Ladies and gentlemen, thank you for standing by. Welcome to the TJX Companies' Second Quarter Fiscal 2025 financial results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. At that time, if you have a question, you will need to press star one. As a reminder, this conference call is being recorded, August 21st, 2024. I would like to turn the conference call over to Mr. Ernie Herrman, Chief Executive Officer and President of the TJX Companies Incorporated. Please go ahead, sir. Thanks, Amanda. Before we begin, Deb has some opening comments. Thank you, Ernie, and good morning. Today's call is being recorded and includes forward-looking statements about our results and plans. These statements are subject to risks and uncertainties that could cause the actual results to vary materially from these statements, including, among others, the factors identified in our filings with the SEC. Please review our press release for a cautionary statement regarding forward-looking statements, as well as the full safe harbor statements included in the Investors section of our website, tjx.com. We have also detailed the impact of foreign exchange on our consolidated results and our international divisions in today's press release and in the Investors section of tjx.com, along with reconciliations to non-GAAP measures we discuss. Thank you, and now I'll turn it back over to Ernie. Good morning. Joining me and Deb on the call is John. I wanna start by thanking all of our global associates for their ongoing commitment to TJX. Thanks to their hard work and collective efforts, we continue to deliver an excellent shopping experience and outstanding value to our shoppers every day. Now, to our business update and second quarter results. I'm extremely pleased with our second quarter performance and the terrific execution of our flexible off-price business model by our teams. Sales, profitability, and earnings per share all exceeded our plans. I am particularly pleased that our comp sales increases across all of our divisions were once again entirely driven by an increase in customer transactions. We believe this is an excellent indicator of the strength of our business as our exciting merchandise assortment, great brands, and outstanding values continue to resonate with consumers across our geographies. I also wanna highlight the strong performance of our largest division, Marmaxx, which drove mid-single-digit increases in both comp sales and customer transactions. As to profitability, with our second quarter outperformance, we are once again raising our full-year guidance for both pre-tax profit margin and earnings per share. John will talk to our profitability, performance, and guidance in more detail in a moment. Also, during the second quarter, we were thrilled to open our five thousandth store, making another milestone for our company. This is a terrific achievement for TJX. We see plenty of additional store growth opportunities for our current retail banners and our existing geographies over the long term. Additionally, with our recent announcements with Grupo Axo and Brands For Less, we expect to participate in the growth of off-price in several additional countries around the world. As we look at the remainder of the year, I am excited about the opportunities we see for this business. The third quarter is off to a strong start, and we have numerous plans underway to drive traffic and sales. Availability of quality branded merchandise is excellent, and we are confident we will have an exciting assortment of fresh goods across all of our stores and online throughout the fall and holiday selling seasons. I'll talk more about our second half opportunities in a moment, but first, I'll turn the call over to John to cover our second quarter results in more detail. John? Thanks, Ernie. I also wanna add my gratitude to all of our global associates for their continued hard work. Now I'll share some additional details on the second quarter. As Ernie mentioned, our consolidated comp sales increased 4%, which was above our plan, entirely driven by customer transactions. Both our apparel and home categories saw comp sales increases. Pre-tax profit margin of 10.9% was up 50 basis points versus last year. Pre-tax profit margin was 40 basis points above our plan. This was primarily due to lower freight costs, which includes a benefit from a true-up of our freight accrual and lower operational freight costs, as well as stronger sales. These benefits were partially offset by higher incentive compensation accruals and a contribution to the TJX Foundation. Gross margin was up 20 basis points versus last year. This increase was driven by strong mark-on and a benefit from freight, partially offset by higher supply chain costs. SG&A decreased 30 basis points versus last year. This decrease was primarily due to a benefit this year from lapping a reserve related to a German government COVID program receivable last year, as well as expense favorability. These benefits were partially offset by incremental store wage and payroll costs. Lastly, we were very pleased that diluted earnings per share of $0.96 were up 13% versus last year and also well above our plan.... Now to our second quarter divisional performance. Again, this quarter, across all of our divisions, the comp increases were entirely driven by customer transactions, which we see as a good indicator of the strength of the business. At Marmaxx, comp store sales increased 5%, and segment profit margin was 14.1%, up 40 basis points versus last year. Marmaxx's apparel and home categories both saw strong, strong comp sales growth, and we saw comp strength across all regions. We were also happy with the strong sales performance of our U.S. e-commerce sites and Sierra stores, which we report as part of this division. We're very pleased with the momentum at Marmaxx and continue to see numerous opportunities to keep growing our largest division. HomeGoods comp store sales increased 2%. Segment profit margin grew to 9.1%, up 40 basis points versus last year. We see HomeGoods and HomeSense as highly differentiated from other retailers in the home fashion space. We focus every day on bringing customers eclectic assortments sourced around the world at exciting values. We continue to see significant opportunity to open new stores and capture additional share of the US home market. Moving to our international divisions. At TJX Canada, comp store sales were up 2%. Segment profit margin on a constant currency basis was 15%, down 70 basis points versus last year. At TJX International, comp store sales increased 1% and were up in both Europe and Australia. Segment profit margin on a constant currency basis was 4.3%, up 230 basis points versus last year. With our leadership position and decades of international operating experience, we are confident we will continue to be an attractive shopping destination for value-seeking customers around the world. Moving to inventory. Balance sheet inventory and inventory on a per store basis were both down 2% and driven by lower inventory at our distribution centers. We feel great about our inventory levels and believe we are well positioned to take advantage of the outstanding availability we're seeing in the marketplace and flow fresh assortments to our stores and online this fall and holiday season. As to our capital allocation, we were pleased to generate another quarter of strong cash flow while also reinvesting in the growth of our business and returning cash to shareholders through our buyback and dividend programs. Now I'll turn it back to Ernie. Thanks, John. Now I'll highlight the opportunities we see that give us confidence that we can continue to drive sales and customer transactions in the second half of the year. First, we're convinced that consumers will keep seeking value. We believe our strategy of trading across a broad range of income and age demographics differentiates us from other retailers and remains a tremendous advantage. I am confident that our value proposition will continue to resonate with shoppers when they visit any one of our retail banners. Second, we feel great about our product category plans and have exciting initiatives planned for the fall and holiday selling seasons. Further, we have made our stores a year-round shopping destination for gifts and believe we are becoming more top of mind with shoppers with our consumable offerings. We believe that all of this will create an even more exciting shopping experience and encourage consumers to visit our stores more frequently. Third, as I said earlier, availability of quality branded merchandise is outstanding. I want to emphasize that we consistently have access to more goods than we could ever buy. Overall, I believe our vendor relationships are as good as ever. Some have been getting even stronger as vendors see us as an attractive way to grow their business. This gives me great confidence that we can bring shoppers the right assortment at the right values throughout the remainder of the year and for many years to come. Next, the flexibility of our buying and planning and allocation teams allows us to go after the hottest categories and trends that drive customer excitement. With the flexibility of our supply chain, I am confident that we can merchandise each of our stores with a curated assortment of good, better, and best brands that will excite and inspire our shoppers. Lastly, we feel great about our marketing plans. Our campaigns will reinforce our value leadership and focus on capturing additional visits from our existing customers, attracting new shoppers, and encouraging cross-shopping of our retail banners. Additionally, we plan to showcase a wide selection of products to highlight that there is something for everyone and demonstrate that our great values are available to every shopper, every day. Further, we plan to continue to represent a broad range of shoppers in our advertising and leverage a wide variety of media channels to target a wide customer base. Also giving us confidence is that our customer surveys continue to tell us that our value perception and overall satisfaction scores remain strong. Further, each of our divisions continue to attract an outsized number of younger customers to its stores, which we believe bodes well for the future. Beyond this year, I am confident that TJX has significant opportunities to capture additional market share over the long term. Let me quickly reiterate why we believe we are so well positioned. First is our reputation as a value leader in the United States, Canada, Europe, and Australia. Second, we believe we are the only global brick-and-mortar off-price retailer that's able to take brand, fashion, and quality and put it all together in a differentiated treasure hunt shopping experience for consumers across a wide demographic. We also offer a Marmaxx-wide fashion assortment, which we believe will appeal to a broad range of shoppers. Third, all aspects of our business model are driven by flexibility, which allows us to constantly pivot to take advantage of market trends. Next, we see the opportunity to grow our store base to nearly 6,300 stores with our current retail banners in just our current geographies. Again, I am extremely confident there will always be plenty of quality merchandise available to us to meet our store growth plans. Lastly, I truly believe the depth of off-price knowledge and expertise within TJX is unmatched. We are laser-focused on teaching and training to develop the next generation of leaders. Finally, I am so proud of our company culture, which I believe is a strong contributor to our success and a major differentiator. Now, moving to our investment in Brands For Less, which we detailed in our press release. As we continue to pursue our global growth vision, we are excited for our plans to have a minority ownership position in a profitable off-price retailer based in Dubai. As with our planned joint venture in Mexico, which we announced last quarter, this investment represents another opportunity for our company to expand our global reach with an established off-price retailer. In addition to BFL's strong financial profile, I have personally met with their management team and feel really good about our investment and the strong business they have built to date. We are always looking for ways to increase value for TJX's shareholders, and we see this transaction as a good use of cash that we expect to be slightly accretive to earnings per share beginning in fiscal 2026. Moving to corporate responsibility. We are looking forward to the annual release of our global corporate responsibility report this fall. Our teams have been hard at work on our corporate responsibility initiatives. For example, in fiscal 2024, we helped provide more than two million young people in our communities with access to educational opportunities. Additionally, in support of career development, we continue to create learning opportunities for our associates, including formal training classes online, in-person learning opportunities, informal mentoring, and direct training. We have also continued to make progress against our global environmental sustainability goals. Further, we remain focused on our social compliance program and operating responsibly as a business. You can read about our progress in our upcoming report. I am proud of the work our teams across the globe continue to do on corporate responsibility, and I hope you'll take some time to learn more about what we are doing in this area. Summing up, we are extremely pleased with our sales and profitability performance in the second quarter. The third quarter is off to a strong start, and we are excited about the initiatives we have planned during the second half of the year. As an off-price leader in every country we operate in, we believe we are in an excellent position to take advantage of the market share opportunities we see over the long term in those geographies. Additionally, I wanna reiterate that we will not be complacent, and we remain laser-focused on increasing the overall profitability of TJX. I truly believe we have one of the best retail models in the world, with the best associates in retail. Going forward, I have confidence that the flexibility of our business, the talent of our associates, and our relentless focus on value will continue to serve us well and allow us to navigate through the ever-changing retail and economic landscapes. Now, I'll turn the call back to John to cover our full year and third quarter guidance, and then we'll open it up for questions. John? Thanks again, Ernie. I'll start with our full year fiscal 2025 guidance. We now expect overall comp store sales to increase approximately 3%. We are increasing our consolidated sales guidance to a range of $55.8 billion-$56.1 billion. This change reflects the flow-through of the stronger sales in Q2. We're increasing our pre-tax profit margin guidance to be approximately 11.2%. This would be up 30 basis points versus last year's adjusted 10.9%. We now expect gross margin to be approximately 30.2%, a 30 basis point increase versus last year's adjusted 29.9%. We expect this increase to be driven by a higher merchandise margin, which includes favorable markdown, as well as a benefit from lower freight costs, partially offset by higher supply chain costs. We continue to plan shrink to be flat versus last year. We continue to expect SG&A to be approximately 19.3%, flat versus last year's 19.3%. We're planning incremental store wage and payroll costs to be offset by lower incentive compensation costs and a benefit from items that negatively impacted us last year. We're now assuming net interest income of about $160 million, which would have a neutral impact on our year-over-year pretax profit margin. Our full year guidance assumes a tax rate of 25.2% and a weighted average share count of approximately 1.14 billion shares. As a result of these assumptions, we now expect full year diluted earnings per share to be in the range of $4.09- $4.13. This would represent an increase of 9%-10% versus last year's adjusted diluted earnings per share of $3.76. It's important to note that we are not flowing through the entire second quarter earnings per share beat of $0.06 to the full year, because we're now planning higher incentive compensation accruals and higher freight expenses for the second half of the year versus our previous guidance. Moving to our third quarter guidance, we're expecting overall comp store sales growth to be up 2%-3%, consolidated sales to be in the range of $13.9 billion-$14 billion. Pre-tax profit margin to be in the range of 11.8%-11.9%, down 10 to 20 basis points versus last year's 12%. Gross margin to be in the range of 31.1%-31.2%. This would be flat to up 10 basis points versus last year. SG&A to be approximately 19.5%, an increase of 10 basis points versus last year. Net interest income of about $34 million, which would delever third quarter fiscal 2025 pretax profit margin by approximately 10 basis points. Our third quarter guidance also assumes a tax rate of 26% and a weighted average share count of approximately 1.14 billion shares. Based on these assumptions, we expect third quarter diluted earnings per share to be in the range of $1.06-$1.08, up 3%-5% versus last year's $1.03. Lastly, our implied guidance for the fourth quarter assumes that overall comp store sales would be up 2-3%, pretax profit margin would be in the range of 11%-11.1%, and earnings per share will be in the range of $1.14-$1.16 per share. When comparing this implied guidance to last year's results, it's important to remember that last year we had an extra week in the fiscal fourth quarter that benefited pretax margin by 30 basis points and earnings per share by $0.10. We plan to provide more detailed guidance for the fourth quarter on our third quarter earnings call. In closing, we are confident in our full year plans, and as always, we will strive to beat them. We have a very strong balance sheet and that continues to allow us to invest in the growth of TJX while simultaneously returning significant cash to our shareholders. Now, we're happy to take your questions. As a reminder, please limit your questions to one per person, so we can answer as many questions as we can. Thanks, and now we'll open it up for questions. Thank you. If you would like to ask a question, please press star one. Our first question comes from Lorraine Hutchinson with Bank of America. Your line is open. Thank you. Good morning. Can you talk about AUR in the quarter, the balance between category mix shifts and like-for-like price increases, and then also any changes you might be seeing in customer behavior around value? Yeah. So, Lorraine, good talking to you. AUR has been pretty consistent, right, John, through the. It has been, yes. It didn't move much, I think. It went up a little, right? Yeah, it's slightly up. Yep. Obviously, the comp was driven mostly by transactions. Right, because it's not up as much as the comp. The balance in like-for-like goods, we're still continuing. If, Lorraine, you're getting at, what are we doing as far as, you know, pricing on goods, we still have been selectively throughout the business. Again, bottom up, we do not manage this top down. We have been bottom up, still, adjusting retails where appropriate. I think if you look at our merchandise margin, though, the story is becoming more and more about the buying better and, not, not just the retails, and I think it's more of a combination of those things as well. Even though, I'm sure you've been seeing all the talk about as inflation subsides, there will be, and I'll get right to it, I'm sure there'd be a question going with that in terms of, AUR and the balance on the like items. What, what could happen in the market if, you know, if retails come down on certain categories, et cetera? We always, and our merchants are excellent at this, our retails are dictated by what's happening around us. That's in the current and in the future, what we predict. So we're always retailing the goods, based on the out-the-door retailer that we see at the competition. ... So we feel as though we will have that covered. Could that have retails come down? Too soon to say on which categories. A lot of those discussions, by the way, have been kind of grocery oriented and not necessarily marrying up with our business. Right now, we haven't been seeing anything significant like that at all, which is why our AUR is where John had just said, slightly up. So I think there still exists opportunity as we move forward to address retails internally based on more of a significant gap between our retail and the out the door, which is still gonna create opportunities there. Having said that, we're always extremely aware of what's going on around us. We don't know the timing of when, you know, that could start to moderate a little, but, I think we're in a really healthy position, especially when you go to point number three, is the availability of goods is creating an unusual ability to buy goods, and retail goods extremely profitably, as you can see from this quarter. And then as far as the customer, you know, we see positive results from all the income demographics we look at. And again, that speaks to the good, better, best product mix, buying close to needs. So if a certain customer category is driving the comp, you know, we can easily go back and repurchase those goods and get them back into the store quickly. So for us, it's about making sure that we're appealing to all customer demographics, which this quarter it appears we have. One thing, Lorraine, and I know we have a lot of questions we need to get to, but you're asking one that touches on so much. The marketing, if you noticed in my script, I talked about our marketing, how lining up with what John just said as far as how we treat the merchandise mix, which we've talked about for years. I don't think I've given as much airtime the fact that we market so appropriately to the good, better, best spectrum, ensuring that, and I mentioned it in the script, is that we are. If you look at who we use in our marketing, we're trying to test more channels to apply to all, again, all age groups. We try to go to all the different channels to evolve with where the consumer's going. We have different media channels. Each brand's campaign has a differentiated and broad invitational message, really, that expresses the benefits of our business model to every customer. So also in my script, you heard me saying, we wanna sell everybody every day, and our marketing is lined up with that same is consistent with that strategy. So just so you know, we haven't talked about the marketing as much, but when you watch our spots, whether it's HomeGoods or Marshalls or Marmaxx or Sierra, it is aimed at not being narrow. It is a wide audience that we're going after. Thanks so much. Thank you. Thank you. Our next question comes from Alex Stratton with Morgan Stanley. Your line is open. Perfect. Just a couple from me. Just first on the Grupo Axo JV, and then now this investment in Brands For Less, can you just elaborate a little bit more on the strategic rationale between those two and what they uniquely add? And then just honing in on the international business, came in a little bit weaker than consensus was expecting, even though Marmaxx, you know, was completely enough to offset it. I'm just wondering if you could talk about what you're seeing in the international business. Any additional color there would be super helpful. Thanks a lot. Yep. Yeah, very much, Alex. Again, good questions. Grupo Axo, so these two opportunities. Here's the big strategic thing that we're trying to do here. So we have this great business model, and as I've also emphasized, and everyone on the team knows it here, we have long-tenured, some of the best experienced certainly in off-price, of course, I'm not objective, but I would say the best talent in retail and certainly in off-price. And what happens is, we have a seasoned, very seasoned management group, that you get to a point, we have some bench strength. So we're able to now, more readily than we would have a number of years ago, where I would have been reticent to pull from the core business, we are able to take advantage of expanding globally and in a manner that has really no risk into the core, and at the same time, takes advantage of additional geographies. So that's why you're seeing we really realized and were able to orchestrate these from a couple of years ago. We started to say, This is a good mission for us to take advantage of a great business model. And now that we have the talent where, and John does this in his world, in the finance world, we do it in every, whether it's operations or merchandise, we wanna make sure if we're going to give up a few people, that we have the right replacement. So Mexico, obviously, is a market we've looked at for a while, and we know there's business to be done there. We felt it was right to do it as a joint venture. And that we also now have the talent to have people get involved to do that. That's a very appropriate one. We own almost half the business. BFL, a little different, but same idea, where we can, and they're terrific, by the way. We have really enjoyed our meetings with them. They are culturally very similar. They are also, they have a lot of retail experience, a little younger on the off-price side, but we have that secret sauce merchandising talent that now, again, back to the original point, we can afford to have people be involved to help them, which helps them and it helps our investment. And so we're excited because, in terms of going to new geographies and new markets with a model, we have the talent now to do that under the big picture of growing, continuing to grow TJX. Does that make sense, or? Yeah, that's great. Thank you. And then the other question was on the international margin. Yep, the international. Do you wanna say something, John, and I'll jump in, or you want me to? Yeah, no. Yeah. So let me explain what we're seeing here. So, we obviously had a, we're lapping the, the German write-off, the receivable write-off that we had last year. But the other thing that's affecting us the other way is that last year, we also had a transactional FX gain that we're up against. So, that's what's driving the margin. It's up, you know, it's up 230 basis points versus last year, which we're pleased with, you know, given those two things. From a sales perspective, we were, you know, a little disappointed in our Europe business, specifically on the international piece, and that was more from a combination of the environment, a little bit of weather, but I would tell you there is a decent size of that, our own execution. And what's good with this company, culturally, in every division we're in, that team has really done a good job. We started talking about this two or three months ago, and we are already seeing the benefit in the numbers over there over the last few weeks of the adjustments we've made in some of the merchandise mix and the way we have shipped the stores, specifically in the UK, I would tell you. It was not really a Germany issue. It was more of a U.K. issue, and so we would tell you, we were disappointed in the performance in Europe, and that's what was, you know, affecting that international number, and specifically the U.K., but we believe we're on the right path going forward. Thanks, all. Good luck. Thank you. Thank you. Our next question comes from Matthew Boss with JP Morgan. Your line is open. Thanks, and congrats on another nice quarter. Thank you. Thank you. Ernie, could you speak to the cadence of same store sales that you saw during the second quarter? Maybe elaborate on recent trends supporting the strong start that you cited for the third quarter, and just maybe what you're seeing across categories or divisions, and if you see this as a positive lead indicator for holiday. Yep. No, great. Great, well- I mean- kind of parts three, well, A, B, and C. Very good, Matt. Yeah, Matt, I can start off. No, start, John, we'll start with the key. You know, obviously, we saw positive comps across all of our divisions. The other important thing to note is that on a two-year stack basis, we did see an improvement each month of the quarter, which is also important to note. Yep, and then dovetailing into that, you're asking about the strong start to Q2. What's been nice about that is we're happy with our strong start to Q2 on the sales line, and it seems to be healthy across the board. So that is something that we're feeling good about. And do we think that is a sign? Of course, we first of all, Q3 is, for many retailers that have an apparel component to their business, can often be with a transitionalizing, you know, coming out of spring/summer goods and going into the fall goods, can be a little treacherous. You have weather dependency, et cetera. We have strategies, we try to mitigate that, as well as the way we plan and ship by regions within the United States. Not as much of an issue in Canada and Europe, but our teams planning and allocation and buying have done a great job, I think, on buying and the right transitional goods. So we feel really. This is another indicator I'm mentioning, that makes us feel good about where we're heading in Marmaxx and the apparel ends of the business, as we head into Q3, in addition to what we've been seeing in sales for the last couple of weeks, as we started the quarter. And I would- Yeah, and then the last thing I'll say, which I did mention in the script, also, John and I talk about this all the time, is since we have year- after- year, our store experience, as you know, has gotten better and better. With that, our merchandise mix, good, better, best, but a lot of more giftable brands that we carry, I think bodes well because we're always more gifty to a wider range of customers year- after- year. I feel as though we improve on that year- after- year, and so I am bullish on Q4 upside, because my first comments were really oriented to Q3. Q4, I believe, we're gonna be well positioned for gift giving across many families of business in the store. I mean, I'd just add on to that, that, you know, our strategy with consumables in the stores definitely gives customers a reason to shop If the weather is not compliant, and that goes both with the apparel businesses and the home businesses. It's great color. Best of luck. Thank you. Thank you. Our next question comes from Paul Lejuez with Citigroup. Your line is open. Hey, thanks, guys. Curious if you could talk a little bit more about apparel versus home within the Marmaxx business. I think you said both were up, but curious how the home business within Marmaxx performed relative to HomeGoods and the drivers of the home business in each, if they were different at all. And then just curious, at a very high level, Ernie, I'm c urious what surprised you the most in the first half of the year, and how that might have influenced how you're thinking about the second half? Thanks. Okay. Well, let's so, on the part about the home versus the apparel, this won't be really a surprise when you think about it. So the Marmaxx home really outpaced. I'm not gonna give you the exact numbers, but outpaced the HomeGoods home. Largely, really, what do you sum it up to? I would sum it up to like big, big ticket that we stand for at HomeGoods is an industry, as you know, furniture, and that business industry-wide is slower, and also that would apply in HomeGoods. So the business, even though the Marmaxx slightly outpaced, it wasn't by a lot. And but that was the driver of the difference. We're very happy with the way, and I can specifically say, very happy with the continued improvement in HomeGoods across the store and where we're seeing HomeGoods going for the start of Q3. John, did you have- Yeah, I would just add that where we see departments that line up between Marmaxx and HomeGoods, we saw similar- Very similar trends. Yep. So, no, it's a good point. It was really when you get to the big ticket, then, that made the difference. Your other question, Paul, is about the... I wanna make sure I get this right. Is, was it on the surprises in the first half? Is that what you- Yeah, we- In that? How does that impact the way we look at the back half? The- Yeah, yeah. Without- What surprised you first half, and how does that influence the back half thinking? Yeah. I guess the only surprise, a little bit of a surprise to us, is we know there's always gonna be a lot of availability of goods, and the amount of tough environment surprised us is even a little, and I think I alluded to this where. We're a little surprised by the amount of goods that is off the charts, even a little bit more than we would've thought. So that's caught us. So, how does that affect your back half? So what we do is we look at what categories is there, even beyond the normal, phenomenal, about, whatever the word, we always use different words, about of availability. And we actually, what that affects is how we, how much we leave open in those categories for, and more of the closeout hand-to-mouth buying in the back half. And so, as you can imagine, it had us, for the back half and even through Q1, to leave more liquidity, because clearly, there's no lack of availability. If anything, it surprised us on the amount of increased availability. Right. So that's probably the biggest surprise. Got it. Thank you. Good luck. Thank you. Thank you. Our next question comes from Brooke Roach with Goldman Sachs. Your line is open. Hi, good morning. Thank you for taking our question. My question's on margin. Can you elaborate on your view for further margin expansion opportunity on a multi-year basis? And then on near-term trends, can you speak to what's changed in your freight forecast versus your prior thinking? And any other puts and takes that we should be thinking through on supply chain and merchandise margin into the back half of the year. Thank you. Do you wanna start, or you want me to start with? I can start with the freight forecast- Yes. If you want. Yeah, the freight forecast that we're seeing, so we did add some expense to our forecast in the back half of the year to, you know, take care of some additional ocean freight increases that we're seeing. We're seeing ocean freights per container rise, so we did take that step to add something in our forecast there. Brooke, on looking forward at margins. I think you're asking about margins. Do we see margin opportunities? Is that it, kind of as we look out? Yes, that's right. Yeah. Okay, so, well, that's a very... When you say, and are you talking merchandise margin? Sure, we can talk merchandise margin, but also- Okay. I mean, the bottom line margin is consistent with what we've said in the past. Right, the bottom line, That on a three to four comp, we could be flat to up ten basis points. You know, again, assuming no outsized expense headwinds, that message is still consistent. Yeah, obviously, this year, we have raised that now, where our margin for the year is going up from where we planned for a lot of reasons. But one of the reasons I think, if I'll go to the merchandise margin, which we were starting to talk about, is the situation of all these, the stars keep aligning with our opportunities and gaining market share. We mean more to vendors than ever before. Our relationships should continue to bode well in terms of us continuing to buy goods more favorably as we move forward. Another place where I think our merchandise margins have upside is where the way we manage our flow, every division has gotten continues to get even better. This is why in the last couple of, which helps our markdowns and our merchandise margin directly, when you put the right goods into the right clusters of stores, you obviously end up with a reduced markdown rate and an increased sales. Because our planning systems over the last couple of years and our planning associates are getting better and better at this. Another place in Marmaxx, specifically, and in HomeGoods domestically, we are able to now tailor the mix, and we've done a better job at putting together Sun Belt strategies and different region strategies across the different climate zones in the United States, which also is a huge benefit to our merchandise margin. I think what we're going to also see is when you look at total margin, we've talked about this before, is our Europe business. John and I have talked about this for a few years now. We're seeing that, you know, our goal there is to get to an 8% bottom line versus where we were, and we're doing that in pretty short order over a few years, and I think that is also gonna bode well for the, obviously, that's gonna help our total TJX margin. And then we still see in different markets, Canada's obviously continuing to be very profitable, but I think we're gonna see our home business, specifically, which is big throughout TJX, we're feeling good about the margin opportunities there beyond just the freight savings because of our fashion component, where we are able to still provide great value, our sourcing is excellent, and we can still value and make good margins at a business. As that business continues to grow, just feeling big upside and excited about the opportunities for year after year on the margin side. Great question. Thanks so much. I'll pass it on. Thank you. Thank you. Our next question comes from Adrienne Yih with Barclays. Your line is open. Great. Thank you very much, and let me add my congratulations. Super well done. Ernie- Thank you, Adrienne. First question. You're very welcome. The first question is, can you talk about for the macro consumer health backdrop today versus when we were at the last quarterly call in both the U.S., Canada, and then Europe? Obviously, you know, the overall sentiment is the consumer backdrop has worsened, but you're obviously, your model is prepared for that. So that's number one. And then, John, can you just talk about where are those store payroll investments going? What do you expect to get in terms of the return? Is it hours? Is it employees? Thank you so much. Hey, Adrienne, great, great question on the landscape and what's happening to kind of get at where the trends could be going. The macro health situation does vary, I think, by country also a little bit. You know, we see, I would say the U.S. versus in the first quarter is similar macro environment, at least for us, for our experience. I, I know everything you read is, we always wait. You know, we have some of the same information that you have, so we wait for a lot of reports to come out to kind of adjust. All, all I know is the availability seems to keep growing, which makes me, you know, wonder if, certainly at our supply, the brands that we deal with, are they running into a little tougher situation? So that could be, again, tough for me to answer that versus just a quarter ago. We also don't tend to see the movement by quarter. It seems to be over six months or 12 months. Canada, pretty challenging up there. Europe, more challenging. I would say both are challenging environments from maybe six months ago. The difference in our comps there, I think, is we've had weather in both those areas. Canada was hit with some weather situations. Canada did a little better than Europe and is up against tougher numbers. Europe, I would say again, our performance probably had half of it was due to our own execution, which not that we like it, but we like it because we can adjust that, and we know what to do. And you've followed us for years, you know that whenever we identify execution issues, we address it, and that team has been great, and they already have really addressed a lot of the things that we think we could improve on, which is why we're already seeing that improvement as we start Q3. I'd say the environment there is challenging, though, and economically in Europe. So I can understand why you would ask the question, and probably a little bit more so than, again, six months ago. John, did you want to talk about that? Yeah. So on the wage, you know, we continue to see wage increases across all of our geographies. You know, you'll remember we talked, I think, on the first quarter call, about the U.K. announced a 10% increase in wage. We've seen, you know, some of the provinces, I think most recently, Ontario, announce a minimum wage increase. And of course, you know, we've seen that as well in the U.S. Our strategy still holds that, you know, we are increasing obviously where the legislative increases have gone, but also where we have competitive reasons to increase our wage. We also keep something in our budget for that as well. So if we see either higher attrition rates or, you know, some challenges hiring, we have the ability to go in pointedly and increase wages. Very helpful. Best of luck for back-to-school holidays. Thank you. Thank you, Adrienne. Thank you. Our next question comes from Michael Binetti with Evercore. Your line is open. Hey, guys. Congrats on a great quarter. Thank you. I think you mentioned earlier the two-year stacks accelerating through Q2. I was kind of wondering, looking at the model here, HomeGoods has very tough compares coming up in the third quarter, in the back half, I guess. Is there a scenario where the 2%-3% total company comp for third quarter allows for a negative comp in HomeGoods, like the stacks might imply, just against that big +9% a year ago? And then on the margin, since you spoke a little bit about flow through, in the normal framework, the 3%-4% comp and flat to 10 basis points of leverage, you've been outpacing that for a while. Is there anything on the horizon that would cause that to slow back down to the normal framework that we should think about? So two things. I'll jump on the HomeGoods. So yeah, we don't feel HomeGoods would run a negative. We're not anticipating that. We're not anticipating that, so good question. That is not what we would be planning. Yeah. On the margin, so the you know, obviously, you know, we've been pretty consistent about the three-to-four comp being flat to up 10 basis points. But what we saw in this year is that we had a number of one-time items that allowed us this year to leverage on a two-to-three versus that three-to-four, and that's really the reason. Okay. Does that change as you look out in next year, or is it think about the same framework? Like I said, next year, you know, I would place it that you know again that model of a three to four comp being flat to up ten basis points at this point is what we would be consistent with. We're not giving FY 2026 guidance just yet. But that's what you know that's what we've said, and that's what it still holds. Okay, guys. Best of luck into the holidays. Thank you. Thanks. Thank you. Thank you. Our next question comes from Mark with Baird. Your line is open. Good morning. Thank you for taking my question. Just maybe first for Ernie, I was hoping to get some perspective on the market share gains. You know, Marmaxx comps obviously compare very nicely to what we've seen out of the department store channel, and others thus far. But at the same time, we are seeing some of the mass retailers report some better results in general merchandise, including some more positive commentary on apparel. So could you just speak to how you're protecting your flank when it comes to some of the mass discounters that are also competing for that trade down consumer? Yeah, great question, Mark. We've been, by the way, to your point, we've been looking at the same numbers. We track all of this as we continue to monitor our market share gains. And by the way, we, as best we can, some countries that we're in don't have, but in the U.S., as you just stated, there's a lot of good information out there. So we track. Well, when you look at the total, so first thing we do is we look at the Marmaxx total with new stores, and you can see clearly we're gaining market share in total. Now, as to where it is, we have some information that shows in the apparel and in home that would say we're picking up market share in both. It depends on how you slice out some of the discounters that have home in it. Because if they're not, if they have general home, and you throw all the families of business in there, it can look at one number. But if it's more home furnishings driven, which is what we are, with some other things that make it a little fuzzy. For example, we have a pet business in our home area. We have a lot of consumables that John talked about, like the gourmet food that we carry. Where does that. That's in our home business. Greeting cards. Greeting cards, where- Wrapping paper. Yeah, yeah, yeah, wrap. Where is that in those business? So that's where it gets really funky. So as best we can, and some of the reports that are written in, in your industry, on the sell side will show us that we're picking up home business clearly against the direct competition. But I do like your wording on protecting your flank, because what we look for is any sign of, in total, on those groups that we look at for competition, are they getting close? Are there promotional retails? Are we feeling that their sale, comp sales are any healthier than ours were? Right now, we haven't seen it, and we're clearly gaining market share in home as well. But to your point, we're always trying to protect our flank by being aware of where they are. And then one of the things our merchants do is whoever's doing better business, when their business, we shop them very aggressively to look at our values and the categories from a fashion perspective that they carry, that, A, should we have more of it? Are we selling it? Should we be retailing it differently? Because, again, our first priority is to offer value that's better than everyone else around us. So that's kind of all that goes into kind of protecting the flank, so to speak. I love the terminology you used. I think it's just being on top of it every day. Thank you. Yeah, thank you. Thank you. Our next question comes from Corey Tarlowe with Jefferies. Your line is open. Great, thanks, and good morning. Ernie, I was wondering if I could get your perspective on opening price points. So other retailers have talked about cutting prices. They've also highlighted more promotions. You also, I think, mentioned in your prepared remarks that you're seeing, I think, flattish ticket, maybe it has a little bit of a plus sign on it. How do you think about the trajectory for AUR and opening price points going forward within the context of the broader environment? Yeah, great, great question, Corey. So start with that we won't top-down manage it, so which is why we're always reluctant on a top-down average ticket, average unit retail, giving a projection too far out because we're sometimes the market moves fast. We go after, oftentimes, it, and John often talks about this, it's the mix of our departments. So we could have an accessories area or a gourmet food area that's at a low ticket, but we're driving sales are hot there. Just by the fact that we're gonna drive that a little disproportionately than something else, that could lower our ticket temporarily. But we normally see units go up when we see- Right, we would see the units in the basket go up. Right. Right. So. But on opening price points specifically, which is at the beginning, we. So, and if you look at what we've talked about really more in depth, the last few calls and meetings we've had, is we believe strongly in having opening price point goods ensuring they're at the right value. But this is why we are all over having a balanced, good, better, best mix throughout all of our brands and banners in all of our markets. So we are always passionate about opening price point goods in balance, though, and we're always up against it being balanced, which is why you're not seeing our ticket move around that much. Because as much as we're passionate about, we have it in ratio to our better brands and better retails and our best brands, and that hasn't moved a lot. Again, we don't top down tell the merchants that we let nature take its course a little. The only thing we insist on is that every merchant have a balanced mix of good, better, best, and we let that fluctuate a little bit, but we never get away from it. So I hope that answers that opening price point question. And on the cutting prices, well, again, that back to the original thing at the beginning of this call is we do cut prices when we see that a price on an item is coming down around us because we're going to ensure that our value is proportionally, significantly better going out the door than they're out the door. But that's when we would cut the price, or we cut the price if we're not selling something as well, regardless of what's happening around, because that happens as well. We do that through the markdown process. Right. You know- Which is very, automated- Right ... and the merchants initiate, and we continue to slash, and we can take a markdown. Right. We can take a price adjustment where we just adjust it to what we think is the new right retail. Again, remember, we will never, ever be undersold, so, but that's what drives us cutting prices when we do cut prices. Hope that answers it. Thank you so much. Yes, welcome. Thank you. Our final question comes from Jay Sole with UBS. You may proceed. Great. Thank you so much. I just wanna ask another, one more question about Brands For Less. Ernie, you talked about the strategic rationale. Can you just help us understand sort of the financial rationale, why take a 35% stake? Why not more? Why not less? And how do you- That's very good, Jay. Well, some of that, you know, John and I will both jump in on this, but the, so these negotiations. I won't get into the specifics, but sometimes when you start with these negotiations, one side could be looking for a couple of investors, and they actually might be looking for us to be less of an investor than 35. Sometimes after you start exploring, you see a good number. Sometimes, I would say it's kind of a meeting of the minds, to sum it up, that we don't always. You have to come out with a proportional amount that the founders, the owners there, that are great, and us, where we all feel we're at the right level. And there isn't as much... I mean, there's some science, but then there's a bit of the qualitative discussion about how much we think they want us to own, how much we think we should own. Yeah. And we ended up in what we thought was a sweet spot given their feelings and our feelings. John, did you- They weren't looking for a complete buyout. Right. you know, they were looking for a minority investor, and- They weren't looking for a 50% buy either. Right. And at a 35%, it gives us enough skin in the game that, you know, it makes us- it makes it worthwhile. Jay, what is neat about it, though, at the same time, the 35%, the way it works with us, it stays a healthy investment, as you can see, based on the number that we put in. We believe it's accretive in a couple of years. Uh, next- Next year. Next year. Next year. Accretive. And if we plan to add the value that we think we can, we still have a, you know, we own 35%, so if it grows like we think it can- Yeah ... and we add our secret sauce, so to speak, on terms of the buying and they're excellent. They really wanna collaborate, and we're very impressed with what they've done. I think it's a great marriage. Yet, you know, they didn't want to buy out, and we wanted to own a decent chunk, so you end up kind of in that middle zone. Makes sense. Ernie, thank you so much. You're welcome, Jay. That was our last call. I would like to thank you all for joining us today. We look forward to updating you again on our third quarter earnings call in November. Take care, everybody. Thank you.