Q2 FY2027 results
| Metric | Result | Change |
|---|---|---|
| Consolidated comp sales | 4% | Above plan |
| Adjusted diluted EPS | $1.22 | Up 11% versus last year |
| Adjusted pretax profit margin | 11.9% | Up 50 basis points versus last year |
| Adjusted gross margin | 31.4% | Up 70 basis points versus last year |
| Marmaxx comp sales | 1% | Not stated |
Guidance and outlook
- Third quarter comp sales are planned to be up 2% to 3%, with sales in the range of $15.6 billion to $15.8 billion.
- Third quarter adjusted diluted EPS is expected to be in the range of $1.30 to $1.32.
- Full year comp sales growth is expected to be 3% to 4%, with sales in the range of $63.4 billion to $63.8 billion.
- Full year adjusted diluted EPS is expected to be in the range of $5.15 to $5.20.
- Fourth quarter comp sales are expected to be up 2% to 3%, with adjusted diluted EPS in the range of $1.44 to $1.47.
How management sounded
Positive (+6 on our -10 to +10 scale). Management raised full-year profit and EPS guidance while highlighting strong performance in most divisions, despite acknowledging self-inflicted execution issues at Marmaxx. Management sounded more upbeat than on 8% of the 190 calls we cover; most companies sound positive on their own calls, so the comparison says more than the label.
Q&A summary
Marmaxx execution
Asked: What caused the underperformance at Marmaxx and how will it be fixed?
Answer: Management stated the issues were self-inflicted and related to having the wrong merchandise mix in certain stores. They have identified the problems and expect to see improvement by the holiday season.
Store growth
Asked: Why is the company increasing its long-term store target?
Answer: Management sees opportunities in rural markets, urban areas, and strong performance in new store openings, leading to an accelerated 4% annual growth plan.
HomeGoods performance
Asked: What is driving the strong results at HomeGoods?
Answer: The division is benefiting from strong execution, a mix of impulse and consumable staple products, and effective store presentation that differentiates it from competitors.
Marketing strategy
Asked: Is the company changing its marketing approach?
Answer: Management is playing offense with a focus on digital and social media, noting high engagement and video completion rates on platforms like TikTok and YouTube.
What to watch before the next call
- Improvement in Marmaxx sales trends as the company moves toward the holiday season.
- Management's ability to manage freight and fuel cost pressures in the second half of the year.
- Execution of the accelerated 4% store opening plan starting next year.
