Company: TJX
Filing Date: 2025-12-02
Form Type: 10-Q
Source: 0000109198-25-000061
Chunk: 78

Company: TJX COMPANIES INC /DE/
Filing Date: 2025-12-02
Form: 10-Q
Item: Part I, Item 8
Chunk 78
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 in currency exchange rates during a short period of time. The mark-to-market adjustment on these derivatives does not affect net sales, but it does affect the cost of sales, operating margins and earnings we report.

Transactional Foreign Exchange

When discussing the impact on our results of the effect of foreign currency exchange rates on certain transactions, we refer to it as “transactional foreign exchange”. This primarily includes the impact that foreign currency exchange rates may have on the year-over-year comparison of merchandise margin as well as “foreign currency gains and losses” on transactions that are denominated in a currency other than the operating division's local currency. These two items can impact segment margin comparison of our foreign divisions and we have highlighted them when they are meaningful to understanding operating trends.

Cost of Sales, Including Buying and Occupancy Costs

Cost of sales, including buying and occupancy costs, as a percentage of net sales was 67.4% for the third quarter of fiscal 2026, a decrease of 1.0 percentage points compared to 68.4% for the third quarter of fiscal 2025. The decrease in the cost of sales ratio, including buying and occupancy costs, for the third quarter of fiscal 2026 was attributable to favorable merchandise margin, lower supply chain costs as a result of a higher average ticket and expense leverage on higher comp sales. Merchandise margin reflects lower freight costs, favorable markon and lower shrink accrual rates in the current year.

Cost of sales, including buying and occupancy costs, as a percentage of net sales was 69.0% for the first nine months of fiscal 2026, a decrease of 0.3 percentage points compared to 69.3% for the first nine months of fiscal 2025. The decrease in the cost of sales ratio, including buying and occupancy costs, for the first nine months of fiscal 2026 was due to favorable merchandise margin, which reflects lower shrink accrual rates in the current year.

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Selling, General and Administrative Expenses

SG&A expenses, as a percentage of net sales, was 20.1% for the third quarter of fiscal 2026, an increase of 0.6 percentage points compared to 19.5% for the third quarter of fiscal 2025. The increase in the SG&A ratio for the third quarter of fiscal 2026 was due to incremental store wage and payroll costs, a contribution to our U.S. charitable foundation and higher incentive compensation costs.

SG&A expenses, as a percentage of net sales, was