Even as higher-end department stores struggle, off-price retail is thriving, showing that Americans are still spending, just more selectively. TJX Companies – which owns TJ Maxx, Marshalls and HomeGoods – blew past Wall Street expectations in its fourth quarter earnings report Wednesday morning.Sales surged 9% year-over-year to $17.7 billion in the fourth quarter, with comparable store sales up 5%. TJX also boosted its quarterly dividend 13% to 48 cents per share, and brought in a net income of $1.8 billion ...

TJX Companies (NYSE:TJX) Q4 2026 Earnings call February 25, 2026 11:00 AM ET Company ParticipantsErnie Herrman - Chief Executive Officer and PresidentMichael Binetti - Senior Managing DirectorPaul Lejuez - Managing DirectorSimeon Siegel - Senior Managing DirectorNone - Company RepresentativeConference Call ParticipantsAneesha Sherman - Senior AnalystBrooke Roach - Vice President and Senior Equity AnalystJay Sole - Managing Director and Senior Equity Research AnalystLorraine Hutchinson - Research AnalystMatt ...

Core Insights - The Consumer Discretionary SPDR Fund (XLY) has a significant concentration risk, with Amazon and Tesla accounting for over 40% of the portfolio, leading to underperformance compared to the S&P 500 [1] - XLY returned only 3.2% over the past year, while the S&P 500 gained 11.8%, primarily due to Amazon's 13.7% decline [1] - Consumer sentiment has dropped 18.2% to 52.9, indicating pessimism, while retail sales grew 3.3% year-over-year, creating a disconnect in consumer behavior [1] Fund Structure and Performance - XLY holds 51 companies across various sectors, including e-commerce, automotive, home improvement, and dining, but is heavily weighted towards Amazon (20.73%) and Tesla (19.77%) [1] - The fund's top five holdings also include Home Depot, McDonald's, and TJX Companies, but the portfolio remains top-heavy [1] - XLY charges an annual fee of 0.08% and has a modest dividend yield of 0.72%, focusing on capital appreciation rather than income [1] Market Conditions - Consumer discretionary stocks are cyclical, performing well during economic expansions and poorly during downturns [1] - Current economic indicators show a contradictory picture, with low consumer sentiment typically associated with recessions, yet retail sales are increasing [1] - The fund is suited for investors who believe in accelerating consumer spending and can handle the volatility associated with concentrated positions in major companies [1]

Company Overview - Ross Stores, Inc. is a leading off-price retailer headquartered in Dublin, California, with fiscal 2024 revenues of $21.1 billion [4] - The company operates Ross Dress for Less, the largest off-price apparel and home fashion chain in the U.S., with 1,909 locations across 44 states, the District of Columbia, Guam, and Puerto Rico [4] - Ross offers first-quality, in-season, name brand and designer apparel, accessories, footwear, and home fashions at savings of 20% to 60% off regular prices [4] - Additionally, Ross operates 364 dd's DISCOUNTS stores in 22 states, featuring moderately-priced assortments with savings of 20% to 70% off regular prices [4] Leadership and Legacy - Norman Ferber, former Chairman and CEO of Ross Stores, passed away on January 23, 2026, at the age of 77 after a brief illness [1] - Ferber was instrumental in shaping the company's strategy and culture, contributing to its growth from a small chain to a leading retailer [2] - He held various leadership roles over decades, including President, COO, CEO, and Chairman of the Board, and remained engaged with the company for nearly 30 years after his tenure as CEO [2] Community Engagement - In honor of Ferber's commitment to Ross Associates, the company contributed to the Ross Cares Fund to support community members in need [3] - Ferber was passionate about the partnership with Boys & Girls Clubs of America, dedicating time as a volunteer and donor [3] - The Ross Stores Foundation made a donation in Ferber's memory, and a main Art and Academic Room at the Moldaw-Zaffaroni Clubhouse was named in his honor [3]

Market Overview - U.S. equities showed resilient but volatile performance in Q4, with major indexes near all-time highs while market conditions shifted significantly beneath the surface [2] - The S&P 500 Index returned 2.7% during the quarter, while the Russell Midcap Growth Index declined 3.7%, indicating increased selectivity among investors [3] Performance Analysis - The ClearBridge Growth Strategy outperformed its benchmark for the third consecutive quarter, benefiting from early-quarter momentum in AI-related sectors and strong downside protection as risk appetite moderated [4] - The Strategy delivered a strong year, outperforming its benchmark by nearly 600 basis points (gross of fees), highlighting the importance of stock selection in a market where much of the upside is already priced in [6] Sector Contributions - Positive contributions came from the consumer discretionary and materials sectors, while the consumer staples and information technology sectors detracted from performance [20] - Notable contributors included Vertex Pharmaceuticals, Broadcom, Freeport-McMoRan, and TE Connectivity, while detractors included e.l.f. Beauty and Doximity [22] Portfolio Positioning - The Strategy reallocated capital towards opportunities with more attractive risk-reward profiles, including new positions in Vistra, Alnylam Pharmaceuticals, and Hilton [14] - The portfolio is more diversified across sectors and subsectors, improving resilience while maintaining the ability to capture long-term upside [7] Outlook - The outlook remains consistent with earlier assessments, emphasizing the importance of disciplined stock selection and a balanced approach to portfolio construction amid increased volatility [17] - AI continues to represent a long-term opportunity, with a focus on maintaining exposure within the AI complex while balancing offensive and defensive characteristics in the portfolio [18]

Financial Data and Key Metrics Changes - The company reported a holiday comparable store sales increase of 9.3%, building on last year's 7.1%, resulting in a two-year stack of 16.4% [5] - Year-to-date through December, comparable store sales increased by 9.8%, with a two-year stack year-to-date of 13.3% [5][23] - The company aims for total sales growth of $150 million, targeting approximately $900 million in fiscal 2027, with a gross profit rate expansion of about 400 basis points to 42% [25][26] Business Line Data and Key Metrics Changes - The company operates 591 stores across 33 states, with annual sales of about $820 million in fiscal 2025 [7] - The company plans to open 25 new stores in 2026 and at least 40 stores per year from 2027 onward, aiming for approximately 650 stores by the end of 2027 [19] Market Data and Key Metrics Changes - The company has a strong market presence in the Southeast, focusing on African-American customers, which has created a loyal customer base [8][12] - The off-price retail sector has historically grown faster than traditional retail, and the company aims to align its market valuation with this sector [10] Company Strategy and Development Direction - The company is focused on a clear, disciplined growth plan designed to deliver sustainable value creation and strengthen its position as a leading neighborhood retailer for African-American families [4] - The strategy includes a three-tiered product assortment to appeal to all income levels, with a focus on style, price, and trends [10][12] - The company is investing in capital projects, primarily store remodels, new store openings, and technology infrastructure, with a total capital spend expected to be around $45 million in 2026 and 2027 [22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's transformation strategy, highlighting consistent comparable store sales increases and a strong customer connection [30] - The company is positioned for growth with a debt-free balance sheet and projected cash balance of $65 million in the next three years [9][22] - Management acknowledged that while progress has been made, significant work remains ahead to refine processes and optimize categories [30] Other Important Information - The company has implemented an AI-based planning and allocation system to improve inventory management and reduce markdowns [27] - A marketing campaign titled "Joy Looks Good on You" has been launched, resonating well with the target demographic and achieving over 12 million viral views [15][16] Q&A Session Summary Question: What are the expectations for future sales growth? - The company expects consistent total store sales growth of 6%-8% annually, resulting in sales of over $900 million in 2027 [26] Question: How is the company addressing inventory management? - The company is leveraging AI tools to analyze transaction data and improve inventory allocation, aiming for approximately 90% accuracy in sales prediction [20]

Financial Data and Key Metrics Changes - Citi Trends reported a holiday comparable store sales increase of 9.3%, following last year's 7.1%, resulting in a two-year stack of 16.4% [5] - Year-to-date through December, comparable store sales increased by 9.8%, with a two-year stack year-to-date of 13.3% [5][23] - The company aims for total sales growth of $150 million, targeting approximately $900 million in fiscal 2027, with a gross profit rate expansion of about 400 basis points to 42% [25][27] Business Line Data and Key Metrics Changes - The company operates 591 stores across 33 states, with annual sales of about $820 million in fiscal 2025 [7] - The three-tiered product strategy includes value-focused basics, better quality products priced between $7-$12, and an expanding extreme value segment aimed to represent an incremental 10% of total sales [11][12] Market Data and Key Metrics Changes - Citi Trends is positioned as the only off-price retailer specifically focused on African-American customers, creating a uniquely loyal customer base [8] - The average customer household income ranges from $50,000 to $150,000, with over one-third shopping weekly or biweekly [12][14] Company Strategy and Development Direction - The company is focused on a disciplined growth plan designed to deliver sustainable value creation and strengthen its position as a leading neighborhood retailer for African-American families [4] - Future plans include opening 25 new stores in 2026 and at least 40 stores per year from 2027 onward, aiming for approximately 650 stores by the end of 2027 [19][22] Management's Comments on Operating Environment and Future Outlook - Management emphasized the importance of community connection and the competitive advantage it provides, noting that transaction growth has driven comparable sales increases [17] - The company is in the early stages of a transformation, with significant opportunities ahead, and is committed to refining processes and optimizing categories [30] Other Important Information - Citi Trends operates a debt-free balance sheet, projecting a cash balance of approximately $65 million and total liquidity of about $140 million [9][22] - The company has implemented AI-based systems for inventory management, which are expected to improve efficiency and reduce markdowns [27][28] Q&A Session Summary Question: What are the expectations for future sales growth? - Management expects consistent total store sales growth of 6%-8% annually, resulting in sales of over $900 million in 2027 [26] Question: How is the company addressing supply chain challenges? - The company is leveraging technology and innovation to improve inventory management and reduce costs, including implementing markdown optimization [28]

Financial Data and Key Metrics Changes - Citi Trends reported a holiday comparable store sales increase of 9.3%, following a 7.1% increase last year, resulting in a two-year stack of 16.4% [5] - Year-to-date through December, comparable store sales increased by 9.8%, with a two-year stack year-to-date of 13.3% [5][20] - The company aims for total sales growth of $150 million, targeting approximately $900 million in fiscal 2027, with a gross profit rate expansion of about 400 basis points to 42% [22] Business Line Data and Key Metrics Changes - Citi Trends operates as an off-price retailer specializing in family apparel, accessories, and home categories, with annual sales of about $820 million in fiscal 2025 [6] - The company plans to grow its extreme value segment to represent an incremental 10% of total sales, focusing on branded products purchased at steep discounts [10] Market Data and Key Metrics Changes - Citi Trends has built a competitive position within the off-price retail sector, specifically targeting African-American customers, which has resulted in a loyal customer base [7] - The company operates 591 stores across 33 states, with a strong presence in the Southeast, and plans to increase its store count to approximately 650 by the end of 2027 [6][17] Company Strategy and Development Direction - The company is focused on a clear, disciplined growth plan designed to deliver sustainable value creation and strengthen its position as a leading neighborhood retailer for African-American families [4] - Citi Trends is implementing a three-phased framework for transformation, focusing on repair, execution, and growth, with an emphasis on improving operational capabilities and customer connection [20][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's transformation strategy, highlighting consistent comparable store sales increases and a strong customer connection [26] - The company is positioned for growth with a debt-free balance sheet and plans to invest in capital projects, including store remodels and new store openings [19][26] Other Important Information - Citi Trends has a projected cash balance of approximately $65 million and total liquidity of about $140 million, providing flexibility for growth initiatives [8][19] - The company has refreshed 62 high-volume stores this year, with plans to continue remodeling about 50 stores per year as part of its market investment strategy [15][16] Q&A Session Summary - No specific questions and answers were provided in the content, thus this section is not applicable.

Core Insights - ClearBridge Investments reported a strong but volatile performance in US equities for Q4 2025, with the S&P 500 Index returning 2.7% and the Russell Midcap Growth Index declining 3.7% [1] - The ClearBridge Growth Strategy achieved its third consecutive quarter of outperformance through a balanced, highly active share approach, capturing early momentum while providing downside protection during rising volatility [1] - The strategy maintained a disciplined portfolio management and opportunistic capital allocation philosophy [1] Company Highlights - The TJX Companies, Inc. (NYSE:TJX) is highlighted as a key stock in the ClearBridge Growth Strategy, with a one-month return of 0.70% and a 52-week gain of 31.63% [2] - As of January 9, 2026, TJX stock closed at $157.81 per share, with a market capitalization of $175.633 billion [2] - Positive contributions from steadier growth holdings, including TJX, helped offset pressures in the consumer discretionary sector, with solid third-quarter results and a strong start to Q4 due to better merchandise availability [3] Investment Sentiment - Despite the potential of The TJX Companies, it is not among the 30 Most Popular Stocks Among Hedge Funds, with 69 hedge fund portfolios holding it at the end of Q3, down from 73 in the previous quarter [4] - The analysis suggests that certain AI stocks may offer greater upside potential and carry less downside risk compared to TJX [4]

Amazon - Amazon has deployed over 1 million robots in its warehouses, projected to save up to $4 billion annually in fulfillment costs, with expectations of significantly lifting operating margins for the retail segment by 2030 [1] - The company is investing heavily in AI, with planned capital expenditures projected at $125 billion in 2025, focusing on custom silicon chips to enhance performance and reduce costs compared to competitors [2] - Amazon's advertising segment is the fastest-growing, with annualized revenue expected to exceed $60 billion in 2025, potentially approaching $100 billion annually in the coming years [3] - Amazon Web Services (AWS) remains the primary profit engine, accounting for approximately 30% of the global cloud infrastructure market [4] - In Q3 2025, Amazon reported revenue of $180.2 billion, a 13% year-over-year increase, with net income rising 38% to $21.2 billion [7] Vertex Pharmaceuticals - Vertex Pharmaceuticals has a trailing-10-year return of around 90%, driven by its cystic fibrosis drug franchise and expansion into the rare disease market [8] - The company is diversifying its portfolio with late-stage clinical programs targeting kidney disease, pain management, and type 1 diabetes, supported by a solid balance sheet and substantial free cash flow [9] - Vertex is launching Casgevy, a gene-editing therapy for sickle cell disease, and Journavx, a non-opioid medicine for pain management, with significant market interest and regulatory approvals [10][11] - The company reported revenue of over $3 billion in Q3 2025, an 11% increase from the previous year, and is positioned for significant growth through innovation and diversification [14] TJX Companies - TJX Companies has seen a nearly 150% increase in stock value over the last five years, attributed to its effective off-price retail model [15] - The company plans to expand its store footprint to 7,000 globally, enhancing its physical presence in existing and new markets [16] - TJX's business model encourages frequent shopper visits due to its ever-changing inventory and unique product offerings, appealing to cost-conscious consumers [17] - In Q3 2026, TJX reported earnings per share of $1.28 on $15.1 billion in revenue, reflecting year-over-year increases of 12% and 7% respectively [19]