TJX’s Q3 sales pickup — real momentum or seasonal noise?

What happened

Zacks reports accelerating Q3 comps at TJX driven by apparel (Marmaxx) and HomeGoods, with traffic and larger baskets fueling strength. That aligns with our DeepValue read: Marmaxx comps have been steady (~+3% for recent 13‑ and 26‑week periods) and HomeGoods is showing recovery, supported by TJX’s scale, opportunistic buying and FY2025 FCF of roughly $4.2B. The company still posts double‑digit operating margins and sits on a net‑cash balance sheet that funds dividends and buybacks, which cushions downside into the seasonal H2. But the stock already trades at a premium (~32x trailing EPS) and headline momentum can overstate durability when backed by transient factors like closeout cycles and freight improvements. Key risks — tariff or de‑minimis policy shifts, rising shrink and wage/occupancy costs, or a holiday execution miss — could quickly reverse margin gains and should temper enthusiasm.

Implication

The reported acceleration in apparel and home goods comps is a constructive signal for TJX’s core treasure‑hunt model, reinforcing that traffic and basket gains can drive near‑term upside. However, investors should demand confirmation: sustained mid‑single‑digit comps and stable merchandise margins through the holiday quarter before adding exposure. Monitor gross margin drivers (freight, markdowns, mix), inventory levels per store, and shrink trends closely — these are the immediate margin levers. The balance sheet and buybacks provide capital‑return support, yet the current ~32x trailing P/E leaves little valuation cushion for setbacks. If momentum proves fleeting or margins deteriorate, downside could be swift, so position sizing should reflect limited margin of safety.

Thesis delta

Small positive confirmation only. The Zacks piece corroborates Q3 top‑line momentum and strengthens conviction that off‑price demand remains healthy, but it does not change our HOLD because the improvement must prove durable through holiday and into FY2026 to justify the premium multiple. We remain focused on sustained traffic‑led comps and merchandise‑margin stability as the upgrade catalysts.