TJX Companies: A Contrarian Play in a Retail Turnaround

The TJX Companies (NYSE: TJX) stands at a pivotal moment. With its Q1 2026 earnings report due on May 21, the off-price retail giant presents a compelling contrarian opportunity. Despite near-term headwinds, TJX’s margin resilience, aggressive store expansion, and untapped e-commerce potential position it to thrive in a post-tariff environment. Here’s why now is the time to act.

Margin Resilience Amid Rising Costs

TJX’s Q4 FY25 results showcased its ability to navigate inflationary pressures. Pretax margins expanded 70 basis points to 11.6%, driven by tight inventory management and opportunistic buying. While Q1 FY26 guidance anticipates margin contraction due to rising store wages and FX headwinds, the long-term picture remains bright. Unlike traditional retailers, TJX’s off-price model allows it to reset prices frequently, shielding margins from input cost volatility.

Accelerated Store Expansion: A Global Play

TJX plans to add 130 net new stores in FY26, with HomeGoods—now a $1 billion segment—accounting for 1,800 of its 7,000-target store network. International expansion is key: its entry into Spain and Mexico via joint ventures, plus a 1,000th HomeGoods milestone, signals global dominance. Each new store leverages TJX’s low-cost real estate strategy, often repurposing shuttered competitor sites (e.g., Big Lots closures).

E-Commerce: The Untapped Frontier

While e-commerce sales are projected to reach $1.6 billion in 2024, TJX’s digital strategy is underappreciated. Its omnichannel model integrates online and offline inventory, enabling seamless shopping. With 10% of sales online and room for growth (industry peers average 20%), TJX’s scale and treasure-hunt inventory could propel e-commerce to a $3B+ business.

Tariff Relief: A Tailwind for 2026

The rollback of Chinese tariffs has reduced procurement costs, easing the 1% FX-driven headwind in FY26. Buyers now focus on retail pricing, not input costs, enabling TJX to offer deeper discounts. This bodes well for Q1’s 2-3% comp sales growth target—conservative compared to the 4% beat in FY25.

Near-Term Risks? Buy the Dip

Analysts expect Q1 EPS of $0.91, a 2% dip from last year’s $0.93, due to FX and wage pressures. Yet this is a buying opportunity. Historically, TJX stock rises 70% of the time post-earnings (median gain: 3.8%). Even if results miss, the 13% dividend hike and $2.5B buyback program underscore management’s confidence.

Why Act Now?

• Valuation: Trading at 28.4x forward earnings, TJX trades below its five-year average and industry peers.
• Catalysts: FY26’s 5% sales growth target, new store openings, and e-commerce scaling are all growth levers.
• Timing: With shares down 0.4% in the past week, the dip ahead of earnings creates a low-risk entry.

Final Verdict: A Contrarian’s Dream

TJX isn’t just surviving—it’s thriving. Its ability to grow margins, expand stores, and tap digital growth while facing short-term noise makes it a rare contrarian gem. As the off-price sector’s leader, TJX offers a 10-20% upside in the next 12 months. The earnings report on May 21 is your chance to lock in this opportunity. Act now before the market catches on.

Investors seeking resilience and growth in a volatile market: Look no further than TJX.