benefit from both of their financial expertise and decades of TJX experience and leadership. I'd like to start today by thanking all of our global associates for their great work in 2022. I am truly appreciative of their continued commitment to both TJX and our customers. I want to give special recognition though to our store, distribution center and fulfillment center associates for their hard work and dedication every single day. Now to an overview of our results beginning with the fourth quarter. I am extremely pleased with our strong top line performance. Our better-than-expected U.S. comp store sales increase of 4% was driven by the excellent performance at our Marmaxx division, which delivered its strongest quarter of the year. We also saw positive U.S. customer traffic in the fourth quarter, which was also driven by Marmaxx. Our exciting assortment of gifts and great values resonated with shoppers this holiday season. I believe the freshness of our mix really sets us apart as we shipped ever-changing selections to our stores and online throughout the quarter. In terms of profitability, pretax profit margin increased over last year. Our merchant organization continue to do a great job buying better and retailing strategically, which drove excellent mark on. Unfortunately, we had an outsized shrink charge in the fourth quarter that resulted in pretax profit margin coming in below our plan, which John will discuss in a moment. For the full year, total sales were nearly $50 billion. Profitability improved over last year, and adjusted earnings per share grew 9%. I want to again recognize all of our talented associates around the world for the excellent execution of our flexible off-price business model throughout the year. Their collective efforts drove outstanding value on our assortment, excitement in our stores and the satisfaction of our customers. Moving to 2023, the first quarter is off to a strong start. We are excited about our plans to drive sales and customer traffic and are laser-focused on initiatives to drive profitability this year and beyond. Availability of quality branded merchandise is phenomenal. We are in a great position to take advantage of the opportunities we are seeing in the marketplace. Further, we are convinced that our commitment to value and our treasure hunt shopping experience will continue to serve us well in this environment. Importantly, we continue to see many opportunities to capture market share and improve profitability over both the short and long term. Now before I continue, I'll turn the call over to John to cover our fourth quarter and full year financial results in more detail. John Klinger: Thanks, Ernie, and good morning, everyone. I'm pleased to be starting in this new role, and I want to add my sincere thanks to Scott for his guidance and mentorship over the years, and I look forward to continuing to work with them. I would also like to echo Ernie's comments and thank all of our global associates for their hard work and commitment throughout 2022. I'll start with some additional details on the fourth quarter. As Ernie mentioned, U.S. comp store sales increased 4%, exceeding our expectations. Our U.S. comp growth was driven by a very strong 7% comp sales increase at Marmaxx. For the fourth quarter, average basket was up in the U.S., driven by a higher average ticket and U.S. customer traffic was up. TJX net sales grew to $14.5 billion, a 5% increase versus the fourth quarter of fiscal '22 and despite a significant impact from unfavorable foreign currency exchange. Fourth quarter consolidated pretax profit margin of 9.2% was up 20 basis points versus last year, and merchandise margin was down slightly. Within merchandise margin, strong mark-on was offset by higher markdowns, which were compared to exceptionally low markdowns last year. Freight was a benefit in the fourth quarter. Further, we had an unplanned shrink charge of 60 basis points versus last year. I want to note that our fourth quarter pretax profit margin guidance contemplated an expected 50 basis point benefit from shrink due to the elevated charge in the fourth quarter of last year. Therefore, the negative impact of shrink versus our pretax profit margin guidance was 110 basis points. Lastly, we're pleased that earnings per share were $0.89, up 14% at the high end of our plans. Moving to our fourth quarter divisional performance. At Marmaxx, fourth quarter comp store sales increased a very strong 7% over a 10% open-only comp increase last year. Marmaxx's comp increase was driven by apparel and accessory categories, which had a high single-digit comp increase. Further, in the fourth quarter, customer traffic was the main driver of the comp increase and average basket also increased. Marmaxx's fourth quarter segment profit margin was 11.6%. HomeGoods fourth quarter comp store sales decrease of 7% versus an outsized 22% open-only comp increase last year. HomeGoods fourth quarter segment profit margin was 7.3%. Internationally, we're pleased with the performance of both our TJX Canada and TJX International divisions in the fourth quarter. At our Canadian division, net sales were up 10% on a constant currency basis versus last year. Segment profit margin on a constant currency basis was up 12.5%, which exceeded their fiscal '20 margin. And at our International division, net sales on a constant currency basis were up 11% versus last year. Segment profit margin on a constant currency basis was up 7.2% -- excuse me, segment profit margin on a constant currency basis was 7.2%. Now to our full year consolidated fiscal 2023 results. U.S. comp sales were flat versus a 17% U.S. open-only comp sales increase last year. TJX net sales grew to $49.9 billion, up 3% compared to fiscal '22 despite a significant impact from unfavorable foreign currency exchange. Full year adjusted pretax profit margin was 9.7%, a 10 basis point increase versus last year's adjusted 9.6% and merchandise margin was down. Within merchandise margin, strong mark-on was more than offset by 120 basis points of incremental freight costs and higher markdowns, which, again, were up against exceptionally low markdowns last year. Shrink expense negatively impacted full year merchandise margin by approximately 30 basis points and was not contemplated in our most recent full year guidance. Full year adjusted earnings per share were $3.11 at the high end of our plan and up 9% versus last year's adjusted $2.85. Moving to inventory. Balance sheet inventory was down 2% versus the fourth quarter of fiscal '22. We are confident that we are strongly positioned to both capitalize on the abundant merchandise in the marketplace and flow fresh assortments to our stores and online this spring. I'll finish with our liquidity and shareholder distributions. For the fourth quarter, we generated $3 billion in operating cash flow. For the full year, we generated $4.1 billion in operating cash flow. We ended the year with $5.5 billion in cash. In fiscal '23, we returned $3.6 billion to shareholders through our buyback and dividend programs. Now I'll turn it back to Ernie. Ernie Herrman: Thanks, John. I'll pick it up with some full year divisional highlights. Before I begin to speak to them, however, individually, I want to highlight the outstanding performance of our teams across each of our divisions in 2022, while they navigated historic levels of inflation and an uncertain retail environment. All year long, each of our retail banners delivered shoppers an excellent assortment of apparel, accessories and home merchandise and offered great value every day. Beginning with Marmaxx. Full year comp store sales increased 3% and total divisional sales reached $30 billion. Marmaxx's apparel and accessories businesses were very strong all year long with a mid-single-digit comp increase. For the year, average basket was up significantly and customer traffic increased slightly. Marmaxx's full year segment profit margin was 12.7%. During the year, we opened a combined 50 T.J. Maxx and Marshalls stores. Further, we remodeled approximately 225 stores, and the feedback from customers has been terrific. We are extremely pleased with the performance of our largest division and see a significant opportunity to continue growing the top and bottom lines. At HomeGoods, full year comp store sales decreased 11%. It is important to remember that last year, HomeGoods had a remarkable 32% comp sales increase as we saw consumers spend an outsized amount in home-related categories. While HomeGoods customer traffic was down for the year, average basket increased. HomeGoods full year segment profit margin was 6.3%. In 2022, we surpassed 900 stores for this division with the opening of over 50 HomeGoods and HomeSense stores. Long term, we continue to see the potential for HomeGoods to open over 500 additional stores and for profitability to significantly improve. At TJX Canada, net sales were nearly $5 billion and increased 18% on a constant currency basis. Segment profit margin increased to a very strong 14%. Our Canadian business operates more than 550 total stores and is very well penetrated throughout the country. TJX Canada is one of the top apparel, accessories and home retailers in that country and a sharper destination for several signature categories. We remain confident that TJX Canada is well positioned to capture additional market share over the short and long term. At TJX International, net sales surpassed $6 billion and increased 22% on a constant currency basis. Segment profit margin improved to 5.7% on a constant currency basis. In Europe, we believe we significantly outperformed many other major brick-and-mortar retailers as our values resonated with consumers in a heightened inflationary environment. In Australia, sales were very strong, and we continued expanding our store footprint across the country. Going forward, we believe that we can grow our market share in each country that we operate in and continue to improve this division's profitability. As to e-commerce, we added new categories and brands to each of our online banners in 2022. While e-commerce only represents a very small percentage of our overall net sales, it allows us to offer shoppers our great brands and values 24 hours a day. As we look ahead, we are convinced that the characteristics of our business and the depth of talent in our organization will allow us to capitalize on the opportunities that we see to further grow our top and bottom lines. First, we are in an excellent position to continue offering consumers great value and freshness every day. We have a team of more than 1,200 buyers who source from a universe of approximately 21,000 vendors last year, including many new ones. Our ability to buy goods across good, better and best categories gives us tremendous flexibility in the vendor marketplace. Again, availability of merchandise is phenomenal, and we are confident that we'll have plenty of quality branded goods going forward. Second, we are convinced that the appeal of our touch and field treasure hunt shopping experience will continue to resonate with consumers. Giving us confidence is the continued strength of our customer satisfaction scores. Further, our leadership and flexibility allows us to take advantage of the best opportunities and the hottest trends in the marketplace. This allows us to offer our shoppers an assortment of merchandise to surprise and excite them every time they visit. We are also focused on being a gift-giving destination all year long. Third, our convenient, easy-to-access store locations attract consumers across a wide income demographic. Our eclectic mix of good, better and best merchandise across categories allows us to offer a branded, fashionable mix across a wide span of price points. We see these as key advantages as we continue to expand our store footprint. Long term, we see the potential to open more than 1,400 additional stores across our current geographies, which we believe will attract even more shoppers to our great assortments and values. Next, our marketing has been very effective in targeting consumers with broad reaching and compelling brand campaigns across different channels and platforms where consumers are currently spending their time. Our messaging is continuing to reinforce our value leadership and demonstrate that we are one of the best choices for consumers during the current economic environment. We are particularly pleased that we continue to attract an outsized number of younger customers to our stores, which we believe bodes well for the future. As to our profitability outlook, we are planning an increase in our fiscal 2024 adjusted pretax profit margin to a range of 10.0% to 10.2%. Beyond this year, our target remains to return to our fiscal 2020 pretax profit margin level of 10.6% by fiscal 2025. Giving us confidence are the sales, better buying and strategic retailing opportunities we see going forward at each division. John will outline the other assumptions embedded in our plans in a moment. Turning to corporate responsibility. We continue to focus our global corporate responsibility efforts under our 4 key pillars: workplace, communities, environmental sustainability and responsible business. Last quarter, I noted that TJX published its 2022 Global Corporate Responsibility Report which summarizes the company's ESG efforts and progress across these 4 reporting areas. And as a reminder, in fiscal 2023, we set expanded and accelerated global environmental goals, including a goal to achieve net zero GHG emissions in our operations by 2040. We are working hard to make progress toward our goals and help mitigate our impact on the environment. I'd also like to take a moment to speak about the work our teams are doing in our communities. In fiscal 2023, we helped support more than 2,000 nonprofit organizations globally. We're very proud of the impact this has had, including helping to provide more than 25 million meals to individuals experiencing food insecurity and helping with access to educational opportunities for more than 1 million students from under-resourced communities. We also continue to support nonprofits working towards racial justice through new grants to several national organizations. Finally, for the first time since the beginning of the pandemic, we were able to restart our in-person community relations programs and have seen a resurgence in volunteering across our organization. In the past 6 months alone, our U.S. associates provided more than 2,400 hours of service to their communities. I'm grateful to our teams around the globe for the work they do to support our global corporate responsibility priorities and we are proud to continue to make progress across our many programs and initiatives. As always, we invite you to visit tjx.com to learn more. Summing up, we feel great about our performance in 2022 and our momentum heading into 2023. I am confident that the strength and resiliency of our flexible off-price business model and the depth of expertise and knowledge of our teams, set us apart from many other major retailers and will continue to serve us well. I want to again recognize the exceptional talent we have across the organization. It is their collective efforts and execution of our off-price fundamentals that bring our business to life for our shoppers every day. As an off-price leader in every country we operate in, I'm excited about the market share opportunities we see ahead in both the U.S. and internationally. I am very confident in our plans to grow TJX into an increasingly profitable $6 billion-plus revenue company over the long term. Now I'll turn the call back to John to cover our full year and first quarter guidance and then we'll open it up for questions. John Klinger: Thanks again, Ernie. Before I start, I want to remind you that our guidance includes a 53rd week in the fiscal 2024 calendar. Additionally, in fiscal '24, we are returning to reporting overall comp store sales growth versus fiscal '23 as we now have a baseline for our TJX Canada and TJX International divisions. Now to our full year guidance. We are planning overall comp store sales growth to be up 2% to 3%. As a reminder, our comp guidance will exclude sales from the 53rd week. We expect full year consolidated sales to be in the range of $52.5 billion to $53.2 billion, a 5% to 7% increase over the prior year. This guidance assumes approximately $800 million of additional revenue from the 53rd week. We're planning full year pretax profit margin to be in the range of 10.1% to 10.3%, excluding an expected benefit of approximately 10 basis points from the 53rd week, we expect adjusted pretax profit margin to be in the range of 10.0% to 10.2%. This would represent an increase of 30 to 50 basis points versus fiscal '23's adjusted pretax profit margin of 9.7%. Our pretax profit margin guidance assumes that we will see a benefit of about 80 to 100 basis points from lower freight expenses as well as a continued benefit from better buying and strategic retailing. We're planning these benefits to more than offset continuing headwinds from incremental wage and supply chain costs. Also contemplated in our guidance is that shrink will be similar to last year. For modeling purposes, we're currently anticipating a full year tax rate of 26.1%, net interest income of about $116 million and a weighted average share count of approximately 1.16 billion. We expect full year earnings per share to be in the range of $3.39 to $3.51, excluding an expected benefit of approximately $0.10 from the 53rd week, we expect adjusted earnings per share to be in the range of $3.29 to $3.41. This would represent an increase of 6% to 10% versus fiscal '23 adjusted earnings per share of $3.11. Moving to the first quarter. We are planning overall comp store sales growth to be up 2% to 3%. We expect first quarter consolidated sales to be in the range of $11.7 billion to $11.8 billion, a 3% to 4% increase over the prior year. We're planning first quarter pretax profit margin to be in the range of 9.2% to 9.5%. This guidance includes an expected benefit from freight of 130 basis points in headwinds from a combination of incremental wage and supply chain and the timing of some expenses. For modeling purposes, we're currently anticipating a first quarter tax rate of 26.4%, net interest income of about $29 million a weighted average share count of approximately 1.17 billion. Lastly, we expect first quarter earnings per share to be in the range of $0.68 to $0.71. Moving on to our fiscal '23 capital plans. We expect capital expenditures to be in the range of $1.7 billion to $1.9 billion. This includes opening new stores, remodels and relocations and investments in our distribution network and infrastructure to support our growth. For new stores, we plan to add about 150 net new stores which would bring our year-end total to nearly 5,000 stores. This would represent a store growth of about 3%. In the U.S., our plans call for us to add about 45 net stores at Marmaxx, 50 stores at HomeGoods, including 18 at including 18 HomeSense stores. At Sierra, we're planning to open 18 stores. In Canada, we plan to add 11 new stores. And at TJX International, we plan to open 18 net stores in Europe and 6 net stores in Australia. Lastly, we also plan to remodel 400 stores and relocate approximately 55 stores in fiscal '24. As to our fiscal '24 cash distribution plans, we remain committed to returning cash to shareholders. As we outlined in today's press release, we expect that our Board of Directors will increase our quarterly dividend by 13% to $0.3325 per share. Additionally, in fiscal '24, we currently expect to buy back 2 billion to 2.5 billion of TJX stock. I'll finish by highlighting the assumptions we've included in our fiscal '25 pretax profit margin target of 10.6%. First, our outlook assumes that overall comp store sales will increase 3% to 4%. Secondly, as I just highlighted, we're expecting freight to be a significant tailwind in fiscal '24, with a smaller benefit expected in fiscal '25. Third, we expect that incremental wage and supply chain cost will continue to be headwinds in both fiscal '24 and fiscal '25. Further, our plans assume that shrink will remain similar to fiscal '23 over the next 2 years. Next, as Ernie highlighted, our plans assume additional merchandise margin opportunities across all our divisions. Lastly, I'll mention that certain macro factors we haven't made assumptions for could change our plans such as geopolitical events, foreign exchange volatility, consumer behavior or a worsening shrink environment. In closing, I want to emphasize that we have a very strong balance sheet and continue to generate a tremendous amount of cash. We are in an excellent financial position to invest in the growth in our business while simultaneously returning cash to our shareholders. Now we are happy to take your questions. As we do every quarter, we're going to ask that you please limit your questions to one per person so we can keep the call on schedule and answer as many questions as we can. Thanks, and now we'll open it up for questions. Operator: [Operator Instructions]. Our first question comes from Michael Binetti from Credit Suisse. Michael Binetti: So I guess just on a modeling cleanup. Would you mind helping us quantify the swing in incentive comp dollars in 2022? And how much that we should anticipate that coming back in 2023? I guess on a bigger picture on the margin as we look out to the North Star getting back to the 2019 pretax margin of 10.6%. This year, it was 9.7%, you mentioned. But you probably have -- I think we do the math right, about 300 basis points or more of cumulative freight embedded in 2022. And I think shrink was only about a 30 basis point headwind versus 2019. You have -- obviously, you know your leverage pricing is a new lever since then. So maybe you can help us think about what are the other incremental headwinds we should consider that would cap the endpoint of the recovery at 10.6% next year? Ernie Herrman: So Michael, you're asking about -- you're going to the 10.6% and what would be the challenges of getting there? Michael Binetti: Well, yes, with starting at 9.7% and you have 300 basis points of freight, you'll recapture some of that and then shrinks only a 30 basis point headwind. I think it just seems like -- it seems like there's opportunity to go above 10.6%, but I would love to hear what you should think about for our models to that [indiscernible]? Ernie Herrman: I like your attitude. Yes. I mean part of this comes down to -- as always, we're going to plan -- as witnessed by this year, right, we did not plan on the shrink impact. On the flip side, to your point, our sales certainly in Q4, showing that we have some really strong momentum and perhaps we're planning conservatively on that line. It's just a little early to call based on the environment that's around us. Yes, we had Marmaxx have a 7 comp in the quarter. So we are feeling very bullish as well as all the divisions and all the different metrics throughout all the performance metrics throughout TJX are extremely healthy other than the shrink surprise. To your point, and I'm just going to try to explain why we are where we are in the plan. To your point, shrink was the only component of our operational performance that wasn't very strong. Everything else, sales, merchandise margin, the way we're retailing and buying goods, the way we operate and manage expenses and distribution in stores, all of those metrics are extremely healthy. So now we have a situation where we're looking at and John will touch on it, we're essentially planning our shrink flat okay, for this coming year. So when we're putting in tactics and strategies to try to ensure that we get there, I do think we're being judicious, I think, on that plan and not trying to go to either extreme either way and expect too much or too little in terms of how we manage that. We do think we -- how do we put this -- we're feeling very good about the where position going in because I feel on the retailing of goods and the buying of goods, we're probably in a little better position where there might be some upside there to your point. The strengthening that's happening in the dynamic of this is -- this is part of the art form is the vendor community right now because of a lot of store closures as well as the slowdown in the e-com business across the board, is obviously creating an influx of inventory and better brands than we've seen even versus our last call. Every call we're talking about, you could see we purposely said phenomenal in terms of availability because the environment right now is more phenomenal availability -- I would say, in terms of branded content across good, better and best. So again, I'm giving you the merchandising side and the top line side. We just feel as though we don't want to go out with too aggressive sales plan when it's very difficult to forecast on the volatility as witnessed by last year, we still early on, didn't do the sales were figuring on. We have HomeGoods, which -- we're still trying to figure out the home trend nationally. We might have another couple of quarters across our home businesses, which just aren't in HomeGoods that could keep our top line down a little. So Q4, right, we ran on minus 7% in home goods. We still had a 4% in TJX driven by Marmaxx in Canada and Europe. And so bottom line is we're being conservative in our plans, but I think judicious given the environment. I'll let John get into some of the financial modeling margin question. John Klinger: Yes. So Michael, just on the -- getting to that 10.6%, I mean, in FY '25, again, it does assume a 3% to 4% comp and continued benefit from better buying an average retail. Now we do anticipate a benefit in freight in FY '25, albeit lower than what we're seeing in FY '24. And that's really a function of the -- when our domestic contracts renew and so there would be a little bit of year-over-year benefit as we cycle a full year of that freight savings along with things we're doing internally to reduce our shrink rate, wage and supply chain costs, we expect those to moderate in FY '25. So we're adding a distribution center in all of our brands this year. So there will be some, again, year-over-year, the annualization of those costs in FY '25, but we do expect those costs to moderate. And again, shrink flat over the next 2 years. Beyond FY '25, we do expect to be able to hold or slightly increased pretax margin on a 3% to 4% comp. And again, it assumes a slight improvement from better buying in average retail with no outsized expense headwinds and some favorability from shrink going forward. But we still feel very good about the fundamentals of the business. Operator: Next, we'll go to the line of Omar Saad. Omar Saad: A couple of follow-ups. Maybe Ernie, you could talk a little bit about the comment you just made about e-com, that as a source of that channel slowing down across the board as a source of inventory. And then maybe also talk about the fact, at least on a multiyear basis, it seems like you're HomeGoods business is stabilizing, and you're seeing a little bit maybe more of a predictable pattern at home. At the same time, as apparel and accessories accelerate, we talk about that dynamic. And you have kind of both the pandemic winner and the post-pandemic winner working at the same time, both those kind of 2 sets of categories. Ernie Herrman: Omar, great questions. Let me -- I'll go with the e-comm one first. Yes. So I agree, and I think you were starting to hint at that. So it creates a sales opportunity for us certainly as e-com business has slowed across the board. By the way, in our e-com business is very complementary and additive to us, but it's such a small 2%. We're not a player there per se in terms of the key component. However, it does help our branding and our current feel for our younger customer base as well as the older customer base for our brick-and-mortar. So we are high on our e-comm business. It's just the external businesses that are so big have been running into you, as you know, and some of them are home related, some of them are apparel related and they're running into, I think, given the inflation, they're running into, obviously, top line slowdowns, they might have hit saturation points within certain market -- within certain merchandise categories. And that does create, and I think you were getting an additional inventory supply for us ironically that we have been taking advantage of. And when I was referring earlier when Michael had asked the question about our positioning, et cetera, and I was mentioning in the script, the phenomenal availability, we know that a chunk of that availability is actually e-com spill off availability from many of the other e-com players. So it's a tremendous source and also some good brands in there as well because some of the vertical e-com players, as you can imagine, tough to forecast with their sales -- that their sales were going to be that hit that hard that they were going to yield this much goods, which is why we are very bullish on the branded content of our mix, specifically even on the better and best levels. We have lulls every now and there but key to our success, we believe, is carrying ranges of good, better and best merchandise across all the categories consistently as much as possible and e-com has been a great supplier of that. Yes. So HomeGoods, Michael, is it's very interesting. So you could see our decrease there in Q4, it's getting a little better. And I think Omar, I mean, the way you were referring to it, I think, Omar, as we look out, we're kind of watching the next couple of quarters and seeing where we're going to go with that business. What I would say here is talk about store closures and e-com declines in that arena, that is going to create -- all we have to do there is weather the storm and keep HomeGoods and home in our Marmaxx business going. And we think we come out the other side here and even a bigger player in a fashion home business than anybody thought we would be. The key is we have to -- everyone has to go to this lull in the demand. But I think that creates a shakeout that actually, to your point, we see light at the end of the tunnel. It's just -- we're not seeing it right now. HomeGoods still down 11% for the year, down 7% in the quarter. The interesting thing is if you look at total TJX we still ran a 4% with HomeGoods down 7% because we have everything else clicking, which is one of the best parts about our portfolio is we're so diverse that we're able to flex and we talk about our flexible business model all the time. This is the time when that flexible business model really shines. And I think when you have a category like home, which is a roller coaster ride, we're able to mitigate the ups and downs by the rest of our business. Great question. John Klinger: I'll just add on that. So it feels like sales are getting close to stabilizing. Q1, as Ernie mentioned, is up against really strong sales from previous years. It's actually the highest 3-year stack of the year that we're going into. So we feel like Q2 we'll probably start to see more clearly where we are with that. But we feel really good about the value proposition, which is still strong. We're attracting new customers. We're opening new stores, and we're likely to benefit from other home store closures. So we still feel very positive about the HomeGoods business. Operator: Our next question comes from Lorraine Hutchinson. Lorraine Hutchinson: I wanted to get your updated thoughts on pricing. Was there any change to the customer reaction to your price increases in 4Q? And then what are your plans for prices this year? Ernie Herrman: Lorraine, okay, great touch base on that. Yes, no. So the pricing strategy has continued to work extremely, extremely well. And in fact, very few situations. And again, our buyers are all over it. When it doesn't work, we have repriced. The good news is we turn so fast, as all of you know, that it doesn't last long in any SKU. And it's been -- I'm saying we're 95% successful on it. And so going forward, as I mentioned in the script, that is a key component of our way to continue to raise our margins because -- and it's a combination, by the way, of buying better and the strategic retailing of the goods. And Lorraine, one of the big advantages we have, we've been looking at this a lot in depth recently. And this goes -- well, it goes to a couple of things. It goes to the fact that we do good, better, best. Many other retailers, as you know, are fairly narrow. And I don't want to say the names of them, but some of them, they're good, maybe they'll dabbling a bit better, but they certainly don't do good, better, best. And that's in terms of quality, the level of brands, good, better, but there are good brands, meaning they're household names, but they're at a moderate price per se. Better brains and then there's higher-end designer/best brands. And we -- because we tend to want to have a balance of all of that in every category throughout the store, we're able to execute the strategic retailing of the goods more effectively than I think retailers that are really kind of boxed in and more of just a good and slow better only situation. So once again, that's -- and we have this team. The other thing we keep talking about the business model, other retailers have strong business models, but they don't have the tenure that we have across TJX and the experience in the teaching, the university, the -- I always look for all the different areas within TJX that allows us to do some of these pricing things without the risk where you're swinging a pendulum because you don't have the talent, the experienced merchants that we have here. So we have such a long tenure in buying and planning and storage distribution, marketing, logistics, IT, finance, HR, legal, administrative. i mean we just have such tenure that helps us execute some things that I think some other companies run into where they're not as experienced at it. And to your point about the customers, we've had no issues. In fact, given our sales, you can see it's -- we do -- by the way, our perception of value, and I think I mentioned that there somewhere in the script is -- continues to go up on our surveys on our perception of value by our customers. Operator: Our next question comes from Paul Lejuez from... Paul Lejuez: I think you mentioned higher markdowns within the fourth quarter, the drag on merch margins. Can you just talk about what drove that? And maybe you think that was unique to 4Q? Or might that linger into the first quarter? And also, I was curious, inventory, if you could talk about the [indiscernible] units, how that breaks down by segment? Ernie Herrman: Yes. Thanks, Paul. So yes, markdowns were higher versus FY '22. But again, FY '22 was up against an exceptionally low year. When you look at our markdowns compared to FY '20, they're actually favorable. So the markdown is -- most of it is due to the comparison to just an exceptionally low year. Paul Lejuez: In inventory? Ernie Herrman: I'm sorry, what was your question on inventory? Paul Lejuez: Just curious what it was in units and how that breaks down by segment? But then -- and just a follow-up on the last piece. Is that markdown issue expected to linger into the first quarter? Do you have really difficult comparisons would you say in the first quarter of '23? John Klinger: As far as the first quarter versus -- so markdowns, we expect them to be in the first quarter, roughly flat to the previous year. Now as far as our inventory levels for Q4, we ended the year essentially 1% up on a per store basis. We do anticipate the inventory levels to increase a little bit into Q1. So part of it is that the inventory levels, we had forecasted bringing our inventory levels down and Scott had talked about it in previous quarters. So we did bring the inventory levels down. We probably came in a little bit lower due to the shrink impact that we had in the first quarter, which we are correcting -- excuse me, in the fourth quarter, which we are correcting into the first quarter but we feel very comfortable with where the inventory levels are in our stores. Ernie Herrman: Yes. By the way, Paul, I'll just jump in on that. On the inventory levels, as John said, and maybe a notch lighter than we expect. The other thing is sales, obviously, we had outperformed in sales, which added to the slightly less inventory. And then we love our position right now, and by the way, this could end up helping with our markdown rate because we're so fresh going into the first quarter and our start to the year on sales is a strong start. It will allow us to chase and potentially do even better than the sales plan. You guys have witnessed, for example, we didn't plan to run a 7% in Marmaxx in the fourth quarter. We were able to chase it and achieve it or do we plan a 4% overall in TJX or in 2021, when we ran -- we had like a 3% comp plan that we ran, I don't know, 15% or something like that. We did not plan that. We just -- we were able to chase because the market has those goods, and there's more goods today than there was then. So I like our inventory position because I think it's just textbook for us to -- and I like our sales momentum. So it's a good combination going in this way into the new year. Operator: Next, we'll go to the line of Brooke Roach. Brooke Roach: Ernie, you framed the opportunity from strategic retailing buying better and your pricing initiative and driving margin improvement as you track towards 10.6% pretax profit margins. Can you talk to the sustainability of this better buying environment and the key levers for continuing to expand that buy-in margin even if industry inventory overhangs begin to ease or the consumer continues to shift towards value? Ernie Herrman: Sure. Well, yes, let me mention that last thing first. Well, the consumer does continue to shift towards value, and that's one of the reasons our top line is so healthy, and we don't think that's going to change for a number of years, especially in an inflationary environment where there's a pressure on the average consumer with all costs in their household going up. So we -- this is really a textbook situation for us. In terms of the buying better. The buying better, it's all in a few pieces here. So part of it is the strategic retailing of the goods is actually a little different than the buying better. So the buying better is and what you're getting at is how sustainable is that? One reason I think there's a long sustainability to it is because you're running into a lot of closures and slowdowns with other retailers permanent store closures. And we are becoming even more important to vendors today than we were even as recently as a year ago, certainly, as we were 3 years ago, and we're just seeing the beginning -- the tip of the iceberg, I would say, on our ability to leverage that with our -- all of our vendors. Yes, we have 21,000 vendors, but the reality is we have a lot of really key relationships with the biggest brands in the industry. And I would think most of them, and I was on the phone recently with 2 of our biggest vendors. And I think they would all say that we are more important to them today than ever before. So that will help in terms of our buying better for a long period of time, that's not just an availability of goods today. That's a long term, more important to the key brands, and we're so brand driven. Unlike other retailers that -- and by the way, good, better, best plays into that as well. We're also not -- we're not private label driven where many other retailers are relying on that so much, and that doesn't yield this type of benefit for them because they're their own importers and they're up against their own dealing directly that way. In terms of the retailing of the goods, that we have many years to go because the inflation -- so we do shopping reports about how many of our SKUs, we look at our SKUs, how they -- our buyers comp-shop our SKUs, how are they at the other retailers and there is still so much more room for us to continue to move along those lines to surgically raise retails because the other retailers around us are having to do it because of inflation, that also a long tail. So very sustainable, not a 1-year thing, a multiyear opportunity. And our -- we're probably one of the only retailers set up to be able to capitalize on this the way we can. But we really are excited about this not being a short-term window because of those 2 dynamics. It's a great question and one we talk about in depth here. So thank you, Brooke, for asking that. Operator: Next, we'll go to the line of Matthew Boss. Matthew Boss: Congrats on a nice quarter. So a couple of things, Ernie, a key inflection this quarter, I think, was U.S. traffic turning positive for the first time in over a year. Could you speak to the traffic inflection and drivers behind the material acceleration that you saw at Marmaxx? And then, John, just to summarize on gross margin. So I think you cited freight up 80 to 100 basis points, shrink flat in the AUR strategy accretive. So is gross margin for the year up 100 basis points or so? Is that fair? Or how best to quantify the components? And then just multiyear to Ernie's comments, is there any ceiling on gross margins relative to the 29% that we saw in 2017? Ernie Herrman: Go ahead. You can go on the margin on that. John Klinger: Yes. So gross margin, we are planning it up to 140 basis points. So freight is a major component of that. Also, mark on an average retail is another piece of it. So those are the drivers for why we are expecting gross profit margin to be up. Now on the other side of it, obviously, we have minimum wage and other things that are in SG&A going the other way. That's on a full year basis. Ernie Herrman: Does that answer that, Matt? Or yes? Matthew Boss: Yes. And then just maybe, Ernie, on the traffic and... Ernie Herrman: Yes. Well, the traffic we're -- you're right, it is a bit of an inflection point. I like the way you described it. So we're looking -- we would like to see that continue here as we move into the new year. Again, we're feeling good on the start. Going back to the way we're planning our sales though, we'd like to see a longer-term trend there to start planning it a little more aggressively. I mean -- we're in a good position here based on the inflection. Again, the average -- the average basket was up significantly, customer traffic increased slightly, which is good. We'd like to see just a little bit longer trend there. We do like across the board where our average baskets look healthy, right, John? In terms of the total. So that's feeling really good. If we can start to get a traffic increase on a regular basis will kind of be really off to the races on the sales, although we're feeling already that there's -- that we have some upside. Operator: Our final question comes from Marni Shapiro. Marni Shapiro: Congratulations on the quarter and a great year and I guess, a good start to this year. I just have one quick question. You've talked a lot about -- you've seen a little bit of an increase in traffic, up a little bit in the basket, but are you seeing a change in the way people are shopping your stores? Are they buying more units or just spending more of some of the price increases? Are you still seeing new people come into your customer file? I mean, from my vantage point, every person in the U.S. is already in your file, but I know that's not actually true. Can you just talk a little bit about what that looks like for us? Ernie Herrman: Well, you know, Marni, yes, we'd like to thank every person [indiscernible]. We still have so much of the population that is not shopping us strangely enough which is why we're bullish on continuing to take -- here's what I think that happens in this environment, by the way, and it's going to help traffic even more is the store -- back to the store closures that are happening around us. Marni, even if you factor in that half of those stores, only half of the categories marry up and create a visit to us. That's still a big number when you take in account the hundreds that are now slowing down or closing hundreds of stores. And I think that's going to play into us because we -- unfortunately, we wish we did. We don't have everyone shopping us, and we still have a lot. We -- our market share continues to go up every year, however. And as you can tell by our performance, we are gaining percent of our sales is new customers without a doubt, and we track that. But it's a mix of new customers, up spend of existing as well as -- and some of the up spend is driven by an additional visit. Not necessarily on the basket, John. John Klinger: Yes, I mean I would say we break down the fourth quarter is probably half transactions and half basket, probably leaning a little bit more towards transactions. Marni Shapiro: That's fantastic. Best of luck with the... Ernie Herrman: We do think, Marni, to what you're getting at is the -- we're starting to differentiate ourselves even more because of all the brands that we have and [indiscernible] shopper, we across the different brands and the different fashion looks and the different quality levels, we're covering it across a wide band of pricing throughout all of those and trying to appeal to wider customer range than your typical retailer, which I think is working. Marni Shapiro: I think it's happening automatically on TikTok, you guys are cool, which is really hard to do when you're this bigger retailer. And for this generation, you're a cool place to shop. I can't believe I'm saying that, but it feels like something has changed. Ernie Herrman: What you're saying is, so we look at the -- we have some marketing studies. But when you look at TikTok or you look at the average age of our new customers, and I'll give you one other metric, which I mentioned in the script is we're becoming a gifting destination all year long, which is an indication that we're cool because typically, [indiscernible] like gifts, they don't do it from uncool retailers. And years ago, I don't think we were a big candidate for gifting, and now we are throughout the year, which says we're cooler to your part. Ernie Herrman: I appreciate all the time with everybody. And I think that's the end of our call. And thank you for joining us. We will be updating you again on our first quarter earnings call in May. So thank you all for your time. Operator: Ladies and gentlemen, that concludes our conference call for today. You may all disconnect, and thank you for your participation.

Operator: Ladies and gentlemen, thank you for standing by. Welcome to The TJX Companies Third Quarter Fiscal 2023 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference call is being recorded, November 16, 2022. I would like to turn the conference call over to Mr. Ernie Herrman, Chief Executive Officer and President of The TJX Companies, Inc. Please go ahead, sir. Ernie Herrman: Thank you, Fran. Before we begin, Jeff has some opening comments. Jeff Botte: Thank you, Ernie, and good morning. The forward-looking statements we make today about the Company's results and plans are subject to risks and uncertainties that could cause the actual results and the implementation of the Company's plans to vary materially. These risks are discussed in the Company's SEC filings, including, without limitation, the Form 10-K filed March 30, 2022. Further, these comments and the Q&A that follows are copyrighted today by the TJX Companies, Inc. Any recording, retransmission, reproduction or other use of the same, for profit or otherwise without prior consent of TJX is prohibited and a violation of United States copyright laws. Additionally, while we have approved the publishing of a transcript of this call by a third party, we take no responsibility for inaccuracies that may appear in that transcript. We have detailed the impact of foreign exchange on our consolidated results and our international divisions in today's press release and the Investors section of our website, tjx.com. Reconciliations of the non-GAAP measures we discuss today to GAAP measures are posted on our website, tjx.com, in the Investors section. Thank you. And now, I'll turn it back over to Ernie. Ernie Herrman: Thanks, Jeff. Good morning. Joining me and Jeff on the call is Scott Goldenberg. As we announced today, John Klinger is being promoted to Chief Financial Officer at the beginning of our new fiscal year in late January. I wanted to take this opportunity to congratulate John on his broader role, and I look forward to working more closely with him as we move forward. Scott is remaining with the Company as Senior Executive Vice President, Finance. I would like to recognize his long and extremely successful tenure as CFO for which we are enormously grateful. I cannot emphasize enough how beneficial Scott has been to me personally. He has truly been a great partner. We are very pleased that TJX will continue to benefit from both, John and Scott's expertise and leadership. I'll start today by thanking all of our global associates for their hard work and commitment to TJX. We truly appreciate their collective efforts to deliver great merchandise and values to our shoppers every day. Now to our results. I am very pleased with our third quarter performance. Once again, we delivered strong profitability and a terrific merchandise margin. On the top line, our better-than-expected U.S. comp sales were driven by the excellent performance at Marmaxx, particularly its apparel business, where sales were strong. Our third quarter results once again highlight the outstanding execution of our flexible business model by our very talented associates. While our business is not immune to macro factors, I am convinced that the flexibility of our off-price retail model and the depth of our expertise and experience, especially within our merchant organization, will remain an important advantage for us. As we enter the fourth quarter, we're in a terrific position to take advantage of the tremendous buying environment and to flow fresh exciting assortments to our stores and online this holiday season. We have many initiatives planned to drive sales and our value proposition remains very strong. Further, we are convinced that our great values will continue to resonate with consumers whose wallets remain stretched. Medium and longer term, we remain extremely confident that TJX is well-positioned to gain market share and become an even more profitable company. I'll talk more about our holiday plans and our opportunities beyond 2022 in a moment. Before I continue, though, I'll turn the call over to Scott to cover our third quarter financial results in more detail. Scott? Scott Goldenberg: Thanks, Ernie, and good morning, everyone. I'll start with some additional details on the third quarter. Third quarter consolidated pretax margin of 11.2% was up 20 basis points versus last year. Third quarter pretax margin exceeded the high end of our guidance, largely due to the timing of some expenses. Our plans for the fourth quarter assume that most of this benefit will reverse out. Aside from the timing of expenses, the other components of our pretax margin were essentially in line with the high end of our plan. Merchandise margin was flat, despite 120 basis points of incremental freight pressure. Within merchandise margin, we saw a significant benefit from markon, mostly due to better buying. Incremental wage costs continued to be a headwind to pretax margin with a negative impact of 80 basis points this quarter. Third quarter U.S. comp store sales decreased 2% and exceeded our expectations. As a reminder, we were anniversarying an outsized 16% U.S. open-only comp increase last year, which was versus fiscal '20. When added together, our comp would represent a 14% increase on a 3-year stack basis. Further, U.S. comp sales improved each month of the quarter on that same 3-year stack basis. Excluding foreign exchange, third quarter total sales would have been at the high end of our guidance. For the third quarter, U.S. average basket was up. U.S. customer traffic was down, but strengthened as the quarter progressed and improved versus the second quarter. Lastly, adjusted earnings per share were $0.86. Again, this was above the high end of our guidance, largely due to a benefit from the timing of some expenses, and our plans for the fourth quarter assume that most of this benefit will reverse out. Now to our divisional results. At Marmaxx, third quarter segment profit margin was 13.5%. Comp store sales increased 3% versus an 11% open-only comp increase last year. Marmaxx's comp sales were positive each month and improved throughout the quarter. Again, it was great to see a strong comp increase in Marmaxx's apparel business. Once again, Marmaxx's average basket increased as it has throughout the year. While customer traffic was down, Marmaxx saw improvement each month of the quarter and versus the second quarter. At HomeGoods, third quarter segment profit margin was 8.9%. The segment profit margin improvement versus the first half of this year was mostly due to a significant moderation of the year-over-year impact of incremental freight costs. Comp store sales decreased 16% versus a 34% open-only comp increase last year when we saw an outsized -- when we saw outsized spending in home-related categories. HomeGoods' average basket increased slightly. At TJX Canada, we are pleased with the overall -- with their overall performance, particularly their strong profitability. Third quarter segment profit margin was 15.8%, exceeding their fiscal '20 margin. Overall sales on a constant currency basis were up 4% in the third quarter. Further, third quarter Canadian sales growth also improved each month of the quarter when compared to fiscal '20. At TJX International, third quarter segment profit margin was 6.7%, despite some deleverage from lower sales. Pretax margin was essentially in line versus fiscal '20 due to better buying and expense management, which mostly offset incremental freight wage and other expense pressures. Overall sales on a constant currency basis were down 1% from the third quarter. Moving to inventory. Our balance sheet inventory was up 26% versus the third quarter last year. This is higher than we expected due to early receipts of merchandise as the supply chain continued to improve. On a per-store basis, inventory was up 31% on a constant currency basis. We are very comfortable with our balance sheet and store inventory levels when compared to fiscal '20. Importantly, overall store inventory turns and markdowns are in line with our fiscal '20 levels. We still have plenty of liquidity and are in excellent position to take advantage of the great buying environment, including packaway opportunities. I'll finish with our liquidity and shareholder distributions. During the third quarter, we generated $1.1 billion of operating cash flow and ended the quarter with $3.4 billion in cash. In the third quarter, we returned $843 million to shareholders through our buyback and dividend programs. Now, I will turn it back to Ernie. Ernie Herrman: Thanks, Scott. Now, I'd like to highlight the opportunities we see to drive traffic and sales in the fourth quarter. First, in this inflationary environment, we believe it is important as ever to deliver shoppers excellent value throughout the store and online every time they visit. This is our top priority, and I am confident that our banners will be a destination for consumers seeking great value this holiday season. Second, as I've been saying all year long, the marketplace is absolutely loaded with quality branded merchandise across good, better and best brands. Importantly, this has set us up very well to offer an excellent assortment of branded gifts this holiday season that we believe will excite and inspire our shoppers. Third, I want to highlight that we plan to flow fresh product to our stores and online multiple times a week, which is a key differentiator of our business compared to many other retailers. With the rapidly changing merchandise mix, I am confident that shoppers are going to be very satisfied with the gift assortments they see every time they visit. Our store teams are excellent at managing this flow and creating fresh organized shopping presentations throughout our stores. Next, we feel great about our holiday marketing campaigns that just launched. We believe these campaigns can help drive traffic from both, new and existing shoppers across each of our banners. This year, each of our divisions will reinforce our value leadership and emphasize that shoppers can get more for their money when they visit. We are also highlighting the fresh flow of merchandise throughout the holiday season with messaging such as Spend Less, Get More, All Season Long. In the U.S. and Canada, we are leveraging the strengths of our retail brand portfolio and multi-banner campaigns, helping to drive efficiencies and building awareness. Further, for all our retail banners, we have strong comprehensive marketing plans in place to help us stand out. Lastly, the flexibility of our business model has allowed us to successfully operate our business against some level of retail promotion every year for the past 46 years. I really want to emphasize that we are extremely confident that we can manage through any type of promotional environment that we may see from other retailers in the fourth quarter and beyond. Looking beyond this year, we are convinced that we are set up very well to capitalize on the growth opportunities we see for our business in the medium and long term. On the top line, we believe we are well positioned to capture additional market share. We see many opportunities to drive sales and traffic as we attract a wide range of customers across many income demographics, which we believe is a key advantage of our business. Further, we have substantial store growth potential remaining in our current geographies around the world. In a retail environment where overall pricing has been reset higher, we believe our value proposition will be even more compelling and visible to consumers and that our treasure hunt shopping experience will hold tremendous appeal. I want to reiterate our continued confidence in product availability to support our long-term growth plans. Throughout our history, availability of quality-branded inventory has never been an issue for us. Our more than 1,200 buyers source from a universe of approximately 21,000 vendors and from over 100 countries. There has always been significantly more merchandise in the marketplace than we could buy, and we expect that to continue. As to our profitability outlook, we remain committed to returning to our fiscal 2020 pretax margin level. To be clear, that would be a 10.6% pretax margin by fiscal 2025. Over the next two years, our plans assume additional merchandise margin opportunities across all of our divisions. We also expect our overall expense headwinds to moderate and that freight will be a tailwind next year. Lastly, this outlook assumes that our overall comp store sales will return to a low single-digit increase in each of the next two years. Turning to corporate responsibility. I am pleased to share with you that our 2022 global corporate responsibility report was published this past quarter and is available on tjx.com. This report summarizes our fiscal 2022 initiatives and progress within our four areas of focus, which are workplace, communities, environmental sustainability and responsible business. The report includes an appendix of ESG data and maps our work and disclosures to a variety of ESG standards and frameworks, including The Global Reporting Initiative, United Nations Sustainable Development Goals, and the Sustainability Accounting Standards Board. We're proud to continue to make progress in our programs and initiatives, and I'm grateful to our teams around the globe for the work they do to support our global priorities. As always, we invite you to visit tjx.com to read our full report, and we'll continue to update the site over the next year. In closing, I want to again thank all of our associates around the world for their hard work that led to our strong results in the third quarter. Our teams have put us in an excellent position this holiday season. I am convinced that we have some of the best talent in all of retail and across all areas of the business. Further, I believe their depth of off-price knowledge and expertise is unmatched and has driven our strong execution. I truly believe our associates will continue to be a major advantage for TJX going forward. I'm convinced that the flexibility of our off-price model and our commitment to value set us apart and have allowed us to successfully operate in many different economic, retail and promotional environments. While we are impacted by macro factors, we have historically outperformed in both, good and bad environments throughout our 45-plus-year history. We are confident that we can execute on our short- and long-term growth plans to build TJX into an increasingly profitable $60 billion plus revenue company. Now, I'll turn the call back to Scott to cover our full year and fourth quarter guidance. And then, we'll open it up for questions. Scott? Scott Goldenberg: Thanks again, Ernie. I'll start with the full year. We increased our outlook for full year U.S. comp sales and now expect them to be down 1% to down 2% versus our previous guidance of down 2% to down 3%. This guidance now reflects the flow-through of our above-plan third quarter U.S. comp sales and our increased expectations for the fourth quarter. For the full year, we're now planning total TJX sales in the range of $49.3 billion to $49.5 billion. The change versus our previous guidance is due to our forecast that unfavorable foreign exchange rates will negatively impact our fourth quarter reported sales. For full year adjusted pretax margins, we're anticipating a range of 9.8% to 9.9%, maintaining the high end of our full year margin guidance. For full year adjusted earnings per share, we now expect a range of $3.07 to $3.11 million, which is up 8% to 9% over last year's adjusted $2.85. The change to the high end versus our previous guidance is due to an incremental $0.02 negative impact from unfavorable foreign exchange rates. Excluding this foreign exchange incremental foreign exchange impact, the high end of our adjusted EPS guidance would be unchanged. For modeling purposes, for the full year, we're currently anticipating approximately 130 basis points of incremental freight expense and 70 basis points of incremental wage costs. Also, we're assuming an adjusted tax rate of 25.3%, net interest expense of approximately $10 million and a weighted average share count of approximately 1.18 billion. We remain committed to returning cash to shareholders through our dividend and stock repurchase programs. In fiscal '23, we continue to expect to buy back 2.25 to 2.50 of TJX stock. Now to the fourth quarter. For the fourth quarter, we are increasing our plan for U.S. comp store sales to be flat to up 1% over an outsized 13% U.S. open-only comp store sales increase last year. Next, we are planning total fourth quarter TJX sales in the range of $13.9 billion to $14.1 billion. In the fourth quarter, we're now assuming -- in the fourth quarter, we're now planning pretax margin in the range of 9.5% to 9.8%. This outlook now assumes that most of our third -- the third quarter timing of expenses -- the expense benefit will reverse out in the fourth quarter. For modeling purposes, in the fourth quarter, we're currently expecting a headwind from incremental wage costs and for freight to be flat. We're also anticipating a tax rate of 24.9%, net interest income of approximately $19 million, and a weighted average share count of approximately 1.17 billion. As a result of all of these assumptions, we're planning fourth quarter EPS of $0.85 to $0.89 per share. This outlook now assumes that most of the third quarter timing of benefit -- of expense benefits will reverse out in the fourth quarter and also reflects an expected unfavorable impact due to foreign exchange rates. In closing, I want to highlight that we are in great position operationally and financially to grow our business. We have a very strong balance sheet and continue to generate outstanding cash flow. Further, we are set up extremely well to continue making important investments to support the growth of our business while simultaneously returning significant cash to our shareholders. Now, we're happy to take your questions. And as we do every quarter, we're going to ask that you please limit your questions to one per person, so we can keep the call on schedule and commence our questions from as many analysts as we can. Thanks. And now, we will open it up for questions. Operator: [Operator Instructions] Our first question is from Omar Saad. Omar Saad: Thanks for taking my question. Great job in the quarter. Ernie, if you take a look at the consumer, a macro lens for your business, maybe you could talk a little bit about whether you're still seeing any resistance to the pricing that you put for your business and to the products? And also any trade-down effects showing up whether inside your business or you're pulling consumers in some other more premium channels? Thanks. Ernie Herrman: Thanks, Omar. Well, on the macro lens, with regard to the pricing, we are seeing very, very little resistance. And I would say our hit rate is in the 90-plus-percent in terms of success on measuring it. In fact, at one point, I think, Scott and his script talked about how our turns are essentially where they were in FY20, which is always a barometer. So, we look at pre-COVID, and we get all the way down to a SKU level. So, we look at categories, we look at apartments and then we go to SKU level. And obviously, we zero-in on where we've adjusted the retail. And because of what's happened around us where the retails have gone up so much significantly, we have really been so effective at it and hit extremely low resistance. So, a lot more, I guess, opportunity as we move forward to keep doing because we've spot it, as you can imagine, we're also spotting places where we've gone up for retail and we can go up again. So you have that dynamic, which is a little unusual because sometimes we do an intermediate price point raise, and the goods, whether it's apparel or hard lines, have gone up a couple of price points because remember, some of the inflationary hits have been more than just 2% or 3%. So, there are some items that have gone up 10% or 20%, and we've only gone up the first price point. So, all in all, Omar, definitely more opportunity there, if anything, in terms of pricing stance. Scott? Scott Goldenberg: Yes. Hi Omar. Scott. The other thing, and we said this last quarter, I'll use Marmaxx as the example, in terms of our sales, and obviously, we had some outperformance at Marmaxx. It's the consistency. So asking on the trade down, not necessarily saw that we saw any. But it was just a consistency across regions, across age of stores, across locations, urban, suburban, rural, across volume. Almost any way you look at it, we saw that same level of consistency. Most of our departments improved versus the second quarter, as you would expect, as the overall numbers went up. And I think it goes back to what Ernie has been saying just the strong execution of our buying and planning and our allocation teams. Ernie Herrman: The interesting thing, Omar, that we're -- we try -- I tried to emphasize in the script is the nature of one of our biggest, biggest strengths. We've talked about this before, we probably don't emphasize it enough is the fact that we trade so broadly between the good, better and best in the brands, and it makes it a little -- by the way, to what Scott said, it makes it a little tougher to read if there a trade down or not because we're not going after a certain demographic. I mean, we're trying to trade as broadly as we can. We're going after demos, all different income levels, age levels. And we do not go after one sector of good, better or best goods. And so I think it's actually tough to see are you taking from one trade down area when, in fact, I think in some cases because we've had some great buys I see a list every week at the good level, which means in some cases, we could -- we're taking good sideways, not necessarily trade-down from other retailers, if that makes sense. So again, I think we're in the advantage of having a good, better, best wide offering is going to continue to serve TJX well on taking market share. Operator: Our next question is from Lorraine Hutchinson. Lorraine Hutchinson: I wanted to dig in on inventory a little bit further. Are there any pockets of excess inventory, particularly in home? And then what does your packaway capacity look like? If you were to purchase a large volume of spring product, does that preclude you from taking advantage of some of the great deals you're seeing during holiday? Scott Goldenberg: I'll actually prompt Ernie to actually talk first about the markdowns and overall how that's been. Ernie Herrman: Yes. I think, Lorraine, so great question. One of the things we do, I think that is also different than what some of our counterparts, not just on off-price, counterparts across the board is we take aggressive timely markdowns throughout the year. And with that, it becomes a -- even if we end up with, well, I guess, you'd call it, liability of inventory, something you're kind of, I think, touching on there, we clear those situations fast. And because we turn so fast, as you know, I think all of you know, we turn our home inventories extremely fast. We have a high standard on taking aggressive markdowns there probably as much as anywhere, if not more so. And so, it never precludes us taking advantage of other opportunities in the market because we're always addressing any issues we have in our stores or inventory very quickly. So, it really limits any excess inventory situation that we would have anywhere within the box, within its online. And by the way, that applies to whether it's HomeGoods or home within Marmaxx or home within Winners in Canada or HomeSense in Europe, it applies to every brand. Great question, by the way, because if we manage that differently, and this is where I think it goes to the talent that we have, the seasoning and other people have a similar model of business, does not mean they execute it the same and take the markdowns as aggressively as we do. And I think, again, it's another advantage. Scott Goldenberg: Yes. So talking about just the markdowns this year, we keep talking about our markdowns, rate has been better all year than our fiscal '20 levels. Although our markdowns have been slightly higher than what we had anticipated, but they've been built into each forecast that we give you and have largely been exactly where we thought they would end up. So, no surprises there. Again, just to reiterate, we have adjusted -- most of our -- a lot of our inventory pickup has been due to getting inventories a bit earlier than we expected as the supply chain improved quicker than what we had -- when we had ordered the goods, and they just came in quicker. But we expect, again, our inventories to come in at the end of the year, we've adjusted all our open to buys, the receipts will obviously a bit less receipts this year than last fourth quarter. And really, so by flushing that inventory down, we'll have both inventory levels where you want and great cash flow in the fourth quarter compared to both last year and even compared to fiscal '20. Operator: Our next question is from Matthew Boss. Matthew Boss: Congrats on a nice quarter and a tough backdrop. Ernie Herrman: Thank you. Matthew Boss: So Ernie, could you speak to drivers of comp improvement as the quarter progressed? And notably, I think you cited sequential acceleration in traffic. Maybe how you see Marmaxx positioned to take share in holiday? And then Scott, merchandise margin, if you exclude freight, remains materially above 2019 levels. I guess, maybe if you could just help walk through what are the structural improvements in the model that you see relative to pre-pandemic? Ernie Herrman: All right. Yes. So Matt, let me go with the first couple, and then Scott will jump in with regard to some of the margin aspects. Yes, acceleration within the quarter, total sales. But I think what you're getting at is on some of the categories, we mentioned that our -- and we're very pleased with this, our apparel in general and Marmaxx outpaced the store. So, that is an extremely healthy barometer for us. It also means that we are going to be driving more traffic down the road. When we do that, it's very healthy. Whenever we typically run some of our best market share gains is because the whole store is participating. And of course, last year, you had across the board, not just in TJX, a home business that was over indexing in most businesses, but we are very happy, particularly happy with our apparel business in Marmaxx. So, when you ask what any categories help driving it, yes, apparel ironically. And I don't think that is the same story with other retailers. I think you're going to hear more mixed reads as more results come out on the apparel business. Once again, I'll give you the different why do I think our apparel shines. And by the way, this -- I think we're performing better in every division there is because of the branded content, good, better, best brands. So, our apparel is not non-branded-driven. It's brand-driven, and it's across good, better and best. And that applies to whether it's our ladies business or our men's or our kids business. We try to go after all three levels and really have a branded focus, not a private label focus. So, I think that's really, really key. And I think that's why I look at the future, you're asking, I think one of your questions there was about Marmaxx, how we position, open to buys in great shape. And we have open to buy in all the areas that are some of our harder driving sales, better sales performing areas right now. And I also look at the on order because we can see some of the -- again, we buy close to need, but we still can see our first quarter on order because as we start buying and putting goods into those buckets, so to speak, the branded content based on what's been available in the market, this applies not just to apparel. This applies to accessories or to our hardlines areas, to our tech areas. The branded content is really going to be at a new level here going forward. And a lot of that is the nature of what's been happening in the marketplace just yielding an amount of inventory across all of these brands that is beyond what we normally see. I'll let Scott now talk to the margin. Scott Goldenberg: Yes. Well, I'm not the expert. I'm actually why we're buying better. So, I'll let Ernie say that. Ernie Herrman: Yes, I didn't mean for you to. Scott Goldenberg: Yes. So, I’ll hit a bit on the technical side there. I think -- when we look back since the beginning of the year and what we did in the last -- in August is that our retails have largely, as we've said for the last couple of quarters, has been unchanged. So not because we're raising retails anymore or anything less than what we thought it's really -- they basically what we thought has happened. The cost increases have been have come through. They haven't been changing dramatically, and our retails have raised up slightly above the cost, but haven't -- we haven't done that any more than what we have thought. What has changed over the last couple of quarters and when we changed our forecast last quarter is that the -- we're buying better, the marketplace, as we said, was absolutely loaded and we've actually been buying better. Some of this -- and again, is -- the freight is largely coming in where we want a little timing between the third and fourth quarter. Markdowns came in slightly higher, but again on our forecast, but it's largely we're actually buying better than what we thought not a retail increase more than what we thought. So -- and again, we would expect the same thing in the fourth quarter to have a strong merchandise margin by -- and with better overall markon. So, that's about all I have to say on merchandise margin. Ernie Herrman: Yes. I'll just jump in, Matt. I think Scott's saying really it's been a two-pronged effort in terms of buying the goods better and retailing. The retailing continues. But I think the new news is that we are buying better based on the market environment than I think we had even anticipated back a couple of months ago. Although that’s where I think anything you'd read about the availability in that, creating more inventory out there for models of business like us to take advantage of that -- that part is turning out to be true, so. Scott Goldenberg: Yes. And we've also been helped out as we thought it would because we saw the apparel getting better as we move through the back half of the year. And last year, it was all about having a significantly higher home contribution. We're kind of back to where we were from the apparel home contribution at the end of this third quarter where we were back in fiscal '20. So, it's almost been a 6%, 7% change in the apparel home contribution, which certainly has benefited us a bit on just from a mix point of view on the average retail. Operator: Our next question now is from Brooke Roach. Brooke Roach: Ernie, I wanted to follow up on a few of the high level guardrails that you provided into next year and calendar 2024. As you contemplate that low single-digit comp sales increase that you've suggested next year, are there any puts and takes that we should be contemplating by major banner? And do you expect this to be led by a sequential increase in traffic, or will this be a balanced traffic and ticket driver as a result of ongoing pricing strategy and better branded availability in the stores? Ernie Herrman: Awesome, those are good high-level questions. I think the first one on the single-digit comp. Hard to -- first of all, hard for us to call today on how much will be from traffic or ticket. We're being very conservative on our traffic expectations based on what's going on, but I think it's probably going to be a combination. But it is a little early for us to kind of step out and make a call on that. And your first part of the question is, I think, how much does it vary by -- does it vary by banner. And right now, our initial thinking is it's in a pretty narrow bandwidth by banner. They're all going to be planned fairly similarly within a couple of points, I would say. This is not different than this past year. And the volatility of what's around us is making it a little challenging for us to kind of Scott and his team, myself with all the SEVPs who try to figure out what's our best guess. But who could forecast some of the things that have happened even this year, where sales are not where we had projected. Having said that, we've been able to execute in a different manner and pull off some things that I think strategically are going to benefit us on the long term. The flexibility of our model, but the team that we have executing that flex. We've executed -- I believe the team has executed really well. So again, I have to be a little vague on that because we're not sure. The only thing I can tell you is right now, our initial thinking on our banners is, they'll be in a pretty narrow bandwidth all planned fairly similarly. Operator: Our next question is from Paul Lejuez. Paul Lejuez: I just want to go back to the markon benefit that you spoke about. You said that it helped in 3Q. I think it's been helping you. But maybe, Scott, can you frame the benefit that you saw in 3Q versus prior quarters? Also how are you thinking about markon in 4Q relative to what you've been seeing? And then, also just curious about the expenses, just the nature of the expenses that shifted out of 3Q and into 4Q, what were those? If you could just give any detail there? Thanks. Scott Goldenberg: Yes. We're not going into the detail just due to the timing of multitude of items, some related to inventory, flow and the related costs and/or expenses or how they get capitalized between one quarter and another. So, that's really all to say on that. In terms of the margin, if you look at it on a three-year basis on our markon, similar levels of -- it's largely going to be driven by strong markon, whether it's on a three-year basis or a two-year basis, and nothing really much more to add there. It can't break it down because there's tens of thousands of items. So, it's a combination of some retail and better buying and it's hard to parse out exactly what goes to which, but it's a combination of the both. Certainly, again, as we've talked about over the course of the last 6, 7 quarters having a slightly higher average retail helps on the expense lines, whether it's in the freight, stores and DC, and that's a good chunk of some of the benefit we've been getting as well. Paul Lejuez: Got it. If I could just pivot one other the direction, Ernie. Just there's some concerns, just macro concerns out there over in Europe. I'm curious how you feel the business is positioned over there to take advantage of maybe consumers looking for value, maybe what you're seeing over there from a promotional perspective and competitive positioning of the business. Ernie Herrman: Yes. Paul, great question. We talk about this all the time. And the environment there is at a different level of challenging. From here, it's even more serious, and you have the market drops by retailer there or even more significant than they are here. Our sales have been below our expectations there. But what we do is we look at our sales performance against the retail market, and we have been trending basically 500 to 1,000 basis points ahead of the competition there. So, we don't like our -- the way the consumer is getting hit there and affecting us. But relatively speaking, we are actually gaining significant market share there. So, our outlook there is over the next year or two to continue to gain more market share and take advantage as things level off there. And we're staying extremely liquid and demanding the same type of -- looking for the same type of healthy terms and model execution that we do here. Being a little patient with the environment -- can’t control. We can't control the traffic. We can measure there and we do the footfall going into our stores, and that has been off, not the conversion of when they're in our stores. So, the good news is when the customer is in our store, they're very happy with the mix they find, and they are buying at a conversion rate very similar to before. So that's not the issue. The issue is footfall is off. And -- but it's off less for us than it is for the competition. So, Scott… Scott Goldenberg: Yes. I mean the other thing is, given the environment over there, it's even more difficult for most -- for many retailers. And it's certainly -- and Ernie can jump in after me. But we're certainly adding as many new vendors as we have in the past and probably getting our fair share of good, better and probably even more better and best over there in terms of the branded quality. Ernie Herrman: Absolutely. Scott Goldenberg: So, I think that's the thing. And given the environment, we've talked about this before, we're still taking advantage of when -- of both relocation opportunities at good rates and obviously getting lower rates when we -- our leases come. So, we're minimizing some of the costs, taking advantage of those aspects that we can. Ernie Herrman: Yes. Paul, Scott was bringing up a good point there. The level of what you do have in a situation like this is there's some -- I was talking about the good, better, best, how we go after all three. We've had a disproportionate amount of better and best goods over there and from some brands and sizable deals that normally we wouldn't have seen or open some vendors we wouldn't have opened as recently. So, that all bodes well. That's our -- truly our best form of marketing and our best form of capturing a customer for the long term. So again, I think we'll just stay patient and we'll weather -- and we have to execute the way we always do. And we'll mitigate any margin range or anything like that because we're keeping the business clean. Operator: Our next question is from Mark Altschwager. Mark Altschwager: I guess, first for Scott, with respect to freight, just any further color on what you're seeing in terms of the inbound versus trends in domestic freight expenses, and how you're thinking about the recapture opportunity next year? And then Ernie, you've emphasized the gifting position quite a bit over the last few years. Can you talk about some of the learnings from recent years that you've incorporated into your holiday assortment and marketing plans this year that support your confidence? Thank you. Scott Goldenberg: Sure. Yes, we're certainly not going to go into giving specific guidance at this point in time. But, there's been largely no major changes to what we thought would happen at the back half of this year and consequently what we thought would happen next year. But when we were giving the long-range guidance out for '24 and '25 going to that 10.6%, it contemplated over the course of those two years some freight benefit. And we still are assuming that due to -- whether it's less demerge or some of the ocean freight or some of the other factors and over two years switching some of it to more intermodal than we currently have, we do see a freight as a tailwind, but we're not going into the details, certainly give that more on the -- when we give more detailed guidance on the February call. But yes, we definitely -- it's built in, none of the factors have really changed from what we thought over the last -- so yes, so a tailwind over the next two years on that. And obviously, as I think we stated earlier, the freight will go down significantly from the third quarter impact over last year or over ‘20 versus the fourth quarter. Ernie Herrman: Mark, so talking about our gifting position, yes, we've talked about that every year for the last few years. What's really neat, I think, for us on what we've done in every banner and every geography we're in, as we have become a cooler -- we've talked about our entertainment question and all that, but we have been cooler for gifting because now we're hitting even younger audiences that are very comfortable buying gifts from us. I think the big thing that's happened over the last handful of years, and we have really accelerated during COVID is, a, our in-store experience from our -- and I mentioned this in the script, let's start with our store ops teams and our field organization really does an amazing job on setting up our stores for gift-giving well beyond what we did 6 or 7 years ago. And I give them a lot of credit on how we present giftable tables and features and knowing where to put certain items toward the register and really catering to impulse gift items. And they do it with -- across the board with good, better and best goods. And they are just phenomenal at setting up the -- and that's whether it's in a Marmaxx store or a HomeGoods store, a Sierra, you name it, Winners, T.K. Maxx, every division is all over the gift-giving presentation and execution from a store level. Secondly, we are now more branded than ever. So, if you think about -- if you want to give a gift and this applies to any demo on any age group, any income level, you ideally are going to lean towards giving a branded gift. It doesn't feel good to give a private label gift or a gift that's just kind of generic. While we become -- and then this holiday, we will be more branded than ever, I think that's going to bode well for our gift business as we get even closer to Christmas. And then, the third aspect that we've tried to do every year in terms of gifting is a lot of gifting is done -- significant amount is done closer to Christmas every year. It moves back a little bit. And so we, last year, ran out of a little bit of steam right towards Christmas. So, we think one of our fourth quarter opportunities this year is to have fresh flowing branded goods that are gift-oriented coming in later, which we are significantly going after this year, which I think is going to bode well for our Q4 sales, especially in the last week or two right before Christmas. So, I think that touches on why -- again, two of those reasons are really why we've been doing better every year at it. This last one, I think, is really about this year last year comparison. But I intend for us every year to continue to get better and grab more market share at holiday. Even though years ago, we were not thought of as a gift destination. I think now we're absolutely becoming that. So, thank you for the question, Mark. Operator: Our next question is from Michael Binetti. Michael Binetti: Congrats on a nice quarter. And Scott, I'll have to add my congrats to you here on the next steps. I think you said -- just a near-term one, I think you said on the three-year rate was increasing throughout the third quarter. Strong exit rate, the guidance looks like it's taking a little bit of a deceleration in that three-year rate. Maybe just a comment on what you're seeing on November versus if that's from your expectation, the rest of the quarter, any source of conservatism that you want to hold back? And then, Scott, a little math on the consensus model, looks like expectations are for about a 2% to 3% comp in that combined U.S. business in the first half next year. You looked at a number of things. You're comfortable with/excited about it. I just want to make sure you think that's reasonable. Scott Goldenberg: Yes. We haven't given any guidance on how we're breaking out getting to the 10.6% from next year or the year after. So we haven't -- we don't have any details to both share at this point or have on the breakout by quarter for next year. In terms of this -- the fourth quarter, the start to the fourth quarter, your question that overall U.S. comps have improved over the last day or so. But, as there was some unseasonable weather early on, however, this has been factored into our increased Q4 U.S. comp guidance. So I guess, again, just all factored into what we're -- what we've contemplated. Michael Binetti: Makes sense. And maybe I could follow up with one just a little bit further out. Based on the buys that you commented on, I'm wondering how long you think you're going to have -- how long do you have visibility to having these great branded assortments? Do you have visibility via your packaway into this great good, better, best assortment of branded goods into fall of next year at this point? Ernie Herrman: Yes. Michael, so the good better, best has -- that type of content has been there prior to the recent surge of availability. And I would think that will continue to the level that it's at here, which is unusually flooded market across well more than we could ever buy. It's hard to have visibility really as to the long term. The only thing I would say, as I said in the script, is for 40-something years we've always had more availability out there than we can buy. So, I don't see that changing. And I'll give you -- and even if it lean -- here's the other thing, and I didn't get to mention this earlier. Even if the availability out there comes down a little. One thing that has happened during COVID, and as we've seen over recently as for our merchants and our vendors, we have become even more important to them than ever before. So we always like to think we're the first call, I think from a different perspective, we have just become without a doubt, the most important for the branded market, I'm talking, we have become even more important as a relationship for them to liquidate their goods and to know that if they get aggressive on some of their cuts ahead, which, again, most of those cuts are imports that we're going to be there for them. So, we -- I think they know that even more so now when our relationships are there better than ever. Scott Goldenberg: And Michael, the packaway, were you asking about the level of packaway? Michael Binetti: I'm just wondering if you already know that you've got good packaway for -- in goods that can be deployed in the fall season next year if the content and the amount of branded goods that you're very excited about clearly today. You have in-store today visibility in packaway today visibility that you'll be able to have those goods before next fall. Scott Goldenberg: Yes. We're not at a high level of packaway at this point in time. We're probably -- even or slightly lower than what we would have been. So it's more on the come on what we will or could buy for the rest of the year… Ernie Herrman: I'll jump in there on that. What could happen because of the availability is, typically, we're -- still right now is we're just in the middle of November. You're in this time, Michael, when actually you're using the goods. So, you don't -- and we don't -- you kind of wait for you buy through a lot of these current goods. And as you go through it, as you get toward maybe December, you start saying, okay, there's goods in that category from that vendor left. I am now going to look at packing those away. My gut would say to me there's going to be more of that later than there was prior. So, as Scott said, we're not -- right now, we don't see that. Just based on what's out there, however, I would guess there will be more packaways coming out of this Christmas that we would pack away for next fall than we did last year. Operator: Our next question from Chuck Grom. Chuck Grom: Congrats on a good quarter. Typically, consumers trade down during these tough economic times, but that's clearly not the case for you yet. And I guess, I'm curious why you think that's different today? And I guess, when you look ahead, when do you think you may start to see that? Walmart has called it out, the dollar stores have started to call it out, but you and your peers have not. So just curious if you think it's on the come? And I guess, if you have any sense of when you think it might start to see it based on history in the business? Ernie Herrman: Yes. Chuck, I think it's not -- I guess, it's hard for us to read if it's trade-down or if we're just getting it across the board. So that -- so I think what we were trying to say before is we can't read if it's trade-down because again, part of that goes to we buy across good, better -- we're buying -- we're trying to service almost every customer. So, what happens is, I think we get trade sideways. Right now, we're gaining market share from across the board. And so, that's -- I wouldn't say we're not getting some trade down. I would say that's just a piece out of many of the trade-overs, I guess you would call it. It's too hard for we can't seem to read -- and Scott even mentioned, I think if you look region by region, where you would look at some of the stores that might be closing where might have created the trade down, we're not seeing any significant difference by region, which is telling us we're kind of getting a little everywhere. Scott? Scott Goldenberg: Yes. If you go back again, history, 14, 15 years during the last recession, it was a little more pronounced at the higher income demographics where you were -- given the stock market impact and people -- and overall it was more pronounced in those demographics. So, it's more noticeable. Again, I think Ernie said it right. It's so across the board and so consistent, it's just -- we just may be getting it more across than just from the top end. Ernie Herrman: I think we have time for one more question. Operator: Thank you very much. The final question for the day will be from Dana Tesley. Dana Telsey: Hi. And congratulations, John, and congratulations, Scott. Can you expand a little bit more on the HomeGoods business, exactly what you're seeing there and how you see that path of improvement coming from, and what you saw in home versus apparel? I mean, Ernie, you mentioned that apparel over -- and it goes back to the normalized index. But what should we be expecting from home and margin opportunity go forward? Thank you. Ernie Herrman: Yes. So for sales and margin, Dana, is where you're getting at going forward. Our outlook that we start to -- next year because we were up against enormous increases this year as was everybody. The good news is from what I've seen across the board, yes, we're dropping in our home business, but not as much as some of the other retailers that -- so we feel -- again, we look at that barometer. We're hoping that next year, we get to a home sales trend that's more back to -- as I said earlier, back to those low single-digit comps is what we would hope. Margin-wise, there should be some upside because of what's happening with freight becoming a bit of a tailwind. And as you know, the home business was hit significantly by freight more so than most of the other businesses. I do feel that we wouldn't have an outpacing home business. It probably starts to track toward the rest of our business. Again, tough to forecast with what's going on and all the volatility around us in the environment. But that's kind of our outlook right now. The beauty of our business is we play a hand to mouth close in. And if we're not seeing that, we'll adjust We are bullish on our accessories and apparel business still moving forward because it looks like there's consistent opportunity as well as there's some newness there. And newness always bodes well in our business as far as generating a reason to buy an impulse, which our business has so much built on impulse SKUs and categories and -- so again, we just feel good across the board. Good question. Dana Telsey: Thank you. Ernie Herrman: Thank you. And I think that was our last question for today. I'd like to thank you all for joining us today. We will be updating you again on our fourth quarter earnings call in February. So, thank you, everybody. Operator: Ladies and gentlemen, that does conclude your conference call for today. You may all disconnect. Thank you very much for participating.

Operator: Ladies and gentlemen, thank you for standing by. Welcome to The TJX Companies Second Quarter Fiscal 2023 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference call is being recorded, August 17, 2022. I would like to turn the conference call over to Mr. Ernie Herrman, Chief Executive Officer and President of The TJX Companies, Inc. Please go ahead, sir. Ernie Herrman: Thanks, Sheila. Before we begin, Deb has some opening comments. Debra McConnell: Thank you, Ernie, and good morning. The forward-looking statements we make today about the Company’s results and plans are subject to risks and uncertainties that could cause the actual results and the implementation of the Company’s plans to vary materially. These risks are discussed in the Company’s SEC filings, including, without limitation, the Form 10-K filed March 30, 2022. Further, these comments and the Q&A that follows are copyrighted today by The TJX Companies, Inc. Any recording, retransmission, reproduction or other use of the same for profit or otherwise without prior consent of TJX is prohibited and a violation of United States copyright and other laws. Additionally, while we have approved the publishing of a transcript of this call by a third party, we take no responsibility for inaccuracies that may appear in that transcript. We have detailed the impact of foreign exchange on our consolidated results and our international divisions in today’s press release and the Investors section of our website, tjx.com. Reconciliations of the non-GAAP measures we discuss today to GAAP measures are posted on our website, tjx.com, in the Investors section. Thank you. And now I’ll turn it back over to Ernie. Ernie Herrman: Good morning. Joining me and Deb on the call is Scott Goldenberg. I’ll start today by once again thanking each of our global associates for their hard work. I truly appreciate their commitment to bringing our customers excellent value every day. Now, to our results. I am very pleased with our second quarter pretax profit margin, which was above our plan and our earnings per share, which are at the high end of our plan. This is despite U.S. comp sales coming in lighter than we expected as we believe historically high inflation impacted consumer discretionary spending. We achieved the strong profitability through better-than-expected merchandise margin and disciplined expense management. I can’t emphasize enough how this quarter is a testament to how great our business model is. Our teams executed our off-price fundamentals extremely well, and our merchants did an excellent job buying the right merchandise in the right categories. Across the company, our talented associates all played a part in delivering great value to our customers every day and helped our company drive strong profitability in the quarter. As we enter the second half of the year, we see the flexibility of our business and our value proposition as key advantages in the current retail landscape. While we’re not immune to macro factors, over our 46-year history, the flexibility of our off-price model and our commitment to value have served us very well in different kinds of macro environments. We attract a wide range of customers, which we believe is a key advantage in today’s environment. Long term, we remain very confident in our plans to capture market share and improve the profitability profile of TJX. I’ll talk more about our opportunities for the remainder of 2022 and beyond in a moment. But before I continue, I’ll turn the call over to Scott to cover our second quarter financial results in more detail. Scott Goldenberg: Thanks, Ernie, and good morning, everyone. I’d like to echo Ernie’s comments and thank all of our global associates for their continued dedication to TJX. I’ll start with some additional details on the second quarter. Second quarter consolidated pretax margin of 9.2% was above our plan. We are very pleased with our strong flow through, despite our softer sales. Our pretax margin outperformance was primarily driven by merchandise margin and effective expense management, which were both better than we planned. Pretax margin was down 150 basis points versus last year’s adjusted 10.7%. Merchandise margin had a significant benefit from a combination of strong mark-on and our pricing initiative, but was down due to 240 basis points of incremental freight pressure. Incremental wage costs were 80 basis points. Second quarter U.S. comp store sales decreased 5% over an outsized 21% open-only comp increase last year versus fiscal ‘20, which when summed together would be a 16% comp increase on a three-year stack basis. Moving on, we are very pleased that our comp sales in our overall apparel business at Marmaxx were slightly positive every month of the quarter. U.S. home comp sales were down low teens versus a 37% U.S. home open-only comp increase last year and were the primary driver of the U.S. softer -- of the softer U.S. sales trends we saw. For the second quarter, U.S. average basket was up, driven by a higher average ticket, and U.S. customer traffic was down. Lastly, earnings per share of $0.69 were at the high end of our plan. Now, to our divisional results. At Marmaxx, second quarter segment profit was 12.9%. Comp store sales decreased 2% versus an 18% open-only comp increase last year. Again, it was great to see their overall apparel comps slightly positive. While customer traffic was down, we saw an increase in Marmaxx’s average basket, driven by a higher average ticket. At HomeGoods, second quarter segment profit of 2.7% was hurt by nearly 800 basis points of incremental freight costs. Comp store sales decreased 13% versus a 36% open-only comp increase last year when we saw outsized spending in home-related categories. HomeGoods average basket increased significantly driven by a higher average ticket, and customer traffic decreased. We were very pleased with the improvement in profitability we saw at our international divisions. At TJX Canada, second quarter segment profit margin of 15.8% exceeded their pre-COVID Q2 fiscal ‘20 level. Overall sales increased 22% and benefited from having stores open all quarter this year. On a constant currency basis, TJX Canada sales were up 28% in the second quarter. At TJX International, second quarter segment margin of 7% was significantly higher than the first quarter and also exceeded their pre-COVID Q2 fiscal ‘20 level. Overall sales decreased 7%. This sales decline is entirely due to the impact of foreign exchange. On a constant currency basis, TJX International sales were up 6% in the second quarter. As to e-commerce, it remains a very small percentage of our overall sales. We continue to add new brands and categories to our sites so shoppers can see something every -- something new every time they visit. Moving to inventory. Our balance sheet inventory was up 39% versus the second quarter last year. On a per-store basis, inventory is up 35% on a constant currency basis. We are very comfortable with our balance sheet and store inventory levels. Importantly, overall store inventory turns are better than our pre-pandemic levels. I’ll finish with our liquidity and shareholder distributions. During the second quarter, we generated $641 million of operating cash flow and ended the quarter with $3.5 billion in cash. In the second quarter, we returned over $1 billion to shareholders through our buyback and dividend programs. Now, I will turn it back to Ernie. Ernie Herrman: Thanks, Scott. I’d like to start by sharing the key traffic, sales and profitability opportunities we see for the remainder of the year. Starting with the top line. First, we are excited about our merchandising plans for the fall and holiday season. Again, this year, we will be flowing eclectic assortments to our stores and online multiple times a week. This is a strategy that has worked well for many years and sets us apart from other retailers during the busy holiday season as shoppers can see something new every time they visit us. We are confident that we can execute on our merchandising initiatives and manage our supply chain to keep our shelves fully stocked. Second, availability of merchandise across good, better, and best brands is exceptional. We have plenty of open-to-buy, and I have great confidence that our buying team of more than 1,200 buyers will bring the right brands, fashions and values to our consumers throughout the years. Next, we are laser-focused on driving traffic and sales with our marketing initiatives. This year, we have sharpened our messaging to reinforce our value leadership position. Each of our banners are communicating that we offer shoppers more for their money, and at the same time, deliver great brands and quality. In an environment where consumer wallets are stretched, we believe it is as important as ever to amplify our value messaging across television, digital and social media platforms. I also want to highlight that our customer satisfaction scores remain very strong. Further, we continue to attract a significant number of millennial and Gen Z shoppers, which we believe bodes well for the future. Moving to profitability. We are extremely pleased that we are able to increase our full year pretax margin guidance in this environment, giving us confidence of the merchandise margin opportunities we see. The buying environment is very attractive, and we believe we can continue to benefit from buying better. Further, our pricing initiative is working very well. Our teams have done an outstanding job implementing this initiative over the past year, and we are very pleased that our value perception scores remain very strong. Again, we are seeing extraordinary off-price buying opportunities in the marketplace and have no issues with overall availability. We are in a terrific inventory position, and we have plenty of open-to-buy to take advantage of the current environment. This allows us to offer even more exciting merchandise and value to our shoppers, which is our top priority every day. Lastly, we remain focused on managing expenses and continue to look at ways to operate our business more efficiently. Now, I’d like to remind you of the characteristics of our business that we believe strongly position us to continue our successful growth around the world over the medium and long term. First and foremost is the strong appeal of our great values, outstanding merchandise and differentiated treasure hunt shopping experience. Further we believe the ability to touch and feel merchandise and take it home the same day is very important to consumers. Second, we see an excellent opportunity to grow our global store base by at least another 1,500 stores in our current geographies. We are extremely confident that there will be more than enough real estate locations and merchandise available to support our store growth plans. Again, being one of the most flexible retailers in the world is a tremendous advantage. The flexibility of our opportunistic buying, supply chain and store format enable us to change up our floor space to expand to hot categories and trends that shoppers are looking for. As to profitability beyond this year, we remain committed to returning to our pre-COVID pretax margin level of 10.6% within three years. We expect that across all of our divisions, our merchandise margin opportunities, the moderation of expense headwinds, particularly freight, and our focus on expense management will contribute to our improved profitability. As always, we believe driving outsized sales is our best opportunity to improve pretax margin over the long term. Turning to corporate responsibility. I’d like to update you on our commitment to building a more inclusive and diverse workplace. Last year, we completed our global associate inclusion and diversity survey. This was an important step, and we used the findings to help to find three global inclusion and diversity priorities for the company: increase the representation of diverse associates throughout all levels of our talent pipeline; equip leaders with the tools to support difference with awareness, fairness, sensitivity and transparency; and empower all associates to integrate inclusive behaviors, language and practices and how we work together and understand our role and responsibility and inclusion. We have a number of initiatives underway to help support these priorities. For example, we have introduced a new leadership, competency and cultural factor focused on inclusion. In addition, associate resource groups similar to those we have in the U.S. have launched and are now active in both, Canada and Europe. Also, teams throughout the organization have set up committees to better incorporate inclusion and diversity into our everyday work. In our communities, we continue to support a number of organizations that work with Black communities and other communities of color. In addition, we have deepened relationships with some nonprofit partners in the U.S. to expand our reach to diverse students for recruitment efforts. We appreciate that this is a work in progress, and we remain committed to our global priorities and helping associates feel welcome, valued and engaged. In closing, I want to emphasize my confidence in the future of TJX. We have a long track record of successfully operating through many different types of economic and retail environments. We believe value is as important as ever to consumers, and delivering great value has been our mission for over 45 years. We are very confident in the power of our off-price buying and pricing initiative while maintaining our value gap with other retailers, as always. We continue to invest in our stores and shopping experience, which we believe positions us strongly, and we remain committed to returning cash to shareholders. Further, we have a management team with decades of off-price expertise at TJX and a very deep bench of talent who have successfully navigated through the unprecedented COVID environment. I am convinced that we are set up well to grow our top and bottom lines over the medium and long term and am confident in our plans to grow TJX into an increasingly profitable $60 billion-plus revenue company. Now, I’ll turn the call back to Scott for some additional comments, and then we’ll open it up for questions. Scott? Scott Goldenberg: Thanks again, Ernie. I’ll start with the full year. We now expect full year U.S. comp sales to be down 2% to 3% versus an outsized 17% U.S. open-only comp increase last year. This guidance now reflects the flow-through of our second quarter U.S. comp sales and our expectations for the second half of the year, which assumes our three-year stacked U.S. comp continues at levels similar to recent trends. For the full year, we are now planning total TJX sales in the range of $49.6 billion to $49.9 billion. The lower sales guidance includes our lower-than-planned second quarter sales and our updated sales expectation for the second half of the year. Despite the reduction in our sales plan, we are pleased to be raising our guidance for the full year adjusted pretax margin to 9.7% to 9.9%. This is 10 basis points higher than our previous guidance due to our assumption for even stronger flow-through for the back half of the year. Our improved profitability outlook versus our prior guidelines is due to stronger merchandise margin, better expense management and less incremental freight and wage pressure expected in the second half of the year. For modeling purposes, we are now assuming 140 basis points of incremental freight expense and 70 basis points of incremental wage costs. For full year adjusted earnings per share, we are now planning a range of $3.05 to $3.13, which is up 7% to 10% over last year’s adjusted $2.85. This guidance now includes a $0.03 negative impact from FX that was not contemplated in our original full year plan. Excluding this impact, the high end of our earnings per share guidance would be the same as our original plan. For modeling purposes, for the full year, we are currently anticipating an adjusted tax rate of 25.5%, net interest expense of approximately $20 million and a weighted average share count of approximately 1.17 billion. We remain committed to returning cash to our shareholders through our dividend and stock repurchase programs. In fiscal ‘23, we continue to expect to buy back $2.25 billion to $2.5 billion of TJX stock. Now to our third quarter guidance. For the third quarter, we’re planning pretax margin in the range of 10.1% to 10.4%. This guidance assumes approximately 100 basis points of incremental freight expense and about 80 basis points of incremental wage costs. In the third quarter, we are planning U.S. comp store sales to be down 3% to 5% over an outsized 16% U.S. open-only comp store increase last year. Next, we are planning third quarter TJX sales in the range of $12.1 billion to $12.3 billion. For modeling purposes, in the third quarter, we’re currently anticipating a tax rate of 25.8%, net interest expense of approximately $2 million and a weighted average share count of 1.17 billion. As a result of these assumptions, we’re planning third quarter EPS of $0.77 to $0.81 per share. Our third quarter and full year guidance implies that for the fourth quarter, pretax margin will be in the range of 10.1% to 10.4%. U.S. comp stores will be in the range of flat to down 1%, and earnings per share will be in the range of $0.92 to $0.96. In closing, I want to reiterate that we are confident with our medium- and long-term growth and profitability plans. Further, we have a strong balance sheet and are in excellent financial position to navigate the current environment while simultaneously investing in the growth of our business and returning significant cash to our shareholders. Now, we are happy to take your questions. As we do every quarter, we’re going to ask that you please limit your questions to one per person and one part to each question to keep the call on schedule, and so that we can answer questions from as many analysts as we can. Thanks. And now, we will open it up to questions. Operator: Thank you. [Operator Instructions] Our first question will come from Lorraine Hutchinson. Lorraine Hutchinson: Thank you. Good morning. Can you just talk a little bit about your view of the U.S. consumer and how that changed over the course of the quarter? Are you seeing any pushback to the price increases you’ve taken? And are you seeing that trade-down customer shop your store a little bit more? Thank you. Ernie Herrman: Thanks, Lorraine. First of all, U.S. customer trend in the quarter, it’s moved around a bit. I think what happened in this quarter is when a little bit of that fuel spiked, if you remember back in the middle of the quarter, that’s when we had a big ramp-up on that. In addition to really food, those are the two inflationary categories that really, we feel, can impact our consumer the most. But the fuel has obviously come down more recently. So I’m thinking there, we might have a bit of a lag in terms of the benefit of that having coming down, and that could work out better for us as this quarter moves on. There was no -- let me be clear on your question about pushback on the pricing. We have zero -- not only do we do qualitative studies on it, we are actually able to measure, well, down to the SKU level, turns, how we’re selling an item where the retail has been adjusted, but even entire categories, departments and the store. In fact, we’re measuring our turns and all of these things relative to pre-COVID, fiscal ‘20, calendar ‘19. And in most cases, we are actually turning our inventories faster than then. And that, as you know, was a very, very good year for us and a real, actually, model of business that we’re very happy with from an inventory turn and sales perspective. So, we have zero concern overall. We’ve had a couple of items here or there, where we found it, and we react quickly if it hasn’t worked. But I would say, Lorraine, our batting record is in the probably 95% zone. So a great question, by the way, because, of course, we monitor that every week. So, that has been a nonissue. Again, we felt, Lorraine, it was prudent to -- when we went to this more conservative sales for the back half, I would tell you, we did that knowing that we want to be conservative. It’s been a little volatile. It’s moved around a bit. We tend to look at the three-year stack, how do our sales compare to FY20. And that’s kind of where we looked at the recent trend at the end of the second quarter, and that’s where we just kind of applied that going forward. Our intention is always, as you know, to beat that. The management team in every division is on a mode to beat that. I have to tell you that I think -- and it’s too far out for us to change the numbers right now. We have -- Q4 is where we feel like there’s a lot of opportunity for us. And I would say if you look at -- and I know you’re aware of this, we kind of ran out of some steam there in some categories and businesses last year. And I’m sure I’ll get into more on other questions during the call, but we have a, I feel like, a great opportunity to drive some more incremental sales in Q4 specifically. Thanks for the question. Operator: Thank you. Our next question will come from Matthew Boss. Matthew Boss: So, it’s kind of a perfect set up for my question, Ernie. So, on the overall product availability, are there any inventory constraints by category that you still see remaining or on the very attractive buying environment and maybe some of the category opportunity you left on the table last year that you’ve cited? Do you see this translating now to an optimal fall and holiday assortment across apparel and home? And maybe just last, could you elaborate on the excitement you cited in the release for some of the back half initiatives to drive traffic? Ernie Herrman: Sure. No, a great question, Matt, and it does piggyback on what we started to talk about with Lorraine. Well, constraints, I would tell you there were no -- the only constraints that would apply in this discussion is the constraints and us having to hold back all the merchants from buying too much too soon. So, we have -- this is self-inflicted constraints we’re putting on because the teams right now, and I know my senior team, right now, one of their prime responsibilities has been to -- this really gets at the meat of what’s been going on, has been to get at -- holding the merchants back from buying too much too soon. As you know, we mentioned in the release, and I think even ahead of this, many of you were aware of the amount of goods in the market. I hesitate to use the word unprecedented, but it is at a different level, I would say, than we’ve seen. And it’s across our good, better and best zones. And so, I’m going to give you an example that speaks to a place where we’ve been challenged but I would tell you gives us a level of optimism, as you would say, to getting to that optimal mix and an excitement level for the back half. So, we’ve been struggling in our home area, as other retailers have, and you can see with the HomeGoods sales. However, they have done, as has Marmaxx specifically, both have gone in and kept their inventories very clean and taken aggressive markdowns to ensure that we go into the back half with no liabilities and mix so that we can deliver as much fresh excitement based on what’s working and chase the hotter trends and vendors. So, HomeGoods specifically, again, where we’ve been a little softer on the three-year stack than we would have liked, is in a terrific inventory position now. They put in a lot of work to get there. But what they’ve done is created significant open-to-buy to the point of -- and normally, we don’t give numbers like I’m about to give you, but I would tell you at this point in time that we are going to buy 4 million units in HomeGoods over the next few weeks, all to be what we call ladder plant and shipped into September for selling in September. And because of the market situation with the availability there, we’re able to go after the categories that are happening, the healthy ones in home, and buy them even better. So, we’ve been buying goods really better than ever in HomeGoods recently. And I think, a, it’s going to help us drive sales because we are going to be so fresh. We’re going to be taking some of the best goods. We’re going to be able to pick and choose out of the market because there’s so much availability. And that’s, again, 4 million units that will be bought in the next couple of weeks and shipped to the stores and to sell -- buy, ship and sell in the next month of September. So, Marmaxx, larger scale, great inventory position. I think what’s happening in the brands, and this might preempt some of the other questions. But for the excitement for fourth quarter to get to the optimal mix, when we get to fourth quarter, brands means so much for gift giving. And so, what I’m very happy about what I’m starting to see on the on order, again, significant open-to-buy, significant availability across better and best and good out there as I think we’re going to have a mix that has even more brands and some new vendors that we didn’t even have last year in some of our hottest categories. I actually get an update on key vendor buys every week. And the last two weeks have yielded some vendors. It’s meaningful quantities that I know we did not have last year. So, it’s all tough to measure and put into the sales forecast right now. It just gets me excited that I think we have some upside there. So, sorry for the long-winded answer, but you’re touching on some of the most exciting part of the model and the part of the secret sauce that really, I think, is going to set us apart from everyone else. So, thanks. Operator: Our next question will come from Kimberly Greenberger. Kimberly Greenberger: Ernie and Scott, you guys have been talking about getting back to this sort of 10%-plus pretax margin in the back half. And I mean, in a year when so many retailers are struggling with margin visibility, you guys look to be sort of solidly on track to hit those targets. I wanted to know if you could sort of step back and talk about margin, not specific targets necessarily for 2023 or 2024, but just what are the puts and takes as we head into next year and the following? What are the puts and takes on margin? And do you see opportunity to sort of claw back even more of the margin here over the next couple of years that we saw under some pressure through COVID? Thanks. Ernie Herrman: Yes. Kimberly, I’ll let Scott jump in on some of the big pieces of this. But what I’d like to highlight one thing I mentioned in the script is -- well, first of all, I’m thrilled with we -- and we called this out back really at the beginning of the year that we thought we could approach -- getting approached at 10%. We’re getting there as we’re talking, I think, at 9.7% to 9.9% this year. But even over the three years, Scott, I think, will talk to this, is we’re feeling good about getting back to that pre-COVID 10.6% for TJX, which is right, I think, what you’re getting at. And he’s going to give you some of the puts and takes. But let me give you another piece on that that I think is really -- one thing is a moderation, obviously, of some of the other expenses around us, freight, for example. We realized where wage is going. That’s been something we haven’t talked on this call about, but we kind of have a good feel for where that’s going. The big game changer right now in this environment, in addition to what Scott’s going to talk about, is our merchandise margin -- not that I’m leaving him a lot to talk about, is the merchandise margin opportunities we see really from two things. We’ve been talking more in the last two calls about retailing, Kimberly, right, retailing selectively better and the way we’re changing retail. But the buying better is one of the things -- right now we’re seeing is we’re able to really because of the availability out there, lower our costs on light goods. And so, we’re kind of -- over the next couple of years, what I’m envisioning is we’re going to win on both sides of it, on the retail and on the cost of the goods because our buyers are doing a terrific job in the market. And again, the market right now across all the different categories and vendors is really yielding some amazing opportunity. And this will not be short term based on what’s happening in the industry as far as store closures and market shift and online, online shifting patterns where we think we get market share, but we get margin opportunity on that. Scott, I don’t know if you... Scott Goldenberg: I needed to put some -- my mouth got a little dry the last few minutes. But the -- a few things. The -- first, I’d say that we’re starting, as Ernie said -- I mean, when we started the year, we thought we were going to be similar to last year in that 9.5%, 9.6% range. So, the fact that we have dropped effectively ex-FX almost $2 billion in sales from our original guidance and our margins are going up, I think just speaks, as Ernie, I think, said several different times to the model and our ability to -- in a sluggish environment where we’ve never said we’re immune from sales, we’ve been able to take advantage of those other aspects of the business on the gross margin and the -- and expense management that we do when we flex down. Again, Ernie, I think, touched on it, but we’ve managed our markdowns quite well, maybe a little more due to some of the home sales. But the markdowns have have been in -- slightly higher but in line with what we would have expected. And our -- as we move through -- as the freight starts to moderate, a lot of this has to do with the freight. We did say if the environment was such that the freight would moderate, we would be able to improve our margin. That certainly is what’s happening in the back half. And we still would expect our freight rates to be better next year. Some of that has to do a lot with what our teams are doing, the logistics folks and others in terms of a lot of the mitigation strategies, getting longer term contract rates, more -- using much more contract rates on the spot market -- the spot market for ocean freight. We are taking advantage of where we’re moving our goods into what ports. And I think a lot -- and a lot of other strategies, and we think some of the demurrage costs and other things we believe are going to be going down next year. So, some of that’s reflected in our back half, and some of that we think will continue into next year. By starting at a higher base next year, I mean, we would hope that -- we’re in a sluggish environment worldwide from an economic point of view, home -- in home, obviously. Although we’ve changed the mix, the apparel is up 5% more than what it used to be. It’s still more than what it was in home -- than compared to what it was in ‘20. And I think we’re maintaining these margins as we go into next year and get back to the level of comps we would see pre-COVID. I think that with some slight increases in retail and adding that to the level we’d see this year, we should be able to, as we’ve spoken over the last several quarters, increase our profitability, assuming, as Ernie said, there’s no major changes to the headwinds, so. Also, this hasn’t been a -- other retailers have talked to it, the flow of both the merchandise into our distribution centers worldwide has certainly not been optimal from an expense efficiency point of view and like, what we call our output per hour. So, I think those are things that next year, we would hope to get better once we flow a little better and I think get back to having less lead times in buying. So, we’re buying closer to need. So, I think, again, it’s all setting us up well for a continued improvement on a more normalized sales increase. Operator: Thank you. Our next question comes from Paul Lejuez. Paul Lejuez: Hey Thanks, guys. Curious if you can talk a little bit about what you saw just throughout the quarter on a monthly basis, maybe changes in traffic patterns and the detail you might be able to provide by concept. And Ernie, usually, you say something about the quarter-to-date period. So, curious if you’re seeing comp trends in line with that third quarter comp guidance. Earlier, I think you made a comment about maybe there being a lag effect on the gas price reduction. Does that mean that you have not seen any sort of a pickup as gas prices have come down? Anything you could say on 3Q quarter-to-date? Thanks. Ernie Herrman: Yes. I’ll let Scott jump in, but I’ll talk about the quarter-to-date. Basically, the guidance we gave is based on how we’re trending. So, that’s -- we’re right in line with what we just gave for guidance. To your point, could -- I’m hoping we get a little benefit as that fuel factor wears off a little. And the other dynamic that we’re not sure of that was in the quarter, we haven’t talked about it, is we had some weather noise, I guess, a little during the quarter where the weather was -- for apparel was a little -- it was just extremely hot in certain areas of the country. So, I don’t know if that hit us by a little. So, this is where we say we wanted to be prudent on our go-forward comp estimates and stay conservative. My goal and the team’s goal is to beat those. And I think we -- I just think we have upside. If you look at some of those other issues as well as we -- going into this quarter so far, I would tell you our flow was a little less than probably we would have liked, and that is getting into the stores as we speak. And I think that could give us a little bump up at the end of August going into September because we did run a little lighter than we would have liked at the end of July. So, that hit Q2 and it’s really hit us a little. Having said that, again, we’re trending right now where we’re giving you the guidance. So hopefully, that gives you a little color there. Scott Goldenberg: Yes. Just to add to what Ernie said, I think we’ve been -- we’ve done the sales, I’ll call it, forecasting or what we put in our guidance exactly the same way at the end of -- from we started the year to the first quarter to now and that we’ve taken whether -- whatever we think the appropriate period, but it’s generally been 4 to 6 weeks of the most recent trend and use that for the rest of the year, regardless of trying to -- as Ernie said, we think we might be able to do better in the fourth quarter, but we’ve just held that trend because that’s what we’re seeing. Because last year was such a volatile year on the upside, those comps, as we’ve said many times, we’re on a -- we’re 21% in the second quarter, 16% in the third quarter, moderating in the fourth quarter of last year but still higher than in typical year. So, we just felt that was the more prudent way from a sales perspective. Within the sales and in the adjustment, it’s more HomeGoods adjustment than Marmaxx adjustment as our home sales have -- the HomeGoods sales dropped a bit more than the Marmaxx sales from the prior trend, and that’s reflected in our go-forward trends. Other than that, addressing maybe the first question that was asked on the call, where Ernie alluded to, whether it’s inflation or gas prices. In the first quarter, for the first time in 5, 6, 7 years, we saw that our lower -- where our stores are in lower-income areas were dropped below the higher-income areas. That is still true through the second quarter, although the change from the first quarter to the second was equal. But the higher demographic stores are still doing better than the lower. And again, that’s a pretty much of a big change versus the last five to seven-year trend. Everything -- I think it just seemed to, at least for our spend, stay similar type of impact across the different demographic levels. And again, not much change also from a geographic perspective within the United States as well, pretty equal the change from the first quarter to the second. Paul Lejuez: Ernie, what drove that slower flow relative to what you would have liked at the end of the quarter there? Ernie Herrman: Well, when we -- so what we do is we look at the way sales are trending. And so, when we were having that little bump down in July, we slowed the shipping a little bit. And that’s what we do -- it’s a big ship. And so, we probably ended up with a little bit less shipping than we would have liked. However, we reacted a week or two later, and we know it will be in good shape at the end here. We have an advantage, Paul, in the way we stage goods in our warehouse, right, because we’ve always talked about it. We can use it to manage. So, if we see -- this happens quite a bit. By the way, if we see sales slowing, we’re able to slow our shipping out of our DCs. But sometimes you get caught off guard, and this was one of those where we shipped to the sales, but then the sales started nudging up a little. And we realized, oh, we probably could have shipped a little bit more. And so, it’s just -- that’s our own execution. Yes, I would tell you there was -- nothing impacted that other than us. But the teams are great and they reacted quickly. And so, we ended up with a couple of weeks of blip, where we’re probably giving up a little business, but then we’ll be back on track really in about two weeks from now. So yes, good question. It’s -- that is part of the -- if it was easy, anyone would do it, right? But it’s a big ship when you have that many stores. And I give the teams a lot of credit because they caught it -- they catch it quickly. And by the way, I’m giving you the time -- we don’t talk about the times when 9 out of 10 times, if we slow the shipping or increase the shipping based on the trend, it happens to be the right amount, which isn’t always easy. This just happened to be one of the times where we’re a little on the wrong side of it. Operator: Our next question comes from Jay Sole. Jay Sole: Just curious about what’s baked into the guidance in terms of what you see from competition from your -- from the other off-price retailers, meaning whether it’s a Nordstrom Rack or Burlington or Ross. Like given that -- obviously, inventory availability seems really strong for your company, but maybe it’s not so great out there for everybody at large. Do you expect them to get more competitive? And what impact do you think that would have on the business? Thank you. Ernie Herrman: Yes. Jay, so we’re pretty simple with the teams here. And again, our buyers are excellent and our planning and allocation team. And we -- the good news is we kind of keep them focused, and I tell them not to worry too much about what the competitors are doing because -- let’s face it, we’re in a bit of a fortunate position. This isn’t anything we’re doing, but we’re so big. And we have a lot of strong relationships with certain -- some of the strongest relationships with certain vendors. And some of the vendors don’t overlap as much with those competitors you’re talking about, and some do. From what we’ve seen and what we hear, there’s plenty of goods, honestly, to go to everybody in the off-price world right now. And they typically is, by the way. But right now, we don’t foresee that as being any issue. I don’t know how they -- that’s up to them as far as how they’re running their open-to-buys and what they’re doing as far as how far they want to buy out or whatever. We right now -- if anything, our strategy on the buying of goods is to get more liquid, and it has been for the last month, and to buy less further out than we typically have because of -- we’re not worried about other competitors buying the goods. We think there’s going to be more goods, an unusual amount of more goods across all the branded areas, which, by the way, going back to what I mentioned before, I think for Q4, gift giving, I think we’re going to have some of the best branded content we’ve had in a while, again, regardless of what competitors are doing in terms of how much they are buying or not. Now, let me say, good question. We do talk about -- our merchants talk about in a category with a vendor, hey, based on this amount of goods, do we think that could go to one of the other competitors? Is this important for us to have or -- they weigh all of that out when they’re making buys. And again, that’s why I give them all the credit on handling it all really, really well in this environment. I have to say, we like an environment like this where there’s a lot of -- strangely enough, a lot of volatility around. That generally bodes both for us because in the end, I usually think there’s a market share opportunity for us to keep getting additional brick-and-mortar market share from other brick-and-mortar out there because the model is so flexible and it will allow us to chase the hotter category trends more nimbly than most retailers. But, thanks for your question. Operator: Our next question comes from Brooke Roach. Brooke Roach: Ernie, you’ve made some comments about the strong buying environment and the opportunity that that better buying can drive some of the margin improvement that is underpinning the improvement of 10.6% pretax margins. Can you discuss your view on the longevity of this benefit and perhaps the opportunity for this buying environment to persist even when we’ve heard about some order book cuts into the second half of this year and also a more promotional retail environment overall? Thank you. Ernie Herrman: Sure, Brooke. Yes, these are -- these topics are things we talk about internally quite frequently. First of all, we think we have multiple years of longevity to this strategy. From what we’re seeing, there’s even probably more opportunity in the retailing of the buying of goods as we continue as well as, by the way, not just merchant-driven, some of the costs that Scott mentioned could be a couple -- a few year trend because they -- some of those freight costs went up so dramatically so fast. It could be kind of a bit of a slow correction, and we don’t think it’s going to happen fast. So, between buying goods, retailing the way we’re retailing, the fact that we mean more to the market than ever before and to key vendors and as well as -- well, and you’re talking about, by the way, the promotional environment. So, we haven’t seen the promotional environment, if anything, because of what’s happened with inflation, again, we look at the promotional environment is less promotional. And a lot of these costs are baked in even going forward. I foresee the promotional environment not getting any worse for a few years. I think we’re good for a couple of years there. And as I said back in the script, our mission still is -- our out-the-door retail that we provide to the consumer has to maintain that gap between the out-the-door retailer that they have and what we sell it for, our out-the-door retail, which is always our ticketed price. I do if you -- you’re onto a whole -- we could spend a whole phone call on this. But if you look at the promotions happen, there’s still, as you know, a lot of retailers that are still doing the very high/low game of a sale all the time. And it’s -- I always look at that where consumers today are looking for authenticity. They’re looking for an exciting treasure hunt entertaining shopping experience in stores. And we continue -- along with that value equation, we continue to provide those two things. In fact, one thing we haven’t talked about today is we’re very bullish on keeping our store experience right in line with the strong merchandise values and excitement that we’re giving. So, we’re going back to our remodeling program aggressively. We have new prototype in our Marshalls business specifically that we’re excited about that we’re starting to roll out because we want our -- we believe there’s a market share gain, not just on -- number one, by our merchandise value, yes, but number two, by the shopping experience. So, that’s a long-term play as well, just so you know. But I know you were talking about the buying and the retailing. No reason to think this won’t go on for a number of years. And thanks. It was a good question, Brooke. Operator: Thank you. Our next question comes from Omar Saad. Omar Saad: Ernie, I was hoping maybe you could elaborate a little bit the comment you made earlier about the availability of brands and the excitement you have around, especially with the fourth quarter, around brands. Are you talking about designer brands? Is this kind of across categories? Is it more specific to apparel or some of the fashion areas? And maybe also talk about -- for T.J. Maxx, obviously, TJX company is obviously known for its flexibility at scale. Maybe talk about broadly your ability to reassort away-from-home categories if they’re going to be soft for a while as you deal with -- consumers deal with inflation and you cycle those big gains from last year and towards some of those more reopening-type categories? Does the organization as a whole have the ability to kind of shift its merchandising assortment? Thanks. Ernie Herrman: No. Omar, two big things that we’re approaching. I’ll start with the reassort from home. We’ve been doing that consistently in Marmaxx and in the international divisions and in total TJX, where we have moved funding out-of-home goods. And into Marmaxx and within Europe and in Canada, we do the same thing, where we take open-to-buy. And sometimes, by the way, we move actual merchants out of those areas to the areas that are the more trending areas that we forecast over the next 12 to 18 months. So, we have been doing that consistently since we were watching the home trend, and it’s really one of the strengths of the business model because we can do it so quickly. Again, we buy so much of the inventory so close in relative to traditional retailers, we don’t get stuck with this big liability of home product like many retailers would. And you tend to read about some of the other retailers that are more bought in advance, how they run into really a profit hit because they’re stuck with the liability, we are not to that degree. We took our markdowns, as I said earlier, and we were able to move more over. On your first part, Omar, which is interesting, the brands are across, yes, not just -- actually not just designer and not just apparel. So, we’re getting some brands. I can’t give you what they are, but this applies to accessories, hardlines. If you walk in our store even in some of the hardlines, either the gondolas where home is or in our queue line area, you’re going to see some new vendors there, but you’re also going to see that we’ve gone after some of those categories more aggressively than before because we’re getting new vendors at different levels of goods. So, when we talk about good, better, best, sometimes it can be assumed I’m talking about on the best end is designer appeal, and it isn’t always that way. It’s actually, I guess, you would call it better or designer hardlines of merchandise that we have -- which, by the way, is as we go to Christmas on gift giving, which I think you mentioned, some of those hardline better vendors, which are special, are great gifts. And it’s not just the apparel because as you know, you probably personally or friends -- today, we don’t -- consumers don’t just give apparel gifts. It’s also other hardline gifts, some of it in the tech area. We have that tech area out there in the queue line. And that’s often given -- those are great gifts, especially when we’re able to buy some better brands in that. And so, that’s all the type that we’re really excited about. And I think it’s going to help us with that Q4 opportunity. Operator: The final question of the day comes from John Kernan. John Kernan: All right. Thanks for squeezing me in. Congrats on a nice quarter. Ernie, not to belabor the point, but just can you talk to the mark-on opportunity? You’ve talked about it in prior calls. It seems like you’re getting more conviction in the opportunity and the deals you’re getting from vendors. And then, maybe just elaborate on what this means for merch margin and gross margin as we go forward. Thanks. Ernie Herrman: Sure, John. Well, we spent more time -- Scott and I both really on the prior two calls, we were -- because I guess it was more new news, I was talking about the retailing of the goods in terms of how that would create some mark-on and ability to offset costs, start with that whole strategy. Again, that’s a -- we’re a byproduct of the fact that all the retailers around us, for the most part, have had to raise retails on certain categories or some, as you know, have done it more in a widespread raising of retail across the board. We didn’t do that. We did it very selective and surgically. But what’s happened is, for different reasons in this environment, our teams -- and we see this every week, are also getting mark-on improvement from the costs. And that is the reason we’re talking about that more. And I think it’s almost as though the two-prong has evened off because we were talking before about the retail was giving us. You can see from these results that we’re delivering and the outlook for the back half of the year that we’re very bullish on our merchandise margin, and it’s really because of both. Scott Goldenberg: Yes. Just to echo what Ernie just said, given our, call it, whatever, the better retailing strategy, all of our improvement versus our last guidance, not -- at least from a margin -- merchandise margin perspective, is all in the buy. So, our average retail is up whatever we had planned it to be up, but it’s all better buying in the -- across all of our divisions. And it’s fairly significant improvement in our mark-on in the back half of the year. So, it’s better buying. Costs are going up, but the retailers are going up a bit more… Ernie Herrman: More than the cost, right. Scott Goldenberg: Yes. That’s the other way. And part of that -- no one asked, part of why the inventory is up is you have the freight and cost impact that’s buried in the overall inventory. But the costs are going up, but the retailers are going up more than the cost. But we had that baked into our both original and last guidance. Ernie Herrman: John -- and the other thing, John, that goes hand-in-hand with this because that wouldn’t -- that would all just be okay if we thought, oh, we’re doing that, but our -- but we’re hurting sales. The opposite is happening because proportionally, our values, you could -- on many of these things are even better value today than they were because retails have gone up even more than what were going up and -- which is why our -- I think it was in the either the first question or close to that, where I was talking about our turns are actually faster than they were in FY20, which is an indication that when the customer’s in the store that those are actually hitting them as stronger than they’ve been for a few years. So, it’s really nice to see. You need both, right? You can’t just have the buy and then retail move if you’re not selling the goods at the right -- and the customer is not seeing the fact that you’re still providing. And I’m telling you, in many cases, we’re providing because of what’s happening around us, more out-the-door value relative to the competition than ever before. Scott Goldenberg: And with a slight -- with the moderation in freight and with a better buying, the back half of the year, our merchandise margin, including all the freight pressure, is actually going to be up versus it was down in the first half of the year. Ernie Herrman: It’s kind of -- I hate to belabor the point, but it’s really what we just experienced in Q2 and the way we’re guiding, yes. But more conservative sales but healthy profit directionally is -- really, it is a testament and a great example of textbook utilization of this business model. And you couldn’t do that if you didn’t have the right teams. And again, we have such great associates here that are executing on this, whether from merchandiser or planning or marketing or in our distribution area, logistics, it’s all working. And it -- this is just a great, I think, evidence of how we’re able to flex and take advantage of the market. John Kernan: Excellent. Thanks, guys. Ernie Herrman: Thank you, John. That was our last question. So, thank you all for joining us today, and we will be updating you again on our third quarter earnings call in November, and we look forward to it. Thank you, everybody. Operator: Ladies and gentlemen, that concludes your conference call for today. You may all disconnect. Thank you for participating.

Operator: Ladies and gentlemen, thank you for standing by. Welcome to The TJX Companies First Quarter Fiscal 2023 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference call is being recorded, May 18, 2022. I would now like to turn the conference call over to Mr. Ernie Herrman, Chief Executive Officer and President of The TJX Companies, Inc. Please go ahead, sir. Ernie Herrman: Thanks, Bessie. Before we begin, Deb has some opening comments. Debra McConnell: Thank you, Ernie, and good morning. The forward-looking statements we make today about the Company’s results and plans are subject to risks and uncertainties that could cause the actual results and the implementation of the Company’s plans to vary materially. These risks are discussed in the Company’s SEC filings, including, without limitation, the Form 10-K filed March 30, 2022. Further, these comments and the Q&A that follows are copyrighted today by The TJX Companies, Inc. Any recording, retransmission, reproduction or other use of the same for profit or otherwise without prior consent of TJX is prohibited and a violation of the United States copyright and other laws. Additionally, while we have approved the publishing of a transcript of this call by a third party, we take no responsibility for inaccuracies that may appear in that transcript. Thank you. And now, I’ll turn it back over to Ernie. Ernie Herrman: Good morning. Joining me and Deb on the call is Scott Goldenberg. I’d like to begin the call by reiterating that together with people and businesses around the world, we are united in our condemnation of the war in Ukraine. We have many associates with ties to Ukraine, including those from Ukraine or with family and loved ones living there and associates in the surrounding countries like Poland. We are steadfastly committed to supporting all of our associates impacted by this crisis. We have offered them our support, including financial, legal and mental health resources. Further, we have made significant charitable donations to help with the humanitarian relief efforts. In terms of our business ties to Russia, in early March, we committed to divest from our minority investment and Familia, which operates off-price stores in Russia. Q1 results, moving to our business update. I want to start by once again thanking each of our global associates for their continued commitment to TJX. Thanks to their collective efforts, we continue to offer outstanding merchandise and values to our shoppers, every day. Now, to our results. I am very pleased with our first quarter performance. I’m especially pleased that both, first quarter adjusted pretax profit margin and adjusted earnings per share exceeded our expectations. We achieved these results even though comp sales came in a bit lighter than our plans. I also want to highlight the strong performance of our largest division, Marmaxx, which delivered a comp increase of 3% over a 12% open-only comp increase last year. We were especially pleased that Marmaxx’s comp was driven by customer traffic increases, which speaks to the appeal of our values and merchandise. Our first quarter performance highlights the sharp execution and flexibility of the entire organization that once again navigated through an uncertain environment and global supply chain issues to bring an exciting mix of merchandise to our stores and online shoppers. During the quarter, our teams flexed our product mix and categories to respond to consumer trends and preferences. We saw the benefits of our pricing initiative for another quarter, while continuing to deliver our customers’ outstanding value, which is our buyer’s number one priority. With people’s wallets stretched even further in the current environment, our teams did an outstanding job of offering shoppers excellent values every day. Longer term, I am confident about our ability to capture market share and improve the margin profile of TJX. Our goal is to return to our fiscal 2020 pretax margin level of 10.6% within three years. We are convinced that our differentiated treasure hunt shopping experience and outstanding values will continue to resonate with consumers and drive the successful growth of our business in the U.S. and internationally for many years to come. Before I continue, I’ll turn the call over to Scott to cover our first quarter financial results in more detail. Scott Goldenberg: Thanks, Ernie, and good morning, everyone. I’d like to echo Ernie’s comments and thank all of our global associates for their continued hard work. I’ll start with some additional details on the first quarter. As Ernie mentioned, we are very pleased with our first quarter profit results. Consolidated adjusted pretax margin of 9.4%, which excludes a 190 basis-point negative impact from a charge related to the write-down of our minority investment in Familia, was up 220 basis points versus last year. This was higher than our plan due to the timing of expenses as well as the combination of expense management and a bigger benefit from our pricing initiative. For the first quarter, the pretax margin increase includes the benefit of our pricing initiatives. Similar to the fourth quarter, we saw a very strong mark-on. However, merchandise margin was down due to 220 basis points of incremental freight pressure. Incremental wage costs also negatively impacted pretax margins by 70 basis points. Our year-over-year margin increase also includes a benefit from a reduction in COVID-related expenses and the annualization of temporary store closures internationally, last year. Adjusted earnings per share of $0.68 were above our plan and exclude a $0.19 negative impact from the charge related to our Familia investment. Our U.S. comp store sales growth rounded down to flat over an outsized 17% open-only comp increase last year, and we’re a bit below our planned range. I want to highlight that we are incredibly close to rounding to a positive 1% U.S. comp. First quarter average basket was up, driven by a higher average ticket and U.S. customer traffic was down slightly. As far as the monthly cadence, U.S. comp sales on a three-year stack basis improved in the March-April period. During the quarter, we saw very strong comp sales in our overall apparel business at Marmaxx, which was up 6%. U.S. home comp sales, including our HomeGoods division and Marmaxx home categories were down 7%. I should note that last year, our U.S. open-only home comp sales increased over 40%. Importantly, we believe the comp sales decline in our U.S. home businesses was a result of the difficult year-over-year comparison and not driven by our pricing initiative. Another point I want to highlight is that our store inventory turns for every division and overall markdowns were favorable to pre-pandemic levels. Further, our research tells us that customers’ perception of our value gap with other retailers remains strong. Now, to our division results. At Marmaxx, first quarter comp store sales increased 3% over a very strong 12% open-only comp increase last year, and segment profit increased to 13.2%. Again, we are particularly pleased to see an increase in customer traffic at Marmaxx, which is up low single digits. I’ll also reiterate that the comp increase was driven by Marmaxx’s overall apparel business, which was up 6%. In the first quarter, we saw an increase in Marmaxx’s average basket, driven by a higher average ticket, primarily due to our pricing initiatives as well as apparel sales being a higher percentage of the mix. At HomeGoods, first quarter comp store sales decreased 7% versus a remarkable 40% open-only comp increase last year. Segment profit margin was hurt by nearly 700 basis points of incremental freight costs. I want to highlight that HomeGoods three-year comp stack for the first quarter was up 33%. HomeGoods average basket increased driven by a higher ticket and customer traffic decreased in the first quarter. Looking ahead, we see HomeGoods as strongly positioned in the retail environment, and we will be emphasizing our value messaging in our marketing. At TJX Canada, overall sales increased 41% and segment profit margin exceeded their pre-COVID Q1 fiscal ‘20 level. Year-over-year sales benefited from having stores open all quarter this year versus significant temporary closures in the first quarter of last year. At TJX International, overall sales increased 163% due to the benefit of having stores open all quarter this year, even while there were still some shopping restrictions. Segment profit margin was negatively impacted by freight costs. We are very pleased that all of our stores in Europe are currently operating without restrictions. Moving to inventory. Our balance sheet inventory was up 37% versus the first quarter last year. On a per store basis, inventory was up 37% on a constant currency basis. I want to emphasize that in-store inventories are where we want them to be as we look at a more normalized -- as we look at more normalized comparisons to pre-pandemic levels. We still have plenty to open buy for the second quarter and second half of the year. We remain well positioned to take advantage of excellent deals we are seeing in the marketplace and flow fresh merchandise to our stores and online throughout the year. I’ll finish with our liquidity and shareholder distributions. During the first quarter, we used $634 million in operating cash flow, primarily due to the timing of inventory purchases and related accounts payables. We ended the quarter with $4.3 billion in cash. In the first quarter, we returned over $900 million to shareholders through our buyback and dividend programs. Now, I will turn it back to Ernie. Ernie Herrman: Thanks, Scott. Now, I’d like to highlight the opportunities that we see that give us confidence that we can continue to capture market share and improve our profitability, both in the near and long term. Starting with the top line. First, we are confident that the combination of our value proposition, our treasure hunt shopping experience and flexibilities will continue to be a winning retail formula. We are convinced that the consumers’ desire for exciting brands and fashions at great values is not going away. Additionally, in today’s highly inflationary environment, we believe our value proposition is as appealing as ever. We serve a wide customer demographic and offer a range of merchandise categories and brands across good, better and best, which we see as a major advantage. This year, we have exciting marketing initiatives planned to showcase our exceptional value and differentiated shopping experience. First, we are sharpening our marketing messages across our outlets to emphasize our value leadership to consumers. Second, we are strategically targeting pockets of opportunity within certain geographies to amplify our messaging even further. Lastly, we are pleased to see that across all our divisions, customer satisfaction scores are strong, and we are attracting new shoppers of all ages, including a large number of Gen Z and millennial shoppers, which we believe bodes well for the future. Second, we continue to see significant store growth opportunities ahead for all of our divisions. As we have seen over the last few years, demand for our exciting and inspiring in-person shopping experience remains strong. We see our flexible buying supply chain and store formats as tremendous advantages which allow us to open stores across a wide customer demographic. All of this gives us confidence in our long-term plan of opening more than 1,500 additional stores in our current markets with our current banners. Lastly, and I can’t emphasize this enough, we are extremely confident that we’ll continue to have plenty of quality branded merchandise available across good, better and best brands to support our growth plans. Our global buying team of more than 1,200 buyers sources goods from the universe of approximately 21,000 vendors in more than 100 countries. In a landscape where we are planning to grow our sales and open new stores, while many other retailers are closing stores, we offer vendors a very attractive solution to clear their excess product. To be clear, overall product availability has never been an issue for TJX. We believe that each of these characteristics of our business set us up as well to deliver sales and market share gains in the U.S., Canada, Europe and Australia over the long term. Now importantly, to profitability. I am very pleased that for the full year, we now expect an adjusted pretax margin on an adjusted basis to reach 9.6% to 9.8% higher than our original plan, and adjusted earnings per share in the range of $3.13 to $3.20, which at the end is also higher than our original plan. Scott will provide more details, but the key drivers are our strong mark-on our pricing initiative and expense management. We continue to believe that delivering strong sales is the best way to offset the cost pressures that we’re facing. We also remain laser-focused on looking at other ways to improve profitability and operate our business more efficiently. As I’ve mentioned on our last few calls, our initiative to selectively raise retails has been working very well, and we continue to believe it will be a multiyear opportunity for us. We are also optimistic that the expense headwinds we’ve been facing for the last three years will begin to moderate going forward. Further, looking ahead to the next few years, we see opportunities to improve divisional margins and deliver continued increases in overall profit margins. I want to reiterate that our goal is to return to our fiscal 2020 pretax margin level of 10.6% within three years. Turning to corporate responsibility and ESG. Last quarter, I shared with you that our environmental sustainability teams were developing plans for more aggressive initiatives across several of our priority areas. I am pleased to share that last month, we announced four new global environmental sustainability goals. First, we have set a goal to achieve net zero greenhouse gas emissions in our operations by 2040. Second, we intend to source 100% renewable energy in our operations by 2030. Third, we are working to divert 85% of our operational waste from landfill by 2027. And finally, we are aiming to shift 100% of the packaging for products developed in-house by our product design team to be reusable, recyclable or contain sustainable materials by 2030. As I’ve shared in the past, we’ve been committed to mitigating our impact on the environment for many years. I’m very excited about these new goals and the plans our teams are putting in place to support them. We look forward to sharing more about our progress as we go forward. As always, we have more information on corporate responsibility at tjx.com. In closing, I want to again thank each of our associates around the globe. We feel great about the health of our business and are confident that the appeal of our exciting merchandise mix and outstanding values will continue to resonate with consumers around the world. Through our 45-year history, and many kinds of retail, economic and geopolitical environments, we continue to see the advantages and strength of our flexible off-price model. We see many opportunities to capture additional market share and increase our profitability as we look to become a $60 billion-plus revenue company. Now, I’ll turn the call back to Scott for additional comments. And then, we’ll open it up for questions. Scott? Scott Goldenberg: Thanks, again, Ernie. I’ll start with the full year. As Ernie mentioned, we are pleased to be raising our guidance for full year adjusted pretax margin to a range of 9.6% to 9.8%. This is 10 to 30 basis points higher than our original plan. I’d like to highlight that this contemplates our expectation for better flow through on lower planned sales, which speaks to the strength of our flexible off-price model. I’ll also note that we’re planning approximately 150 to 160 basis points of incremental freight expense. Again, for full year adjusted earnings per share, we are planning a range of $3.13 on to $3.20, which is up 10% to 12% over last year’s adjusted $2.85. This is also $0.04 more on the high end than our original plan for EPS this year. We expect full year U.S. comp sales to increase 1% to 2% over an outsized 17% U.S. open-only comp increase last year. This guidance now reflects the flow-through of our first quarter U.S. comp sales and our second quarter guidance. Our implied back half guidance is for a 4% to 5% increase over a 14% increase in the second half last year. For the full year, we are now planning total TGX sales in the range of $51.3 billion to $51.8 billion. The lower sales guidance is primarily a result of a change in FX rates, which reduced our full year sales forecast by approximately $700 million as well as our lower-than-planned first quarter sales. For modeling purposes, for the full year, we’re currently anticipating an adjusted tax rate of 25.7%, net interest expense of about $35 million, and a weighted average share count of approximately $1.18 billion. In terms of our year-end cash position, we expect it to be in line where we originally planned it. We remain committed to returning cash to shareholders. In March, our Board of Directors approved an increase in our quarterly dividend by 13% to $0.295 per share. This marks our 25th dividend increase over the last 26 years. Additionally, in fiscal ‘23, we continue to expect to buy back $2.25 billion to $2.5 billion of TJX stock. Now, to our second quarter guidance. For the second quarter, we are planning U.S. comp sales to be down 1% to 3% over an outsized 21% U.S. open-only comp store sales increase last year. We’re pleased with the start of the quarter with the momentum from the March-April period continuing into May to date. I should note that our second quarter comp plan reflects this acceleration in comp trends we saw in the March-April period and into May. Next, we are planning total second quarter TJX sales in the range of $12.0 billion to $12.2 billion. In the second quarter, we’re planning pretax margin in the range of 8.7% to 9.1%. This guidance assumes approximately 250 basis points of incremental freight expense and about 80 basis points of incremental wage costs. For modeling purposes, in the second quarter, we’re currently anticipating a tax rate of 26.3%, net interest expense of about $12 million, and a weighted average share count of approximately 1.18 billion. As a result of these assumptions, we’re planning EPS of $0.65 to $0.69 per share. Again, our second quarter and full year guidance implies in the back half of the year, U.S. comp sales will be up 4% to 5%. Additionally, we expect pretax margin in the back half will be in the double digits. In closing, I want to reiterate that we are laser-focused on driving sales and traffic, improving -- and improving the profitability profile of TJX. We’re in a great position, both operationally and financially to take advantage of the opportunities we see to grow our business. Our strong balance sheet and financial foundation continue to give us great confidence in today’s macro environment. Further, we continue to make investments to support our growth initiatives while simultaneously returning significant cash to our shareholders. Now, we are happy to take your questions. As we do every quarter, we’re going to ask that you please limit your questions to one per person and one part to each question to keep the call on schedule, and so that we can answer questions from as many analysts as we can. Thanks. And now, we will open it up for questions. Operator: [Operator Instructions] Our first question comes from Paul Lejuez. Paul Lejuez: Hey. Thanks, guys. Curious how you would characterize the buying environment in home categories specifically versus apparel? And I also love to hear how you would characterize the competitive environment you’re operating in. It seems like some large retailers out there have some excess apparel. Curious if you’re seeing any sort of a pickup in promotions that might be having an impact on how you think about pricing in certain categories. Thanks. Ernie Herrman: Yes. No. Great questions, Paul. First of all, the buying environment in all -- right now, the markets are extremely loaded across the board, good, better, best category, whether it’s home, apparel, accessories, any of the other hardlines that we carry in the store that aren’t just -- fall into those buckets. The markets are fairly loaded in terms of the buying environment. Home right now, as you can see, we have a decrease in the business in the first quarter of 7, but that was against the 40. And so, we are still doing a lot of home business, very healthy. And so, we will continue to buy at a steady pace, I would call it. We also buy in a number of different ways, whether it’s in home or apparel in terms of not just -- what’s in the building now for shipping right now. We also do packaways and things along those lines where we hold the goods for longer. And then, we -- as we’ve talked before, we do a small percent of our business, where we do goods in advance. So, the -- what’s great, again, I go to this business model flexibility, it just allows us to tailor that to the sales levels. Also, our home business within the full family stores in Marmaxx, et cetera. Same thing applies there in terms of availability and how the merchants handle it. It’s interesting you mentioned apparel, which from what we hear has been a little inconsistent out there. Our apparel business has been pretty strong actually here in the first quarter. And in fact, I spent an hour yesterday in our T.J. Maxx store with one of our apparel general merchandise managers, and we were talking about all of the different opportunities. The availability, the opportunities on different aspects of the business that she has been feeling good about, not to mention that our business in that arena has been pretty damn strong. So, feeling good on that front. What was the last piece of your question? Was it about promotions, I believe, in terms of what’s in the environment? And are we seeing retails promoted further aggressively? We are not, certainly not in the categories that we are in. So, when I say that, I would not interpret that as a blanket statement for other retailers that are in other ends of the business. Some of you more commodity-driven retailers that are in more home cleaning supplies or maintenance supplies around the business. I think that’s a different ilk of product per se. Again, we’re fashion driven. So, when you look at our fashion and brand driven, the retailers that carry the like product and categories, if anything, we continue to watch their prices go up and promotions be decreased which continues to favor our selective pricing retail strategy as we look out here, I think, for a number of years. Good question. Operator: Our next question comes from Matthew Boss. Matthew Boss: Great. Thanks, and congrats on a nice quarter. So, Ernie, could you speak to drivers of the improvement that you cited in March and April and then the momentum that you cited in May to start the second quarter? Are there any notable categories that you’re chasing into? And just on the positive traffic at Marmaxx, are you seeing a new customer increase trips from your existing customer? Any signs of trade down that you think we’re seeing just across the board, the March-April improvement and the momentum in May? Ernie Herrman: Yes. No, great, kind of the big picture, right, Matt, in terms of what’s giving us the sales. And of course, we’re looking at our teams who are always striving to exceed our sales plans. We’ve been enjoying these amazing comps at Marmaxx. We were up against the 12 comp right the year before. So, they see a 3 and the NG. [Ph] We wish we could do more. But in this environment right now, obviously, we’re very pleased with that as well as the profitability approach. Many of the categories that were -- I guess, the way you’d look at this because we don’t give -- like to get too specific, but I can tell you this, like I just mentioned to Paul, our apparel business has been -- we’ve been pleased with our apparel businesses given in this environment. And I think part of that is a year ago, you were getting more traffic and more shopping at our home businesses and less in apparel. So, I think what’s happening in Marmaxx is we’re now getting back some of the businesses that weren’t as strong a year ago, which is great. I go back to the flexibility of the business model. It allows us to chase the trends that shift from year-to-year and season to season. So, that was a big part of our, I would say, the escalation in Marpole [ph] business versus February. Not to mention that February, you can kind of have a bit of a weather issue there. When we look out what’s really neat, and Scott mentioned it, how we have the vast bulk -- you can’t go by these inventory numbers because, by the way, you’re looking at a spot in time. And if you look at those inventory numbers about what we used to carry, FY20, they’re comparable. We have the vast majority of our open to buy for this whole year, still available to us. So, when you’re looking at hundreds of millions of dollars here, remember we’re buying to a $50-plus billion sales plan. And so, we have so much open to buy to still chase the categories for third quarter that we think as we get closer and that we should be driving harder. Having said that, as you can tell by the way our business even coming into the second quarter, as you alluded to, we’re happy with the way we’re tracking. We have a lot of opportunity in some of those high categories to buy close in because there is such good availability. So I hope that answers your question. We don’t give specific -- I can’t give you specific categories, but I -- hopefully, that gives you the color. Scott, I think will jump in a little. Scott Goldenberg: Yes. I think one of the things we saw a little different from the first quarter and into May that was different than, frankly, many, many years, probably have to go back half a decade where we have approximately more than 75% of our stores at HomeGoods and Marmaxx where they’re in the, what we call, higher demos over 75,000 versus under 75,000. Those stores have done better than our lower demo stores. And I think, again, we’re positioned well and Ernie can jump in because of the goods that we carry for a lot of those customers in the better and best goods. And that -- again, that’s continued into the start of the quarter. So, that’s a bit of a change. But again, the majority of our stores are in those areas. So again, I think it bodes well for us. In a difficult environment, maybe we’re not immune, but a little more resilient in terms of the customers that we -- who might have a little more money in their pocket book than the lower demos. Ernie Herrman: Yes. I’ll just jump in, Matt, because this has really triggered some of the discussions as we have -- we talked about this for years, I think. One of the benefits at TJX with T.J. Maxx, Marshalls, HomeGoods, even with Sierra or online is we trade very broadly. And we’ve always consciously said, we don’t want to segment a moderate versus a better versus even a higher end. We want to sell goods to everybody. And so, I think the fact that we are across the board and particularly right now that we have higher demos, specifically in HomeGoods in Maxx and Marshalls than some of the other retailers out there, I think that probably helps at all even off, Scott was talking to where some of these has trended. And I go back to we -- always have consciously, the merchants here, we have always gone after good, better and best. I think I mentioned in my script a couple of times. So, it’s kind of where we put our -- it’s a combination of our merchandise, our locations, the store atmosphere and our treasure hunt shopping experience, certainly allows us to appeal to a broad, broad customer base. Operator: Our next question comes from Kimberly Greenberger. Kimberly Greenberger: Okay, great. Thanks so much. And love to see the margin inflection you guys are delivering here, both in the quarter and for the year. So, well done to you on that. I wanted to ask about the pricing initiatives. It’s obviously one of the drivers in this margin inflection story. Can you talk about where you have seen the most success in your pricing initiative? And are there any areas where you might be seeing some pushback on those pricing initiatives? And then, I just wanted to follow up on an earlier thread, if we could, and sort of ask the question a different way. It seems like this is an environment right for trade down. We’re starting to hear from some of the food retailers and I think others that they’re starting to see signs of trade down. I don’t know, Ernie or Scott, if you’ve got data from years and years and years ago, maybe during periods of consumer stress in the past. How many quarters has it typically taken for you to see a traffic benefit from trade down where shoppers might be trading down from higher cost retailers into the TJX banners? And are there any signs of that happening yet? Thanks. Ernie Herrman: Yes. Great, Kimberly. I’ll let Scott -- where you end it, I’ll let Scott with that, and then we’ll come back around to your first question. Scott Goldenberg: Yes. And I’ll just address the first part at a very high level and let Ernie go into the detail. I think from a big picture point of view, as I said -- I think we said in the scripted remarks is that our sales -- our turns are better at all divisions than they were pre-COVID. So, we feel at a hot macro level that we’re the merchandise is moving through with our price initiative. Our markdown rates similarly are lower than our pre-marks. So, we’re not seeing any of our big picture financial metrics. In fact, they’re all better. In terms of going back to your question on the -- what happened. If you go back to the -- again, this is a long time ago, the recession in 2008 going into 2000 -- calendar ‘9, we had two soft quarters that third -- if you remember, going back to third quarter and fourth quarter of fiscal 2009 for us. And then, the first quarter of that year, we had a slight comp transaction increase and then it accelerated from there on in. So, hard to say it’s exactly comparable. So, two quarters of softness, and then we started to rebound and get a lot -- I believe we’ve got a lot of trade down. We were renovating a lot of stores, and I’ll let Ernie address it on other things that we did. Ernie Herrman: Yes. I think we -- I think you’re spot on there, Kimberly, in terms of what dynamic takes place out there where you get -- we were getting trade down or trade over, I don’t know what you’d call it from some of the mass market guys, department stores. It was a little from every direction. This time, strangely enough, and I don’t -- again, I don’t know if you call it trade down or trade over is you get it from some e-com players, too. Because clearly, what’s been need is our store visits -- visiting stores now has become a very appealing thing to a lot of customers, as we have seen, right, from last year as COVID now -- yes, it’s out there, but customers love shopping our stores. So, you do get that treasure hunt entertainment quotient, especially in a HomeGoods or in Marmaxx, T.J. Maxx or Marshalls where you can have really an eclectic value trip there that really, I think, allows -- there’s a reason for people to kind of trade down, as you would say, obviously, driven by the value equation, which leads me to the, I guess, your first question. The pricing initiative, yes, across the board, we have had -- first of all, we have not had any pushback in any area. We’ve had a few items here or there, but we have been 95%, plus-90%, over that, successful on the pricing initiative. And so, there’s -- and really, we’re still in the beginning stages. I believe we’re well ahead of -- first of all, our model allows us to do this. We’re well ahead of probably other retailers on this front, but we also have a business model in the categories that we’re in, which are fashion-driven and brand-driven, which is allowing us to probably have the flexibility to do this more than other retailers could. So, we’re super excited about it. As you can tell, our results are really panning out. It’s not just the way we can -- we monitor the out-the-door retail that we’re selling it versus the out-the-door promotional retailer -- of the other retailers, and we are still well, well below. Of course, part of that is because many retailers on the similar items have had to raise the retail that they’re at or promote it less. So, we’re really, I think, in a multi-year margin expansion opportunity driven by that, but it sounds like that is because of the markup. It’s also because our ticket now is going up, which is helping us with our other cost efficiencies within the business in terms of processing less units. So, we don’t see that not continuing to happen for another few years anyway. So, we’re excited about it. It all seems to be connecting at once. And you can see from our outlook -- well, you can see from the last quarter in our outlook for the year, we’re feeling really good. And where we think we can take the TJX margin over the next three years, we’re feeling very confident about that as well. Operator: Our next question comes from Michael Binetti. Michael Binetti: Hey, guys. Congrats on a great quarter. And thanks for all the detail here. I guess what I’m trying to figure out is you have the comps accelerating to 4% to 5% in the back half, and you have obviously a ton of great merchandise. But help us connect the dots on how having great supply is enough evidence for you that demand will remain strong or strengthen to the trends you saw. And then, Ernie, you said you feel really good about the long-term opportunity to take share here. Similar question. What do you see today for a business model that, in a lot of ways, works very close to need -- getting inventories in very close to turning around. What do you see today to know that this isn’t just department stores or specialty retailers having over ordered at a moment in time or during holiday or for spring? And with some time left for fall or holiday, they can start to trim their orders, and we’re back to a situation where there’s not as much inventory more quickly than you thought. How do you know that we have duration here as you think about your comments on the long term? Ernie Herrman: Well, okay. So, let’s take your first question, which I think -- I’ll let Scott actually talk. It’s fairly clear as to why we’re filling those sales trends based on the way we’re trending now when you look at the stacks. Scott, do you want to talk about that? Scott Goldenberg: Yes. Just from -- again, I’ll let Ernie answer from long term, we keep it up. From a -- when you look at the first half of this year, as we -- as I called out, we’re going against a total U.S. stack of 19% and have reflected close to that between the two quarters, obviously, zero to slightly less comp, so a two-year stack of ‘19. We haven’t reflected any increase on that stack because we’re going against a -- three-year stack because we’re going against a second half that’s 5 points lower than in the back half. And again, I’ll let Ernie speak to the opportunity. Ernie Herrman: Well, if I could jump in on -- so Michael, so what that’s saying is we’re not actually -- we’re assuming that we’re just doing the same things we’re doing now, and we would trend rate of 4% to 5%, based on the current trend. Scott Goldenberg: The other thing, again, that we said and maybe could have been clear on the script and in the press release, is that when we started the year, we gave guidance before the invasion that happened in Ukraine. We did see a bit of a slowdown across the globe pretty much for about three to four weeks. And then even though with all the news of inflation and the gas price increases and everything else, we got back on to what our -- what would have been our trend that we did guide to, but which is what we’re similarly using for the rest of the year. So, it hasn’t seemed to impact the customer coming into our store, but we haven’t set an improvement to that trend, but just that same trend, as Ernie just indicated, over the rest of the year. And I’ll let Ernie speak to the inventory. And I think we always believe that we can flex into the categories for the back half of the year to take advantage of what we’re currently seeing, right? Ernie Herrman: Yes. So Michael, so we’re in a great position for open to buy for the back half. To your question though, which I think I know what you’re getting at is what would make us think that this isn’t just short term in terms of the duration, I think you’re using that word in terms of duration of this trend and how could we keep it going. So, what we’re also strategically, we look at the -- as Scott was looking at the three-year track and then we look at -- we studied the market share opportunity based on store closures and what’s going on with some of the other reports around us. But we’ve really gotten pretty good at in this environment, projecting what our trend would be like. Again, pre-COVID, we had a pretty good handle on our trend. So, we’re really going back to that trend, which went on for multiyears, pre-COVID. And then, we’re factoring in what we’re seeing today. And, of course, availability is probably greater than it was ever pre-COVID now because there’s so much stop and go. And I think it’s hard for a lot of these vendors because it’s been more volatile than it was a few years ago to predict. So, if you factor that in and say, oh, overall, I’m going to have a notch more exciting branded valued mix, if anything, we’d probably do better than where we typically trended it out. But really, we’re using past trends over multi-years, where we’re trending now on 3 stack, we analyze that. And then we look at the -- most importantly, what’s out there in terms of brands and how we’re retailing the goods. And by the way, the -- our buying here’s one thing that’s really happened during COVID. And I think I’ve talked about this is we were able to learn a lot of things and for our merchants, which are very well connected during COVID. One advantage they’ve learned is how to communicate faster, whether virtually or with the technology. And so I think there’s been some neat faster-moving approach to certain categories that I think we’ve actually improved on versus a few years ago. But that -- I think that really answers it. Operator: Our next question comes from Omar Saad. Omar Saad: A couple of little follow-ups. Did I hear you guys say somewhere in the prepared remarks that you think the expense headwinds are moderating going forward? I just wanted to kind of clarify what you meant by that, is that -- Scott, your rate come in? And do you mean from here or do you mean at some point in the future? I mean, it sounds like Europe was probably kind of the biggest kind of demand drag in -- Europe and the Ukraine war rather were the biggest demand drag in the quarter. Is the cold wet spring, was that also a factor in your business in the quarter? Scott Goldenberg: Hard to talk on weather patterns. It certainly didn’t help early in the quarter. So, probably, in the month of February, I think our trends were pretty much where they -- once we got a couple of weeks, as I said, past the war that started, they were pretty much -- they were closer to being in line with what we thought. And we also -- we did see an uptick, though, not just in the U.S., but an uptick in both, Canada and in Europe as well, both in Mainland Europe and in the U.K. So, I think it was pretty much similar across all geographies. In terms of -- the first thing I’d say is in terms of the freight costs, which are certainly the largest deleverage, we -- they -- our freight costs came in as planned for the first quarter. So, what we anticipated is what happened. Two, as we look forward, we have reflected at least what we’re seeing at this point in time as best we can determine for the rest of the year due to the freight because the primary difference at this point in time is the diesel, the oil costs going up. Certainly, there are additional costs to that, I’d say, in the $40 million to $50 million range, which have been reflected in our plan. Everything else that we see, we think we adjusted for the higher spot in the ocean freight, have higher demurrage costs and other things, of which it’s not that we see them going down. It’s just we were going against some larger compares. So, when you talk about HomeGoods, we do see both decrease in our deleverage and a decrease in our actual overall rates in the back half of the year. And some of that is -- a lot of that is attributed to a lot of what our teams have done, starting to negotiate new contracts, the mix of goods. We’ve done -- they’ve done a nice job in, call it, port utilization, moving to the ports where there’s less of an issue or where we have better, whether it’s East Coast and get a better benefit. And I think some of that is more to what Ernie talked about going forward where we do see the benefits of what we’re going to be doing to reduce costs, some of that benefit we see going into ‘23 and ‘24 as a reduction in those costs, which we think will benefit our margins. At the same time, what we’re seeing is we think we’ve been doing things to reduce the volatility in the freight costs and at the same time, improve the service levels. And also, Ernie didn’t probably talk to, but going forward, we’ve been dealing over the last two years with longer lead times that we typically have in our model. We still believe less than everyone else, but more than what we have. And we are starting to see some benefit and having reduced lead times, both domestically and international. And again, I think that will bode well for us being even more flexible and reacting going forward to the current trend. So, I think that’s the biggest. The wage and the other costs are pretty much as planned. We don’t -- we -- what we reflected in the guidance is pretty much -- we have no change at this point. So, we think we’re -- what we put in is more than sufficient to cover our future costs, at least for -- at the time being. Ernie Herrman: So, Omar, just to make sure you understand, to your point, it’s a great question on the monitoring, Scott, I think it’s fair to say in Europe, for example, we’re thinking because of what’s going on with the pricing strategy and some of the headwinds moderating that we could approach potentially an 8% profit margin in the next three years there, which I think, as all of you know, is not where we’ve been. And I think that would be a significant inroad to profitability there. So, we have sat with that management team and looked at all these different aspects from pricing to the freight discussion Scott was just talking about and where we think that’s going, understanding the post-Brexit headwinds on that. And we think we can get from the 6 and change to approach 8% really in the next three years. And then, in HomeGoods, which is obviously more directed by these freight issues in terms of the cost. I think that’s where we’re feeling we can get a chunk of that margin back, as Scott was saying in the nearer term. So, feeling good about that, Scott. Scott Goldenberg: Yes. And in the back half of the year, I think we have one more. Our peak deleverage in freight cost is going to be the second quarter of this year, and that disproportionately impacts HomeGoods. But, the back half of the year, as we talked to, just with freight and obviously, we do believe our -- we’re going against lesser sales, won’t have to deleverage on the comps. Last year also, we had an abnormally low -- given when we ran a 40 comp, we had an abnormally low markdown rate at HomeGoods as well. And when we look at the back half, we’re going to be significantly higher in our pretax margins at HomeGoods, not necessarily at double digit, but significantly higher in the back half. So, I think that’s a big change. Omar Saad: Got it. That’s really helpful color. And what it’s worth, your ability to forecast and manage your inflationary expenses, including freight is certainly distinguishing yourself in the market. Ernie Herrman: The teams have worked really hard, Omar. I’m glad you noticed that. And we’re trying to -- as you could tell quarter-by-quarter, we try to talk about that in advance and really give all of you an idea. And as you can see, we’ve been pretty consistently close to being right on the button on where we thought they were going to be. The good news is we -- the good news on this call we’re telling you, we think we know what some of these costs are going, we’re going to start leveraging and we’re going to start getting these costs down as well as at the same time continuing to expand on our pricing strategy. So, both are positive. Scott Goldenberg: Yes. So, again, it goes back to what Ernie was saying about the pricing strategy and the mark-on, we see continued strong mark-on both equal and better than planned for the back half of the year. And that, along with the pricing strategy… Ernie Herrman: The average. Scott Goldenberg: The average is what’s allowing us to raise our guidance. It’s obviously not due to the sales because we’re actually losing several pennies due to that, but we’re more than offsetting it by those two components, that along with some expense management. So, those are why we’re raising the full year. Operator: Our next question comes from Ike Boruchow. Ike Boruchow: So, I guess, my question is kind of, Scott, to what you were just saying, the U.S. comps coming down, the margin is going up, clearly, more of an issue of HomeGoods. I guess, my question is bigger picture. Internally, how do you guys identify that the pricing initiatives that you’re taking are not somewhat responsible for the negative comp reaction that you’re seeing in the U.S. and specifically at HomeGoods. I’m just trying to understand how you kind of balance the pricing you’re taking against potentially some of the lost revenue you might get. Just trying to understand how you guys think about that internally. Ernie Herrman: I can go -- I’ll jump in, obviously. Scott Goldenberg: Yes. I mean, again, we do not see any differential between the products that have had price increases or changes in prices versus the prices that didn’t have it. So, I mean, that’s -- and we haven’t seen any change in our markdown rates, our turns and all that. So, all... Ernie Herrman: We can see it by SKU. We can see the actual SKU that where the price was adjusted versus a non-price adjusted SKU, and we’ll see no difference in turn, the rate the goods are selling at. In addition to our turns, we had it in the script somewhere, our turns are as good, if not better than they were pre-COVID when none of this was going on. So, that’s really a great -- ultimately, that’s a true measure of it. Then, we have the qualitative studies that we’re doing. And when we do take these raising of retails, it’s not in a vacuum or most often looking at what the other retailer has done in terms of them raising it. So, remember, you might think, oh, we just raised the -- well, no, we raised the retail because that item or category has been raised around us. So, we’re following. We’re not leading. It’s where we obviously might have been too low to begin with or whatever based on other people have already gone up or promoted less. It’s a great -- by the way, great question. As you can imagine, we’ve been watching this all along. And then, if you look at HomeGoods, I mean they were just up against -- it’s as simple as they were up against the 40 comps. And when they drop a 7, they were still on a 33 stack. They still have a 33 stack of growth. Scott Goldenberg: Yes. And the thing is that they were remarkably similar last year at the home in Marmaxx and the home increase in HomeGoods, and they’re remarkably similar this year, our home within Marmaxx. So, it’s a similar result happening in both places, so. Ike Boruchow: I guess -- sorry, just one quick follow-up. I guess, what I’m just trying to understand is if it’s not -- if the U.S. comp lowered outlook is not due to the pricing initiatives, then what are you attributing the weakness relative to kind of 3 months ago when you initially gave that guide? I guess that’s really my question. Ernie Herrman: So, really -- well, first of all, part of that is we didn’t -- remember, we did that before the war happened before fuel spiked even more. And so, that was all after the initial. And when we -- and we talked about this, we would have taken our best guess off a year where we had a huge growth. So, we’re kind of off like point or two, but given -- we never knew. We’ve taken our best guess early as to where we would be. And then, you had other dynamics happen around us that impacted it. The good news is -- by the way, and which is why the other question earlier about we’re still looking at a 4% to 5% in the back half, which is a healthy sales increase at plan, which is a healthy sales increase, driven by it’s a more normalized -- we’re up against what in the back half, Scott? Scott Goldenberg: Yes. We’re going down from a U.S. comp of 19% in the first half to 14% -- it is at the high end of 14%, it’s closer to the similar high end where we were running pre-COVID for 2 out of 3. So, it feels... Ernie Herrman: What happens, Ike, as part of this is if we didn’t have that plan out there, and we just went out with the lower plan to begin with and got even more -- we try to take our best guess at the conservative plan. In this case, we’re coming in higher on the profit and the sales. So, it’s kind of -- it’s really good news overall. Scott Goldenberg: It’s kind of like what we said last year for multiple, multiple quarters when asked, how are you going to do against the comps. We didn’t have a crystal ball on exactly how we’re going to do against the 40 comp, both whether it’s in the home and Marmaxx. So, I mean it’s hard to get upset at a 33 three-year stack. And so, we feel we’ve managed through it. And again... Ernie Herrman: By the way, others took a more pessimistic view on -- right and forecast lower comps. And so, yes, we might be missing by a shade, but we’re still actually higher than some of the other comps. Scott Goldenberg: We didn’t get a true run rate or at least a run rate that’s now about two months in the making from a post-war period. And all we’re doing, it’s not a crystal ball here. We’re just holding at the high end that that three-year stack. Operator: And our final question of the day comes from Adrienne Yih. Adrienne Yih: Good morning. Very nicely done in such a tough environment. Ernie, my question for you is… Ernie Herrman: Thanks. Adrienne Yih: You’re welcome. You deserve it. At Marmaxx, do you perceive that with positive traffic that the comp was tapped by a lack of inventory? And then, can you help us within HomeGoods, what categories within that are up trending and down trending? And how quickly can you shift the mix, a, within HomeGoods, but b, and more importantly, within Marmaxx, out of home and into more apparel? Thank you. Ernie Herrman: Yes. Great question. So first of all, no, it isn’t lack of inventory in Marmaxx, actually. That was -- I think what’s happened there is it’s being driven -- that’s being driven more by a bit of, I would say, traffic wasn’t the normal up. That traffic would have been higher, I think if we didn’t have the -- maybe the fuel environment case and costs going up around us. So that there was really just about -- we were thrilled with the 3% comp at Marmaxx against a -- I think it was 12% last year. So, Marmaxx is trending very strong, like the way they started, in the second quarter. To your question, I’ll go to your last question, they’re already flexing their home business. They’ve already flexed it actually. So, to your point -- they’ve already been doing it. So, they flexed the businesses back and forth almost weekly, Adrienne. But in terms of affecting the buying to those flexes, yes, that takes about a month, I would say, between the buying and the planning and shifting the inventories. Why can we do it faster? We turn that business so fast that they’re able to physically flex the store faster in our shipping out of our DCs is well controlled and reactive. And we have a terrific planning and -- so we have an entire team where their job is to massage the shipping by category, by department into the stores. When Scott gives you that inventory level, the bulk of that increased inventory is actually in our DCs, it’s gone in the stores. So, our planning and allocation teams are able to strategically decide how much of that do I ship, when. And so you can imagine if home slows up a little relative to expectations, we just ship less and we ship more in apparel. And Marmaxx has been doing a great job actually on that. And in HomeGoods, the categories, I think your other question was we don’t give which categories are high categories. The only thing I can tell you is to add some color to it. This will probably tell you something is our HomeSense business, which has a lot of bigger ticket items, has been super healthy. So, we’re very happy with that business. We continue to look for opening more of those down the road. Again, when you walk into a Home Sense, half the store has furniture and lighting and rugs and categories that I think traditionally have been -- a lot have been bought online. We -- what’s great about our home business is a customer gets to buy it and take it that day, which has been, I think -- and it’s reason we will continue in HomeSense and in HomeGoods continue to gain market share, we have such an advantage over the online home players. And so, those categories have been very good, and I think they’ll continue to be very good. That’s at a high level I’d like to mention there. Adrienne Yih: That’s super, super helpful. It’s nice to see the environment moving towards your model, so -- and you guys are expecting so well. So, good luck. Ernie Herrman: Thank you , Adrienne. And that was our last call. So, thank you for -- thank you all for joining us today. We’ve enjoyed the discussion. We’ll be updating you again on our second quarter earnings call in August. So, take care, everybody. Thank you. Operator: Ladies and gentlemen, that concludes your conference call for today. You all may disconnect. Thank you for participating.

Operator: Ladies and gentlemen, thank you for standing by. Welcome to The TJX Companies Fourth Quarter Fiscal 2022 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions]. As a reminder, this conference call is being recorded, February 23, 2022. I would like to turn the conference call over to Mr. Ernie Herrman, Chief Executive Officer and President of The TJX Companies, Inc. Please go ahead, sir. Ernie Herrman: Thanks, Missy. Before we begin, Deb has some opening comments. Debra McConnell: Thank you, Ernie, and good morning. The forward-looking statements we make today about the company's results and plans are subject to risks and uncertainties that could cause the actual results and the implementation of the company's plans to vary materially. These risks are discussed in the company's SEC filings, including, without limitation, the Form 10-K filed March 31, 2021. Further, these comments and the Q&A that follows are copyrighted today by The TJX Companies, Inc. Any recording, retransmission, reproduction or other use of the same for profit or otherwise without prior consent of TJX is prohibited and a violation of United States copyright and other laws. Additionally, while we have approved the publishing of a transcript of this call by a third party, we take no responsibility for inaccuracies that may appear in that transcript. Thank you. And now I'll turn it back over to Ernie. Ernie Herrman: Good morning. Joining me and Deb on the call is Scott Goldenberg. I'd like to start the call today by expressing my gratitude to all of our global associates for their continued hard work and dedication to TJX. For the past 2 years, our associates have gone above and beyond to operate our business through unprecedented times while also adapting to the constantly changing retail environment. I want to give special recognition to those associates who have been physically coming into work in our stores and distribution centers. In recognition of their efforts, we awarded a vast majority of them a discretionary appreciation bonus again this quarter. Now to an overview of our fourth quarter and full year results. I want to emphasize that the areas we directly control, like buying, store and distribution operations, our pricing strategy and our initiatives to drive traffic and sales, our execution was excellent due to the monumental efforts of our associates across the company. Moving to the details. I am extremely pleased with our top line performance in the fourth quarter. U.S. open-only comp store sales increased a very strong 13% when compared to fiscal 2020 or calendar year 2019. U.S. comp sales were trending higher than this before the surge in Omicron cases. This quarter represents the fourth consecutive quarter that U.S. open-only comp sales increased low teens or better. Comps at our U.S. home banners and in our home categories were excellent, and our Marmaxx apparel comp was up high single digits. Clearly, consumers continue to seek out our retail banners for exciting gifts and amazing values this holiday season. For the full year, U.S. open-only comp store sales increased an outstanding 17%. Overall, TJX sales of $48.5 billion were almost $7 billion more than in fiscal 2020. We are convinced that we captured significant market share, particularly in the U.S. where our stores were open the entire year, and we leveraged the strength and flexibility of our off-price business model. I want to highlight the excellent execution and collaboration of our buying, planning, distribution, logistics and store operations teams. They work together strategically to strategically buy goods earlier than we typically do to ensure the consistent flow of exciting merchandise to our stores and online to support our outstanding sales throughout the year. As a result, we offer consumers a great selection of branded quality merchandise at excellent values all year long. Going forward, we are laser-focused on our sales and profitability initiatives and remain committed to corporate responsibility. Again, we feel great about the areas of our business that we directly control and we'll continue to look for ways to mitigate the expense pressures currently impacting our business. Further, in an inflationary environment, we believe more consumers will be seeking out our values. Importantly, I am as confident as ever in the medium- and long-term outlook for TJX. We are the off-price leader in every country we operate in and believe we are in an excellent position to capture additional market share in these regions for many years to come. Before I continue, I'll turn the call over to Scott to go over and cover our fourth quarter and full year results in more detail. Scott Goldenberg: Thanks, Ernie, and good morning, everyone. I'd like to echo Ernie's comments and express our sincere gratitude to all of our global associates for their continued hard work. I'll start today with some additional details on our fourth quarter results. As Ernie mentioned, U.S. open-only comp store sales grew 13% over a strong 6% increase in the fourth quarter of fiscal '20. Overall, open-only comp store sales increased 10%, also over a 6% increase in the fourth quarter of fiscal '20. Open-only comp store sales growth was strongest in November and December. As COVID cases began to surge worldwide, we saw sales trends soften with the largest impact in January. The impact was greatest in our apparel businesses, which is consistent with what we have seen during previous COVID spikes. Additionally, sales were impacted by government-mandated shopping restrictions that were put in place internationally. Overall, TJX sales increased by more than $1.6 billion to $13.9 billion, a 14% increase versus the fourth quarter of fiscal '20. In the fourth quarter, we once again saw a very strong increase in our average basket across all our divisions, driven by customers putting more items into their cards. Overall, average ticket was up and improved for the fifth consecutive quarter. I also want to highlight that our U.S. customer traffic was up slightly. Fourth quarter pretax margin was 9%, down 190 basis points versus fiscal '20. Similar to the third quarter, we saw extremely strong mark-on and significantly lower markdowns which include the benefit from our retail pricing strategy. However, merchandise margin in the fourth quarter was down primarily due to the 280 basis points of incremental freight, which was slightly higher than anticipated. We had an 80 basis point negative impact from full year -- from a full year true-up of shrink expense, which was significantly higher than we expected. Pretax margin includes strong buying and occupancy leverage on our excellent sales, which was more than offset by approximately 160 basis points from the combination of incremental investments to expand distribution capacity and higher wage costs. In addition, net COVID costs negatively impacted pretax margin by an additional 50 basis points similar to the third quarter. Finishing up on the fourth quarter, earnings per share were $0.78. Now to our full year consolidated fiscal '22 results. U.S. open-only comp store sales grew 17% and overall open-only comp store sales increased 15% versus fiscal '20. Overall, TJX sales grew 16% compared to fiscal '20. Full year fiscal '22 pretax margins was 9.1%. Excluding a 50 basis point negative impact from a debt extinguishment charge, adjusted pretax margin was 9.6%. Full year pretax margin benefited from buying and occupancy leverage due to our outsized open-only comp store sales. We were very pleased that our full year merchandise margin was up despite 200 basis points of incremental freight. Our merchandise margin increase was driven by strong -- by strong mark-on and lower markdowns, which include the benefit from our retail pricing strategy. Full year pretax margin was negatively impacted by approximately 140 basis points from the combination of incremental investments to expand distribution capacity and higher wages and 80 basis points of net COVID costs. Full year GAAP earnings per share were $2.70, adjusted earnings per share were $2.85 which excludes a $0.15 debt extinguishment charge. Moving to inventory. Our balance sheet inventory was up 22% on a constant currency basis versus the fourth quarter of fiscal '20, primarily driven by higher in-transit inventory. We are very pleased with our per store inventory levels as they once again improved sequentially and were up versus fiscal '20. Availability of inventory is excellent and we are well positioned to flow fresh spring merchandise to our stores and online. I'll finish with our liquidity and shareholder distributions. For the full year, we generated $3.1 billion in operating cash flow, driven by record net income. We ended this year with $6.2 billion in cash. In fiscal '22, we returned $3.4 billion to shareholders through our buyback and dividend programs, which is the most we've returned to shareholders on an annual basis in our history. Now I will turn it back to Ernie. Ernie Herrman : Thanks, Scott. I'll pick it up with our fourth quarter and full year divisional performance. At Marmaxx, fourth quarter open-only comp store sales increased a very strong 10%. For November and December combined, Marmaxx comp sales increased low teens. For the full year, Marmaxx delivered an outstanding 13 open-only comp store sales increase and segment profit dollars increased more than $340 million or 10% versus fiscal '20. For the year, Marmaxx's home business posted a comp increase in line with HomeGoods and apparel comps were up high single digits. Average basket was up significantly throughout the year and customer traffic was up as well. We are very pleased with the performance of our largest division, which delivered double-digit comp sales increases every quarter of the year and offer shoppers an excellent assortment of apparel and home merchandise throughout the year. At HomeGoods, open-only comp store sales increased a remarkable 22% in the fourth quarter and were up high teens or better every month of the quarter. For the full year, HomeGoods delivered a phenomenal 32% open-only comp store sales increase and segment profit dollars increased more than $225 million or 33% versus fiscal '20. During the year, we saw consistent strength across all major categories and geographic regions for both HomeGoods and HomeSense. Further, both customer traffic and average basket increases were outstanding throughout the year. We are convinced that we captured additional share of the home market in 2021 as our eclectic mix of merchandise and great values continue to resonate with consumers. In Canada, open-only comp store sales increased 1% in the fourth quarter and were up 8% for the full year. At TJX International, open-only comp sales were down 2% in the fourth quarter but up 6% for the year -- for the full year. Fourth quarter and full year sales and open-only comp sales at both divisions were negatively impacted by significant government-mandated shopping restrictions throughout the year. For the full year, similar to the U.S., TJX Canada and TJX International's home businesses outperformed apparel and both divisions saw strong increases in their average basket. We remain confident that our International divisions are well positioned to capture additional market share over the long term. As to our e-commerce businesses, we are very pleased with our overall sales growth in 2021. During the year, we added new categories and brands to each of our online banners and launched shopping on homegoods.com. While e-commerce only represents a very small percentage of our overall sales, we are very pleased to offer the U.S. and UK shoppers 24/7 access to our great brands and values. Now to some additional highlights from 2021. First, we took steps to improve our profitability and offset some of the persistent cost pressures we've been facing. Our primary initiative to raise retails on our merchandise is working very well. We are in the early stages of this initiative and believe there will be a multiyear opportunity for our business. Importantly, our customers tell us that our value proposition in the marketplace remains very strong and shoppers continue to see amazing values every time they visit. Second, we opened thousands of new vendors in 2021 and continue to source from a universe of approximately 21,000 vendors around the globe. Our global buying presence continues to be a tremendous advantage. Further, we have strengthened our relationships with many of our existing vendors. With many retailers continuing to close stores and ongoing congestion in the supply chain, we offer vendors an attractive solution to clear excess product. Importantly, and I can't emphasize this enough, availability of quality branded merchandise is excellent across good, better and best brands. Next, we are confident that our marketing continues to help drive new and existing customers into our stores and online. The team has done an excellent job allocating our advertising dollars to the right mix of media channels and a constantly changing digital environment. Further, our customer satisfaction is strong, and we continue to attract new shoppers of all ages, including a large number of Gen Z and millennial shoppers which we believe bodes very well for the future. In 2022, we are launching many new marketing campaigns across the globe that will continue to focus on our exceptional value and an inspirational shopping experience. Lastly, we made important investments to support the growth of the company. In 2021, we opened 117 new -- net new stores, relocated an additional 50 stores and remodeled over 300 stores. We also made necessary investments to expand our distribution capacity and productivity to support our rapidly growing top line and future growth. Our 2021 performance gives us great confidence in the outlook for our business, especially when we get back to a normalized environment. Once stores were open with no restrictions, each division saw very strong sales, attracted new shoppers and captured more spend per customer. Further, we see a path to improve profitability once the retail environment stabilizes and some of the expense headwinds begin to moderate. All of this tells us that we have an excellent opportunity to significantly grow our top and bottom lines over the medium and long term. I want to reiterate that we remain highly focused on improving our pretax margin profile. We continue to believe that our initiatives to drive sales are the best way to offset the current level of cost pressures we're facing. Further, we're very optimistic about our strategy to adjust retails while maintaining our value proposition to consumers. To be clear, our goal is to approach a double-digit pretax margin in the medium term and to return to our fiscal 2020 pretax margin level in the long term. Turning to corporate responsibility and ESG. I'll start by saying that the health and well-being of our associates and our customers remains a top priority as it has throughout the pandemic. I am so proud that while navigating the ongoing pandemic, our team hasn't skipped a beat in our other areas of corporate responsibility. Let me highlight a few initiatives from Q4. One of the many ways we support the thousands of communities where we operate is through contributions to organizations focused on emergency relief efforts. This past quarter, we supported an organizations providing relief for people impacted by the Colorado and British Columbia wildfires and the Kentucky tornado. These contributions are in addition to our annual donations to Save The Children and Red Cross disaster relief. In terms of inclusion and diversity, we launched our new mentoring program pilot and our new I&D advisory boards have begun meeting regularly. We also continued further our direct support to black communities. This includes making donations to organizations committed to providing professional development for diverse leaders. Finally, as we continue to pursue initiatives that are both environmentally responsible and smart for our business, we are excited to share that we are making progress with plans to pursue additional even more aggressive environmental goals in several of our priority areas. I plan to discuss these in more detail on our next call. As always, we have more information on corporate responsibility at tjx.com. In closing, I want to again thank each of our associates around the globe who helped us achieve our very strong results. I truly believe the depth of our off-price expertise and knowledge of our teams is unmatched. Going forward, we are excited about the sales and profitability opportunities we see for the business. We are confident in our plans for fiscal '23 and that our value proposition and the flexibility of our business will continue to be tremendous advantages. Our balance sheet is very strong, and we are in a great position to invest in the growth of our business and to take advantage of the excellent inventory in the marketplace and return significant cash to our shareholders. We feel great about our market share opportunities and our goal of becoming an increasingly profitable $60 billion plus revenue company. Now I'll turn the call back to Scott for a few additional comments, and then we'll open it up for questions. Scott? Scott Goldenberg: Thanks, Ernie. Moving to guidance. First, in fiscal '23, we plan to report comp store sales growth versus fiscal '22 for our U.S. divisions only. As a reminder, we had temporary store closures and numerous shopping restrictions internationally during fiscal '22. Therefore, we do not have a reasonable baseline to report year-over-year comp store sales for our TJX Canada and TJX International divisions in fiscal '23. As for the first quarter, we are planning U.S. comp store sales to be up 1% to 3% over an outsized 17% U.S. open-only comp store sales increase last year. For the start of the first quarter, we are very pleased that our U.S. comp sales growth is strong as we are seeing excellent consumer demand for both our apparel and home categories. It's important to note that our guidance takes into account the acceleration of comp sales we saw during the first quarter last year. To start the first quarter, we are currently cycling U.S. open-only comp store sales increases of low to mid-single digits versus the 20% plus increase we'll soon be anniversarying for the March and April period combined. Next, we are planning total first quarter TJX sales in the range of $11.5 billion to $11.7 billion. In the first quarter, we're planning pretax margin in the range of 8.1% to 8.4%. We feel great about our merchandising margin opportunity and retail pricing strategy. However, we continue to expect elevated expense headwinds versus fiscal '22. We currently expect that level of incremental freight expense in fiscal '23 will be the highest in the first quarter at approximately 220 basis points. We're also expecting incremental wage costs to significantly impact our Q1 pretax margin. For modeling purposes in the first quarter, we're currently anticipating a tax rate of 25.4%, net interest expense of about $19 million and a weighted average share count of approximately 1.2 billion. As a result of these assumptions, we're planning first quarter EPS of $0.58 to $0.61 per share. As to the full year, we are planning a 3 to 4 U.S. comp sales increase over a 17% U.S. open-only comp increase last year. For the full year, we are planning total TJX sales in the range of $52.6 billion to $53.1 billion. In regards to full year pretax margin, we're currently planning it to be close to fiscal '22's adjusted 9.6% margin. I want to highlight that this estimate implies that pretax margin in the last 9 months of the year will be close to double digits. We feel great about our merchandise margin opportunity and retail pricing initiative. However, similar to other retailers, we continue to see cost increases from freight and wage. We now expect these costs to be higher than we had anticipated when we spoke to you last quarter. Currently, we are planning incremental freight expense of approximately 150 basis points and the incremental wage cost of about 100 basis points. That said, our retail strategy is working very well and now expect a bigger benefit this year than we had anticipated. Currently, we expect it to offset a majority of these incremental freight and wage costs in fiscal '23. Importantly, I want to reiterate what Ernie said a few minutes ago, that our goal is to approach a double-digit pretax margin in the medium term. Further, on an annual basis, we believe we can deliver flat to increase margins on a 3% to 4% comp once expenses moderate significantly from these elevated levels. Lastly, for modeling purposes for the full year, we're currently anticipating a tax rate of 25.8%, net interest expense of about $50 million and a weighted average share count of approximately 1.2 million -- billion. We are not providing EPS guidance for the full year at this time given the uncertainty around the expense sales, but hope the mix we are sharing will be helpful for modeling purposes. Moving on to our fiscal '23 capital plans. We expect capital expenditures to be in the range of $1.7 billion to $1.9 billion. These include opening new stores, remodels, relocations and investments in our distribution, network and infrastructure. For new stores, we plan to add about 170 new stores which would bring our year-end total to 4,850 stores. This would represent a store growth of about 3%. In the U.S., our plans call for -- to add about 55 stores at Marmaxx, 60 stores at HomeGoods, including 10 HomeSense stores and 20 Sierra stores. In Canada, we plan to add about 10 new stores. And at TJX International, we plan to open approximately 15 stores in Europe and approximately 10 stores in Australia. We continue to feel great about our opportunity to grow our global store base. Long term, we believe we can grow our store base to 6,275 stores, which is nearly 1,600 more stores than today with our current retail banners in our current geographies. Lastly, we plan to remodel 400-plus stores and relocate 50-plus stores in fiscal '23. As to our fiscal '23 cash distribution plans, we remain committed to returning cash to shareholders. As outlined in today's press release, we expect our Board of Directors will increase our current quarterly dividend by 13% to $0.295 per share. Additionally, in fiscal '23, we currently expect to buy that $2.25 billion to $2.5 billion of TJX stock. In closing, over the last 2 years, we have successfully navigated our business through an unprecedented retail landscape and an increasingly inflationary environment. We believe the actions we've taken and the initiatives we put in place set us up extremely well to drive both top and bottom line growth for many years to come. I want to emphasize that we are confident about the opportunities for our business going forward. We have a strong balance sheet and continue to generate a tremendous amount of cash flow. We are in a great position to continue to investing and to support the growth of our business while simultaneously returning significant cash to our shareholders. Now, we're going to -- we are happy to take your questions. As we do every quarter, we're going to ask that you please limit your questions to 1 per person and 1 part in each question to keep the call on schedule, so we can answer as many questions from as many analysts as we can. Thanks, and now we will open it up for questions. Operator: [Operator Instructions]. Our first question comes from Lorraine Hutchinson. Lorraine Hutchinson: I wanted to follow up on your comments about the pricing strategy. Does your plan assume acceleration of the initial efforts that you made in the back half? And how quickly do you think these pricing actions can offset the freight and wage pressures? Ernie Herrman: Great question, Lorraine. Yes, first of all, what's happened around us, as you can see, even in some of the media that outwardly reported many of the retailers adjusting their prices across the board. I won't name them, but you probably read about certain retailers taking blanket approaches to raising their retails. So ironically, like anything in this business, I'm looking at this inflationary price increase as a major opportunity for us at TJX to get even more aggressive about adjusting our retails than we've been. So when we started off, as you know, we were taking a very -- the word I was using was surgically and then selectively adjusting retails, but we've had such strong success. And in fact, if you look at the fourth quarter merchandise margin, we had really healthy margins all the way through the back half of the year, really driven by a large part by the pricing strategy. So now, Lorraine, to your question, we are feeling like there's just major -- more significant room for improvement as we go over the next year or 2. And it's a multiyear strategy, by the way, as we said in the script. We're always monitoring the value about how we stack up against everybody else. But the one thing that's happening is everyone is getting here with the same cost pressures. So our merchants are diligent. They're diligent about looking at the -- where we -- where our out-the-door retail is relative to the promotional retail and other retailers. And we have just a high degree of confidence in the ability to do a significant amount this coming year to offset a really the lion's share, I think, of these cost pressures. So feeling great about that. Don't like, again, the freight and wage pressures that we're dealing with. They're pretty significant, as Scott talked about. Having said that, this pricing strategy is one of the biggest things in TJX that I think we can do to mitigate it, and we're very confident in it. Operator: Our next question comes from Matthew Boss. Matthew Boss: So Ernie, can you speak to market share trends and product availability that you're seeing in the U.S. across with apparel and home? Do you think you exit this pandemic as a stronger model? And then maybe just, Scott, near term, on the positive 1 to 3 comp guide for the quarter -- for the first quarter, is it fair to say you've seen February reaccelerate back to November's mid-teens comp or just anything that provides you confidence as we head into the 20% plus March, April on near term, I think, would be helpful. Ernie Herrman: Sure, Matt. Yes. So, oh my gosh, the availability, I would say we're seeing over the last few weeks, specifically a ramp-up in availability. Again, as I mentioned on the script, across good, better and best. And internationally, by the way, we're seeing -- even though it's been -- as you know, we've been fairly restrained over in Europe, for example. We are specifically seeing more better goods there than we have seen in a long time that the merchants are taking advantage of there. So as we open up, we're highly confident, and we have been gaining market share, but we're highly confident once we can open up that normal environment levels that we will see significant branded availability and market share gain there. The market share gain that we clearly have been achieving here has been consistent. So if you look at these open-only comps in the U.S., I mean, there's a extremely healthy comps, as you know. We're just getting here with these -- with wage and freight beyond what we had thought about before. But in terms of availability, product, the pricing strategy, I think we have all of these levers working for us. And then I'll give you -- the biggest thing I didn't get to touch on the script, and this is where the Q&A is good. And you and I have talked about this in the past, is our branded differentiation now. So I think you alluded in the question, we are going to be more important to vendors, and I think that's what you were getting at with part of your question there. We're going to be more important to the branded vendor community than ever before because of what's happened with a lot of the store closures and the complexion of the online guys that tend to be either vertical label-driven or their businesses have not been that great at the department store level. If you really look at the amount of business they're doing. Of course, they're getting better relative to their low volume levels of a couple of years ago, but they're still not doing the volume. And so what's happening is we're becoming, I think, even more important and as well as our buyers are just great at the way they really partner and deal with these vendors. We're becoming more important as we come out of this. So another reason with the branded differentiation for us, being an eclectic branded mix, to continue our treasure hunt format, we feel really good about in this inflationary environment is us becoming more and more a place of choice to shop. And then you have all the -- by the way, you have all the political situations going on out there in inflation and in fuel. Anytime there's uneasiness, I would say, it's just a great opportunity for our model to accelerate a little bit more. So it will be interesting to see what happens over the next coming weeks. But generally, though strangely enough, those environments are good for us. Scott? Scott Goldenberg : Yes. So Matt, to answer your question, we can't give you specific, but I think the most important thing is that -- is what I said in the script, that we're currently comping against low to mid-single-digit U.S. comps where then, again, it accelerates to that strong plus 20 in the [MARPOL] period. But what -- we've given guidance of 1% to 3%. And what we're seeing on the -- our 2-year stack for our start is why we're -- overall, we're confident in our 1% to 3% overall guidance. Having said that, we're -- we certainly have -- as we've -- Omicron starts to lessen, we've seen apparel has reemerged to being strong again versus the impact that it had in January. We've had a strong basket and positive U.S. customer traffic thus far. So all leading us to when we put it together to that 1% to 3% U.S. comp over and outsized 17% comp. Obviously, the international divisions are not -- they were closed for large chunks of last year. So that's why our guidance of the $11.5 billion to $11.7 billion is -- in rough terms, is 14% to 16% increase because as our -- and the other thing is we are starting to see some of the restrictions in Europe be lessened and hopefully, that will give us some room for improvement there as well. Operator: Our next question comes from Kimberly Greenberger. Kimberly Greenberger : Okay. Great. Ernie, in your prepared remarks, you talked about some sort of -- some of the expenses you're currently encountering or what you characterized as temporary headwinds. And once these pass that you feel confident in improving your pretax margins. I'm wondering if you can reflect just on the headwinds in the P&L and help us understand which expense items that you're seeing coming through do you think are temporary and transitory such that perhaps in future quarters or future years, you could get those back? And when -- what do you think is more of a permanent headwind to the expense structure? Ernie Herrman : Sure. Yes, yes, yes. I'll let Scott jump in, but let me answer right away with the -- the one that we are hoping is transient is the freight. And I would say the one that is not would be wage. So wage, I believe, and I believe this would be the case for most businesses within the country is -- will be built into the base, and I think it's hard to reverse that. Freight, and I think Scott had it in his prepared remarks, we are hoping that, that should start to moderate. And that's what I had referred to -- was referring to in my opening remarks. I have to tell you. So we -- you can kind of get at what those 2 mean because they're the biggest chunks, by the way, of what we were talking about in expense pressures. There's others, but those are really the 2 headlines. As witnessed by what happened with our margin in the last fourth quarter and Scott talked about, we were able to offset, oh my gosh, so much with our pricing strategy and our sales and markdowns and our turn rates that I believe when we go to a normalized environment when the virus, we don't have anything, if that just becomes totally normal, and we have our international divisions opened. And we continue to buy and ship the right values at the different retails that we're talking about in significant categories of goods, I think we're going to offset the lion's share of those expense headwinds in the fairly short term here, which is as in this coming year, which is why I think we get to approach double digits on our operating margin. So -- and then I think it's a multi -- I think we have more retail because everyone's going to be getting -- so wage and freight hits most retailers and wage hits everybody and it's sitting in the whole country. So I just think we have an advantage in our model to continue to raise retails for multiple years because everybody else will have to. So I hope that gives color. Scott? Scott Goldenberg : Yes. It's -- there's a lot of moving pieces here. I think we have better visibility. I'll start with the freight into that. I do think, as you've heard on other retailers report, that this will persist for much of the year, but we do believe that the first half is -- has the higher year-over-year increases or incremental costs and it will moderate as we move to the back and particularly in the fourth quarter where everything peaked due to some of the actions we did. I think our teams did a great job of securing the freight, bringing it in. We did have to pay more cost to do that. There were other things like demerge and other costs that due to the longer times that it took to get the goods into our -- at the port and into our buildings. But I think a lot of that we would believe will be lessened as we go against it next year. And the ocean freight and all that was really just more -- it increased every quarter over the year, peaking. We're renegotiating contracts and other things as we move through -- as we start right now move through the year. So I think the freight will still be, as we called out in my earlier remarks, a big headwind, but moderating significantly when you get to the following fiscal year, which I think what was Ernie was alluding to. The wage will, I think, peak this year, but will still be a headwind, as Ernie alluded to, but it will moderate next year. And supply chain, frankly, this year has already moderated, we peaked on that. A lot of the wage increases that we're seeing are the annualization of a lot of the distribution wages that we had several increases that will be impacting us more in the first half of the year, a little less in the second and then the store wages. I think it's still a fluid situation, but we do believe it will decrease. So overall, we would expect when you get past this year, that the sum of all of the expense pressures will be significantly less, not back to our pre-COVID levels but with a level -- we would need a significantly less average retail increase to be able to cover that compared to what we're seeing this year. But I think, as Ernie said, that's still very much a moving target, and we haven't bought the goods for the vast majority of the year at this point. Operator: Our next question comes from Paul Lejuez. Paul Lejuez : Curious on the 3% to 4% U.S. comp expectation for the year. How much of that is pricing versus unit volume? And any breakdown that you can provide between Marmaxx versus HomeGoods on that 3% to 4%? And I guess, related to that, I'm kind of curious where the increased confidence comes from in terms of being more aggressive on taking price. Is that all on the home side of the business? Or you're going to be moving apparel in lockstep with home prices moving both higher. Ernie Herrman : Good questions, Paul. So let me start with the increase -- let me start with the pricing strategy first. No, it's actually not -- even though we would all -- at a high level, you would expect since in the home product area, some of it's more unique or a little bit more blind per se that you'd have more there, we are getting the price increases across the board. Marmaxx, very significant. Yes, HomeGoods significant. But every division, and as you can imagine, we monitor what's going on with each division consistently, pretty much weekly actually, and every division is participating in it. Proportionately, as you can imagine, the dollars are big because we've been open in the States. So your dollars are bigger in Marmaxx and HomeGoods, but I would say every division, we can see directionally, the pricing strategy is working. Again, we also get feedback on what's happening. So we monitor how are we doing with the goods that we've adjusted price on, and that's across every division. And it's extremely successful, no problems at all. And again, I give my -- the merchants a lot of credit because they are the ones that do all the work of really making sure when we do it, we're doing it strategically. We're looking at with the out-the-door retail is at the item whether it's HomeGoods or Marmaxx, Canada and UK as we're opening up, we're going to be more and more doing that. Sierra, who is -- by the way, our Sierra business has those same opportunities and they tend to trade from a moderate to very high end. So they can find pockets of it. As far as the unit breakdown, I'll let Scott jump in here a little as well. But on the 3% to 4% comp, it's going to -- everyone participates a little on that. We could have some -- we could have some average retail driving that really in the Marmaxx, for example, and we could actually be down slightly in units but drive our comp with ticket based on what's going on in the environment and the mix of goods within the store that we're going into. Scott, I don't know if you want... Scott Goldenberg : Yes, I don't have much more to say on that. I think and as Ernie said, is that by having -- this is really opposite of what we've seen for many, many years where our average retails were going down over a multiyear period. And I may have Ernie jump back in that even though with our average retail going up, we're still in an overall unit base -- average retail significantly below what we were, right, Ernie? A couple of years ago. Ernie Herrman : Yes. Scott Goldenberg : So -- but I think -- so I think the piece of -- with your average retail is going up, and as Ernie alluded to, potentially less units, that's what's driving us to be offsetting a lot of these costs, not just the mark-on, but by having less units... Ernie Herrman : Less processing cost. Scott Goldenberg : Less processing costs in stores and distribution centers and all that, I think that's a significant benefit versus prior years when it was going the other direction. The other thing that, again, Ernie alluded to on the value equation, which is obviously important to us, we do a lot of marketing and other surveys and our customers are telling us they're highly satisfied with the overall store experience, which is great, continues to go up. But they're also -- we're not seeing any degradation at all in our value perception at all. So I think we obviously stay on it important, all the metrics, but also we try to get as much indicators from talking to our customers as much as possible. Ernie Herrman : Paul, one other thing I'd point out on the 3% to -- as we say every year, and this is we believe we want to plan prudently, right? But you can imagine that the merchants in our business here, their goal is always to exceed their plans. So you can be sure that the management teams here would like to exceed those plans. But when you look at the stack that we're up against last year, as we talked about, we feel this is what we should plan. We don't really come up until the big -- the enormous comps we start coming up against are in pretty much mid-March, mid-March through April. So we're watching to see what happens there. So we are tracking strongly right now. We want some more information as we get to the middle of this quarter to the end of this quarter. And we'll probably have a little bit more clarity of our feel for the trend line on our next call. Operator: Our next question comes from Omar Saad. Omar Saad : Ernie, I was hoping maybe you could talk about how we should think about cycling the stimulus. You mentioned mid-March, the comps get harder. I think that's kind of when stimulus drops off. Maybe remind us the sensitivity you saw from stimulus benefits during the pandemic and how we should think about that in our modeling process. Ernie Herrman : So Omar, you have gone right to the really, crux of the matter. When we look back at that last year, we could not read exactly when we were kicking in. We felt it was a combination of stimulus, pent-up demand because you have to remember, people have been cooped up. We are one of the more entertaining brick-and-mortar retailers to coming out of that, right? We're such an appealing format for people to distress and go shop from when they were a little cooped up. So we think -- and on the stimulus check, I think it might have been a little piece for sure. I think it was more of the other, of the pent-up demand, et cetera, because our trend line, as you know, from our results, continue for quite a while. Now the stimulus checks, it gets a little great. They were out there for quite a while. So yes, we believe that was a factor, but what percent of our huge double-digit comps was it, we, to this day, really don't know exactly. I think it's a small percent, but part of it. So all the more reason why, again, we want to see this mid-March through end of April, I think we're going to have a good read then. Having said that, we are tracking very healthy right now, and it has been a strong beginning to this quarter when you look at how we've planned it all and what our expectations are for the quarter. So sorry, I can't give you the exact on that. Again, we don't have it internally ourselves. Omar Saad : No, that's great color. Thanks, Ernie. Operator: Our next question comes from Michael Binetti. Michael Binetti : Thanks for all the detail on the call here today, very helpful. I have a couple for you. So I guess you're saying back to margins from fiscal '20 levels in the long term freight normalizing being the big help there, but your sales are 20% higher now. You called sales out is the best thing you can do to fight the margins. You have pricing power. So I'm wondering why longer-term margins wouldn't be set above '20 levels -- above 2020 levels in that scenario. And then Scott, I just wanted to try to get in your head a little bit. You said annual flat to increase margins on a 3% to 4% comp once expenses moderate. It's a little higher than the flow-through rate you've spoken to in the past. So maybe help us think about what kind of a cost algorithm you're baking in as you think about that longer term? Scott Goldenberg : Yes. Again, it's good. So to give some color as -- although the sales are substantially higher there through the roof, the cost over the course of several years are several billion dollars higher on a like-for-like basis as well. So that's why if this had all flowed through, we would be a lot higher than the 9.6%. We printed we'd be hundreds of basis points higher, but we had this -- so the costs aren't necessarily wage and others going down. So that's -- they don't reset. You just start and now go forward, what's your incremental cost right now. I mean, our old algorithm pre-COVID with comps that were slightly less, but we still had a deleverage of 30 basis points, 40 basis points. Now we're saying on a 3% to 4% comp, we would expect to either be flat or leverage on our comp. And I think, again, as Ernie indicated, a lot of that has to do with the pricing initiative, which obviously, if costs moderate and there's still room for pricing more but will flow through than maybe we've anticipated. But the cost pressure, which used to be 30 basis points to 40 basis points of incremental pressure, we expect to moderate, but not down to that level at least over the midterm. Longer term, if they ever not moderated down to something close to 20 basis points to 40 basis points with even a moderate level of average retail initiative in a 3% to 4% comp, we would probably do better. And that's why I think over the longer term, Ernie indicated we get back to the fiscal '20 levels or better. Michael Binetti : Okay. Let me ask one more. You mentioned that even with the average retail going up, we're still at an average retail below where we were a few years ago. I know you guys watch the competitive environment very, very carefully. Do you have any competitive work you've done to inform you on where the mainland department stores are today versus their AURs a few years ago or where you stand on a relative spread basis today versus history? Ernie Herrman : We can -- Michael, good question. We don't get it at a high because we wouldn't know how -- to put it all together from a high. But our merchants at a department level would have an idea of where categories have moved. And the feeling is that they have gone up, but we wouldn't be able to get on an exact average unit retail increase per se. But directionally, we can tell they moved up in many areas of the store. And the pressure -- again, the pressure continues there as well. They're getting here with the exact same cost everybody is in retail. So it would only make sense that that's happening, but we are verifying that really weekly, but I can't get an exact number across a whole store. Operator: Our next question comes from Marni Shapiro. Marni Shapiro : Can you talk a little bit about -- on pricing and just the promotional environment, we're coming off what was a very unique industry year with low inventories, very low promotions in 2021 across the board. And not that 2022 is going to be back to normal, but there is some hope that we'll be a little bit more back to normal, and the expectation is we'll see a little bit more of promotional creep. At the same time, you guys are raising prices and the consumers being hit with costs at home and is looking for better value. Can you just talk a little bit about how you balance that and how you're paying attention to all of the promotional creep that's anticipated for this year? Or are you not seeing that at all? Ernie Herrman : So we are not seeing promotional creep yet. We are reading about it as you are. It's a great question. It's -- we're ultrasensitive to promotional creep, but we've been seeing things go the other way. So regardless of inventory levels, inflation is hitting everybody so dramatically, again, back to wage and freight, they can have leaner inventories, that won't matter because they're still going to have to raise their retails because of the inflationary pressures on too many of their cost lines. I'll give you another one. We don't talk about it. We're talking about wage in the stores or whatever. Most of these businesses, if it's in a DC, if it's an e-com business, those wage rates and their DCs, as you've probably seen what some of those online guys have even announced that they have to pay. If you go to the mass market merchants, what they've had to raise their wages to. If you go to central offices throughout all of retail, so all the corporate offices, just as we have here, and you take the study of what's going on, on merit increases across the country. Everybody is going up at a higher rate than ever before. So I just think no matter how lean their inventories are, I just think everyone's a little boxed in that they have to -- I can't picture them promoting more. If they promote more, there is the -- in a department -- what you can do is you can promote -- you can look like you're promoting more, but the promotional price is raised. Do you know what I mean? Marni Shapiro : Yes, yes. Ernie Herrman : So we're simple with our buyers where we say you got to look at what is the out-the-door price and compare that out-the-door price to what our price is even though they could say they're on sale. So there could be some of that happening with some of the retailers that have a customer base that expect sales, right? We all know how that works. And they expect the high-low game. I think that could happen to a degree. But I just think on the actual retail that they sell from, it's going to be up from where it was, even though it could look like they're promoting more. Marni Shapiro : So even if it looks like they're promoting, your pricing will still be better anyway and it shouldn't have an impact? Ernie Herrman : Absolutely. We do not -- we're pretty simple internally here. We flex on many things. We do not flex our merchants. There was no flexibility on us being close to the out-the-door price of any other retailer. Marni Shapiro : And can I just follow up on that 1 listing? Are the price increases across the board? Or are there certain segments that are more amenable to those price increases? Ernie Herrman : More amenable, I like that. I might have to use that -- I'm going to use some of that language with some of my team. I would say, yes, there are -- absolutely, there are categories that are a little more sensitive where I think it's more dangerous for us to play it because we're already there. And up around us, say it's a certain branded category, and they're already be kind of a known commodity retail there, our merchant buyers have to kind of stay away from that. And there are a decent amount of those throughout the store. There's just -- what we have found in the last quarter or 2, there are more categories where we can really adjust retails on more product than we thought 6 months ago. So we are just feeling really good about it. And I get -- literally, every week, I can see on a report what's happening at a high level across all the divisions and that. So we're able to monitor all the senior teams all the way down to merchandise managers and buyers, in the planning organization. We can kind of keep our hands around this to also make sure that we're not swinging the pendulum as they say. Operator: And our last question comes from [Bob]. Unidentified Analyst: I just wanted to touch on something you mentioned on good, better, best in terms of just sort of product availability. Is this an environment where you would actively adjust the sort of good, better, best? And I guess the second question that I have is around product availability, I think you mentioned seeing some stuff in the last few weeks. Is your expectation that as we get through this year, the environment would get even better from like a product availability or what you're seeing and hearing from your vendor base? Ernie Herrman : Thank you, Bob. Two great questions directionally, types of things that we ask ourselves all the time. So we don't adjust -- we don't specifically adjust good, better, best going in. But I do have to say that based on what's out there, our merchants kind of strategize because we buy a lot of different ways. So if they see we're going to be overloaded and say good and not enough better and best, they will lean into trying to balance those areas. But we don't -- how do I put it? We don't get real definitive on that. So we don't mind if there's been more exciting buys in one of those areas, we don't have to have it be so exactly balanced. So if you had in the men's shirt area, if we were kind of imbalanced on certain brands and certain looks to good -- we would try to move it to be more balanced because we try to appeal to a broad customer base and we don't want to be just in one price point or one look in any category. So it's a great question. We could spend a couple of hours on this on how we do a mix. But we really, really -- we adjust, but we don't adjust to as much as a traditional store would, I'd say, to answer your question. And then the second question, can you remind me on the second question? It was... Unidentified Analyst: It was just more on product availability. I think you mentioned you're seeing some better product the last few weeks. Do you foresee the next 6 months being materially better than you saw over the last 12 months? I'm just trying to understand when you look at the environment and supply chain. Ernie Herrman : Yes, the -- so here's what's good. As retail gets better, typically -- remember, the wholesale market is mainly imported products. So they tend to buy more aggressively when retail gets better, and there tends to be more excess. So I think in theory, there's going to be more availability over the next -- as everybody -- if things normalize, people will tend to cut goods a little more aggressively. There's just been some -- there's a lot of availability right now, particularly coming out of holiday going into first quarter. But I would assume that even ticks up some more as things normalize. So yes, great question. We talk -- again, we talk about those type of things consistently here. So you're touching on some of the big rocks for sure. Ernie Herrman : All right. Thank you all for joining us today. We enjoyed our discussions. We'll be updating you again on our first quarter earnings call in May. And let me just say from the team here at TJX, we hope you all stay well and talk to you soon. Operator: Ladies and gentlemen, that concludes the conference for today. Thank you for participating.

Operator: Ladies and gentlemen, thank you for standing by. Welcome to The TJX Companies Third Quarter Fiscal 2022 Financial Results Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded, November 17, 2021. I would like to turn the conference call over to Mr. Ernie Herrman, Chief Executive Officer and President of the TJX Companies, Inc. Please go ahead, sir. Ernie Herrman: Thanks, Missy. Before we begin, Deb has some opening comments. Debra McConnell: Thank you, Ernie, and good morning. The forward-looking statements we make today about the company's results and plans are subject to risks and uncertainties and that could cause the actual results and the implementation of the company's plans to vary materially. These risks are discussed in the company's SEC filings, including, without limitation, the Form 10-K filed March 31, 2021. Further, these comments and the Q&A that follows are copyrighted today by the TJX Companies, Inc. Any recording, retransmission, reproduction or other use of the same for profit or otherwise without prior consent of TJX is prohibited and a violation of United States copyright and other laws. Additionally, while we have approved the publishing of a transcript of this call by a third party, we take no responsibility for inaccuracies that may appear in that transcript. Thank you. And now I'll turn it back over to Ernie. Ernie Herrman: Good morning. Joining me and Deb on the call is Scott Goldenberg. I'd like to start our call today by once again thanking our global associates for their continued hard work and commitment to TJX. As I've said before, I want to give special recognition to those associates who have been physically coming into work in our stores and distribution centers throughout the pandemic. In recognition of their continued efforts we have awarded a vast majority of them an appreciation bonus, which was the sixth appreciation bonus we have paid during the pandemic. Now to an overview of our third quarter results. I am extremely pleased with both our top and bottom line performance in the third quarter. Overall, open-only comp store sales when compared to fiscal 2020 or calendar year 2019 and increased an outstanding 14%. Importantly, our open-only comp sales growth was just as strong at the end of the quarter as it was at the start of the quarter. Once again, we saw phenomenal comp growth in our home categories across each of our divisions as well as a mid-single-digit comp increase in our overall apparel businesses. Clearly, our great brands and amazing values continue to resonate with shoppers. Overall sales were $12.5 billion, which was over $2 billion more than the third quarter of fiscal 2020 and total segment profit increased by $285 million over the same period. Our strong results are a testament to our flexible off-price business model and our associates. I truly believe we have the best business model and the best people in retail. Throughout the third quarter in the midst of uncertainty in the marketplace around supply chain delays and consumer behavior, our buying, planning and allocation, logistics and store operations teams all did an outstanding job. They ensured our stores had plenty of merchandise for our shoppers every time they visited. Our flexible model has been a tremendous advantage in this environment. We've been able to expand and contract categories and merchandise in our stores so that customers have full racks and shelves to shop when they visit. I am very happy with our third quarter pretax margin increase. Our excellent sales growth and strong merchandise margin increase more than offset the outsized expense headwinds that we have been facing. Our strategy to surgically raise retails on select items is well underway, and we believe it is working very effectively as shoppers continue to see outstanding value every day. Lastly, third quarter earnings per share increased an outstanding 24% to $0.84. As we look to the fourth quarter, overall open-only comp sales are off to a very strong start. We continue to see excellent availability of merchandise in the marketplace and are extremely happy with the mix of good, better and best brands that we are offering consumers. We are confident that we'll have plenty of great merchandise in our stores and online this holiday season, and we will be emphasizing this in our marketing. I'll talk more about the fourth quarter in a moment. But first, I'll turn it over to Scott to cover our third quarter financial results in more detail. Scott? Scott Goldenberg: Thanks, Ernie, and good morning, everyone. I'd like to echo Ernie's comments and express our sincere gratitude to all of our global associates for their continued hard work and dedication to our business. I'll start today with some additional details of our third quarter results. As Ernie mentioned, overall open-only comp store sales increased 14% over fiscal '20 and overall sales increased 20% over the same period. This quarter marks the third straight quarter that overall comp sales increased mid-teens or better. I want to recognize the excellent execution on the part of our teams for managing through the supply chain issues facing all of retail and ensuring a consistent flow of exciting merchandise to our stores to support the outsized comp sales we've seen all year. In the third quarter, we saw consistent strength in our overall comp sales every month. Once again, we saw a very strong increase in our average basket across all divisions, driven by customers putting more items into their carts. [indiscernible] Overall, average ticket was flat and improved for the fourth consecutive quarter. Overall, customer traffic was up, driven by a mid-single-digit traffic increase in the United States. As Ernie mentioned, we believe our pricing initiative is working as we've rolled it out to -- rolled it out to very select items across categories. We're extremely pleased that sales, inventory turns and the markdown rates in the third quarter remained very strong, where we have selectively adjusted our retails. Across each of our divisions, third quarter open-only comp store sales increase was also excellent. At Marmaxx, open-only comp store sales increased a very strong 11% and divisional profit dollars were up 21% versus fiscal '20. Marmaxx's home business continued its outstanding performance, posting a comp increase in line with home goods and apparel comp sales were up mid-single digits. Further, Marmaxx increase in customer traffic, had a very strong average basket, and sales across all geographies were excellent. At HomeGoods, open-only comp store sales increased a phenomenal 34% with consistent strength across all major categories and geographic regions for both HomeGoods and HomeSense. HomeGoods saw outstanding increases in both customer traffic and average basket. We're also very pleased with HomeGoods' divisional profit dollars, which were up 52% versus fiscal '20. As a reminder, HomeGoods margin is disproportionately impacted by freight increases due to its product mix. When looking at Marmaxx and HomeGoods divisions combined versus fiscal '20, total open-only comp store sales for the U.S. increased 16% and profit dollars were up 26%. In Canada, open-only comp store sales were up 8% and at TJX International, comp store sales were up 10%. Comp sales at both divisions were driven by strong increase in average basket. Further, similar to the U.S. home sales across all of our Canadian and European divisions were outstanding. Next, our overall pretax margin for TJX in the third quarter was 11%, up 30 basis points versus fiscal '20. Our pretax margin increase reflects strong expense leverage due to our excellent sales growth. We also saw a significant increase in our merchandise margin, driven by strong mark-on and lower markdowns despite 160 basis points of incremental freight expense. These increases more than offset substantial investments to expand our distribution capacity, higher incentive accruals and wage costs as well as 50 basis points of net COVID costs. Moving to the bottom line. Third quarter earnings per share of $0.84 were up an outstanding 24% versus $0.68 in fiscal '20. Our balance sheet inventory is up 4% on a constant currency basis versus the third quarter of fiscal '20. We were very pleased that our inventory levels on a per store basis improved in the third quarter versus both the first and second quarters. Again, and we can't emphasize this enough, availability of quality branded merchandise is excellent, and we're confident that we have plenty of inventory in our stores and online for the holiday season. Moving on to our liquidity and shareholder distributions. During the third quarter, we generated $1 billion in operating cash flow and ended the quarter with $6.8 billion in cash. In the third quarter, we returned $1.1 billion to shareholders through our buyback and dividend programs. For the full year, we have increased our range of our buyback by $500 million and now expect to repurchase $1.75 billion to $2.0 billion of TJX stock. And now I will turn it back to Ernie. Ernie Herrman: Thanks, Scott. Now I'd like to highlight the opportunities that we see to drive sales in the fourth quarter. First and most importantly, we will deliver great gifts and value for the holidays. We are in a terrific position to flow fresh product multiple times a week to all of our stores and online this holiday season. Since reopening our stores last year, we have been buying with longer lead times from many of our approximately 21,000 vendors to compensate for supply chain delays. Further, our vast vendor universe is by far the largest in off-price and has always allowed us to have quality branded merchandise for our shoppers. Importantly, most of the inventory we need for the holiday season has already been delivered to us or is scheduled to arrive in stores and online in time for the holidays. This leads me to my second point, which is that we are set up extremely well as a gifting destination for consumers this holiday season. Our store shelves are full with great gifting selections today, and we expect them to continue to be that way throughout the holiday shopping season. We expect to have something for everyone on consumer shopping lists and to offer an exciting and inspiring treasure hunt shopping experience. We also believe that our great values will resonate with consumers as much as ever in an inflationary environment. Third, our store locations are convenient for shoppers. Our stores are generally in easy-to-access script centers and often near other high-traffic retailers like grocery stores that consumers visit multiple times throughout the season, making for an efficient shopping trip. Next, we believe our holiday marketing campaigns, which started earlier this month, will help drive new and existing customers to our banners. This year, each of our divisions will showcase our differentiated shopping experience by reinforcing our value leadership while also highlighting the fresh flow of merchandise throughout the holiday season with messaging such as endless selection, great prices, all season long. In the U.S. and in Canada, we will leverage the strength of our retail brands together in multi-banner campaigns. In Europe, we have a strong cross-channel marketing plan, which includes TV for the first time ever across all of our European markets. At the e-commerce, we launched homegoods.com in September and are happy to offer consumers our exciting and collect to come selections 24/7. Looking ahead, we plan to bring more home categories to homegoods.com. On all of our e-commerce sites in the U.S. and in the U.K., we plan to offer exciting gift selections for the holidays that complement our in-store assortments Like our stores, new merchandise will be arriving frequently on our sites, making for an exciting online shopping experience. Okay. Beyond this year, we believe we are set up extremely well to significantly grow our market share and improve our profitability. On the top line, we see tremendous opportunities with our sales and traffic-driving initiatives and our global store growth plans. We have gained significant market share this year, and we see excellent opportunities to keep attracting more consumers around the world. Giving us confidence is the appeal of our values, great brands and treasure hunt shopping experience. In all of the countries, we have brought our off-price concept around the world, too. It has resonated with consumers seeking great brands and fashions at great value. In terms of profitability, I want to reiterate that we remain highly focused on improving our pretax margin profile over the medium to long term. We believe our top line initiatives can lead to outsized sales which is our best opportunity to offset some of the persistent cost pressures we face. In addition, we're very optimistic about the margin opportunity from our strategy to surgically adjust retails while maintaining our value proposition for consumers. Turning to our ESG efforts. I'll start by saying that protecting the health and well-being of our associates and our customers remains a top priority, as it has throughout the pandemic. I also am pleased to share with you that our 2021 global corporate responsibility report was published this past quarter and is available on tjx.com. The report summarizes our fiscal 2021 initiatives and progress within our 4 areas of focus: workplace, communities, environmental sustainability and responsible business. In addition to our report, we have published an appendix of relative ESG data and frameworks, including our first disclosure that is aligned to select metrics from the sustainability accounting standards book, or SASB. You can learn more about our efforts in our report, but I'd like to share a few highlights of our latest work with you now. I spoke on our last call about our commitment to inclusion and diversity and our work to help support a more inclusive and diverse organization. Since that time, we are well on our way to launching a variety of new programs for our associates, including new mentoring programs, associate-led inclusion anniversary advisory boards and expanded partnerships with community-based organizations to support our recruitment efforts. We also recently completed our global associate inclusion and diversity survey, which will help inform our longer-term priorities. Looking ahead, we expect to publish our 2020 EE01 data by the end of the year. In environmental sustainability, we made progress in our global science-based emissions reduction target. We are pleased to report a 32% reduction at the end of fiscal 2021 in greenhouse gas emissions from our direct operations against fiscal 2017. Our global approach to reducing our climate impact includes emissions reductions actions focused on reducing our energy consumption and expense, also investing in energy efficiency projects and sourcing low carbon and renewable energy sources for our direct operations. I look forward to continuing to update you on our progress in this important area. And as always, there is a lot more information on tjx.com. In closing, I want to again thank each of our associates around the globe who helped us achieve outstanding third quarter results. We feel terrific about our overall execution, a very strong start to the fourth quarter and our initiatives this holiday season. We are in an excellent inventory position to flow goods to our stores and are confident our associates are in place to meet the sales demand. I want to reiterate my comments in the future of TJX and our ability to grow our top line and profitability over the medium to long term. As an off-price leader in every country we operate in, we believe we are in an excellent position to capture additional market share for many years to come and to become a $60 billion-plus revenue company. Now I'll turn the call back to Scott for a few additional comments, and then we'll open it up for questions. Scott Goldenberg: Thanks again, Ernie. And just a few brief notes before we move to Q&A. In terms of the fourth quarter, we are very pleased that overall open-only comp store sales growth to start the fourth quarter is up mid-teens. Keep in mind that comp sales growth in the fourth quarter of fiscal '20 was a very strong 6%. As to our fourth quarter pretax margin, we're continuing to face significant expense headwinds. Specifically, we're currently expecting incremental freight costs to be about 80 to 90 basis points more than the third quarter. This is primarily due to the significantly higher market rates we're paying in order to secure capacity to ensure our stores continue to have plenty of inventory. Further, we anticipate that the combination of investments to expand our distribution capacity, incremental wage and net COVID costs will be similar to the third quarter levels. Looking to next year, we feel great about our sales and customer traffic opportunities, the buying environment and our merchandise margin and our ability to surgically adjust retail. As a reminder, this year, we've been benefiting from the huge expense leverage on our outsized double-digit comp sales. Again, we feel great about our top line and margin opportunities, but it's still too early to forecast comp sales or costs for next year. I want to reiterate what we said on our second quarter call, which is despite the continuation of outsized expense pressures in the macro environment, we believe our pretax margin can get very close to the double digits next year. To be clear, we expect the level of margin deleverage from the combination of investments in distribution capacity and the incremental freight and wage costs to be higher than it was pre-COVID, but less than this year. In closing, we feel great about our execution and strength of the business, both operationally and financially entering the fourth quarter. We have a strong balance sheet, and we are well positioned to take advantage of inventory opportunities, including packaway, that we will believe -- that we believe will arise from the disruption in the supply chain while also continuing to invest in the growth of our business and return significant cash to shareholders. Now we are happy to take your questions. [Operator Instructions] Thanks. And now, we will open it up for questions. Operator: [Operator Instructions] Our first question comes from Matthew Boss. Matthew Boss: Great. Congrats on another strong quarter. So Ernie, I think you've made it crystal clear how you feel about availability of product today and through holiday. So I won't touch on that. But my question is, your mid-teens stack comp implies a top line run rate exiting this crisis. It's nearly double your pre-pandemic trend. Is this new customers? Is this larger basket? Is it a combination of both? Scott, are you seeing any pushback at all on pricing? And how best to think about expansion of the AUR initiative from here? Ernie Herrman: Yes, Matt, good question, getting out the foundation of what's going on. Clearly, the run rate we're having is based on numerous things or I think we wouldn't be achieving these outsized comps. So yes, we're getting new market share, new customers from the data we showed, but we're also getting an increased basket. Scott can talk to that a little bit, but that's been happening really consistently. I think we mentioned that in the script. There's also a conversion thing that's also happening, Matt, where I think when the customers come in, we believe we're converting at a higher rate, so they're making the purchase because there are certain times you have customers come in and they don't purchase, right? And so I believe we're running at a successful way in that manner because we have such good brands and great value out there. And the fact, obviously, at the same time, we've been surgically addressing the retail is a great indicator for the future, right? Because if we're getting the new customer, if we're getting increased visits, I would also look at it this way: We have a certain percent of our customers that are more occasional visitors and certain that are more regular visitors. And we're getting, we believe, increased visits as well. And again, conversion is at a higher rate. So all cylinders are hitting. I guess I would caution us not to assume that we will run kind of at more like a triple the rate of what we used to run as you look down the road. On the other hand, the market share we're gaining now, and we think many of these customers are going to stick, right? We're going to -- we're capturing it. We're obviously making many of them very happy with what they're experiencing when they come in. So that bodes well for -- that we're acquiring and we'll be retaining some of these new customers as we go forward, which, again, all is a great indicator. Your second question, was it around the margin, or no? On the -- the average retail, I guess? Matt? Matthew Boss: Yes. So have you seen any pushback to pricing? And where does the AUR initiative go from here? Ernie Herrman: Yes, yes, yes. Okay. So no, that's what it was. No pushback to pricing. We have had, I would tell you, a higher hit rate of success than we even anticipated. We thought there'd be a handful of items here or there that we would run into challenges with, but that has not been the case. It's been very few and far between where we've run into any hiccups on the adjusting of retail, which means as we continue to go ahead -- and again, we will not do anything that jeopardizes our mix being at better retail than anyone around us on like-for-like product. And we can't talk to price points, obviously, on different products. We're not responsible for the quality or the brands where they retail -- that we don't carry from other retailers. But on the upstairs brand, so to speak, department store brands, we are feeling there's a lot more room for us to surgically do this well into the next few years. So we're feeling very bullish about next year as well. So hopefully, that answers your question. Operator: Our next question comes from Lorraine Hutchinson. Lorraine Maikis: It sounds like you're really pleased with your inventory position for holiday. But as you look into calendar '22, is there anything that you're seeing that concerns you around product availability for spring? Ernie Herrman: Lorraine, nothing. So we are -- the teams -- I would like to put in a plug again for our teams where I give them so much credit on the way they manage. I think we have more unknown and volatility given the supply chain ups and downs and the way our business is trending back. And we talked to you and many, as we talked back in the first half of the year, right? As you could see, our trend's starting to take place. I give the teams credit for stepping out and buying earlier, as we said in the script. Buying more earlier to time the cadence of when we get the deliveries, and then anticipating some of the supply chain obstacles that were going to be out. And obviously, as we said in the script, we have figured out a way, it doesn't mean we're not getting hit with the -- paying the rates of moving goods at the supply. We're getting hit with all of that. But the teams figured out how to get the goods here. So we -- they've established, and I give the merchants, the buying teams, logistics, as I said in the script, everyone has participated in making this happen, planning and allocation. Those same teams have -- I get to see every week what we're placing further out. So I get to see the calendar '22 that you're asking about. And I can see the trend that we're on for opening up for first quarter, for example, which is the beginning of what you're talking about next year. And we are already heading to a very good place for February, March from what I can see on the on order. So yes, I have no concern. And then one of the other things that's happened in COVID is TJX, I believe, when you look at all the branded vendors of the market, we are probably more important today than we've ever been. We're probably more important to the marketplace than we were pre-COVID. When you look at the amount of volume that we're doing with those upstairs brands, I believe that we will continue to be able to leverage those relationships well through '22. So hopefully that answers your question. Operator: Our next question comes from Mark Altschwager. Mark Altschwager: So understanding that it's too early to talk specifically about sales expectations for next year. Just wondering if you could speak more generally to where you see the incremental opportunity from a category perspective at both Marmaxx and HomeGoods as you cycle these big multiyear comps? Ernie Herrman: Yes, Mark, great question. So continuing, obviously, our home category across the board based on the behavioral changes that have taken place with COVID and the way people -- the workplace are either hybrid situations or more virtual or -- I'll give you another one. The way people are very -- and you've probably seen a lot of data on this, people are outdoors more, and probably that will continue, which is affecting which type of apparel the world is selling, including us. I expect all of those related categories to continue to stay at a, I guess, disproportionate percent to our business and trend that way, which we're excited about. Now the home business pre-COVID, for us was already trending. If anyone looks back, it's easy to forget about it, was already trending very strongly. Now we are just trending more off the charts. I do believe that levels off, but leveling off when you're running 30 comp still leaves you in an extremely bullish home trend, I think, for quite a while. And as we've seen and mentioned in the script, our apparel business has been reemerging and really some healthy high single digits here. And I believe we are going to be one of the -- when consumers continue to be value-driven, especially on apparel. I believe we take more market share there as we look out. So I would see -- but then when you look to more of the, I would call it, more of the active-inspired apparel, will continue to be something that we will, I think, shine in, as well as home. And then there are certain accessory categories, I think, we will tend to outpace them. So hopefully, yes, we see a lot of opportunity there. Great question. Operator: Our next question comes from Paul Lejuez. Paul Lejuez: Ernie, wondering if you could talk about the sourcing of inventory, just maybe how it's different in the current environment relative to a more normal period. Maybe talk in terms of direct source versus in-season versus packaway; maybe the types of vendors you're working with, how that's evolved; and maybe even just frequency and size of buys amongst your different vendors. Ernie Herrman: Yes. That was good, Paul. That's a multiple -- you were able to finesse Scott's rules, right? We have like a 5-part. But I like it. Paul Lejuez: All the same topic. Ernie Herrman: Same topic. Very good. So the sourcing is quite appropriate based on everything going on. So direct sourcing, what we always do -- let's start with we're closeout-driven, okay? So we, in season, hand-to-mouth, buy the bulk of what we do. We buy very opportunistically that way. So that were continuing -- I would say that will continue the way it's going. And we've had -- all indications are, again, what I said earlier, that a lot of those key brands -- by the way, good retail around the board, as you've seen the results. Retail is pretty strong out there, obviously, right? And what that does create though, is for a lot of the public company brands that are wholesalers, it allows them -- they want to keep chasing that business with their more regular price accounts. So it allows them to get bullish knowing that we're always there on the backside for the excess inventory. So let's start with that dynamic that's happening, which will happen more as -- which is why we always like it when everyone's business is good in this environment as we go to next year. I think you're going to see a lot of wholesalers now stepping out to be a little more bullish on their upfront orders for those retailers, knowing that they have TJX for the later, for the cleanup, so to speak. So I think that whole piece, which is probably one of the biggest pieces of our business, is looking forward to a tremendous opportunity as we move forward because of that dynamic. Direct sourcing, I think what you're getting at, which is we all do some business that way. I think that is just a piece where we'll look at if there's a void in a mix, and we'll do it very selectively. What you talked about on packaways. So you mentioned packaways. I think that is something we very possibly, as we come out of holiday, could see a tremendous amount of packaways based on the supply chain challenges that a lot of the other retailers are going to -- the whole market's going to run into. And if they end up with some late deliveries that don't make it in for Christmas, which is very possible, if they didn't plan their cadence correctly, then I think that is going to spill off a great opportunity for us to have increased packaways for next year -- for next fall that we would be buying this January, February. And I'm anticipating that could be a huge benefit to us. I think. I think I'm missing. What's the fourth -- there was a fourth aspect? Paul Lejuez: The frequency and size of buys... Ernie Herrman: Okay, great. Yes. So the -- wow, so the challenge we've had is we're buying very frequently, and the sizes of the buys vary by vendor a lot. So what's been an interesting dynamic is we have some -- and obviously, we don't talk about them on the call, but we've had some amazing brands, and one moment can have an enormous amount of goods. And it's interesting because they could be trying to unload the goods now a little early, knowing that maybe they're running into trouble later. And then we'll have some other brands that have a lot less and aren't necessarily yielding as much as a brand who's typically as comparable a size. Overall, we're having a slowed -- we've had to slow down as we were getting into the time period here because there's still more availability in total than we could handle. I would say it's a tip -- that piece, ironically, is almost the same as pre-COVID, where you'll read some articles where the brands will say certain brands, and I won't mention who the h*** will say, oh, we're not going to -- we're cutting back on the discount "off-price channel." And -- but they've said that for years pre-COVID. And then what happens is it goes in cycles, where all of a sudden, they say that for 3 to 6 months, and then they are more loaded later. And then -- so we might do less business with a certain brand for 6 months, but we're just going to do more with a different brand for that 6 months. And then the cycle goes back the other way. And what's interesting on this is we watch for those situations, because typically -- and this is better post-COVID, since we mean more to the market in general, I think some of those vendors that are saying they're going to go less to discount are actually the ones that are still going to want to, for the future, place some more orders upfront that allow them reorders with some of the hot retailers, which in turn should come back and leave more availability. Hopefully, that all makes sense. Probably more than you need to know. [indiscernible] It's a great question. Great question. Operator: Our next question comes from Chuck Grom. Charles Grom: Scott, can you just dive into the offsets you expect to see in the fourth quarter to help offset the incremental 80 to 90 basis points of supply chain pressures? And then any color specific on where you think pretax margins can land in 4Q specifically? Scott Goldenberg: Yes. We didn't get -- you'd probably going to be disappointed with my answer. I think it's similar to what Ernie has been alluding to. We feel great about the top line initiatives to drive sales, and our merchandise margin and the cost is -- I think, the biggest thing we called out on the cost is the incremental freight for the fourth quarter in and around that 75 to 100 basis points, 90 basis points more. And a lot will just depend on what the level of the comps are. We said all the other costs are similar to -- similar prices we saw in the last quarter. So not much more to say in terms of where we'll end up. I think a lot will depend again on that level of comps that we're able to achieve. Operator: Our next question comes from Kimberly Greenberger. Kimberly Greenberger: Okay. Great. Glad to be able to see the momentum in the business. Ernie, I want to make sure I heard you correctly. I think you said the surgical price increase strategy is well underway. I'm assuming that means you started executing it here in the third quarter. It sounds like you've already got a reasonably good kind of level of feedback on how those price increases are being received by consumers with basically no price resistance. I just want to make sure I understand that correctly. And then, Scott, wanted to ask you about the benefit in gross margin. You talked about a nice expansion in the merchandise margin from higher IMU, maybe that's a piece of the pricing, and strong full price selling. But I'm trying to just sort of unpack the moving parts in that gross margin line to uncover or reveal just exactly how great that performance is in merchandise margins. So if you could just help us with some of the moving pieces in gross margin, specifically since you saw that nice boost versus 2019? That would be helpful. Ernie Herrman: So Kimberly, yes, let me go right to -- what you thought you heard from me is exactly correct the way you said it. And we did start -- we started very early actually as we were coming out of second quarter and going into third quarter, we were starting to do this pretty aggressively, but surgically. So we did it very selectively, and that's how we're going to continue to do it. And the merchants are doing a great job at approaching it in extremely analytical, and as well as verifying that, again, our out-the-door retail is significantly below anyone else's out-the-door retail. Remember, the foundation of this is what's going on in this country, which is that wages and supply chain costs are hitting really like never before altogether. And it is forcing retailers around us to either promote less or raise their retail. So it is just creating a window of opportunity that we -- and the wage thing. I have no reason to believe that ends. So our teams, yes, started back then. We had a significant amount of the selective adjusting at retails, and we have had very good success during the third quarter. Scott Goldenberg: Yes, I'd just echo on what -- we do a lot of customer surveys with our marketing group and everything, and first -- one of the things in the survey is our value perception remains just as strong as ever. So whatever we're doing selective to the retail has had to the best week and determined no impact from a customer perspective, and as I think we said multiple times, we were looking at the turns, the sales, the categories and everything has been consistent and strong, similar to the first and second quarter. So we can't see any impact in. And so that's just from that perspective. In terms of the merchandise margin, we've seen similar again to the second quarter, half of our benefit is coming from reduced markdowns due to the strong sales, and the other is by an increased mark on. We are seeing some cost increases, but we're having a retailing increases that are offsetting some of that. I think one of the benefits to having our average retail come down or improve over the last couple of quarters is as that happens, our cost -- it helps us on our cost structure as well as it takes -- you'll have fewer units to move in our stores, DC and freight. So we're seeing some of the benefit on that as well. But to answer your question, it's about half of our benefit is coming from mark-on and half of it is coming from markdowns. And in total, we offset a bit -- even with the higher freight costs, we went up slightly in our merchandise margin this quarter versus last quarter. Operator: Our next question comes from Simeon Siegel. Simeon Siegel: Congrats on the great results. Ernie, just your comment earlier about the importance of the upstairs brands. Are you seeing any difference in concentration of the top brands now versus historically? And then sorry if I missed it, did you guys say what percent of inventory was on hand versus in transit? Ernie Herrman: Simeon, so interesting question. On the concentration of vendors, well, I would say, it varies by -- it varies by family of business. But yes, I would say there is a little shifting just like the environment has shifted. So certain categories are performing a lot better, which includes certain brands. So what's happening is in those categories that represent certain brands, we're ending up with more brands there. And this won't surprise you. Overall, I would say, in the store, Simeon, we're ending up with some of the more, I guess, you'd call it, casual brands because that's the way the market has kind of gone, if you know what I mean. Having said that, as apparel has kicked back in, we do have some dressier parts of apparel where some of the more traditional brands are still, I would say, they've ramped back up a little bit. But if you look overall, I would say the casual brands have shifted to make up a greater percent of our mix and less dressy, which, again, that's a behavioral issue going on. And probably that type of trend continues for a while. And then I'm not going to do the actual categories, but in home, as you can imagine, that's a greater percent of our business. So we have some home labels that I think we're doing more business with today than we were a couple of years ago that have ramped up, and the complexion looks that way. And what we do, Simeon, is at the end of the day, no matter who the brand is, the buyers are -- their first focus is to make sure we're at the right value. So it's interesting. We won't force -- we try not to -- too much predetermine which brand we're going to emphasize based on just what the brand is. We kind of do it based on how exciting is the value. I'll let Scott jump in on the second question. Scott Goldenberg: Yes. So Simeon, on the inventory, good question. The in-transit on order is up -- it was -- it's up about a little more than 5% in terms of the contribution of that total inventory that we have on our balance sheet, but it was up -- it's similar to where we were up in the second quarter over fiscal '20. So yes, it is in that 5% range more as a percent of the total than it would have been total than 2 years ago. Having said that, our -- as we've said, our -- both store and distribution on a per store basis versus '20 was improved versus the second quarter where we ended at the end of the third quarter versus the second quarter, which also had improved versus the first quarter. So we've -- even despite our sales increases, we've been continuing to improve that inventory position, both in the stores and DCs. Given that we have a fair amount of inventory coming in, it should bode well for the fresh flow of inventory as a lot of -- all of this -- the vast majority of this inventory will be coming in over the next several weeks. So feel good about the fresh flow. I don't know, Ernie, if you have anything. Ernie Herrman: Yes. No. I mean I agree with everything that Scott just said. And we're bullish on -- we are just bullish on the way we can flow and availability as we look forward as we addressed on the other question. Operator: Our next question comes from Dana Telsey. Dana Telsey: Congratulations on the nice progress. Two quick things. As you think about real estate, remodels, relocations, what are you seeing and how is that working for each of the banners? And you mentioned TV and marketing for Europe. How are you planning your marketing budget this holiday compared to last year? Ernie Herrman: All right. I'll let Scott talk on the real estate, and then I'll jump in on the marketing. Scott Goldenberg: Yes. Again, I think we're extremely bullish on the real estate, both what we've seen this year. First, in terms of our new store openings, we are -- we've been experiencing as good as ever in terms of beating our -- both our pro formas across our divisions. So that's exciting. As we said, we expect approximately the ability to open 170-plus stores next year, and then historically, get back to that 4% growth where we were over 200 stores a year for many, many years averaging on that with, as you know, very 3 to 5 closings a year. So we love that aspect. In terms of the remodels, we're doing over 300 this year. We don't have a number for next year, but it's going to be significantly higher across our divisions. Part of that is -- and that's something that's very important to us as one of the things that we have just continually seen in this -- all this year we've seen the same thing where there's very little difference when you go from a store that's 10 years old to 20 years old to 30 years old. So part of that is we're just keeping these stores look fresh, and that's why I think our ability to run the comps has been as good as it's doing. And then I think we've also, in the lease rates on both the hundreds of stores that we come to a renewal period, our teams have done a great job across the board in getting lease renewals at lower rates than what we had contracted at. And that's continued all year long. And it's starting, as you get over time, to being some meaningful dollars. So we feel real good about that. And then the availability for the sites and what we're seeing, we expect to see that for years to come given the amount of store closures that have happened in the past 2 years. Ernie Herrman: Yes. And on marketing, great question. Our marketing spend -- I mean, we're going after it this holiday in terms of driving -- continuing to gain market share. So our marketing spend is planned up significantly in Q4 versus FY '20, with the idea to keep -- it allows to be top of mind for consumers during the holiday season. As you know, Dana, it gets very noisy around marketing, and we want to break through. Our campaigns are designed to break through as best they can with the budget in terms of our creative campaigns the way we execute them. By the way, more than half of our marketing dollars are going to be allocated to digital advertising, which is where the consumers are. And we're really -- I think I briefly mentioned it, we're really laser-focused on capturing the market share and driving customer traffic, and we'll be reinforcing. And a lot of the messages are really built around the competitive advantages on value that we show, our unique selection. We do that by showing certain product categories to remind the customer that we're going to be in these categories for gift giving. I think that's always key for us, because sometimes, customers forget that we have such a wide assortment of categories. And our goal is really to win discovery shopping occasions, which is roughly half of all shopping occasions where people are seeking inspiration and a bit of our treasure hunt retail therapy that I think we can provide for the customer. And then we're leveraging the power of influencers and brand fans, and we're giving her a choice via multichannel messaging and we're just -- this is how we're spending the money. And I just think we are so well positioned to -- let's start with well positioned with our store execution, our merchandise and then our marketing, to help drive them into the stores. Operator: Our next question comes from Michael Binetti. Michael Binetti: Let me add my congrats on a great quarter guys. Scott, a couple -- I want to ask you, I know on your comment about pretax margin getting very close to double digits next year, I think is how you phrased it. I know pre-COVID, it's a little too early to plan, but pre-COVID, you always plan the business around a 2% to 3% comp. Is that how we should orient ourselves related to your comment. And then we flex our models up and down with our own assumptions on comps. But is that a fair assumption? And then I'm just trying to think through the puts and takes on how you're thinking about it. You said deleverage on the combination of investments and distribution capacity. But your COVID costs were a pretty big burden this year, your store volumes will be much higher in 2019. I would think freight would be a net benefit to the whole year next year. And I know on the last call, you said you thought it'd be -- freight would be worse than second half, gets a little better next year. And then you have some pricing. So I'm just trying to think through the puts and takes that would end up below double digits next year as you think about it? Scott Goldenberg: Yes. Again, too early to make the call. Again, as Ernie said, we feel great about the top line, too. We haven't made a definitive call yet on what we think the comp sales will be over this year, but we... Ernie Herrman: Well, I would jump -- I think we're thinking it will be slightly above 2% or 3%, I would say, Michael. Because with this type of momentum and the amount of customer acquisition, I think we'll be a notch above that. Scott Goldenberg: So I guess that means 3% to 4%. In terms of the other costs, Michael, the one thing I'd say is that the combination of freight, although not going to be at the outsized delevers that we're seeing this year north of $150 million. We still expect, because of at least the visibility to the first half and to be determined the second, to have more than the normal amount of freight deleverage. So it's still going to be a lot less, but still more than what we would have seen pre-COVID. Ernie Herrman: Only in the first half. We're hoping in the second half, Michael, to your point, that we level off on that. Scott Goldenberg: Yes. So overall, though, for the year, still would expect it to be more. So the combination of the supply chain wage and freight, yes, less COVID, but we would still expect to see those to be more than what we are seeing pre-COVID. Now we'll -- as we get closer and -- to the end of the year and we see with the retail strategies and how we're buying and what the benefit we're going to get from a higher retail, but yes, we expect the margin to go up, what would it be over this year. The question is just what we'll be able to offset in terms of to drive the margins even higher. Longer term, we, again, feel real good to the ones we have some level of stabilization. As we said that we would expect -- if we have headwinds that are closer to what we saw pre-COVID, that we would -- with a 3% to 4% comp, as Ernie just said on a go-forward basis, we would expect to be flat or leverage our business in the longer term from wherever we end up at the end of next year. Operator: Our next question comes from Laura Champine. Laura Champine: I wanted to talk about availability on the luxury brands, because we've seen fewer of those in stores, and I know that it's tough to check a material number of stores, but it looks like there's something changing in closeouts for true luxury. Is that -- am I seeing something that's consistent across the chains? Or is that more you buying towards trend and the trend is not on the luxury brands anymore? Ernie Herrman: Laura, very good question. I think it's a combination of both, and I think it's a fair observation. I would say in your traditional categories where you might have seen us have a little bit more luxury brands, we have a little less of that right now. But as I mentioned earlier, it's also not where the action is, so to speak, or where all the trends are, which is much more casual, not luxury brands more active but we do have less. I don't think it's a -- I don't think this is a long-term situation. I think this starts to go away as we get into next year on the less luxury brands. And also as the apparel cycle, the more traditional, slightly dressier apparel cycle comes back, I think we'll see more of the luxury brands I know you're referring to. And I think it's an accurate observation on your part. In terms of total brands and best brands as we would call it, by category, varying by category, yes, we're in great shape there. The luxury brands are definitely a little less valid. But I would not think it's a long-term issue. Laura Champine: And if I could follow up on with that. Obviously, it's not a material part of sales. And obviously, traffic is great right now. But is there any concern on your part that you might lose some of that treasure hunt customer traffic towards the holidays because that not there on the luxury side? Ernie Herrman: No. Well, no, because that side of the business, the true luxury side, was very small to begin with as a percent of our business. And it also becomes more of the self-purchase, not the gift, on the true luxury goods. Yes, there's some gift giving there, but we have a lot of the gift-giving categories and items in depth. So no concern at all on that. And again, no really concern as a medium-term thing because I think this cycle is back as you go to next year. I could tell you -- so that's one that you've noticed. I could give you a few other departments we actually also have a lot less of right. Here's the beauty of our model. There's a few other departments right now that are bigger deal than, say, luxury vendors that we are actually very low on, but we're running in 15 comps. So it's -- the stores are flexing. And as we mentioned in the -- we're able to flex the entire store and go after where the exciting value is. And also what I mentioned earlier is, again, our contract to our customer is to have -- what we have in the stores, to have exciting value and get ready for gift-giving season. And we do that, even though we are at times going to run into pockets of either certain brands or certain departments or categories like I just said, that we're not actually -- that were under on. So yes, there's just other things besides that we're actually light on, and it won't -- we believe it won't impact our performance over holiday. Operator: The final question of the day comes from Omar Saad. Ernie Herrman: Did we lose you, Omar? Omar Saad: Can you hear me? Ernie Herrman: Now we can hear you. Omar Saad: Sorry about that. I wanted to ask a follow-up on some of the discussions you've been having around the pricing actions you've taken, given the inflationary environment. Maybe -- especially around the term surgical, does that mean only a certain banner? Did you do it across banner? Did you try international? Or do you -- is it only certain products and categories? And also kind of strategically, as you -- are you thinking differently about how you price your goods? Your merchants may be used to use a cost-plus mentality, and now, you're approaching it more from a value perspective, especially given the inflationary environment. Any kind of philosophical change in how you think about price and value would be helpful to understand. Ernie Herrman: Yes. No. Again, very good questions, Omar. So let me -- there's 2 key questions you're asking. Let me go at both. They're interesting. No, we did not isolate the strategy to any one banner or any category. So the selective retailing goods applies to Maxx, Marshalls, HomeGoods, or every division we have in Canada, Europe, every banner, Australia. So it is not a -- by any means, and we have all the merchants in every marketplace looking at this. And the approach to your second question, and it's -- I'm glad you asked this because you could think that we actually don't approach a cost plus. That is a formula we don't do. That is a formula that a traditional retailer does. And what our buyers do is they determine the retail first. And almost we say, forget about what the cost is. What's the exciting value retail? And then we work it back from there. And so that's where -- and how do you determine the value of retail? You take your fashion in your brand and you look at where it's being sold at other retailers. And from there, we determine the significant retail gap we need to have between us and the other retail. And that's how we established the retail, not at what the cost is. And that philosophy, I just discussed just now, that is what is being utilized, I guess, you would say, in every division that is doing this. And again, it is international, it's everywhere. And that is what allows us to make sure that the retail is still providing tremendous value, because we're using comp shopping of what is the retail in that item at other retailers, what is it selling for. And that's how we do it. We don't do what the cost is to us or -- and that's what we referred to as a markup wheel, which traditional retailers do, do that. We do not do that. And it's a great question, though, because you want to do one with -- I like the way you asked it because you want one without the -- you don't want to go around surgically address the retailer that we were doing it off the cost, that you could run into trouble. So this, again, good question. Thank you, Omar. And I believe that was our -- Missy, that was our last question for the group. Thank you all for joining us today, and we'll be updating you again on our fourth quarter earnings call in February. Let me just say from the team here at TJX, we hope you all stay well, and we wish you good health and happy Thanksgiving. Operator: Ladies and gentlemen, that concludes your conference call for today. You may all disconnect. Thank you for participating.

Operator: Ladies and gentlemen, thank you for standing by. Welcome to The TJX Companies Second Quarter Fiscal 2022 Financial Results Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded August 18, 2021. I would like to turn the conference call over to Mr. Ernie Herrman, Chief Executive Officer and President of The TJX Companies, Inc. Please go ahead, sir. Ernie Herrman: Thanks, Sheila. Before we begin, Deb has some opening comments. Debra McConnell: Thank you, Ernie, and good morning. The forward-looking statements we make today about the company's results and plans are subject to risks and uncertainties that could cause the actual results and the implementation of the company's plans to vary materially. These risks are discussed in the company's SEC filings, including without limitation, the Form 10-K filed March 31, 2021. Further, these comments and the Q&A that follows are copyrighted today by The TJX Companies, Inc. Any recording, retransmission, reproduction or other use of the same, for profit or otherwise, without prior consent of TJX is prohibited in the violation of the United States copyright and other laws. Additionally, while we have approved the publishing of a transcript of this call by a third party, we take no responsibility for inaccuracies that may appear in that transcript. Thank you, and now I'll turn it back over to Ernie. Ernie Herrman: Good morning. Joining me and Deb on the call is Scott Goldenberg. I'd like to start our call today by once again thanking all of our global associates for their continued hard work and dedication to TJX. We are especially grateful for their efforts over the past 18 months and for their commitment to the health and safety of our associates and customers. Now to an overview of our second quarter results. First, I am extremely pleased that our overall open-only comp store sales, when compared to our fiscal year 2020 or calendar year 2019, increased an outstanding 20%, which well exceeded our plans. Comp growth in home continued to be excellent, and we also saw a very strong low teens comp increase in apparel as that category continued its upward trend this quarter. We were particularly pleased with the strong execution we saw across each of our divisions, which all drove double-digit, open-only comp sales growth versus fiscal 2020. Clearly, our branded mix and great values continue to resonate with consumers in the U.S., Canada, Europe and Australia. Next, overall sales were $12.1 billion, over $2 billion more than the second quarter of fiscal 2020. And overall segment profit increased more than $300 million over the same period. We are convinced that our sales growth and profit in the second quarter demonstrate that we are capturing profitable market share. We are confident that many of our loyal customers have returned to our stores and are shopping us more frequently and that we are attracting new shoppers with our marketing and exciting treasure hunt shopping experience. Third, I am very pleased with the sequential improvement of our pretax margin versus the first quarter. Our strong sales growth and merchandise margin increased more than offset the persistent expense headwinds we have been facing. The buying environment has been excellent, and our teams have done a terrific job sourcing the right mix of goods and getting them to our stores to satisfy the strong customer demand. Lastly, second quarter earnings per share of $0.64 were also well above our plans. As a reminder, this includes a negative $0.15 impact from a debt extinguishment charge and the impact from our temporary store closures. Our strong earnings per share in the second quarter were over EPS of $0.62 in fiscal 2020. Now I'll turn it over to Scott to cover more of our second quarter financial results in more detail. Scott Goldenberg: Thanks, Ernie, and good morning, everyone. I'd like to echo Ernie's comments and thank all of our global associates for their hard work and continued commitment to our business. I'll start with some additional details of our second quarter results. As Ernie mentioned, overall open-only comp store sales increased 20% over fiscal '20, well above our plans and segment profit was very strong. In the second quarter, we continued to see an increase in our average basket across all divisions, driven by customers putting more items into their carts. Overall, average ticket was down slightly versus fiscal '20, but improved significantly compared to the first quarter, primarily due to the improved strength in apparel. Further, average ticket improved each month of the quarter and was up in July. Overall, customer traffic in the United States, where we were open the entire quarter with minimal occupancy restrictions, was up mid-single digits versus fiscal '20. Across each of our divisions, second quarter open-only comp store sales growth was also excellent and exceeded our plans. At Marmaxx, open-only comp store sales increased an outstanding 18% and profit dollars were up 19% versus fiscal '20. Marmaxx's home business continued its excellent performance and once again posted a comp increase in line with HomeGoods. Apparel comps were up mid-teens and improved significantly versus the first quarter. Further, sales were strong across all geographies and by age of store. At HomeGoods, open-only comps increased a phenomenal 36% with consistent strength across all major categories and geographic regions for HomeGoods and HomeSense. We were also very pleased with HomeGoods profit dollars, which were up 42% versus fiscal '20. As a reminder, HomeGoods margin is disproportionately impacted by freight increases due to its product mix and further pressured by supply chain costs related to its new distribution center and wages. When looking at our HomeGoods -- Marmaxx and HomeGoods divisions combined versus fiscal '20, total open-only comp store sales for the U.S. increased 21% and profit dollars were up 22%. During the second quarter, Canada, Europe and Australia each face challenges with temporary store closures and occupancy restrictions. Despite these limitations, we saw very healthy sales when we were open with TJX's Canada's second quarter open-only comp store sales, increasing 18% and TJX's international comp sales increasing 12%. Moving on, overall sales increased 22% over the second quarter of fiscal '20. As we detailed in our press release this morning, we estimate that sales were negatively impacted by about $300 million to $350 million due to the temporary closing of our stores for about 3% of the quarter. Pretax margin for the second quarter was 8.7%. This includes a 200 basis point negative impact due to a debt extinguishment charge and an estimated 60 basis points negative impact from the temporary store closures. Net COVID costs moderated significantly versus the first quarter and negatively impacted pretax margin by only 30 basis points in the second quarter. Again, we are extremely pleased with our improved pretax margin in the second quarter. Our very strong sales and excellent merchandise margin increase more than offset the 150 basis points of incremental freight expense, the substantial supply chain and wage costs and higher incentive compensation accruals. Moving to the bottom line. Second quarter earnings per share were $0.64 and well above our plans. Second quarter EPS includes a $0.15 negative impact due to the debt extinguishment charge and an estimated $0.05 to $0.07 negative impact from the temporary store closures. Again, EPS in the second quarter of fiscal '20 was $0.62 per share. As for balance sheet inventory, it was down 3% on a constant currency basis versus the second quarter of fiscal '20. Store inventories were down, but essentially where we want them to be. In our distribution and centers, inventory was lower as we have less packaway and more goods on order and in-transit. Our bars are doing a great job sourcing merchandise and have been able to chase the goods we need to satisfy the current strong consumer demand. To reiterate, the availability of merchandise is excellent. Moving on to our cash flow and liquidity. During the second quarter, we generated $1.4 billion in operating cash flow and ended the quarter with $7.1 billion in cash. In June, we completed the make-whole calls for $2 billion of principal outstanding notes which resulted in a pretax debt extinguishment charge of $242 million. As a result of these actions, we have reduced our outstanding debt by $2.75 billion this year and lowered our annual interest expense by over $90 million. As for the shareholder distributions, in the second quarter, we returned $614 million to shareholders through our buyback and dividend programs. For the full year, we have increased our stock buyback by $250 million and now expect to repurchase $1.25 billion to $1.5 billion of TJX stock. Now I will turn it back to Ernie. Ernie Herrman: Thanks, Scott. Looking ahead, I'd like to highlight the opportunities that we believe will allow us to drive sales and traffic in the second half of the year. First, we are convinced that our relentless focus on value is a tremendous advantage. In an inflationary environment, we believe even more consumers will be seeking out value. We are confident that our value position will be a very attractive option for consumers looking to stretch their dollars without sacrificing on quality and brands. Second, we are excited about our store and online merchandising plans for the back half of the year, especially the back-to-school and holiday shopping seasons. The marketplace is loaded with a great selection of apparel and home merchandise across good, better and best brands. We have enormous confidence that our teams will execute on these initiatives to bring consumers the right brands and fashions at the right values every day. Next, we are planning exciting marketing campaigns for television and digital media for the fall and holiday season. We believe these campaigns will help us continue to attract new shoppers and stay top-of-mind with our existing customers. Each of our divisions will showcase our differentiated shopping experience by reinforcing our value leadership while also highlighting discovery, fashion and quality. Further, in an ever-evolving media landscape, we continue to learn and adapt to new digital outlets so that we can broaden our consumer reach and ensure we are connecting with shoppers on the platforms where they are spending their time. Additionally, our research tells us that, overall, our marketing campaigns and great assortment of values continue to attract new shoppers of all ages into our stores, including an outsized number of Gen Z and millennial shoppers. We are also encouraged by our strong overall customer satisfaction scores. Lastly, while most of our European and Canadian stores were open in the second quarter, many of them were still operating with stringent COVID-related occupancy restrictions. Many of these restrictions have eased, and assuming this trend continues, we expect overall sales and customer traffic to improve in the second half of the year in these regions. Further, with a significant number of permanent retail closures in these geographies over the last 18 months, we see a great opportunity to capture a bigger share of consumers' wallets going forward. As to e-commerce, we continue to be pleased with the sales at our U.S. and U.K. online businesses. We are excited to launch e-commerce on homegoods.com in the third quarter. We believe this is something our existing customers have been waiting for and is another way for us to attract new shoppers. Similar to our other online businesses, homegoods.com will be complementary to our physical stores and allow customers to shop our great values 24 hours a day, 7 days a week. Beyond this year, we are convinced that we are set up extremely well to significantly grow our market share and improve our profitability. Let me take a moment and share the characteristics of our business that we believe will continue to draw consumers to our retail banners going forward. First, we are confident that the appeal of our treasure hunt shopping experience will continue to resonate with consumers. Our merchandise assortments are constantly changing, so there's always something new to surprise, excite and inspire shoppers in our stores and online. Further, we offer great value every day. So our customers know they are getting excellent deals every time they visit, and they don't have to think about coupons or promotions. Second, we believe our stores offer consumers a much more eclectic assortment of merchandise versus traditional department and specialty stores. Our more than 1,100 global buyers are in the marketplace every week sourcing fresh, exciting merchandise from a universe of about 21,000 vendors around the world. Our planning and allocation teams curate these goods to create a differentiated store-by-store mix that we believe no one else is offering. Next, we locate our stores in convenient, easy-to-access locations to make it easy for shoppers to visit our stores in a timely and efficient way. For example, in the U.S., we estimate that we have a T.J. Maxx or a Marshalls store within 10 miles of approximately 80% of the population. Our retail banners are located across urban, suburban and rural markets, which allows us to reach consumers across a very wide customer demographic. Lastly, the flexibility of our business model allows us to adjust our buying, store formats and distribution to take advantage of hot categories and brands and adapt to changing consumer preferences. In terms of profitability, I want to emphasize that we are highly focused on improving our pretax margin profile next year and beyond. Clearly, our ability to keep gaining market share and drive outsized sales is our best opportunity. In addition, we feel great about the opportunities we are pursuing that we believe will help offset the margin pressures that we have seen over the last several years. One of these is to surgically look for opportunities to adjust retails in select areas, while maintaining our great values to our shoppers, just as we have throughout our history. Scott will discuss this in more detail in a moment. Now I would like to share some information about corporate responsibility at TJX. For our nearly 45-year history, our mission has been consistent to deliver great value every day. And similarly, since the very beginning, we have also committed to acting as a responsible corporate citizen. Throughout the pandemic, the health and safety of our associates and our customers has been a top priority and remains so today. Simultaneously, over the past 1.5 years, important issues like equity and racial justice and climate change have become even more critical. To be clear, these are areas that we have been committed to for many years and are proud of the actions we have taken recently to make additional progress. Let me share a few key points on these. In terms of equity and racial justice for our 45-year history, we have been committed to making TJX an inclusive workplace. In June, we shared with our associates and on tjx.com the most recent steps that we are taking to help us become a more inclusive and diverse organization at all levels. These efforts include initiatives related to recruitment practices, associate education, training and development and an expanded focus on our process and programs to support an inclusive work environment. We know we have work to do and are committed to improving in this important area. As to the increasing importance of environmental sustainability, we have made progress working towards the goal we set last June for a science-based greenhouse gas emissions target mapped to the Paris Climate Agreement 1.5-degree Celsius guidelines. In the coming weeks, we will make our annual update to the environmental sustainability portion of tjx.com, including information about our climate and energy strategy, along with waste and chemicals management. These are just a few of our initiatives. We recognize there is an increasing interest in our efforts related to environmental, social and governance, or ESG practices, and we look forward to keeping you updated on our progress. Our commitment to corporate responsibility is as important as ever. And as always, there is a lot of information on tjx.com. In closing, I want to again thank each of our associates around the globe who stepped up to support the business and helped us achieve outstanding second quarter results. I could not be prouder of the collective efforts of our associates over the past 18 months and their commitment to working as one TJX throughout this health crisis. I am extremely pleased with our excellent top and bottom line performance in the second quarter, and I'm optimistic on the remainder of the year. As an op price leader in every country we operate in, I am convinced that TJX is set up extremely well to gain market share for many years to come. I am confident that our sales and traffic initiatives as well as our global store growth plans, will draw even more shoppers to our retail banners. In terms of the bottom line, we are very confident in the opportunities we see to drive higher profit margins beyond this year. I truly believe the characteristics of our off-price business model will continue to be a winning retail formula and that TJX is on its way to becoming a $60 billion-plus revenue company. Now I'll turn the call back to Scott for a few additional comments, and then we'll open it up for questions. Scott Goldenberg: Thanks again, Ernie, and just a few brief notes before we move to Q&A. In terms of the third quarter, we are very pleased that overall open-only comp store sales trends are up very strongly to start the quarter at the mid-teens level. This is despite what we believe is a negative sales impact from the Delta variant that we've seen since the last week of July. Currently, all of our stores in the U.S., Canada and Europe are open and approximately, 40 of our Australian stores are closed. While we are not planning for overall store closures in the third quarter to be significant, sales could also be negatively impacted if new COVID-related regulations are put in place. As we mentioned in the press release, due to continued uncertainty with COVID, we are not providing guidance for the third quarter or the second half of the year today. Lastly, I want to pick up on Ernie's point about improving our margin profile next year and beyond as we pursue opportunities, both on the macro level and within our business. First, while we expect the combination of freight, supply chain and wage costs to be higher in the back half of the year, we do not envision freight and wage -- we do envision freight and wage beginning to moderate as we move through next year. Second, to the extent we can drive outsized comps, that is the easiest way for us to improve our margin going forward. Further, we will remain focused on continuing to buy even better and opening more vendors. Also, we are seeing a less promotional environment and rising inflation as well as stronger sales in our apparel categories. We see all of these factors as opportunities for higher retails. At the same time, we remain laser-focused on continuing to offer consumers great values, just as we have throughout our 45-year history. In closing, we feel great about the strength of the business, both operationally and financially, and we are confident that we are capturing market share. We are extremely pleased to be in a strong financial position to make important investments in our business and return significant value to our shareholders through both our share buyback and dividend programs. Now we're happy to take your questions. [Operator Instructions] Thanks, and now we'll open it up for questions. Operator: [Operator Instructions] Our first question will come from Lorraine Hutchinson. Lorraine Maikis: Ernie, you made -- and Scott, you made a few references toward adjusting retail. And I was just curious, was that specifically for HomeGoods? Was that across the entire portfolio of brands and how do you balance increasing your prices with also providing great value to the customer? Ernie Herrman: Sure, Lorraine. Great question. First of all, when we referred to -- we are talking about all of the businesses. We believe perhaps there might be a little bit more opportunity that we're seeing in the home area. But we are, in effect, talking about all of the banners. We also have seen that we started a big change from the first quarter when we had talked about this is we want to more wait and see what happens around us. And as you would have expected, with the inflation of the cost pressures that I think all the other retailers are receiving, we're observing that there is less promotion as well as more pockets than we saw a quarter ago in terms of ability to raise retail surgically and selectively in certain areas of the store. And again, that applies not just in the home area. Even though I think the home area is disproportionately a place where we'll do more of that. We also think that the freight that has hit everybody, by the way, has created -- freight and wage, which we all knew this could be an unusual time to see this opportunity. First quarter, again, when we talked about this, we were going to be looking hard at it. We have just seen the ability to do that more than we were thinking we could do before. And I'm sorry, the second -- what was your second part of the question? Lorraine Maikis: Just how you think about raising prices, but also still providing... Ernie Herrman: The maintaining value, I think, is what you were questioning, right? So we mentioned -- I mentioned in the script, but we bottom up this strategy. It's a little like we used to talk to on our average ticket, and we'd say our ticket was down or whatever. Although that's been moderating in a nice direction and we're feeling good about that upside as we move forward. But our buyers drive where the retail adjustment opportunities are. It is not top-down-driven as far as what items we do that on. So the first mission, as always, and again, in the script, I mentioned this a couple of times as we've done in our 40-plus year history, we're always making sure our retail adjustment is providing still a tremendous gap and value for us versus the out-the-door retails of competition. So buyers do not do that unless we are still showing a great value. So if it wasn't for the fact that the retails around us are up a little bit or less promotional, we wouldn't be able to do what we're doing there to the degree that we think we can do it. And by the way, to the degree, which we think we'll be able to do it going forward. We also feel the -- another cost pressure we have been dealing with for the last handful of years was the ticket lowering. And in this environment, what we're starting to see now is that moderating. So again, what Scott and I have looked at it with the teams, as we look at next year, really, as we get to fourth quarter into next year, I think we really start seeing these -- really start seeing more opportunity to do more of what we just talked about because we have just started this mission. I think we are in a great position to surgically look at the way we're retailing goods really throughout the whole corporation over the next couple of years. And I think that's going to bode well for us. But great questions. Operator: Next, we will hear from Matthew Boss. Matthew Boss: And congrats on a really nice quarter. Ernie Herrman: Thank you, Matt. Matthew Boss: So Ernie, you cited material market share opportunity remaining. Where are you the most excited from here? And Scott, maybe just a follow-up on margins. Is there a way to rank the opportunities that you cited to improve profitability in the medium term? And I guess what I'm really trying to figure out is, is there opportunity to close the international profit margin gap or any structural constraints that would prevent Marmaxx from returning to that 13% to 14% operating margin profile as we think about it? Ernie Herrman: Yes. So Matt, I will go first and then Scott will back -- clean up, as they say. And the market -- you saw market share, man, we see it on a lot of fronts. So clearly, the most obvious one is the home area, which we've talked about and in the script, we're -- truly phenomenal results in our home area. Yes. We see that as a continued strength in that we are so differentiated. You know this. Our home area is very fashion-driven, extremely fast-turning. It's eclectic with great value, great brands, all the different categories in the world you would want. And it's probably our most impulsive-oriented right form of shopping banner that we have. So when a customer walks in, and let's talk -- we didn't talk much about it earlier in the script about the entertainment treasure hunt value in HomeGoods. It is off the charts, as we know, which is why we are having these just amazing outsized comps there. And just so you know, the home business throughout the corporation and the full family stores, so whether that's in Maxx or Marshalls, the same thing applies. Our home business is there are just as healthy. And when we look at international, also very healthy. So I would say the #1 market share thing will continue to be home. However, as we mentioned on the call, our apparel and some other areas of the store, which I don't want to put out there specifically right now, has been extremely healthy across men's, ladies, kids. And as those start to kick in, as you know, in our business, that helps us with our average ticket, but it also helps us, I think, with continued market share gain because based on a lot of store closures around us, a lot of them were branded apparel retailers where certain boxes have closed. And I think this presents an unusual opportunity for us to continue to gain more market share because of our branded content being really second to none, I think, in terms of also doing good, better and best which is another advantage we have when you look at some of our competition. They tend to be a little narrower in their scope of goods. They don't trade up as quite as high. And I think that range for us will allow us to continue to gain. That's why I'm so excited about it. Before I hand it over to Scott, the other thing I would like to say is on the margins that -- what we're seeing here is another plus is all of these areas, just like Lorraine had asked me, are presenting opportunities for us to either raise our ticket in total or adjust our retail surgically on select amount of goods and doing it in the right way, but I think that's going to kind of play out as we move forward next year. And it does allow us a goal. You were asking Scott about the margins overall internationally, et cetera. But we're feeling pretty bullish about really starting to get back to those double-digit margins as we look out to next year, are getting very close. And I'm sure Scott will -- and I'm talking in total, but I'm sure he will get into more of that international that you asked about. Scott Goldenberg: Yes. So I think, Ernie, the setup is that we think we can do this across all divisions. So I think we wouldn't be looking for any one division to get better. We're really looking for all divisions to get better in getting -- not necessarily -- it's not -- I think, as Ernie said, it's going to be a pace. We have to see what -- we want to make sure we're doing this prudently and do it right. But it would be over the course of time. I think the first thing is we get up to those double digits is once we get there and go beyond, is that we would be looked -- and I think it's mostly going to be through a strong merchandise margin, offsetting a lot of the cost pressures. But I think Ernie alluded to the higher average retail or the moderation in retail, I think, then resulting in a higher average retail will some of those expenses will moderate on the store and distribution and freight line as we get a higher average retail. And to be determined on the pace of that, but it could be 2/3 merchandise margin, 1/3 on the expenses because you do get a significant benefit. But a lot of that will be the pace, and we'll have to see as we move through the fourth quarter into next year as we start buying and get this benefit, that's when we would expect more of it to happen as next year. I think the other point that Ernie was making is that once we get to those levels, the first point is get to a point where our -- we can leverage on a -- we'd be flat or better on a low -- the 3, 4 type of comp. And that's what our expectations would be in the longer term of getting to that level. Once we get to that, then I think we'll be talking about higher overall pretax levels. But first, as you know, for many, many years, we've been delevering slightly on some strong comps. And I think now would be how do we get to a point, and we feel confident that we can do it, that we can stop that bleeding but on a low- to mid-single comp. Operator: Our next question comes from Michael Binetti. Michael Binetti: Thanks for all the help there on the AURs and the margins. I wanted to follow up with a question on SG&A. Scott, I think if we just run rate out the SG&A in the quarter, it could be trending to $1.5 billion or even $2 billion higher than calendar '19. I know there's been -- there were some COVID costs there in the first quarter, but I don't think that was much of an explanation in 2Q, you gave us the 30 basis points. So could you maybe talk about what's in that base of dollars this year that sticks? What becomes more leverageable? What's an investment this year? What are you investing in? But what becomes more leverageable as you look out to 2022? I know a lot of the focus in your prior answer was on the shift in retails that you spoke about. Scott Goldenberg: Yes. Let me unpack Q2 a little better because it's not straight. As you know, there's a lot of noise quarter-to-quarter and some -- there are things that are different quarter-to-quarter. When you just look at the surface on our 28% overall growth in SG&A compared to the 23%, you'd say on the surface, not that great and accounting for that deleverage of the 70 basis points. But if you exclude and you look at it on a per-store basis, just the COVID cost, which we don't believe will be hopefully around next year, we had approximately a 21% per-store growth and about 19% after stripping out COVID growth. So leveraged a bit there. There was one line item that we don't think will be as -- it was more of a catch-up due to the strong sale growth over our own plans in profit, both in the first and second quarter, made us do a bit of a catch-up on a lot of line items on the incentive accruals. It's a bit just the way when things are either lower than plan or underwater and then all of a sudden the catch-up, we had a bit of that. When you'd strip out the incentive accruals this quarter, we had approximately a 6% growth per store on a 10% comp growth when you look at it over 2 years. Remember, a lot of these are over a 2-year period. So I would say that we felt pretty good. And when you look to the third quarter, although not giving guidance, that incentive accruals will be -- there'll be some of it, but much, much, much less. And so the level of deleverage, if there is deleverage, will be less than what it is this quarter. So when you strip out just 2 line items, which we don't think are comparable and not necessarily go-forward, we feel pretty good about that. In terms of long term going forward, a little hard to say. That will depend on the level of sales and the level of what Ernie said on the growth on the average ticket. So too early to call, but don't see anything in the SG&A that's unusual other than the same level of minimum wage growth that we would expect to see going forward. Michael Binetti: So if I try to orient that to the past, I think about a 3 comp was a 3% inflation on SG&A was about normal, maybe a little higher per store per foot, however you want to measure it. And then -- but in the past, more of the comp was driven by unit volume that came with a lot of AUC costs. I think the AURs and the surgical flow through at a much higher rate. So it's more of the growth coming out in the fees... Scott Goldenberg: That would be the -- yes. Exactly. And that -- we'll have to see what that level of growth is on the AUR, exactly. Operator: Our next question will come from Kimberly Greenberger. Kimberly Greenberger: Okay. Great. So nice to see the momentum here in the business. I wanted to sort of tackle the unpacking the operating margin in a slightly different way. But if we could just start with the 150 basis points that you called out in incremental freight expense as well as supply chain and wage costs. Scott, is -- could you break down the 150? And is the incentive comp in that 150 as well? Scott Goldenberg: No. So yes, I already noticed that a few people, I thought -- obviously, we weren't as clear as we thought we were. The 150 is just freight. So we had other delevers in terms of supply chain and wage as well. And then obviously, we called out the impact from the store closures. So the 150 was just freight. And that's a combination of both freight, which is inbound and outbound, but also our ocean freight. Ocean freight is probably the bigger sticky one for at least the near term. The rates increases have, as you know, have been up on both intermodal and on trucking and the ocean freight, and that's why we talked and put in, we believe, the costs are still going up higher in the back half as ocean freight rates have, in some cases, gone up 200%, which we would expect in the third and fourth quarter. We don't think this level of freight deleverage, which will be more than that 150, at least what we're seeing now, will be at the sustained levels. If they are, that means the sales levels are going to continue because that means there's a tremendous demand. So we would expect those to moderate to some degree and hopefully a lot as we move through next year. So on top of the 150, we had deleverage from wage. We also had the bonus accruals, which was a substantial amount and some supply chain. Again, the strong leverage on the 20 comp and the strong merchandise margin more than offset all that. Kimberly Greenberger: Okay. Got it. So as I think about just sort of your -- drawing the bridge from your operating margin in the quarter, 8.7%, add back the 2 points for debt extinguishment, 50 basis points for closures, 30 basis points for COVID, then we get to like 11.6%. If you were to get all the freight back next year, that would suggest like a 13% or so margin. And obviously, you're probably not going to get all of that back next year. But it sounds like that 13% sort of adjusted result this year, you think there were still some higher costs in there with supply chain, wages and incentive compensation, and those will be leverageable in future years. Am I hearing you correctly? Scott Goldenberg: Yes. Again, to the extent it's not just that linear like that. Overall, correct, we also -- the merchandise margin was extremely -- you get a lot of benefit from down the markdown line that might not be at the same level because of the 20 comp. But overall, we see more positives than negatives, but I just can't add up all the positives and take out all the negatives to your point because it may -- we still may have some incremental increases off of this year just at a moderating rate. Kimberly Greenberger: Got it. Okay. Great. Scott Goldenberg: So that's the higher -- it's a question of how high. You just can't add it all back and then add it... Ernie Herrman: And we don't know that, Kimberly, if it's a good discussion, but we don't know if the freight necessarily goes significantly down as a rate next year, which you were saying -- I mean, that would be great. And certainly add to our bullishness on those double-digit margins. Scott Goldenberg: Yes. Another way to look at it, though, would be we'd like to think you can run double-digit comps forever, but you might not be able to. So you have to also back down what happens if you go to a more normalized comp, you'll have less leverage, but then you'll have also less expense. So I think there's a lot of moving factors. I think what Ernie said is as you approach and be double digits when you get to a lower comp, that we think is about being not deleveraging and over time, leveraging on that lower comp. Kimberly Greenberger: Yes, in order to deliver those higher margins over time. That's fantastic. Scott Goldenberg: That's right. Exactly. Operator: Our next question will come from Paul Lejuez. Paul Lejuez: Scott, sorry if I missed it, but did you say what merch margin was up this quarter? And if you could provide any color by segment? And then just a longer-term question for Ernie. Just you talked about that $60 billion opportunity. I'm curious if you could talk about international growth and the role that plays in getting to that level. Maybe talk about the store opportunity in each of the markets that you operate in today versus new markets? Just how you're thinking about that long term? Ernie Herrman: Absolutely. So I think I'll go first, and then Scott will come back to you on the merchandise margin. So longer term, also a great question, Paul, because we're looking at this all the time in terms of the growth because, obviously, we have a higher growth opportunity, international as a growth rate, not necessarily in dollars. But we are -- as you could see from the results, very pleased with our open-only results in Canada. Europe, Australia has been absolutely terrific. So we are also looking -- we didn't get into it on that question a couple of minutes ago, but we are looking at making some positive margin improvements in those divisions also over the next 18 months. We feel there's opportunity there. Regardless of what happens with exchange rates, we would love to see the exchange rate obviously going in the right direction since we buy so much in U.S. dollars, specifically for Canada and Europe. But regardless of that, we're feeling very bullish on the market share opportunities. Many store closures, Paul, in the U.K. and in Canada continue -- and Canada is one of our most dominant market shares that we're already in. We have a higher market share there than we even do in the States. So very bullish. I think more opportunity in terms of pure growth rate in Europe in terms of new stores, I think you mentioned new store opportunity. So what we did there, and you've seen the cycle, as when things got more challenging there in terms of Brexit, margin, exchange rate and then what was going on obviously with COVID, we pulled back on store openings there, but now we are relooking at that and ramping it up to a more of a selectively, obviously, because we have to look at the right sites that make sense for us in the different countries, such as in Germany, where we've still had a tremendous amount of new store opportunities and still do. So we're pretty bullish on that. And obviously, Poland and Austria and Netherlands all have performed well. So pretty bullish on margins and sales overseas improving. One thing I would like to mention, it ties in with the new stores there as well as here, is overall we are pretty -- we have a remodel program, which we moderated recently during COVID, but now that as we can see how strong we're coming out of this and how well we're starting to -- so good about leveraging going forward. Scott and I have been looking at really ramping up our remodel program and all the divisions to continue with this market share. That would apply to Europe in Canada. And not as much Australia because those are all relatively new. HomeGoods and Marmaxx specifically because we're capturing all these new customers along with existing customers and one of the best ways to invest cash and the use of our cash is to invest in the business, and we feel remodels, given what's going on for us right now, are a great return on investment in terms of maintaining our new customer shopper. So I know you didn't kind of ask about that, but it does relate to, I think, our international opportunities as well. And I'll turn it back to Scott as far as the merchandise margin. Scott Goldenberg: Yes, Paul. So probably what you would expect, given that I said that we had freight pressures of all in approximately 150 basis points, which included both our ocean freight and our -- all of our other domestic and inbound freight. We are up over -- we are up 70 basis points after including that freight. So approximately 220 basis points up prior to freight. Could be really broken down half between markdowns and mark-on. Again, the markdowns was a function -- some of it was -- we had a little over accrual in some of our European business on -- when we were closed, but just strong markdown performance across the board. And then mark-on, again, was very strong as well. So again, that's very pleased with that similar type of performance we had in the first quarter on that as well. The one thing we would say is that freight line feels to be pressured as we -- at least move through the third and fourth quarter. Paul Lejuez: So any breakdown by segment on merch margin? Scott Goldenberg: No. No breakdown at this point. We're going to... Operator: Our next question will come from Omar Saad. Omar Saad: Great job this quarter. You guys mentioned homegoods.com, which is going to be launching in the third quarter. I'd love to get a little bit more of an update and some color around that. Is it going to be a similar strategy to what you've used in the Marmaxx division in terms of separate customers, separate inventory, kind of a separate differentiated experience versus what's going on in the stores? And then I also -- and is there any opportunity to kind of create a more integrated experience in the home category versus some of your traditional categories where you could have connected inventory between stores and online? And also, Scott, if you don't mind, could you clarify the comment? I think you said you've seen some Delta impact from the Delta variant since late July. I'm assuming you mean Europe and Australia, but if you could just clarify that. Ernie Herrman: All right, Omar. I'll go first. First of all, very excited about homegoods.com. As you know, our -- boy, some of our most passionate customers. I think you and I have talked about this in the past, right, our HomeGoods customers are so passionate. So with that, there is a little tweak in the strategy. And I think we've talked about this briefly, but you're asking for a little bit more color, which I'm happy to provide here. It is a little different in the approach than Marmaxx is for a couple of reasons. And I think I'm going to answer both of your questions at the same time because your second part of the question was, is there any opportunity to have it be a little more connected. And so we would say, yes. And so as opposed to having a different buying organization completely, which is we have at Maxx and Marshalls, HomeGoods, as you know, is our fastest turning, most eclectic business that we have out there. So by a natural nature of the beast, even our HomeGoods stores tend to vary more from store to store, they turn so fast and there are so many SKUs. So we've approached the HomeGoods online business to try to get the best of both worlds. So we have -- we're really leveraging actually our merchant organization in HomeGoods, and we are really peeling off goods from our HomeGoods inventories and using that to create the site and the eventual shipping, but really using our merchants and our planning organizations are more joined together in HomeGoods than they are in Marmaxx. And the way we're buying, we have more point people at HomeGoods, but we're really buying the similar mix, which is I think what you were asking about. So the other benefit is when you want to get multiple purchases as you know, we tend to ship some things not in complete sets. We ship a set. But when they're in the store, the customer could buy 2 of something and leave 2 chairs, et cetera. This is where our homegoods.com business should be extremely complementary because it allows a customer to be more connected like you were asking. So if somebody sees something in the store and online, they can almost execute a buy complementary where it all kind of goes together. So you could really outfit a room or a whole look a little easier by kind of supplementing your in-store purchases with your online purchases with HomeGoods. And that's why it's been a bit of a different strategy on the way we're buying it, which, by the way, should leverage profit for us faster. We don't have as much overhead as we do in the T.J. Maxx and Marshalls online as we do there. This is much leaner setup. And we are currently playing with a shipping strategy on how we're going to ask the customer to pay for shipping. That might be a little different, but I won't get into that here. It's just what you need to know is it -- we believe it's really set up to supplement in a very conducive way where we should get multiple purchases and it shouldn't actually help our store and online at the same time. So a great question, the way you asked it because it is going to be executed differently. Now I will have Scott. Scott Goldenberg: The question I think was about the COVID in the -- as we move -- started the second -- third quarter. First, it was a -- it wasn't necessarily due -- you're right. We do have stores closed in Australia. It wasn't -- that really wasn't the -- really what our comment was about that we put in the release in the script. It was more that we pretty much in the U.S. and in Canada, we had seen a slowdown. I used the word because the sales are still very strong and they're strong both in apparel and in-home versus -- as we moved into the last week of July and the first 2 weeks of August. The basket has remained strong. Our traffic is still up. But the other thing I also would say is that as a reminder, the Q3 of FY '20 that we're reporting and going against also had a higher comp, both in the overall third quarter than the second quarter and also was higher in the beginning of the third quarter as well. So that's probably a piece of it when you look at it on a 2-year stack. Operator: The final question of the day comes from Adrienne Yih. Adrienne Yih-Tennant: Great. Ernie, I agree with your comment towards the end of your prepared remarks about being set up extraordinarily well for '22. One of my questions for you is the inventory is always a topic. And I know you guys talked about the availability of it. But if we straight look at the balance sheet inventory $5.1 billion now to $5.1 billion 2 years ago, on the $2 billion in extra sales, how are you doing that? What is the efficiency that's gained there? And can you sustain that because you're comfortable with that position? And then my second question for -- my one question for Scott. When are we going to get back to that 4% non-comp or new store growth? Is that going to be next year? I'm sure you're working on your plans now. And great, great quarter. Scott Goldenberg: Yes. Let me... Ernie Herrman: You want to go first, Scott? Scott Goldenberg: You're... Ernie Herrman: You're throwing them for a loop, Adrienne. Usually, I go first and he -- but go ahead, Scott. Scott Goldenberg: I'm going to pay for this later. But just to be clear on the inventory at the end of the second quarter was in the similar position on an average per store compared to '20, both quarters, both in the stores and overall on the DC. We had a lot of in-transit inventory at the end of the first quarter, a lot of in-transit inventory at the end of the second quarter. Obviously, we didn't specifically say, but we certainly have a lot on order and talk about our ability to -- availability has been great. The inventory position, like we said, compared to 2 years ago, we have less store inventory. Structurally, the way the stores from a shopability and all that, we have less fixtures and all that, so approximately 10% is just due at the store level due to that. So we have -- we're turning faster, almost 1 turn faster both in the first and second quarter due to having the lower inventory, and it's paid dividends in terms of the markdown. So we feel good about that. And the other thing is part of it, which is hard to -- we have less packaway inventory. So that's a bit of the piece of it in our DCs. And the last thing is, particularly in the first quarter and in the second quarter, the trends, we were buying to better trends. Clearly, we saw the home trends were up, but the apparel trends have gone also up. And so we're chasing more than we typically would have been compared to 2 years ago. Ernie Herrman: So Adrienne, let me give you a little more color also on how it's -- well, the first thing I'd like to do is give credit to our teams because they have really -- all the teams. And when I say that, the buyers, our logistics teams, our distribution services teams, the stores getting the goods out. So what we've done here is every functional areas had to really execute a little differently and it varies by category, but I'm very proud of all of them because they've been as you alluded to, it's been -- it's a strange market out there, and the inventories at points in times have been up and down. But a couple of things that have been happening. The buyers when -- if they're in a category when things were a little light, they've been pulling the trigger a little sooner in buying with longer lead times than we typically would. Versus as there are out there, there are many categories that are extremely loaded, and they'll buy it even closer hand to mouth. So I really give them a lot of credit. The logistics teams have been securing the freight capacity, we need to get the goods to our DCs and stores to meet our strong demand, and we're paying more when we need to. So as always, and I know we've talked to you and others about this, we do that because we think we will figure out -- as witnessed by what we're talking about today, we'll figure out later how to offset the cost, but we want to continue to gain the market share and gain customers for the future. Again, the best thing for our business for the next couple of years is to continue to grab this outpaced market share -- paced market share opportunity that we're on right now. Here's the ironic thing. I believe the disruption in the supply chain is going to create a future buying opportunity for us. So when you look out at the end of this year, here's what I think. So we've talked about these margin opportunities for next year, but what we haven't factored in because those are really more based on retail adjustments, average ticket going up. What we're not factoring in is if the supply chain continues to be choppy, which it has been. We will be -- this is going to be classic off-price textbook execution where there will be more uneasiness out there, which in my eyes, typically creates even more opportunity, buying opportunities. So in that case, we probably get the buy goods a little bit better. So then you're getting it out of the cost and helping your merchandise margin on the other side. So I'm just kind of pretty excited about what's going on right now, but I'm glad you asked that because it really is -- there's a lot going on, on that front right now in terms of inventory and supply chain, et cetera. Okay. That was our last call. We really appreciate and thank you all for joining us today. We'll be updating you again on our third quarter earnings call in November. And I really can't say enough from the team here at TJX. We hope you all stay well and wish you good health. Thank you, everybody. Operator: Ladies and gentlemen, that concludes your conference call for today. You may now disconnect. Thank you for participating.

Operator: Ladies and gentlemen, thank you for standing by. And welcome to The TJX Companies First Quarter Fiscal 2022 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference call is being recorded, as of today, May 19, 2021. I would now like to turn the conference call over to Mr. Ernie Herrman, Chief Executive Officer and President of The TJX Companies Incorporated. Please go ahead, sir. Ernie Herrman: Thank you, Ivy. Before we begin, Deb has some opening comments. Deb McConnell: Thank you, Ernie, and good morning. The forward-looking statements we make today about the company’s results and plans are subject to risks and uncertainties that could cause the actual results and the implementation of the company’s plans to vary materially. These risks are discussed in the company’s SEC filings, including without limitation the Form 10-K filed March 31, 2021. Further, these comments and the Q&A that follows are copyrighted today by The TJX Companies, Inc. Any recording, retransmission, reproduction or other use of the same for profit or otherwise without prior consent of TJX is prohibited and a violation of the United States copyright and other laws. Additionally, while we have approved the publishing of a transcript of this call by a third-party, we take no responsibility for inaccuracies that may appear on that transcript. Thank you. And now I’ll turn it back over to Ernie. Ernie Herrman: Good morning. Joining me and Deb on the call is Scott Goldenberg. As we’ve done throughout the pandemic, I’d like to start our call today by saying how truly grateful I am for the hard work and dedication of our global associates and their continued commitment to our health and safety protocols. I want to give special recognition to our store, distribution center and fulfillment center associates who continue to physically come into work. In recognition of their continued efforts, we awarded a vast majority of them an appreciation bonus, which was the fourth appreciation bonus that we have paid during the pandemic. While the health crisis is beginning to improve in some parts of the world, there are many areas that are still facing challenges or have become worse. Our hearts go out to everyone whose lives have been impacted by this virus. We are hopeful that more people around the world will have access to the vaccine in the coming months and that we can move past this health crisis soon. Moving to our business operations, during the first quarter, we were very pleased that our U.S. stores were able to stay open. However, we continue to have a significant number of our stores in Europe and Canada that were temporarily closed at certain times throughout the quarter due to government mandates. Currently, approximately 300 stores remain temporarily closed, all of which are in either Canada or Europe. Around the world, we continue to prioritize the health and well being of our associates and customers and our stores, our distribution centers and our offices. Now, I will recap our first quarter results. First, I am extremely pleased that our overall open only comp store sales when compared to fiscal 2020 increased 16%, which well exceeded our plans. We believe we saw a benefit from consumers feeling more comfortable leaving their homes, visiting our stores and being happy with the brands and values they found. Our home businesses across all of our divisions continued their phenomenal sales trends. Further, we saw strong open only comp increases in many other categories and positive open only comp store sales in overall apparel. Open only comp sales were also outstanding across each of our divisions, which indicates to us that our value proposition continues to resonate in all of our geographies. I’ll talk more about our divisional performance in a moment. Next, overall sales of $10.1 billion were a first quarter sales record, despite the temporary closing of our stores for approximately 14% of the quarter. We are extremely pleased that we are seeing our most loyal customers return to our stores in the U.S. and that new shoppers are discovering our great values and exciting treasure hunt shopping experience. All of this gives us great confidence that we are set up extremely well to continue driving sales and gain additional market share over the medium- to long-term. Third, merchandise margin remains healthy. The buying environment is excellent with the marketplace loaded with a great selection of merchandise across good, better and best brands and trending categories. Our buyers are doing a tremendous job sourcing quality branded merchandise to keep up with the strong consumer demand that we have been seeing. Lastly, first quarter earnings per share of $0.44 we’re also well above our plans, despite a larger than expected sales loss, as our non-U.S. stores were temporarily closed more than we had anticipated. Now to our divisional performance, which is again compared to fiscal 2020, beginning with Marmaxx. Marmaxx’s open only comp store sales increased an outstanding 12% and overall sales increased 14% versus the first quarter of fiscal 2020. Marmaxx’s home business continued its excellent performance with a comp increased some of the HomeGoods as shoppers continue to spend on their homes. We were also very pleased to see a comp sales increase in our overall apparel business, which is driven by strong demand in select categories. We believe our apparel sales benefited from wardrobe refreshing as more consumers began resuming more normal activities. We feel very good about Marmaxx’s sales momentum and our ability to flex the merchandise mix to the category shoppers want. At HomeGoods, open only comp store sales increased phenomenal 40%. During the quarter HomeGoods and Homesense sales were remarkable across all major categories and geographic regions, as their eclectic mix of home fashions from around the world continue to resonate with consumers. Similar to Homesense sales at Marmaxx, we believe HomeGoods sales continue to benefit from consumers spending more time in their homes during the health crisis. We have been aggressively investing in the growth of our home division for many years and are convinced we are set up very well to build upon our market leadership position in the United States. While Canada continues to face challenges with store closures, we are very encouraged with the sales trends we have seen when our stores are open. TJX Canada’s open only comp store sales increased 9%. Open only comp sales at our Homesense banner and home sales at Winners and Marshalls were also in line with the increase we saw with our HomeGoods division. Shoppers love our great values in Canada and we are very confident that this division is well-positioned to return to and exceed their pre-pandemic sales levels once we are beyond this health crisis. Now, The TJX International, like Canada, Europe faced continued store closures and we expect them to continue into the second quarter as well. However, during the limited time our stores were permitted to be open. Customer excitement was very high and response for our values was fantastic. We were very pleased with TJX Internationals 11% open only comp store sales increase. Given the length of time our stores were closed in Europe, we saw significant pent-up demand when we reopen later in the quarter. As the only major brick-and-mortar off-price retailer of significant size in Europe, we see an opportunity to scale our business and capture a bigger piece of the European retail market over the long-term. In Australia, where our stores were generally open for the entire quarter, comp store sales were extremely strong for both our apparel and home categories. As to e-commerce overall, we saw terrific growth over first quarter fiscal 2020 sales levels in both the U.S. and U.K. We are still on track to launch homegoods.com later this year and are looking forward to offering consumers even more exciting home fashion items at great value online. Moving on, while the health crisis persists, we are confident that the core strengths of our off-price business model will continue to help us navigate through the current environment, while setting us up very well to succeed in a more normalized environment. Let me take a moment to highlight these strengths. First, is our relentless focus on value, we believe our value proposition, which is a combination of brand, fashion, price and quality, is as important as ever to consumers. Second, is our world-class global buying organization of more than 1,100 buyers. These buyers are located in 12 countries across four continents and sourced from a vast network of approximately 21,000 vendors. We see our global buying offices and reach as a tremendous advantage, particularly in an environment where travel remains limited. Consumer demand across our home businesses has been especially strong. So, our ability to successfully leverage our global buying has been a great benefit. We believe our 500 plus homebuyers around the world allow us to offer consumers a truly global differentiated merchandise mix versus other large retailers. We strengthened our relationships with many of our vendors and have added thousands of new vendors for apparel and home product over the past year. All of this allows us to offer a fresh and exciting mix of quality-branded merchandise to our shoppers every time they visit. Next, the flexibility of our buying, store format and distribution network allows us to take advantage of consumer trends and hot categories as consumer demand changes. We also reach a very wide customer demographic in urban, ex-urban, suburban and rural markets. With our fast growing inventories, our customers can discover something new in-store and online every time they visit. Lastly, is our global presence, with nearly 45 years of operating expertise in the U.S., 30-plus years in Canada and more than 25 years in Europe, we are an off-price leader in every country we operate in. Even in Australia, a country we have entered more recently, we are an off-price leader. We have spent decades establishing relationships with vendors and landlords, and building out our global buying offices, distribution networks, systems and infrastructure. Further, we have expansive country-specific knowledge of consumer shopping habits and have earned customer loyalty. We believe our well-established global off-price retail model and level of international expertise is a tremendous advantage, and our size and scale would be very difficult to replicate. Now, I’d like to walk through the reasons why we are confident, that we can drive sales and traffic growth in a normalized environment and why we continue to see a significant opportunity to increase our market share across each of our divisions. First, we believe the appeal of our entertaining treasure hunt shopping experience, gives consumers a compelling reason to shop us. Based on what we’ve seen for decades, including the past year, in-store shopping is not going away. We see our stores as a desirable destination for consumers seeking some stress relief or, quote, me time, unquote and also a great place to shop when they are seeking inspiration and looking to discover new things, which is difficult to replicate online. Second, we see a significant opportunity to grow our global store base at each of our divisions. In total, we believe, we can open more than 1,600 additional stores to grow to about 6,275 stores in the long-term, just with our and our current countries. Availability of real estate is terrific and we see plenty of opportunities to open new stores or relocate existing stores. Further, we believe our strategy of locating stores in convenient, highly accessible locations, makes it very easy for shoppers to find and visit us. We are anticipating incremental traffic once consumers return to their workplaces and go out more, as they will be passing by our stores much more frequently. Next is our focus on marketing to attract new shoppers, while staying top of mind with our existing customers. This year, we have already launched new campaigns across television, digital and social media platforms for a number of our banners. These campaigns continue to reinforce our value leadership, while also highlighting discovery, fashion and quality. I hope, you have seen them, the creative is excellent. Let me take a moment to highlight a couple of them. First, we took a unique approach for Mother’s Day and created a multi-brand music video in the U.S. that was highly successful and was viewed by more than 17 million times on YouTube over a two-week period. We also did, an integration with the NBC prime show, The Voice, where each of the top 20 contestants were styled head-to-toe with products from Marshalls and performed a powerful segment lasting over two minutes. This work continues to reflect our leadership in fashion and value and helps us show that our stores can be for everyone. Further, we continue to see strong overall customer satisfaction scores where we are open including on our ongoing health and safety protocol measurements. Lastly, our research tells us that, overall, we continue to attract new shoppers of all ages into our stores, including a significant amount of Gen Z and millennial shoppers, which we believe bodes well for today and in the future. Fourth, we see a great opportunity to capture a bigger share of the consumer’s wallet due to other retailers closing stores. We also believe that these store closures may lead to even better product and real estate availability and more favorable lease terms. Lastly, we are investing in new stores and remodels, and our distribution network and systems to ensure we have the infrastructure in place to support our global growth plans. In closing, I want to again recognize the exceptional talent that we have across this entire company. With outsized open only comps in the first quarter, our organization really stepped up from buyers who successfully chased the goods in the marketplace, to our associates in planning and allocation, distribution centers, logistics and store operations. Each of these groups has a vital role to play to ensure our merchandise flow and keep up with the consumer demand we have been seeing. It’s the collective efforts of all of our associates and their dedication to TJX that brings our business to life for our customers every day in all kinds of retail environments. Our outstanding first quarter results tell us that consumers are seeking out our branded quality merchandise and great values. Clearly, they are enjoying our entertaining treasure hunt shopping experience. Overall, open only comp store sales trends for the start of the second quarter remained similar to the first quarter. Looking ahead, I am convinced that TJX is very well-positioned to emerge from this health crisis in a position of great strength. We see numerous opportunities to continue our global growth and are excited about the runway for growth that we see ahead for TJX. Now, I’ll turn the call over to Scott for a financial update and then we’ll open it up for questions. Scott Goldenberg: Thanks, Ernie, and good morning, everyone. I’d like to first echo Ernie’s comments and thank all of our global associates for their hard work and continued commitment to our business. I’ll start today with some additional details on our first quarter results. As Ernie mentioned, overall open only comp stores increased an outstanding 16%. As you described in the press release, our first quarter open only comp store sales compare fiscal 2022 sales to fiscal 2020 sales. In the first quarter, we continued to see a very strong increase in our average basket as consumers put more items into their carts. In the U.S., where we open -- where we were opened the entire quarter, customer traffic compared to fiscal 2020 increased for the first time since the start of the pandemic. At Marmaxx, we saw a significant improvement in customer traffic the fourth quarter and at HomeGoods customer traffic remained outstanding. Overall sales for the first quarter increased 129% over fiscal 2021, as stores were closed for approximately 50% of the first quarter last year. More importantly, when comparing to fiscal 2020, first quarter sales increased a very strong 9%, despite the negative impact of approximately $1.1 billion to $1.2 billion of lost sales due to the temporary closings of our stores across TJX for about 14% of the quarter. These closures were primarily in Europe, which was closed for about 76% of the quarter, including essentially all of February and March, and in Canada, which was closed for approximately 25% of the quarter. Pre-tax margin for the first quarter was 7.2% and merchandise margin was up slightly compared to fiscal 2020. During the quarter, we were very pleased with our strong mark-on and lower markdowns. However, these were mostly offset by significantly higher freight costs, which we expect to persist for the remainder of the year. Moving to the bottomline. First quarter earnings per share were $0.44. As detailed in our press release this morning, we believe the temporary store closures in Europe and Canada during the first quarter resulted in a significant loss of profit dollars, with an estimated negative impact to earnings per share of approximately $0.21 to $0.24. Additionally, I want to remind you that our first quarter pre-tax margin and earnings per share reflect some significant expense headwinds compared to the first quarter of fiscal 2020. These include approximately $200 million of net costs related to COVID, approximately 40 basis points of additional interest expense and incremental costs from freight, supply chain and wage pressures. As for inventory, it was up 3% last year and store levels are where we want them to be. Our buyers are doing a great job sourcing merchandise and have been able to chase the goods we need to satisfy consumer demand. To reiterate, availability of merchandise is excellent. Moving on to our cash flow and liquidity, we ended the quarter in a very strong liquidity position with $8.8 billion in cash. With our strong liquidity, we took several proactive actions to deleverage our balance sheet and reduce our annual interest expense. First in April, we paid down the $750 million note that was due to mature this coming June at par. Secondly, this morning, we announced make-whole calls for our $1.25 billion principal outstanding 3.5% notes maturing in 2025 and our $750 million outstanding 3.75% notes maturing in 2027, both of which were issued last April. As a result of this action, we are expecting a pre-tax debt extinguishment charge of approximately $250 million in the second quarter. We expect the net results of both of these actions to be a $2.7 billion reduction in our outstanding debt and over 900 -- and over $90 million of annualized interest expense savings. Further, after these actions and including the tender refinancing this past November, we expect the average interest rate on our outstanding debt will be about 2.5%, which is in line with our pre-COVID level. Lastly, we declared a dividend of $0.26 per share in the first quarter. In the second quarter of fiscal 2022, we’re planning to declare a dividend at the same rate, subject to Board approval. Now to the second quarter, as a point of reference for the start of the second quarter, overall open only comp store sales trends remain similar to the first quarter. For overall sales we are current -- we currently have approximately 300 stores that are temporarily closed. Based on what we know today, overall, we expect stores to be closed for approximately 3% of the second quarter, which includes Canada being closed for an estimated 17% of the quarter and Europe being closed for about 7% of the quarter. We are planning a $275 million to $325 million negative impact to our overall second quarter sales due to the store closures. These expectations could be negatively impacted further, if current mandates are extended or new ones are put in place as they were last quarter. At this time, we are not planning any significant store closures in the back half of the year. In closing, we feel great about our first quarter results and the momentum of our business. We believe that a growing topline and a strong merchandise margin are excellent indicators of a healthy retailer. Additionally, we have a very strong balance sheet and are in excellent financial position to invest in our business to support our growth plans. Now we’re happy to take your questions. As we do every quarter, we’re going to ask you that you please limit your questions to one per person and one part to each question. We respectfully ask that everyone stick with this request to both keep the call on schedule and so that we can answer questions from as many analysts as we can. Thanks and now we will open it up for questions. Operator: Thank you. [Operator Instructions] Our first question comes from Omar Saad. Your line is open. Omar Saad: Thanks for taking my question. Good morning. Really great quarter. I would love to actually hear more on the traffic side of the equation. We know you guys do a great job once you get people in stores. Can you talk a little bit about the consumer’s willingness to come back to the stores? How that’s been building? Is it vaccine-related? Are you seeing that older customer come in as they get vaccinated and start to return to in-person shopping again? Thanks, Scott. Thanks, Ernie. Ernie Herrman: Yeah. Great question, Omar. Traffic has been very healthy. Scott will give you a little bit of a trend line discussion there, but nothing in terms of -- nothing standing out in terms of a difference in age demographics by the way. But we have such a broad-based age demographics across the business, so probably less likely for us there. But, Scott, on the traffic trend. Scott Goldenberg: Yeah. It’s hard to get real reason on the age. What we’ve been seeing at least over the last couple of quarters is a significant number of the new customers that we’re getting back are… Omar Saad: Yeah. I know… Scott Goldenberg: … skewing even younger… Omar Saad: Yeah. Yeah. Scott Goldenberg: … remarkably at HomeGoods that’s even continuing. So, overall, the average age of the customers in both boxes is likely, when we finish up and get current results, probably, younger than it has been. So that’s really good. The traffic patterns, once we got past some of the weather issues that we called out on our last call have been consistently strong through. We’ll call it the Maple, the Fred [ph], that February, March and continuing right up to, as Ernie talked about, similar sales today. And that’s at both more -- speaking really more Marmaxx and HomeGoods because of all of the closures that we’ve had. So the basket has been remarkably strong… Omar Saad: Okay. Ernie Herrman: Strong average basket, Omar. Scott Goldenberg: And has not really decreased at all, so customers continue to put more units and the traffic continues to be strong and consistently staying that way. Omar Saad: Thanks. Ernie Herrman: Thank you. Operator: Thank you. Our next question comes from Matt Boss. Your line is open. Matt Boss: Great and congrats on the improvement as well. Ernie Herrman: Thank you. Matt Boss: So, it’s kind of a two-part question, probably, more for Scott. I guess, first on merchandise margin. So the improvement this quarter relative to pre-pandemic despite the freight, I thought, was really impressive. I guess, so first, just sustainability or your ability to continue that trend in your opinion? But then second, at the EBIT margin level. So I think three months ago, Scott, you laid it out well, there’s a lot of moving parts. But I think you basically said at a three comp, you see 30 basis points to 40 basis points of underlying margin pressure, but then we needed to consider freight, supply chain and COVID costs this year. So am I thinking about these pieces right and any factors or changes to these factors to think about now that we’re three months later? Ernie Herrman: Yeah. Matt, I think you’re right, a lot of that is for Scott. I will just jump in on the merchandise margin, the healthy merchandise margin. Certainly, what we’re seeing and it -- fortunately, it lines up with our model, and again, I give the teams a lot of credit. We went in with the right amount of liquidity and so the teams did not -- I would say, they were right in the sweet spot of how much and this applies to all the divisions, most especially, obviously, right now, Marmaxx and HomeGoods buying to about the right level of trend. And then when you’re staying on trend like that with what’s going on the buyers have done a great job of being able to buy so opportunistically in the market. So that helped. The sales being so strong has been a big benefit on our markdown rate, also helping our merchandise margin. As I said in my script, it’s coming across, we’re making very advantageous buys across whether it’s the level of good vendors, moderate or best vendors, it’s been everywhere, but in trending categories, which has been key. So we’ve had certain categories that are outpacing the store and the merchants have done a great job of buying into those at the right cost and at the right retail, because, as you know, we’re ultra-sensitive about where we retail are good at, and so, again, I give them a lot of credit. I will tell you, we have a challenge down the road here as we look into probably more like the third quarter, where last year we were up against almost an artificial margin bump up based on what had happened in the country during the COVID shutdown. And so there might be a little bit of a mark-on or markdown jeopardy in a window there of a few months where it’s going to be a little more challenging and I think to show the merchandise margin at these rates. And by the way, I’m talking aside from freight, which has obviously gone up everywhere. I’m talking kind of take that out of the equation. But we might have a little challenge there. However, we’re so opportunistic, I have faith that we can do better than what we’re probably thinking our challenges there. I will now let Scott talk to the margins. Scott Goldenberg: Yeah. I think just to reiterate a little what Ernie said on the merchandise margin in the back half. I mean, I think, if we compare it to -- again as we move, I think, the second quarter trying to make comparisons and we feel good about as Ernie, the overall merchandise margin, especially if you take freight out of the equation compared to two years ago. This third quarter last year where Ernie was comparing to 2021 is really on the mark-on and the markdowns. We also had some technical issues where we had some accruals in which -- and both on markdowns and shrink, which we reversed in the back half of the year, which are not a fiscal 2020 issue, but when comparing to last year or benefits that we saw last year in the back half that we won’t repeat. Ernie Herrman: That’s a good point, Scott. So just to clarify, Matt, what I was talking about on the challenge will be against in FY 2021, not against 2020 as much. Scott Goldenberg: So -- yeah. So the other aspect is in terms of some of the two-year flow-through, it’s hard to isolate, especially when you look at the quarter we’ve just had, when you have -- we have COVID costs, which we’re still roughly in full force and we can talk about that more. But I would expect those to moderate and Ernie can talk about them more as we move through the second quarter and back half of the year. I think what -- at least at the moment is stubborn and we’re still in the middle of assessing like everyone else are freight costs. But probably compared to both last -- what we -- when we talked three months ago and earlier in that, the freight costs are probably going to be stubbornly high at least for the rest of this year. As we’re dealing with the same issues of driver shortages and rate increases likely to be higher than what we had originally thought. So I think that piece of it is still -- is going to be persisting. Having said that, we have been, I think, as Ernie mentioned, we’re doing a great job of getting the goods. Paying more for it, but we’re getting goods. Our inventories are in good shape and the buyer -- and our planning and allocation teams have been allocating those goods and doing a great job as you can see by our sales. On the other hand, the wage costs have been -- there’s been pressure more. It’s still stubborn in the DCs as we’ve had a number of our DCs where we’ve had wage -- increase our wage rates. But on the positive side, both in the stores and the DCs, although, we have pockets of challenges, we’ve been able to hire back to our staffing -- close to our staffing levels we need to staff the store albeit at a deleverage compared to prior year. So, again, the positive is, we adjust as necessary, but we’ve been able to staff the stores and the distribution centers to meet the demand. So it’s hard to compare with the lost sales in Europe and with the COVID costs exactly what those breakpoints would be on sales at this point. Operator: Thank you. Our next question call comes from Paul Lejuez. Your line is open. Paul Lejuez: Hey. Thanks, guys. I want to talk about Marmaxx, specifically. Sales were up about $800 million or like 14.5% versus the first quarter of 2019 or you call it 2020, but margins are down 130 basis points. So I’m just curious, if you can talk specifically within that business, how the deleverage, where that’s coming from and what sort of increases you might need to see versus 2019 for margins to stabilize or is there some point in the year where you see the pressure points abating on that margin? Thanks. Ernie Herrman: Yeah. Scott Goldenberg: Yeah. Again, I can certainly answer to the first quarter. Well, the second quarter goes back to what -- how COVID costs, how we drop, how those decrease, what costs -- we have to see what costs, and Ernie can talk a little about this in terms of how much apparel sales and how that relates to expenses in average retail. So to... Ernie Herrman: But COVID cost is a big reason for the deleverage, as well as others, but… Scott Goldenberg: Yeah. The COVID costs alone to Ernie’s point… Ernie Herrman: Yeah. Scott Goldenberg: … in and of itself was more than the delta of the 130… Ernie Herrman: Right. Scott Goldenberg: … basis points. Ernie Herrman: That’s what I would say. Scott Goldenberg: But I don’t want to be straightforward on that. We obviously would have leveraged and did leverage on those sales. But net-net, those two kind of wash each other and then the rest has to do -- which could get better again in the back half of the year having to do. We -- our average retailers were down, but they did get better as we move through the quarter as our apparel sales started to improve. And also our -- and the rest of the deleverage was just due to our distribution center and wage costs. So the primary difference, I would say, they more or less offset each other was the COVID costs and the leverage, and then we still had the deleverage of wage in the DC expenses. Operator: Thank you. Our next question comes from Kimberly Greenberger. Your line is open. Kimberly Greenberger: Okay. Great. Thank you so much. Scott, I wanted to just talk a little bit about what’s going on at international. When I look at the profit swing here in the first quarter compared to two years ago, it’s about a $250 million negative profit swing from that $28 million operating income two years ago to the $222 million loss here this quarter. And if I -- if there’s a reason to believe that international, once it reopens and sort of gets back to normal in the future, if it goes back to 2000 -- calendar year 2019 profitability. It would suggest that actually operating income in aggregate here in the first quarter would have been up about 10% from two years ago and that’s even with all the COVID cost in there and all the freight inflation and the wages and everything else? So I’m just -- it looks like the weight in the P&L here in Q1, if I look at it from a different angle is really coming from that international piece and sort of everything else kind of came out in the wash and delivered pretty nice profit growth, if we sort of take that out? So to me it looks like you’re probably offsetting a lot of that -- a lot of those cost pressures. Am I correct in that assumption? And as we move through the year and those COVID costs start to come off, does that mean that actually margins could get back to and maybe above where you were sitting in calendar year 2019? Thanks. Scott Goldenberg: Yeah. A lot of hypotheticals there. I think, you were looking at the first quarter, right? Where there was significant -- the two major delevers were the COVID costs and the loss on sales on Europe. Ernie Herrman: Europe and Canada. Scott Goldenberg: Europe and Canada. Yeah. With Europe being the bigger piece of that. So that is correct. As you would expect, you would offset a good chunk of that on the high average comps that we did get. And then, again, but the reason why we still would go down is, you still have higher than normal cost increases both in the wage and… Ernie Herrman: The freight. Scott Goldenberg: And the freight in DC, so... Ernie Herrman: Freight. Yeah. Scott Goldenberg: Not all of that will go away in the back half. So we’re not giving guidance, but I do -- I think as we’ve said before, obviously, we don’t know what the sales level, how high they could be. But you would expect us not, at this point, still to be reaching due to the some level of COVID costs and some of it is deleverage to be -- with the freight to be reaching the percent of 200 and fiscal 2020 or calendar 2019. Ernie Herrman: So, Kimberly, at a high level the way you said that is the way that I’m -- look, you can look at it that way this quarter, though, that if you had had. If we had had Europe and Canada on it, we would have had a lot on the wash, the differences. And Scott mentioned this, we had such an overachievement on the sales that, I mean, you’d have to be counting on a 16 open only comp sales and when the rest of Europe. If we have those type of comp sales, yeah, we’d have a different discussion, where maybe the margin is back to more like those levels. But that you’d have to have these way outpaced comp sales like we just did. Now to your other point though, and Scott mentioned it, we are looking at the COVID cost, it is something we can take a hard look at here in the near future as we move ahead each quarter and as the environment normalizes, we’re going to make some improvements on those lines. So that will help. So, I hope that answered -- hope that answered. We’re -- we do believe there’s sales upside all along. And another plus we have on the cost line is our average retail has been moderating. And Scott, I think, started to allude to this as we go forward even into the back half, we’re looking like it’s going to moderate even more, because we’re seeing some more best brands goods coming in on order as we get to the third quarter, which is going to help our average ticket and that should help our expense on processing come down a little bit. So, a very good question, a lot of moving parts. Kimberly Greenberger: Great color. Thanks. Ernie Herrman: Thank you. Operator: Thank you. Our next question comes from Paul Trussell. Your line is open. Paul Trussell: Good morning. My congrats as well on the improvement. I wanted to dig in a bit more on the topline and maybe you can discuss a bit more of what you’re seeing in terms of category standouts, in particular, is there any sight of the strength in home decelerating? And I would love to hear more about your ability to really stay in stock and to what extent you’re really out needing to case product in the marketplace… Ernie Herrman: Yeah. Paul Trussell: … to keep up with this robust demand? Ernie Herrman: Yeah. No. Great, Paul. So, standout categories, I’ll start with the most obvious one, which is our home business is remarkably consistent, as I said in the script. I mean, you’re looking at 40 comps kind of what we did in the first quarter, and again, that basically was where we were in every division, even in the full family stores in a T.J. Maxx or Marshalls up in Canada, Homesense, so remarkable consistency. And the neat thing there is we have a lot of broad-based consistency throughout our entire loan business. So whether it’s big ticket areas like whether it’s furnitures or rugs or decorative accessories, everything was good. There wasn’t really one category. And this is where I give our teams, planning and allocation and this is not just in the home area. Our buying teams, our planning and allocation teams have been getting the goods fueling it so that the second part of your question was the deceleration in home. We have really not seen it -- I don’t think we’re going to expect it to stay at that almost artificially high level than it did in the first quarter. But I think we have opportunity over the next quarter to stay up in the realm pretty close to that. And we’re not having a problem in the home area of stock -- staying at stock, which was the third part of your question and we’re not actually having a problem where apparel has now started to improve for us. Paul, I think you’re asking what else is standing out. So we have a handful of apparel categories, which I won’t give the specifics on which ones, but they are really kicking in as the quarter went on and going into the second quarter. And the nice thing that often happens is when the weather shifts and apparel kicks in, if there was a trend line prior, usually, our home business takes more of a hit where the consumer moves off of home for a little bit. And yeah, again, our homes is going to continue at 40 comps, but it did not move off hardly at all. And our apparel just kicked in and that’s one reason you’re seeing these outpaced comps from us really at this first quarter. Chasing product, flow of product has been a non-issue. I say, it’s a non-issue because the teams have really executed so well and they’re working so -- and I give logistics credit. I give really everybody involved credit to keep fuel. It’s not easy to keep fueling a 16 comp and that’s why I liked your question when you asked it, because it is an unusual time for us to be running an open only 16 comps. And I just, again, give credit to all The TJX associates that are involved in that. Because they’re making to happen, they have this position going into the second quarter every bit, as well as we were in the first quarter. Hopefully, that answers your question. Paul Trussell: Yes. Well, kudos to the team. Thank you for the color and best of luck. Ernie Herrman: Thank you, Paul. Operator: Thank you. Our next question comes from Ike Boruchow. Your line is open. Ike Boruchow: Hi, everyone. My congrats. Scott, two questions for you on the cost structure and COVID costs. $200 million, I think you said this quarter, which is down from $270 million a quarter, which is what you’re seeing in the back half. What’s your expectation for that over the remainder of the year, I assume that there should be less cost in the model given the reopening and vaccinations, but kind of curious your thoughts there? And then my rough math is that your SG&A per store, if I exclude the COVID cost is actually below where it was two years ago. Are you just -- are there things you’re doing to run the store leaner? Are the costs you’ve taken out, do you think are sustainable once we kind of normalize, just kind of curious how you talk about the cost structure on a per store basis? Scott Goldenberg: Yeah. Great question. In terms of the COVID costs, we would -- right now we’d expect them to be coming down in the second quarter slightly. And -- but I think, as Ernie said, we’re going to evaluate that based on the environment and that we would be expecting them to be coming down substantially in the third quarter and fourth quarter. Ernie Herrman: In third quarter and fourth quarter, and to your point Ike, as the world more normalizes. What we’ve been trying to do is keep associate and customer safety still. I guess, we’ve looked at some of our -- and we’ve talked about this, we have the greeters at the front of our stores, which have -- it’s created a cost, but it’s also created a customer service improvement perception and the safety, which is why we do believe that some of those extra costs have allowed us to play offense to actually drive our sales ironically. And so we are going to ease our way off and not just do a pendulum swing quick move, because we believe it’s been helping our topline. However, we know we need to moderate on that, and we will do it just like Scott said and we’re going to take a hard look especially as you get to the third quarter and fourth quarter. So, hopefully, that -- I just want to give you some color on why we aren’t going to necessarily move off it as fast because it’s been a topline driver. Scott Goldenberg: In terms of your question on SG&A, I’d actually have to get back to you in terms of, we’re up about 4% on a per store basis versus 2020, but it’s -- this quarter, it’s a little difficult to have to segregate that out because you don’t -- you have still have a fair number of expenses in Europe and Canada without the typical type of sales that you might expect and then we had the outside sales in Marmaxx and HomeGoods. So, overall, we were up about 4% versus fiscal 2020. Ike Boruchow: Got it. Thank guys. Operator: Thank you. Our next question comes from Michael Binetti. Your line is open. Michael Binetti: Hey, guys. Thanks for all the detail and taking my question here. I guess, Scott, just a simple question to try and help me boil all this down. Can you help us think what the SG&A dollars are for the year and what you think COVID costs are for the year in the budget? And then with all the noise and you laid out the closures, I think, as we take the inputs you gave us, you probably excluding the closures would have been about $2 billion higher on sales versus first quarter fiscal 2020 and then when we add back your $0.21 to $0.24 that you pointed to, which was, I think, only for the closures, you’d be at about a 9.9% to 10.4% margin in the quarter, compared to the 10.1% in first quarter two years ago? So with that as a starting point, I know you’ve been asked to go through margins in a bunch of different ways. But with that as a starting point from here, it sounds like the incremental puts and takes all get sequentially better going forward except for freight, which you said you now got visibility that it’ll be tough. But as you look at 2Q, 3Q, 4Q, you see the COVID costs coming down, international reopening, some of the AUR tailwinds, some of the mix moving back towards apparel. Am I thinking about that right, that if we kind of reorient to the first quarter last year that way that we should see sequential improvement in the underlying margin going forward through the model? Scott Goldenberg: Again, a lot of this will depend -- I think, again, we’re still evaluating the COVID costs. So not -- again, not giving up the cost save other than we expect them to moderate both in dollars and as a percent sales impact. I think Ernie reiterated on, one, a lot of it is still will depend on the merchandise margin in terms of what the -- what our mark-on and markdown will be and the level of sales. So, again, if we have outsized sales and we’re able to buy better, the real wildcard is freight costs and how high they’re going to be in the back half of the year. But we didn’t say that a lot of the other cost wins are going to be at least for now, the wage and the distribution costs we’re cycling, opening up of both a lot of our facilities and we did a lot -- we opened six 3PLs or just additional, what we’ll call processing space last year that we’re going to go against in the back half and including Lordstown, a HomeGoods distribution center. So, I don’t think our supply chain/wage are going to be levering at this point based on what we know and the wildcards really being merchandise margin and freight with COVID going down. So, I think the biggest benefit to us getting better in our overall margins will be how far does COVID get down and what’s our level of sales and if those stay high then we would expect to go to a higher level of pre-tax margin. Operator: Thank you. Our next question comes from Jay Sole. Your line is open. Jay Sole: Great. Thank you so much. Ernie, I think, in one of your answers to the questions, you mentioned something about sales upside, and I think in the press release, you mentioned that you’re seeing consumers begin to resume more normal activities. Can you just talk about whether the strength in the quarter that you’ve seen to date, how much do you think is still a tailwind from stimulus and how much is maybe just reopening consumers really just getting excited about going out and spend other things? And what the implication is for sales upside in Q2 and Q3 as you look out and the potential for sales growth rates remaining, to your point, unusually high? Ernie Herrman: Yeah. Great question. Yeah. So, obviously, when we looked at the first quarter and it’s tough to measure we can’t get at all that data specifically, we do believe the stimulus checks, et cetera, were part of it and clearly a pent-up demand issue, right, from people not having shopped and then we have the -- something we talked about, I think, it was in last call, you do have that revenge shopping aspect that I think comes out where people are passionate and want to get out there and we are entertaining. So, pieces of that, but you have the store closure thing we talked about, which is going on all around us. So, we believe that, I would say, a chunk of our has not been just the stimulus and the -- to the best of our knowledge we wouldn’t be entering the second quarter with a similar trend, which is why we specifically when we did the release, we put that last bullet point there, which is, I guess, is a little bit more specific than we normally would on how we start a quarter and why we wanted to say that we are entering it similarly. So, you understand that the overall stimulus check thing isn’t the only thing playing and it has to be some of those other issues in our business model store closures. By the way, I do believe our business model now resonates more than it even did pre-COVID. I think consumers, if ever they have even more so now with all the stress of what’s happened in the last year, they appreciate the treasure hunt entertainment, me time as I mentioned in the script , “me time”, they, I think our model and the fact that we talked about earlier on the call, we’ve delivered a lot of exciting merchandise, which plays right into this time period. I think that’s the vast majority of why we’re getting the sales. And to point that’s why I think there’s sales upside as we look out. Scott Goldenberg: Yeah. I’d… Ernie Herrman: You know what I mean it’s not just from the different stimulus government packages that have taken place, where we wouldn’t be seeing what seems to be a pretty consistent trend. Scott Goldenberg: But I think it goes back to what Ernie said, just a couple questions ago where, for the third quarter, fourth quarter and first quarter our home sales were disproportionately benefiting us or the biggest piece of helping us out. But the home sales now have continued to be strong and what’s driving it as the apparel sales have gone up from the fourth quarter and as we’ve moved and continued to be strong -- to be a big benefit, as we’ve moved through up until as we speak today. So the stimulus, as Ernie said was, is best we can term was more of a March, April factor, it probably waning as best we can determine. But now it has to do with the wardrobe people -- they didn’t buy a lot of apparel last year in the first and second quarter and that’s I think contributing to our strength right now. Ernie Herrman: So Jay to add one other thing in terms of market share gain as I look out here. Really through the balance of the year, is one of the advantages we continue to have in this home business. We learned to even improve on it is the way we learn to some of the merchants, a lot of merchants lunch or work virtually in a very effective manner. And our home division has a, as I mentioned, we have over 500 plus buyers in our home division that have collaborated just beyond even what we did before, as well as we have satellite offices for not just home that are overseas, that are now buying more merchandise for us than they did before. So when you -- I feel we can continue to actually now drive and even more eclectic mix of home, which has the advantage that the consumer can buy it that day, if it’s a piece of furniture they can try it and buy it. I mean, think, about all the delivery issues that have taken place or so that’s all an added plus. So, in addition to the apparel thing, Scott, was talking about, as well as some other that are hot categories in the industry, such as the beauty business. We have -- I give that team a lot of credit. We’ve really been doing a nice job. They collaborate strongly across division. And again, some of the learnings that have taken place, I think, we’re going to have a slight bit of advantage over what we did pre-COVID and the way we’re able to flex and leverage all the different division’s merchant knowledge. So I know long way, but that’s a whole other piece that is making us feel even better about the future. Scott Goldenberg: Yeah. And one thing we said when we’re generally running well is the -- both at HomeGoods and Marmaxx, the consistency of the sales regionally, the consistency of the sales based on household income as best we can determine, consistency, in terms of the age of our stores -- our stores whether it’s at HomeGoods and Marmaxx that are over 10 years and depending -- even going up as is all the 20 years and 30 years are doing significant comps. So, it’s that broad base sales that we’re doing and then the good news is, at HomeGoods almost all our stores and Marmaxx, the 90%-plus, where our stores are in the suburban, ex-urban and rural areas. That’s where our stores are located and so their strong strength across all of those three areas and the one area that’s not doing as well would be the urban stores, but we just don’t have that many of them. Jay Sole: Got it. Thank you for all the detail. Ernie Herrman: Thank you. Operator: Thank you. And our last question comes from John Kernan. Your line is open. John Kernan: Many congrats on managing through the quarter and congrats on the topline momentum. Scott… Scott Goldenberg: Thank you. John Kernan: … has the guidance for freight and supply chain costs gotten worse since you gave the fourth quarter out -- the outlook in the fourth quarter? I think it was 50 basis points to 60 basis points of pressure off count fiscal 2020 year, has that gotten worse? And then when we think about the leverage point in the model and the COVID costs continue to come out of SG&A. What do you think is the comp leverage point? Is it four to five in the model? How do we think about getting back to that 10.6% operating margin from fiscal 2020? Scott Goldenberg: Yeah. We had -- again, we have two -- we’ve been saying this for the last that more than ever in cover too many puts and takes to get at this point what the breakeven in terms of getting back to the margins. We expect our margins to get better as we move into the back half and we would expect them to get, significantly better next year to be -- we’ll have to see what level our sales get to in the back half and then what, how some of these costs on freight and supply chain and wage pressure to determine what level of margin we’re going to actually settle in at. But other than we expect both the back half, but certainly next year to be going up significantly in our pre-tax margins. In terms of freight. Yes, in terms of just even versus three months ago, we would expect -- we’re not finalized at this point. But we certainly expect freight costs to persist and would be higher than what we would have anticipated three months ago. John Kernan: Got it. So worse than the 60 basis points to 70 basis points of pressure. Scott Goldenberg: We should have given. I don’t remember, giving the basis points, but we would be worse. It would just be worse than what we would have thought. John Kernan: Got it. Thank you. Ernie Herrman: If you look John around the industry, it’s just the freight rates continue to escalate. John Kernan: Understood. Ernie Herrman: Yeah. Okay. I believe that was our last call. I would like to thank you all for joining us today. We’ll be updating you again on our second quarter earnings call in August and from the team here at TJX, we hope you all stay well and we wish you good health. Take care. Operator: Ladies and gentlemen, that concludes your conference call for today. You may all disconnect and thank you for participating.

Operator: Ladies and gentlemen, thank you for standing by. Welcome to The TJX Companies Fourth Quarter Fiscal 2021 Financial Results Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded February 24, 2021. I would like to turn the conference call over to Mr. Ernie Herrman, Chief Executive Officer and President of the TJX Companies, Inc. Please go ahead, sir. Ernie Herrman: Thank you, Sheila. Before we begin, Deb has some opening comments. Debra McConnell: Thank you, Ernie, and good morning. The forward-looking statements we make today about the company’s results and plans are subject to risks and uncertainties that could cause the actual results and the implementation of the company’s plans to vary materially. These risks are discussed in the company’s SEC filings, including without limitation the Form 10-K filed March 27, 2020, and the Form 10-Q filed December 1, 2020. Further, these comments and the Q&A that follows are copyrighted today by the TJX Companies, Inc. Any recording, retransmission, reproduction or other use of the same for profit or otherwise without prior consent of TJX is prohibited and a violation of the United States copyright and other laws. Additionally, while we have approved the publishing of a transcript of this call by a third-party, we take no responsibility for inaccuracies that may appear on that transcript. Thank you. And now I’ll turn it back over to Ernie. Ernie Herrman: Good morning. Joining me and Deb on the call is Scott Goldenberg. I’d like to start our call today by expressing our sincere gratitude to all of our associates for their hard work and dedication in 2020. Together, our organization has successfully accomplished many monumental tasks in the most uncertain environment we have ever faced as a company. I am so proud of the efforts of our global teams who have worked as one TJX to operate the business in this environment, while prioritizing the health and safety of our associates and of our customers. I want to give special recognition to our store, distribution center and fulfillment center associates. We are truly grateful for their commitment to our business and to our associate and customer safety protocols. In recognition of their efforts, including physically coming into work in the fourth quarter, we awarded a majority of them an appreciation bonus, which is the third appreciation bonus that we have paid during the pandemic. We will continue to look for opportunities, future opportunities to recognize associates for their important contributions to the business. As we continue to manage through the global pandemic, we are thinking of everyone who has been impacted by COVID, including our associates and their families, our customers and our communities. Also, our hearts are with the people in Texas and other parts of the U.S. who have endured so much due to the severe weather this month. Looking ahead, as the power and water situation improves in Texas and other areas, and the rollout of vaccines is more widespread in the coming months, we are hopeful and optimistic about the future. Turning to our business operations. During the fourth quarter, we were very pleased that our U.S. stores were generally able to stay open. However, at certain times during the quarter, we had to temporarily close all our stores in Europe and a majority of our Canadian stores. In total, Europe was closed for almost two-thirds of the quarter and Canada for about one-third of the quarter. As we reopened some of these European and Canadian stores over the past couple of weeks, we were encouraged by consumers’ enthusiastic response, some of what we saw last summer when we began our reopening. We are following government mandates in our regions and at this time approximately 690 stores remain temporarily closed. Currently the vast majority of these closures are still in Europe, where we expect shutdowns to remain in place for a significant portion of the first quarter. Okay, moving to a recap of our fourth quarter results. First, I am very pleased that our overall open-only comp store sales have down 3% exceeded our plans. During the fourth quarter, we saw a continuation of strong sales trends in our home and beauty departments, as well as great customer response to our holiday gift assortments and values. I am particularly pleased with the terrific assortment of brands we offered at shoppers across all categories, which we believe was an important driver of our above plan sales. These comp sales also exceeded our plans across each of our divisions, including at HomeGoods, which once again, saw a double digit increase. While overall sales were down significantly due to the temporary closing of our stores for approximately 13% of the quarter, I want to emphasize that we are very encouraged by our fourth quarter overall open-only comp sales, which improved each month of the quarter and were positive in January. Despite operating during COVID surges with the headwinds of uncertain consumer behavior, occupancy constraints and social distancing protocols, we only had a small decline in sales at our stores that were permitted to be open. It was great to see many of our best customers enthusiastically returned to our stores. We believe this speaks to the resilience of the business in enduring appeal of our value proposition across all of our retail banners, regardless of the environment. All of this gives us great competence in our business over the long-term. We also believe our ongoing commitment to health and safety protocols, help customers feel comfortable visiting our stores throughout the quarter. We continue to receive positive feedback from our shoppers on our safe shopping experience. We believe this will remain an important factor for consumers when deciding where to shop, while COVID persists. Next, our merchandise margin was up. The buying environment remains excellent as we continue to see a terrific selection of inventory from both existing and new vendors. We are very pleased with the improved seasonality and mix of merchandise at our stores as our buying teams have done a great job, aggressively sourcing branded product across good, better and best categories. We achieved fourth quarter earnings per share of $0.27 and maintained our strong balance sheet and liquidity position, despite the overall sales decline. Further, we declared a quarterly dividend and refinanced some of our outstanding debt to lower our borrowing costs over the long-term. Scott will speak to all of these items in more detail in his financial update. As we entered 2021, significant uncertainty remains around COVID and its impact on consumer behavior, while many factors lean outside of our control, such as temporary store closings and customer shopping habits. We are very confident about the areas that we can control, including buying, merchandising and store operations. Despite the near-term uncertainty, we have grown more optimistic about the medium and long-term with the news of multiple effective COVID vaccines. I am convinced that our business will rebound and will capture market share once we are past this health crisis. Let me highlight some of the actions we took in 2020 that we believe set us up for success going forward. First, we have strengthened our relationships with many of our existing vendors. With all the uncertainty in the retail landscape, some vendors have looked to us to buy even more of their inventory. We have also had opportunities to buy goods across an even wider range of product categories. In 2020, our buyers opened thousands of new vendors across good, better and best brands and sourced from a universe of approximately 21,000 vendors around the world. We believe all of this puts us in an excellent position to keep offering consumers an eclectic mix of branded merchandise at amazing values. Second, we’re prepared to take advantage of the terrific real estate availability that we are seeing across each of our geographies and continue our global store growth. With the increase in store closures by some other retailers, we are in an excellent position to open new stores in some of our target markets. Further, we see additional opportunities to relocate existing stores to more desirable locations, and to seek out more favorable terms when leases expire. Next, upon initially reopening our stores last summer, we focused on marketing on addressing safety concerns to build the confidence of our shoppers, while highlighting value and the hotter trending categories. In the fourth quarter, we also emphasize gifting. In 2021, we plan to launch bold new campaigns for each banner that reinforce our value leadership will also highlight the elements of discovery, variety and quality, which are all major strengths for us. Lastly, we prioritized investments in our associates stores, supply chain and systems to strengthen our infrastructure and support our future growth plans. Scott will outline our 2021 capital plans shortly. Looking beyond the health crisis, we are confident that more consumers will be drawn to our stores once they are back to more normalized routines and shopping habits. I’d like to walk through the reasons why we believe we are strongly positioned to capture market share in the future. First, we are confident that our relentless focus on value and quality will be as important as ever for shoppers beyond the health crisis. Second, we are convinced that consumers will seek out store – our stores for our wide assortment of branded and fashionable merchandise. We see our excellent selection of brands and our global buying organization as key differentiators for our business. Further, we believe that brands we offer consumers will continue to be a major driver of incremental customer traffic and sales. We believe our flexible [indiscernible] buying will continue to be a tremendous advantage. Eventually consumers will be physically returning to work, socializing again and resuming travel. This is what we saw happening in Australia, where despite recent COVID shutdowns life had largely returned to normal during the fourth quarter and we saw strong sales trends return in our apparel business. Our buying organization is well-positioned to shift our spending in our other geographies to meet shoppers changing category needs once we move past this health crisis. Third, we are confident that the appeal of our treasure hunt shopping experience will resonate for people looking to be inspired and discover new products when they shop. We shipped to our store several times a week with new and different merchandise, so there was always something exciting for shoppers to see. With our rapidly changing store assortment, shoppers learned to buy something when they see it, because it may not be there the next time they visit. We believe that the entertainment element of our shopping experience will continue to be important. Customers tell us that part of the reason they shop us is for some stress relief, particularly during these times, and some “meantime”, which we expect to continue into the future. Next, we believe our convenience off-mall locations in urban, suburban and rural locations as an advantage as this allows us to reach a very wide customer demographic. In the U.S., roughly 80% of consumers are within 10 miles of one of our stores. This makes it very easy for shoppers to visit our stores. We expect to see incremental traffic once consumers return to their workplaces and go out more, as they will be passing by our stores much more frequently. We also see a great opportunity to capture share from other retailers that have shutdown completely or closed stores. We also believe this will lead to greater availability of inventory from both new and existing vendors. Lastly, we continue to aggressively pursue the significant opportunities we are seeing in the home category just as we have for decades. This includes increasing the HomeGoods divisions’ long-term target to 1,500 stores and our plans to launch e-commerce on homegoods.com later this year. Further, we have been increasing [Audio Dip] all of our banners to capture some of the incremental demand. In 2020, home accounted for almost 40% of our overall sales up from 33% in the prior year. Going forward, we are confident that the strength of our home buying teams at our global buying offices will allow us to keep bringing an eclectic mix of home merchandise at great value to our shoppers and capture additional market share. Before I close, I want to reiterate how great we feel about the long-term and our opportunity to drive sales post pandemic. At the same time, we are still facing several significant expense headwinds. Scott, we’ll discuss this in more detail, but the cost pressures that we had pre-COVID, including supply chain, wage and freight continue to persist and COVID has made each of them worse. Of course, we also continue to have significant COVID related costs. I want to emphasize that we are extremely focused on our top line opportunities that could help to ease some of these pressures. In closing, I am so proud of the resilience and dedication of our associates, who successfully navigated our company through an unprecedented environment in 2020. I also want to add that as an organization and management team, this has been such an important year in terms of our global corporate responsibility efforts. As COVID has been evolving differently in different parts of the world, we have continued to prioritize the health, safety and well-being of our associates and customers, along with the financial stability of the business. 2020 was also a critical year for our inclusion and diversity work, which includes our commitment to standing up for racial justice and equity. We’re committed to listening to and learning from our associates and taking actions to do better. I am confident as ever about the future of TJX. Longer term, we believe we have a tremendous opportunity to capture additional market share, even beyond the prospect of a resurgence in consumer spending and “revenge shopping”, once vaccines are widely available, longer term, we are convinced that our flexible off-price model has structural advantages with our entertaining and engaging treasure hunt shopping experience, differentiated assortment of branded merchandise and our excellent values. Our teams are energized and laser focused on capitalizing on the opportunities we see for our company. And I look forward to sharing our success going forward. Now I’ll turn the call over to Scott for a financial update, and then we’ll open it up for questions. Scott? Scott Goldenberg: Thanks, Ernie, and good morning, everyone. I’d like to first echo Ernie’s comments and thank all of our global associates for their hard work and commitment in 2020 and continued efforts in 2021. I’ll start today with some additional details of our fourth quarter results. As Ernie mentioned, open-only comp store sales were down just 3%, despite the COVID related headwinds we faced. Average basket increased and was strong again, as customers responded favorably to our fresh seasonable mix and put more items in their carts. As to the cadence of comp sales, we saw improvement of each in – each month of the quarter with our Marmaxx, HomeGoods and TJX Canada divisions all achieving positive open-only comp sales in January. At Marmaxx, our largest division customer traffic in the fourth quarter was better than the third quarter and also improved each month of the quarter. As to overall sales, the decline was primarily due to the temporary closures of some of our stores. These closures were primarily in Europe, which was closed for 63% of the quarter, including essentially all of January. And in Canada, which was closed for 32% of the quarter. Overall stores were closed for approximately 13% of the fourth quarter. Fourth quarter merchandise margin was up versus the prior year. This was driven by strong mark on and a benefit from the timing of a shrink accrual. These benefits were partially offset by higher freight costs, as well as higher markdowns as a result of the store closures in Europe and Canada. Moving to the bottom line, fourth quarter earnings per share were $0.27, which included a debt extinguishment charge of $312 million or $0.18 per share. Earnings per share also included a negative impact of $0.05 from our tax rate, which was significantly higher than last year. This was due to the company moving to a year-to-date net income position in the fourth quarter and the related impact of the jurisdictional mix of profits and losses. Further as detailed in our press release this morning, we believe the temporary store closures in Europe and Canada during the fourth quarter negatively impacted sales by approximately $950 million to $1.05 billion resulting in a significant loss of profit dollars and about $0.18 to $0.21 of earnings per share. I want to also remind you that our EPS reflects significant cost headwinds in the fourth quarter, which more than offset some of our temporary expense savings. Let me take a moment to go through a couple of the larger ones. First, our net costs related to COVID accounted for approximately $300 million of incremental expense. These costs include extra payroll to clean the store and monitor occupancy levels, payroll for some store associates that we kept active to support the business while stores were temporary closed, the cost of PP&E and the fourth quarter appreciation bonus for certain associates. The increase in our costs versus the third quarter included extra payroll as our stores were open longer hours, partially offset by increased government relief due to the European and Canadian store closures. Second, we had increased supply chain costs. This was due to a lower average ticket and processing more units, as our merchandise mix continued to shift to a non-apparel categories, expenses related to additional distribution capacity and wage increases at our distribution facilities. As for inventory, our teams are doing a great job, procuring merchandise and adjusting logistics to get it to a distribution facilities and stores. As a result, our store inventory position is close to where we want it to be. To reiterate, availability of merchandise in the marketplace is excellent. Now I’d like to walk through our cash flow and liquidity. First, we generated $4.6 billion of operating cash flow in fiscal 2021. As a result, we ended the fourth quarter in a very strong liquidity position with $10.5 billion in cash. Next, we declared a quarterly dividend of $0.26 per share in the fourth quarter. In the first quarter of fiscal 2022, we’re planning to declare a dividend at the same rate subject to Board approval. Lastly, in the fourth quarter, we significantly lowered our borrowing costs by reducing our higher interest rate, longer dated bonds, through a cash tender offer and issuing lower interest rate bonds. The net result of these actions will lower our interest expense by approximately $32 million per year. Now I’ll spend a moment on fiscal 2022. As we said in our press release this morning, we are not providing a financial outlook for fiscal 2022 because of the continued uncertainty of the environment due to COVID. As a point of reference, overall open-only comp store sales trends for the first three weeks of the first quarter were better than in the fourth quarter, despite the unfavorable one in the United States. In the periods before and after the unfavorable weather, overall comp sales were positive. In terms of fiscal 2022 profitability, we expect pre-tax margins to be higher than fiscal 2021, but to deleverage significantly versus our pre-COVID levels. This is due to a number of known headwinds that we’ve discussed many times before. As a reminder, these include the following. First, we continue to have the net costs related to COVID. In the first quarter, we are currently planning $225 million of net expense. At this time, we do not know or by how much these costs may moderate beyond the first quarter, as a reminder, most of these costs are in SG&A. Second, based on what we know today, we expect temporary store closures will negatively impact overall first quarter sales by approximately $750 million to $850 million and will result in some level of margin deleverage. This includes our stores that are currently closed in Europe and the majority of our Canadian stores that are currently closed or have been closed during the first quarter. Based on what we know today, overall, we expect stores to be closed for approximately 11% of the first quarter, which includes Europe being closed for an estimated 67% of the quarter. These expectations could be negatively impacted further, if current mandates are extended or new ones are put in place. Next, as Ernie mentioned, the headwinds of freight, wage and supply chain that existed pre-pandemic have not gone away. In fact, each of them has gotten worse in the current environment. On freight specifically, we continue to see capacity constraints and driver shortages, which has led to higher rates. We’re also experiencing incremental freight costs due to our lower average ticket and moving more units through our supply chain. All that said, we remain laser focused on looking for expense savings throughout the business. We may also have an opportunity to offset some of these headwinds over the long-term, if we successfully drive outside sale increases in market share gains or see demand improve for the higher ticket categories. Additionally, if then buying environment stays beneficial, we could capture additional merchandise margin. Moving on, we expect capital expenditures to be in the range of $1.2 billion to $1.4 billion in fiscal 2022. This includes opening new stores, remodels, and relocations and investments in our distribution network and infrastructure. For new stores, we plan to add 122 net new stores, which would bring our year-end total close to 4,700 stores. This would represent a store growth of about 3%. In the U.S., our plans call for us to add about 30 net stores at Marmaxx, 34 net stores at HomeGoods and 12 Sierra stores. In Canada, we plan to add about 22 net stores and in TJX International, we plan to open up approximately 15 stores in Europe and 9 stores in Australia. As to our long-term store growth opportunity, we now see the potential to grow to 60 to 75 stores globally. In addition to the increasing HomeGoods by a 100 stores, we’ve also increased the store potential for Canada and Australia. In closing, to reiterate what Ernie said, we feel great about the strength of our business. In general, the stores that are opened are performing well, despite the numerous COVID related headwinds. Additionally, we are in a very strong financial position, which allows us to continue investing in our business to support our growth plans. All of this gives us great confidence that we will continue to successfully navigate this environment and be a stronger company, when we are past the pandemic. Now, we’re happy to take your questions. As we do every quarter, we’re going to ask you that you please let me your questions to one per person and one part to each question. [Operator Instructions] Thanks. And now we will open it up for questions. Operator: Thank you. We will now begin the question-and-answer session. [Operator Instructions] Our first question will come from Lorraine Hutchinson [Bank of America Merrill Lynch]. Your line is open. Lorraine Hutchinson: Thanks. Good morning. We’ve heard a lot about difficulty getting home products through the ports and also some concern around a shortage of apparel receipts later on in the year as the economy reopens, can you just talk about the buying environment in a little more detail and your comfort in your ability to stock the stores with the inventory you need as demand comes back? Ernie Herrman: Sure, Lorraine. Certainly, a question near and dear to my heart, as we talk about how we buy the goods and how we stock the stores, as you said, in terms of the demands by category, really since the beginning, when COVID – if you remember back, and I know we spoke back when COVID first hit and we could see our home business and some of our other trending categories were going to clearly trend differently than apparel, for example. So we were able to adjust as you could hear what we said in the script, how big our home business has actually gotten to over the last six months, we were able to adjust the mix in our stores very appropriately to that because our model is very flexible, right? So we’re able to do – and supply has been plentiful even though, there were little snippets of time when it wasn’t so easy to get exactly what we want. For the most part, we got the categories that we wanted. When you ask about apparel, I don’t think we weren’t trying to communicate that we weren’t able to get it. So apparel is pretty plentiful on the market. It’s just not the consumer demand isn’t there as great as it has been, I would say would be the way to put it. Having said that, I mentioned Australia where the environment is more normal and almost is the least COVID impacted a market that we’re in. Their apparel business has been very healthy. So we are predicting and there won’t be an availability issue that as we start to go through this year, we’re feeling that apparel specifically second quarter into summer as the vaccine rollout becomes more widespread and people start to circulate out there more. I and the teams are anticipating a surge in apparel. Certainly, quite not every department, but a pretty big surge from where we’d been harboring and probably gaining back a little bit more of the share within our store. No availability problem, Lorraine, as we’re sourcing across all the categories. And in fact as I always say to all of you, we have to really control our merchants from buying too much. Specifically, I would say, apparel has been where we’ve really had to slowdown of recent only because the trend isn’t what it is in some of the other areas. Everything has been improving quarter-by-quarter. So if you look at Marmaxx, our business and when you talk apparel, I think domestically here, because obviously our Europe business was kind of shut in the fourth quarter. I can’t give you as much detail there. But if you look at Marmaxx, we improved from a minus 10 in the third quarter to a minus seven in the fourth quarter, and then each month got progressively better in the fourth quarter for Marmaxx and barring the whether we’re starting the year off improved from where we were in the preceding months in the fourth quarter. So hopefully that helps you. Lorraine Hutchinson: Thank you. Operator: Thank you. Our next question will come from Matthew Boss [JPMorgan]. Your line is open. Matthew Boss: Great, thanks and congrats on the progress. Ernie, maybe to dig into your comp improvement, despite that continued COVID restrictions and your model having little e-commerce, could you help elaborate on your comments around expansion of vendor relationships coming out of the crisis and also speak to any offensive initiative that you are taking to capture what others in the sector have quoted as potentially more than $10 billion of potential sector market share that could be up for grabs coming out of this pandemic? Ernie Herrman: Yes. Matt, great question. We talked about this stuff all the time. So on that – what’s been helping us with our comp improvement is a little what I was talking to Lorraine about. So our merchants have really done a great job and shifting their – we shift – first of all, we shifted buyers around, some merchants around, in certain areas to go after the healthier and trending categories. What’s interesting is at the beginning of the pandemic, when the market was an upheaval we took a very, I would call it, very forthright approach with all of our vendor community, and they knew how important we were then. But I think what’s happened and I think this is where we’re getting to the second part of your question on the expansion of the vendor relationships to help us. We talked about the 21,000 vendors that we’re dealing with. We’ve been opening up a few thousand additional vendors, but there’s always vendors falling off because we stopped buying certain categories, or unfortunately in the pandemic, you’ve had some other vendors kind of falling off to the side, as you can imagine. But we are meaning more to, I would say, the more branded vendor community across the board. And so if you listened to the script we made a conscious effort. I made a conscious effort to really highlight that one of the key differentiators of TJX. And I think this applies from us against other retailers maybe against other off price formats is our focus on brands is really second to none. So we and if you look back at my script, I mentioned across good, better and best. So we have had all of our teams on a mission to continue to open more brands, always continuing to do that because you get more newness that way, and you get more excitement in the mix. And then that combined with the market share that’s out that you mentioned the $10 billion up for grabs. I think the way to do it as some of the other – think of the retailers who have struggled during this, it’s not your essential retailers, right? It’s not that people, customers really need to go to right now, very task-based missions that they have to go on. It’s really the more impulse or more fashion driven. In our case, we’re an impulse-driven retailer and you can’t ask for a better situation for us to have more brands in the future, because we mean more to those brands and the fact that when consumers start to get more comfortable, they want to shop our entertainment. It’s a perfect storm. And I just think the expression I would like to use right now, we’re feeling is a tiger by the tail and the business here, meaning once things start to open up and the consumer goes back to normalcy, I just think we’re really going to be in a strong position that continue to improve, which we – as you can see from the sales we’ve been doing every quarter. So a great question. It’s really at a high-level, one of the most important aspects of our strong strategy medium-term and long-term. Matthew Boss: Nice to hear. Best of luck. Operator: Our next question will come from Paul Lejuez [Citi]. Your line is open. Paul Lejuez: Thanks, guys. Two quick ones and then one high level, Scott, maybe can you just quantify the shrink benefit during the quarter also on the payables inventory ratio, inventory down, payables up, just curious how long that might continue that relationship? And just higher level, just given all the changes that have occurred in F 2020 from a cost perspective and any way you could frame for us, what the EBIT margin would look like if you were to return to F 2019 sales levels whether that be an F 2021 or F 2022. Thanks. Scott Goldenberg: Well, on quickly not address unfortunately the last one, we – at this point, we’re not giving guidance in terms of, a lot will depend on just as you can see, right, what we’ve had in the fourth quarter, in the first quarter with a significant number of store closures, how much we going to have for COVID costs. I think we need a little more time and there are any public address fits as we move forward on terms of how much of the mix switches back to apparel, which will then help us both on the average retail, freight, some of the other productivity measures. I think there’s a lot of uncertainty, although we think we’ll be getting, it will have a first half, second half impact. In terms of freight costs, certainly spiked as we moved from the third quarter to fourth quarter, we will likely remain high at least on a TYLY basis as we move through the first half of the year. And we would hope due to things that we’re going to be doing and market conditions be moderating, but we don’t know where that’s going to level off. And that does relate a little to the mix of the merchandise as well. We’ve been buying very good and the other thing, Ernie, I think, will touch on what level we’ll be able to maintain and extend on that is to be determined. Also in certain things, we’ve had very good markdown performance, but as we’ve been chasing inventory at a very high level, particularly at HomeGoods. So again, I think that big cost pressures are going to be the ones that we’ve had in the past, where we’ve now had two years of deleverage on due to wages, supply chain costs, DC wages, opening up a bit, we’re opening a couple of facilities this year. But a lot will depend on when we get back to our sales because we still have to recapture a lot of the sales that we lost last year and get to the level and get back and hopefully surpass where we were going to be. So a lot of uncertainty of when we’re going to get, we know – we feel comfortable, we’re going to get back to sales, but is it going to be in the back half of this year? Is it going to be over a little longer period of time? So putting all that, it’s just too early to give – to be giving a number. In terms of the fourth quarter, what we’re seeing is that the shrink number was really just a time. Our shrink came in slightly lower than our last year number, but we had – we thought early on with COVID with all the closing and opening of the stores, the movement of merchandise that we had accrued for higher levels in the second and third quarter. And it came in better than what we thought. But that was offset by our freight. When you net-net look at all the ins and outs, we also had to accrue for additional markdowns this quarter, due to the Europe and Canadian closures that overall our merchandise margin, when you strip it all away was still up in the – let’s call it in that 30 basis points range for the quarter after all of the ins and outs. And again, that largely be determined on how we do on our mark-on and markdowns for next year, whether we can continue that. Paul Lejuez: Got it. Thanks, Scott. Good luck guys. Operator: Thank you. Next we’ll hear from Kimberly Greenberger [Morgan Stanley]. You may proceed. Kimberly Greenberger: Okay, great. Thank you so much. I wanted to ask Ernie about two comments that you made in your prepared remarks. You mentioned that you’re seeing a lot of real estate opportunities and in particular, both opportunities for new stores and relocations. I’m wondering if you can share any sort of preliminary information on what kind of changes in rent rates you’re seeing on those new leases and maybe give us some examples of what would be the factors that would motivate you to relocate a store, just so we can think forward about the real estate strategy. And then I think you mentioned that inventory in-store is close to where you want it to be. I’m assuming not every category is alike, and if you can just give us some feel for where you feel like there’s more inventory available than really you would like in the stores right now and where maybe inventory levels are a little tighter. Thanks so much. Ernie Herrman: Sure. Kimberly, what I’ll do is, let me just comment on the real estate quickly, and I’m going to turn over some of the when you were asking about the rate on the leases, I’ll turn it over to Scott. But when we look at for the opportunities in the business, we do want to get back to even things such as remodels because our – one other things, we’ve seen over the years is our shopping experience is comprises many things. Certainly, the merchandise is number one. But our consumers have come to appreciate the environment they’re in as well as the shopping center. So when you ask about a relocation sometimes we aren’t in the most happening shopping center. And many – we have found that some of our best uses of capital have been relocation. So Scott will talk to all of that. At a high level, I would just say, it keeps us healthy and keeps our existing stores proceeding and staying up-to-date. So for the long-term health of TJX, it’s very important in every geography we’re in to keep spending appropriately. Obviously, we had curtailed that at the beginning of COVID, but Scott will talk to, why that’s important, and by the way, why we’re excited about opportunities. Inventory, where that falls across in the store, first of all, we don’t – I don’t give out information as far as where we are versus where we’d want to be. But I would just say that at the high level, the reason we’ve been very happy with where our sales have been proceeding. And you can tell what we did give is our home area, our beauty area which have grown in percentage which is where obviously that’s not a secret. Those areas are healthy in the world around us. We have been getting plenty of availability and where we would run into pockets of categories within those worlds. Our buyers have done a great job of shifting around and we buy in different ways. So sometimes they’re buying goods that are landing within a week or two, and sometimes they’re buying some goods that are landing of a couple months out. But we have overall, as you can see, we’ve been happier with our overall inventory levels. Scott and I have talked about that recently in terms of where we are with each division and in full TJX. From where we were, if you remember back in the third quarter, second quarter, the third quarter, we were in a major scramble mode which probably somewhat impacted our sales than versus the healthier open-only comps where we are now. We will run into some little pockets there, obviously, where we were calling missing some departments a little bit more, and we couldn’t get, by the way, some of that was really transportation of the goods. It wasn’t necessarily availability. So right now, I would tell you across the board availability pretty much in any way we want it. There’s more – definitely more apparel out there than we would want to use across most every category. So hopefully that gives you color in terms of where we’re headed. We’re just feeling really balanced on the way our inventory levels are right now heading into February and into March across every division. I mean, the only place that we are not happy is in Europe where we’re closed, because clearly we have inventory there and we can’t do anything in terms of selling it. Scott, do you want to… Scott Goldenberg: Sure, going to capital and some of the things that you talked about on the new stores ramps, et cetera, I think overall the big picture is that, we’re starting to spend some of that, obviously, now that we’re in a position of strength on both the cash and on our balance sheet. We’re spending – we’re going to spend in $500 million to $700 million more in capital than we did last year and more than what we did even two years ago. I think we have an open to buy, to spend more capital as we move through the year as we would – if we see opportunities for. And we see how our business recovers for either new more real estate than the 122 I talked about and/or more remodels that Ernie talked about as something to be using our cash for from timing. We’re going to be doing what north of 350 remodels, I think last year we did several hundred remodels, less than what we had planned. So we would be viewing that over the next several years as we could be getting up even to 400 remodels a year or more to try to catch up and take advantage of that. Two, in terms of new stores, we would say, we’re not giving out a number, but it’s going to be – it will be more than the 122, probably at 150 plus for the next several years. I think there’s great opportunity with all the unfortunate disruption in retail, we are already starting to see in all of our geographies when we are signing leases in store closures that have already happened in the past year and we would do, it doesn’t happen overnight, but we would see that as a big opportunity for calendar 2022 and 2023 to get sites. I think part of – the bigger part of that is the quality of the sites without having to necessarily get them at rents that we would have paid just a year or two ago. So it’s not that it’s necessarily cheaper than our current cost base, but it would be cheaper than what we would have paid and probably locations that we otherwise would not been able to get. In Marmaxx division, particularly, but across all of our stores the relocations is an opportunity as we have hundreds of leases coming to renewal. And so we see a great opportunity to open again, to better real estate and potentially I think the number one thing is to have drive higher sales, but potentially even to keep our costs the same or lower. I think we’ve seen a fantastic opportunity in Europe in terms of cost reductions. A lot of it is the environment there is, as you can imagine, worse than it is here from a real estate with all the closures. And on a lot of our rent renewals we are seeing increases – decreases in terms of the overall costs that we have to pay north of 25% on a per store basis. So that’s a combination of either the capital that you’re going to get when we want to move into a store or the benefit we’re going to get, or just the actual reduction in the rent. So we’re seeing significant decreases there. We’re seeing decreases before, but not to the level that we’re currently seeing. We’re also seeing some phenomenal deals. So I’m not going to name the specific sites, but in the last couple of weeks, we’ve seen stores where we were paying $900,000 and rent go down to $600,000 or 500,000 to less than $200,000, just phenomenal decreases in renewals. And also even landlords who want us giving us, extended rent-free periods because we’re an anchor tenant in a strip and they very much want us to be there. So, yes, I think that’s a tremendous opportunity for us. Kimberly Greenberger: All great color. Thanks so much. Scott Goldenberg: Thank you. Operator: Our next question will come from Janine Stichter [Jefferies]. Your line is open. Janine Stichter: Hi. Thanks so much for taking my question and congrats on the momentum. I want to ask a bit about HomeGoods, the increase of the target there. I’m curious what went into it? How much of this was analysis you contemplated pre-COVID and how much is more the strength you’re seeing in home right now? And then maybe some color on where these new stores are. Are they in new markets, existing markets? And then just lastly, an update on Homesense. Thank you. Ernie Herrman: Sure. All good, Janine. So we were already contemplating pre-COVID upping that target because our HomeGoods business has just been consistent. And by the way, I’ll just throw these together. You asked about Homesense since similarly was heading to a good place, but obviously when COVID has impacted us everything, the tide rose overall with both these businesses. And we’re just seeing as the world changes in lifestyle and focus even when the vaccines all hit, you’re still going to have a dynamic change around us, all in terms of how many people are spending more time still in the home environments and focused on that, regardless of whether there’s an x percent that goes back to work, of course there will be. They’ll be a majority going back to offices, but all you need is a small percent going the other way and with a focus on the environment of home. So yes, we just feel like there’s way more market opportunity as we move forward. If you look at the amount of home business being done online, and let’s go back to the market share mission here, we feel, and of course homegoods.com, which will be later in the year, we sell bats and operated take online business, but we feel our Homesense business specifically really pulls from categories that are significantly done online. We feel Homesense can really eat into that online business. And recently, anecdotally I’ve had friends that have bought goods at Homesense, and they’ve used our delivery service, which again, in many cases is a third-party. But you are trying the – for example, the sofa or the chair, you’re trying that actual sofa a chair there. And that is what shows up at your house within the next day or two. Again, we have same day delivery in many of those sites. And I think that is an interesting dynamic, which obviously the business is extremely healthy right now. But we feel like there’s just so much more upside. And as you can tell by the number we gave you as the percent of TJX, that home has been most recently the momentum is so strong to think otherwise that we wouldn’t continue to just grab more market share. So I hope that answers your question. We’re very bullish on. Scott, I think… Scott Goldenberg: Yes. Just to brief address a little on Homesense. I think what we’ve seen – everything that we’ve seen in the overall home business, it has been a little, I’d say even up a notch on Homesense. So the comps are proportionally even higher at Homesense than they have been in the HomeGoods in the fourth quarter. Our retail has been – average retail has been strong. Our average basket’s been strong. And I think the operational folks where we may have talked about it for the first year or two, because it’s obviously a mix of business where the payroll and other aspects of it are a bit more challenging. They’ve done a great job of working through the – how to make that business more efficient. So our four wall profits on Homesense have increased substantially this year with our volumes. And it’s made us much more optimistic and we’re opening up five Homesense stores this year as well. Ernie Herrman: It’s a great question. And Janine, the other thing is to Scott’s point, I give the teams a lot of credit because they’ve also managed to not, as we open the Homesense. With the Homesense’s surging, they’re not stealing the HomeGoods sales, as you can tell are still very healthy nearby. And I give our merchants and that management team, a lot of credit and the field there as well, and keeping the stores looking different and differentiated between Homesense and HomeGoods. So they start with having a great mix in both the teams have done a great job on that, but they’ve managed to do this in locations where they’re almost right next to each other. So really bodes well for the future. Janine Stichter: Thanks. That’s helpful color. Best of luck. Ernie Herrman: Thank you. Operator: Thank you. Our next question will come from Michael Binetti [Credit Suisse]. Your line is open. Michael Binetti: Hey guys. Thanks for taking all our questions here. Scott, just a simple question, with all the noise trying to model this, you guys mentioned significant deleverage in the model in this year relative to pre-pandemic. Is there anything – any color you can give us to what that mean? I know, if we look at the 10.6% margin in 2019, give us some thoughts on what a normalized comp would mean as far as how much headwind permit from freight from unit volumes going through wages, those kinds of things. Is there anything you can help us to contextualize that comment for this year? Scott Goldenberg: Well, again, the biggest costs on this year will depend will be on the COVID costs. I mean, there’ll be significant as we talked in the first quarter and I’ll let Ernie address it. But it will be to be determined as we move through the – on the COVID costs. Ernie Herrman: Yes. So Michael, on the COVID costs, what we want to do is not – we’re not going to go in with a notion ahead of it and have a preconceived notion as to when we’ll start pulling them out. As we see the vaccine set and the safety start to get aligned, we will start maybe in the back half, second quarter, we think little by little we’ll start pulling them down. Is that what you’re asking Scott? Scott Goldenberg: Yes. Ernie Herrman: So we’re feeling that definitely opportunity there to – we’ve looked at it as just so you know, up till now, it’s a sales driver for us and we’ve gotten on our customer, we do reports, we do surveys. We are getting huge credit on our level of service and safety impact by the greeters we’ve had at the front of the store. If you’ve been in our store, you’ll see that in most stores, we have two greeters they’re really cleaning the carts as well as welcoming asking, do you need help? Were they treated okay and safely? And so that’s had a huge impact, and I’m looking at that as a form of marketing to help us with our top line for the future. And so that is, we want to be very careful as we pull that back, because all the indicators are that has been a big help on our reputation during COVID. So very good questions. Scott Goldenberg: So Michael, to get to your question, a lot of it goes back unfortunately to – to your point at the end of fiscal 2020, we were at $10.6 billion, all things being equal. And again, saying a lot right now, if we had guided to approximately 10.2 to 10.3 last year on a three comp, if you would had the similar level, the headwinds of supply chain wage, et cetera, you would have gone down 30 to 40 basis points for another year. So as we said, nothing’s really changed in terms of store wage. In terms of that the DC – the two components that are a bit larger right now are the DC supply chain and the DC wage, as we’ve had both in our HomeGoods and Marmaxx DCs wage increases this year, which are going to be analyzing for most of this year those impacts and significant freight, what would have been over fiscal 2020 the last results. So those will largely depend on what level of sales, because you have a natural delever on the sales until you got back and recapture those sales. So if the delever was 30 to 40, it’s clearly going to – it would clearly be significantly higher than that without the COVID cost. And then those, we would expect to start recapturing some of that as we get our sales levels up. So it’s – but that 10.6 would have been going down. And then on top of that is the deleverage of the sales and the higher freight and other supply chain costs. Michael Binetti: Can I follow-up a quick model question. Would you mind helping us with what the change was in the corporate expense line in the fourth quarter, I noticed this quite different than… Scott Goldenberg: Yes. There were some benefit – well, the biggest benefit, which was in effect at – thank you. It’s a good point. That’s not a necessarily a go – well, hopefully not a go-forward benefit was this year we did not have bonus accruals or incentive accruals up to the level. Last year, it’s actually – both went the wrong way. Last year, we had a very good end to the year and increased our incentive accruals in the fourth quarter. This year, we obviously are not meeting our plans. And so we had the incentive accruals go the other way. So it was a benefit of almost 90 basis points in the quarter. That’s obviously next year we would hope to have a normal level of bonus accruals. And so that’s the biggest difference. There was some – the rest of it’s just noise between fuel hedges and there was expense savings as a lot of companies maybe haven’t talked about it that much on metal costs and others as due to less people being sick that we had a benefit as well. Michael Binetti: Thanks a lot guys. Ernie Herrman: Thank you. Operator: Thank you. The final question of the day comes from Adrienne Yih [Barclays]. Your line is open. Adrienne Yih: Great. Thank you very much for taking my question. Ernie, this is a bit of a clarification on something that we’ve gotten for probably a couple of years. So as the global apparel brand manufacturers are reducing their footprint in off price, it sounds like you’re finding sort of more disparate newer fresher brands that are replacing those. So it’s making it an even better overall treasure hunt experience versus focused on this handful or a dozen of these historical brands. So is that clear, is that the right interpretation? Ernie Herrman: Yes, it is. And I will tell you to go along with that, Adrienne. As we – it’s funny, you mentioned that now it’s one thing I thought I didn’t get to mention on one of the earlier questions. We are buying significantly more from our satellite buying offices this year, which actually speaks to a little about what you just asked because – probably because of availability around – it’s not always with the same vendors and maybe what’s going on with Europe. So we have satellite offices, we have offices in Italy and in Europe and in the Far East and California. And so we we’ve had a disproportionate growth in purchases from those offices recently relative to our total during COVID. I mean, the good news in the vendor, this is not unusual when we – specifically in the home business, Adrienne. If you ever go to our store one week and you go to the next week, for example, in some of our categories where there’s a lot of newness. So if you look at our food business, you’ll see lots of new brands that’ll go in there and they maybe weren’t there a few months ago. And you don’t tend to think of that area, but there’s a lot of special labels in there that really become hot and quality and country of origin from Italy to domestic brands. And that happens throughout the store, but there are definitely more areas where I think brands have become – it’s really going to be a big differentiator of us from I think everybody else, because so many of the retailers around us in apparel, by the way, the apparel world is going very specialty private label driven. And what will be neat about our businesses is the customer, she or he can walk in and see an assortment of different brands that, yes, you’d find them in depth in other stores, but they’re all going to be under one roof in a treasure hunch format if that makes sense. Adrienne Yih: It totally does. And then Scott very quickly, we’ve been watching these container prices spiking over $5,000. And I guess the issue for us is, we’ve tried to go back and look at 2015 West Coast Port issues, but that was a U.S. specific issue. This is a global kind of the demand or supply issue. Are there any parallels to draw from that? Can you help us into P&L what is freight as a percent of sales? And I would imagine you’re better position because you have a lot more landed goods versus imports. So any color there would be helpful. Thank you. Scott Goldenberg: Yes. I’ll let Ernie address the piece of what you – obviously as vendors and others have to bring the goods in what they’ll pass on and not pass on, because everybody has to pay the increased ocean container costs one way or the other, what gets passed through. Ernie Herrman: Right. Yes. So I would say some of that gets mitigated when we buy through the brands. So a chunk of that gets mitigated because we go – our buyers look at what they can retail a goods at, and they factored into what the cost should be. And regardless of the vendor, whatever they pay for freight is, I don’t want to say it’s not our concern, but it’s kind of not our concern when our buyers, they’re pretty straightforward about how they work that. It’s something where we’re importing, which we do some of that business, then we’re going to get hit with that just like Scott said earlier. Scott Goldenberg: Yes. In terms of the big picture on freight, it’s very difficult to start and you’ll see that when we’re just going to be starting to compare against our numbers in the first and second quarter, because we weren’t open for business for such large chunks of the business of the time. But if you’re going to compare fiscal 2022 to fiscal 2020, it’s – you’re in north of 60 basis points probably a two year impact of incremental basis points on freight. But it’s really going to be a tale of two stories. It’s going to be significantly weighted toward the first half of the year versus the second half of the year, because most – we had the big spike ups. A lot of for us is we’ll be renegotiating domestically our rail, our truck and our ocean in the middle of the second quarter. So we would hope to contract more capacity because a lot of what impacted us and others is having to go to more spot rates and just pay through than those that happened in the fourth quarter and a little what will be happening still. And also the mix of the goods was not ideal because the number one priority I think, Ernie would agree with me, make sure we were getting the goods and our teams did a great job to get the goods, but we were paying – we had to pay a premium in many cases. But we’re working on a lot of issues in our logistics area to reduce costs. And we think there will be opportunities, so we’ll be able to take advantage of as we move forward through the next year and beyond. Adrienne Yih: Very helpful. Thank you. Best of luck. Ernie Herrman: Thank you, Adrienne. All right. I would like to thank all of you for joining us today. We will be updating you again on our first quarter earnings call in May. And from the team here at TJX, we hope you all stay well, and we wish you good health and talk to you down the road. Thank you. Operator: Ladies and gentlemen, that concludes your conference call for today. You may all disconnect. Thank you for participating.