# TJX Companies (TJX) Financial Model Free Excel 3-statement financial model and company analysis for TJX Companies. - Canonical: https://finamodel.com/companies/tjx-companies - Industry: Retail - Downloadable model: Yes - Excel download: https://finamodel.com/company-models/TJX.xlsx ## Model Purpose This model evaluates the equity valuation and store-level growth trajectory of TJX Companies to determine if its off-price "treasure hunt" business model can sustain its historical premium valuation multiple amidst broader retail industry headwinds. ## Company Overview The TJX Companies, Inc. is the leading off-price apparel and home fashions retailer in the United States and worldwide. The company acquires branded and designer merchandise opportunistically and sells it at a 20% to 60% discount to full-price retailers, creating a "treasure hunt" shopping experience that drives high customer footfall. **Business Segments:** * **Marmaxx (61% of revenue):** Includes T.J. Maxx, Marshalls, and Sierra in the US. * **HomeGoods (17% of revenue):** Includes HomeGoods and Homesense in the US. * **TJX International (13% of revenue):** Includes TK Maxx and Homesense in Europe, and TK Maxx in Australia. * **TJX Canada (9% of revenue):** Includes Winners, HomeSense, and Marshalls in Canada. **Key Geographies:** The United States accounts for approximately 78% of consolidated revenues, followed by Europe (12%), Canada (9%), and Australia (1%). **Business Model Type:** Asset-heavy, physical retail-driven model. E-commerce represents less than 3% of Marmaxx sales and less than 4% of International sales. The model relies on rapid inventory turnover, opportunistic buying from over 21,000 global vendors, and flexible store layouts. **Competitive Position:** TJX is the undisputed market leader in the off-price retail sector, significantly larger than its primary competitors, Ross Stores (ROST) and Burlington Stores (BURL). **Recent Major Events:** In fiscal 2025, TJX surpassed 5,000 global stores and $56 billion in revenue. The company also expanded its international footprint via joint ventures, acquiring a 49% stake in Grupo Axo (Mexico) and a 35% stake in Brands for Less (UAE and Saudi Arabia). ## Revenue Deep Dive ### Marmaxx * **Segment Name:** Marmaxx * **Revenue Driver Formula:** (Beginning Store Count + Net New Stores) x Average Revenue per Store OR Comparable Store Sales Growth + Non-Comp Sales Growth * **Historical Growth Rate:** 4% to 6% * **Key Growth Levers and Headwinds:** Driven by customer transaction volume rather than average ticket size. Headwinds include wage inflation and supply chain costs. * **Pricing Dynamics:** Prices are kept 20-60% below full-price retailers. TJX does not use promotional pricing or coupons. * **Revenue Recognition Notes:** Point of sale for in-store purchases; upon delivery for e-commerce (though e-commerce is immaterial). * **Seasonality:** Q4 (holiday season) is historically the strongest quarter for sales and cash flow. ### HomeGoods * **Segment Name:** HomeGoods * **Revenue Driver Formula:** Store Count x Average Revenue per Store * **Historical Growth Rate:** 4% to 9% * **Key Growth Levers and Headwinds:** Highly sensitive to the housing market and home turnover. Benefited from the closure of its e-commerce business to focus entirely on physical retail. * **Pricing Dynamics:** Value-driven pricing on home decor, furniture, and seasonal items. * **Revenue Recognition Notes:** Point of sale. * **Seasonality:** Strong Q4 due to seasonal decor and gifting. ### TJX Canada * **Segment Name:** TJX Canada * **Revenue Driver Formula:** Store Count x Average Revenue per Store (adjusted for FX) * **Historical Growth Rate:** 2% to 4% * **Key Growth Levers and Headwinds:** Mature market with steady growth; heavily impacted by USD/CAD exchange rate fluctuations. * **Pricing Dynamics:** Value pricing relative to Canadian department stores. * **Revenue Recognition Notes:** Point of sale. * **Seasonality:** Standard retail seasonality peaking in Q4. ### TJX International * **Segment Name:** TJX International * **Revenue Driver Formula:** Store Count x Average Revenue per Store (adjusted for FX) * **Historical Growth Rate:** 6% * **Key Growth Levers and Headwinds:** Expansion into new markets (e.g., planned entry into Spain in 2026). FX volatility (EUR, GBP, AUD) is a constant headwind/tailwind. * **Pricing Dynamics:** Value pricing relative to European and Australian high street retailers. * **Revenue Recognition Notes:** Point of sale. * **Seasonality:** Standard retail seasonality peaking in Q4. ## Cost Structure ### Variable Costs / COGS * **Line-by-line breakdown:** Cost of merchandise, freight, inventory shrink, and buying and occupancy costs (rent, utilities, depreciation of store assets). * **Gross margin range:** 28.5% to 30.6%. * **Key input costs and commodity exposures:** Freight rates, fuel costs, and wholesale apparel/home goods pricing. * **How COGS scales with revenue:** Generally linear, but buying and occupancy costs provide some operating leverage when comparable store sales are positive. ### Operating Expenses * **R&D:** Not applicable/not reported. * **SG&A:** Runs at approximately 19.3% to 19.4% of revenue. Primarily consists of store payroll, advertising, and corporate administrative costs. * **Depreciation & Amortisation:** Embedded within COGS (occupancy) and SG&A. * **Stock-Based Compensation:** Standard corporate levels, not a massive driver compared to tech companies. * **Restructuring / one-time charges:** Rare, though occasionally incurs supply chain exit costs or joint venture write-downs (e.g., Familia in Russia in FY23). ### Margin Profile * **Gross margin:** ~29.5% to 30.6%. * **Pre-tax margin:** 10.9% to 11.6%. * **Segment-level margins (FY25):** Marmaxx (14.1%), HomeGoods (10.9%), TJX Canada (13.5%), TJX International (5.9%). * **Margin trend:** Expanding slightly due to lower freight costs and lower inventory shrink, partially offset by higher store wage costs. ## Balance Sheet Structure * **Total assets:** Approximately $25 billion to $30 billion. * **Key asset categories:** Inventory (critical for the treasure hunt model), Operating Lease Right-of-Use Assets, and PP&E. * **Goodwill & intangibles:** Minimal, as growth is primarily organic rather than through large acquisitions. * **Working capital profile:** * **Days Sales Outstanding (DSO):** Very low (mostly cash/credit card sales). * **Days Inventory Outstanding (DIO):** High (typically 55-65 days) due to the need to stock over 5,000 stores with rapidly changing merchandise. * **Days Payable Outstanding (DPO):** High (typically 40-50 days) as TJX leverages its massive buying power with vendors. * **Net working capital as % of revenue:** Generally negative or very low, allowing the company to fund growth through its own operations. * **PP&E:** Primarily store fixtures, distribution centres, and supply chain infrastructure. * **Right-of-use assets / operating leases:** Highly material. TJX leases almost all of its 5,000+ store locations. ## Capital Expenditure & Investment * **Capex as % of revenue:** Approximately 3.0% to 4.0%. * **Maintenance capex vs. growth capex:** Roughly a 50/50 split between maintaining existing stores/supply chain and opening new stores/upgrading distribution networks. * **Major capex programmes underway or planned:** Planned FY26 CapEx of ~$2.15 billion, heavily focused on supply chain upgrades and new store openings. * **Capitalised software / development costs:** Immaterial. * **M&A pattern:** Historically organic. Recently making small minority investments (Grupo Axo, Brands for Less) to test new international markets. ## Debt & Capital Structure * **Total debt:** Conservative debt profile. * **Debt/EBITDA ratio:** Very low, typically under 1.0x. * **Credit rating:** "A" rating from S&P Global, one of the strongest in the retail sector. * **Key debt instruments:** Long-term senior notes. * **Interest rate profile:** Primarily fixed-rate bonds. * **Share repurchase programme:** Highly active. Repurchased $2.5 billion in FY25 and plans to repurchase $2.0 to $2.5 billion in FY26. * **Dividend policy:** Consistent dividend payer. Declared $1.50 per share in FY25 and plans a 13% increase for FY26. ## Cash Flow Characteristics * **Operating cash flow conversion:** Very strong, typically >1.0x Net Income. Generated $6.1 billion in OCF in FY25. * **Free cash flow margin:** Approximately 6% to 8% of revenue. * **Major non-cash items:** Depreciation, operating lease expense, and stock-based compensation. * **Working capital cash flow impact:** Favourable. As the company grows, its high payables balance provides a source of cash. * **Capex intensity:** Moderate (3-4% of sales). * **Cash tax rate vs. GAAP effective tax rate:** Effective tax rate is approximately 24.8% to 25.0%. Cash taxes closely track GAAP taxes. ## Sheet Structure 1. **Assumptions:** Hardcoded inputs for store growth, comp sales, margins, tax rate, WACC, and share repurchases. 2. **Revenue & Store Roll-Forward:** Segment-level build. For Marmaxx, HomeGoods, TJX Canada, and TJX International: Beginning Stores + Openings - Closings = Ending Stores. Comp store sales growth % and non-comp sales. 3. **Income Statement:** Consolidated view mirroring the 10-K. Net Sales, Cost of Sales (including buying and occupancy), SG&A, Interest Expense, Pre-tax Income, Provision for Income Taxes, Net Income. 4. **Segment Profitability:** Revenue and Segment Profit Margin for the four reporting segments. 5. **Balance Sheet:** Cash, Inventory, Other Current Assets, PP&E, Operating Lease ROU Assets, Accounts Payable, Accrued Expenses, Current Lease Liabilities, Long-Term Debt, Long-Term Lease Liabilities, Shareholders' Equity. 6. **Cash Flow Statement:** Net Income, D&A, Change in Working Capital (Inventory, AP), OCF, Capex, FCF, Dividends, Share Repurchases, Debt Issuance/Repayment. 7. **Debt & Interest Schedule:** Tranches of senior notes, interest rate assumptions, and interest expense calculation. 8. **Working Capital Schedule:** DSO, DIO, DPO calculations and projected balances. 9. **DCF Valuation:** UFCF calculation, WACC build, terminal value, and implied share price. ## Key Financial Relationships 1. `Marmaxx Revenue = Marmaxx Prior Year Revenue x (1 + Marmaxx Comp Store Sales Growth + Marmaxx Non-Comp Sales Contribution)` 2. `HomeGoods Revenue = HomeGoods Prior Year Revenue x (1 + HomeGoods Comp Store Sales Growth + HomeGoods Non-Comp Sales Contribution)` 3. `Consolidated Net Sales = Marmaxx Revenue + HomeGoods Revenue + TJX Canada Revenue + TJX International Revenue` 4. `Segment Profit = Segment Revenue x Segment Profit Margin` 5. `Cost of Sales = Consolidated Net Sales x (1 - Gross Margin %)` 6. `SG&A Expense = Consolidated Net Sales x SG&A % (historically ~19.4%)` 7. `Ending Inventory = (Cost of Sales / 365) x DIO` 8. `Ending Accounts Payable = (Cost of Sales / 365) x DPO` 9. `Free Cash Flow = Operating Cash Flow - Capital Expenditures` 10. `Ending Share Count = Beginning Share Count - (Share Repurchase Amount / Average Share Price)` 11. `Dividends Paid = Dividend Per Share x Average Shares Outstanding` ## Cross-Sheet Dependencies * **Assumptions** feeds all other sheets. * **Revenue & Store Roll-Forward** feeds the top line of the **Income Statement** and **Segment Profitability**. * **Income Statement** generates Net Income, which feeds the top of the **Cash Flow Statement** and Retained Earnings on the **Balance Sheet**. * **Working Capital Schedule** uses Cost of Sales from the **Income Statement** to calculate Inventory and AP, which feed the **Balance Sheet** and the Change in NWC on the **Cash Flow Statement**. * **Cash Flow Statement** generates the ending cash balance, which feeds the **Balance Sheet**. * **Debt & Interest Schedule** feeds Interest Expense on the **Income Statement** and Long-Term Debt on the **Balance Sheet**. (Potential circularity here if interest income on cash balances is modelled). * **DCF Valuation** pulls EBIT and Taxes from the **Income Statement**, and D&A, Capex, and NWC changes from the **Cash Flow Statement**. ## Sign Convention * **Revenues and Assets:** Positive. * **Expenses and Liabilities:** Positive on their respective schedules, but subtracted in aggregate formulas (e.g., Gross Profit = Revenue - Cost of Sales). * **Cash Flow:** Inflows are positive, outflows (Capex, Dividends, Repurchases) are negative. * **Margins and Growth Rates:** Expressed as positive percentages. ## Things Most Likely to Go Wrong 1. **Ignoring the 53rd Week:** Retailers occasionally have a 53-week fiscal year (like TJX in FY24). Models must adjust historical growth rates to a 52-week comparable basis to avoid over-forecasting the subsequent year. 2. **Misclassifying Occupancy Costs:** TJX includes buying and occupancy costs in Cost of Sales, not SG&A. Modelling these as operating expenses will distort gross margin benchmarking. 3. **FX Translation Volatility:** TJX Canada and TJX International revenues are highly sensitive to FX. The model should ideally have a constant-currency toggle or clearly state FX assumptions. 4. **E-commerce Overestimation:** Unlike other retailers, TJX's e-commerce is immaterial (<3% of sales). Do not build a complex e-commerce growth driver; it is a physical store story. 5. **Working Capital Cash Drain:** Assuming working capital scales linearly as a use of cash. For TJX, growing inventory is often offset by growing payables due to vendor terms. 6. **Capitalising Leases Incorrectly:** Operating leases are massive for TJX. Ensure ROU assets and lease liabilities are balanced and amortisation is handled correctly in OCF. 7. **Ignoring Share Shrink:** TJX aggressively buys back stock ($2.5B annually). Failing to reduce the share count will artificially depress EPS projections. 8. **Segment Margin Divergence:** Assuming all segments have the same margin. Marmaxx operates at ~14% while International operates at ~6%. Mix shift matters. ## Validation Checks 1. "Consolidated Gross Margin should be between 28.5% and 31.0%; flag if outside this band." 2. "SG&A as a % of revenue should remain stable around 19.0% to 19.5%." 3. "Pre-tax margin should be in the 10.5% to 11.6% range based on recent guidance." 4. "Capex as a % of revenue should run between 3.0% and 4.0%." 5. "Total Store Count should not exceed the stated long-term target of 7,000 without a scenario flag." 6. "Balance sheet must balance: Total Assets = Total Liabilities + Equity in every period." 7. "Effective tax rate should be approximately 24.8% to 25.0%." 8. "Debt/EBITDA should remain below 1.5x to maintain the 'A' credit rating." ## Key Assumptions (Default Values) | Assumption | Default Value | Unit | Rationale | |---|---|---|---| | Marmaxx Comp Store Growth | 4.0 | % | FY25 actual comp growth | | HomeGoods Comp Store Growth | 4.0 | % | FY25 actual comp growth | | TJX Canada Comp Store Growth | 2.0 | % | Conservative estimate based on mature market | | TJX Int'l Comp Store Growth | 4.0 | % | FY25 actual comp growth | | Consolidated Gross Margin | 30.6 | % | FY25 actual gross margin | | SG&A % of Revenue | 19.4 | % | FY25 actual SG&A ratio | | Effective Tax Rate | 24.9 | % | Historical average and guidance | | Capex as % of Revenue | 3.8 | % | Based on $2.15B FY26 guidance on ~$56B base | | Days Inventory Outstanding (DIO) | 60 | Days | Historical average for off-price retail | | Days Payable Outstanding (DPO) | 45 | Days | Historical average reflecting vendor leverage | | Annual Share Repurchases | 2,250 | $ Millions | Midpoint of FY26 guidance ($2.0B - $2.5B) | | Dividend Per Share | 1.69 | $ | FY25 $1.50 + 13% planned increase for FY26 | | WACC | 7.7 | % | Current market estimate for TJX | | Terminal Growth Rate | 2.5 | % | Long-term GDP growth proxy | ## Data Sources & Benchmarks * **SEC Filings:** TJX Investor Relations page (investor.tjx.com) or SEC EDGAR for 10-K and 10-Q filings. * **Key Peers for Benchmarking:** Ross Stores (ROST), Burlington Stores (BURL), Target (TGT), Macy's (M). * **Industry Data Sources:** National Retail Federation (NRF) for US retail sales trends, Placer.ai for foot traffic data. * **Consensus Estimates:** Bloomberg, FactSet, or Yahoo Finance for forward EPS and revenue estimates. ## Sources * Form 10-K for TJX Companies INC DE filed 04/02/2025 (tjx.com) * Success Factors - TJX Companies (tjx.com) * TJX COMPANIES INC /DE/ SEC 10-K Report (tradingview.com) * The TJX Companies, Inc. (TJX) Annual Report (Form 10-K) for the fiscal year ended February 1, 2025 (webull.com) * Annual Report for Fiscal Year Ending February 1, 2025 (Form 10-K) (publicnow.com) * The TJX Companies, Inc. Fourth Quarter Fiscal Year 2024 Earnings Press Release (tjx.com) * The TJX Companies, Inc. - Fiscal 2025 Form 10-K (tjx.com) * The TJX Companies, Inc. Reports Q4 and FY25 Results (tjx.com) * TJX grows worldwide presence to 5,000+ stores; annual revenues surpass $56B (wbjournal.com) * Earnings call transcript: TJX Q4 2025 beats EPS and revenue estimates (investing.com) * TJX WACC, Cost of Equity, Cost of Debt and CAPM (valueinvesting.io) * TJX WACC %: 7.7% - Near Median (gurufocus.com) * Valuation Template 2025 - TJX (uiowa.edu) --- ## Frequently asked questions ### What is TJX Companies' core business model? TJX Companies operates as the leading off-price apparel and home fashions retailer globally, selling branded and designer merchandise at significant discounts. Its "treasure hunt" shopping experience drives high customer footfall, relying on opportunistic buying and rapid inventory turnover. ### How does TJX Companies generate its revenue? TJX Companies generates revenue primarily through its physical retail stores across four main segments: Marmaxx, HomeGoods, TJX International, and TJX Canada. The company's strategy of offering discounted branded merchandise encourages frequent customer visits and purchases across its over 5,000 locations. ### What is the assumed revenue growth rate in the TJX Companies financial model? The financial model for TJX Companies assumes a revenue growth rate of approximately 6.77% over the forecast horizon from FY2027 to FY2031. This assumption is a key input for projecting the company's future sales performance. ### What is TJX Companies' capital expenditure strategy? TJX Companies' capital expenditure is projected at approximately 2.59% of revenue in the financial model, with a historical range of 3.0% to 4.0%. This investment is roughly split between maintaining existing stores and supply chain infrastructure, and funding new store openings and distribution network upgrades. ### What is the purpose of the TJX Companies financial model? The financial model aims to evaluate the equity valuation and store-level growth trajectory of TJX Companies. It seeks to determine if the company's off-price business model can sustain its historical premium valuation multiple amidst broader retail industry challenges. ### Can I download an Excel financial model for TJX Companies? Yes, a downloadable Excel financial model for TJX Companies is available. This model provides a forecast horizon from FY2027 to FY2031, allowing users to analyze key financial assumptions and projections for the company. 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