The TJX Companies, Inc. (NYSE:TJX) Q4 2023 Earnings Call Transcript

The TJX Companies, Inc. (NYSE:TJX) Q4 2023 Earnings Call Transcript February 22, 2023

Operator: Ladies and gentlemen, thank you for standing by. Welcome to the TJX Companies Fourth Quarter Fiscal 2023 Financial Results Conference Call. . As a reminder, this conference call is being recorded as of today, February 22, 2023. I would now like to turn the conference over to Mr. Ernie Herrman, Chief Executive Officer and President of The TJX Companies, Inc. Please go ahead, sir.

Ernie Herrman: Thanks, Ivy. Before we begin, Deb has some opening comments.

Debra McConnell: Thank you, Ernie, and good morning. The forward-looking statements we make today about the company’s results and plans are subject to risks and uncertainties that could cause the actual results and the implementation of the company’s plans to vary materially. These risks are discussed in the company’s SEC filings, including, without limitation, the Form 10-K filed March 30, 2022. Further, these comments and the Q&A that follows are copyrighted today by The TJX Companies, Inc. Any recording, retransmission, reproduction or other use of the same for profit or otherwise without prior consent of TJX is prohibited and a violation of United States copyright and other laws. Additionally, while we have approved the publishing of a transcript of this call by a third party, we take no responsibility for inaccuracies that may appear in that transcript.

We have detailed the impact of foreign exchange on our consolidated results and our international divisions in today’s press release and the Investors section of our website tjx.com. Reconciliations of other non-GAAP measures we discuss today to GAAP measures are also posted on our website, tjx.com, in the Investors section. Thank you. And now I’ll turn it back over to Ernie.

Ernie Herrman: Good morning. Joining me and Deb on the call is John Klinger. As we announced last quarter, John has been promoted to CFO. John will be covering the financials on the call and taking your financial questions today and going forward. continues in the SVP role of Finance role with more of a focus on corporate areas like business development and real estate. I’m very pleased that our company will continue to benefit from both of their financial expertise and decades of TJX experience and leadership. I’d like to start today by thanking all of our global associates for their great work in 2022. I am truly appreciative of their continued commitment to both TJX and our customers. I want to give special recognition though to our store, distribution center and fulfillment center associates for their hard work and dedication every single day.

Now to an overview of our results beginning with the fourth quarter. I am extremely pleased with our strong top line performance. Our better-than-expected U.S. comp store sales increase of 4% was driven by the excellent performance at our Marmaxx division, which delivered its strongest quarter of the year. We also saw positive U.S. customer traffic in the fourth quarter, which was also driven by Marmaxx. Our exciting assortment of gifts and great values resonated with shoppers this holiday season. I believe the freshness of our mix really sets us apart as we shipped ever-changing selections to our stores and online throughout the quarter. In terms of profitability, pretax profit margin increased over last year. Our merchant organization continue to do a great job buying better and retailing strategically, which drove excellent mark on.

Unfortunately, we had an outsized shrink charge in the fourth quarter that resulted in pretax profit margin coming in below our plan, which John will discuss in a moment. For the full year, total sales were nearly $50 billion. Profitability improved over last year, and adjusted earnings per share grew 9%. I want to again recognize all of our talented associates around the world for the excellent execution of our flexible off-price business model throughout the year. Their collective efforts drove outstanding value on our assortment, excitement in our stores and the satisfaction of our customers. Moving to 2023, the first quarter is off to a strong start. We are excited about our plans to drive sales and customer traffic and are laser-focused on initiatives to drive profitability this year and beyond.

Availability of quality branded merchandise is phenomenal. We are in a great position to take advantage of the opportunities we are seeing in the marketplace. Further, we are convinced that our commitment to value and our treasure hunt shopping experience will continue to serve us well in this environment. Importantly, we continue to see many opportunities to capture market share and improve profitability over both the short and long term. Now before I continue, I’ll turn the call over to John to cover our fourth quarter and full year financial results in more detail.

John Klinger: Thanks, Ernie, and good morning, everyone. I’m pleased to be starting in this new role, and I want to add my sincere thanks to Scott for his guidance and mentorship over the years, and I look forward to continuing to work with them. I would also like to echo Ernie’s comments and thank all of our global associates for their hard work and commitment throughout 2022. I’ll start with some additional details on the fourth quarter. As Ernie mentioned, U.S. comp store sales increased 4%, exceeding our expectations. Our U.S. comp growth was driven by a very strong 7% comp sales increase at Marmaxx. For the fourth quarter, average basket was up in the U.S., driven by a higher average ticket and U.S. customer traffic was up.

TJX net sales grew to $14.5 billion, a 5% increase versus the fourth quarter of fiscal ’22 and despite a significant impact from unfavorable foreign currency exchange. Fourth quarter consolidated pretax profit margin of 9.2% was up 20 basis points versus last year, and merchandise margin was down slightly. Within merchandise margin, strong mark-on was offset by higher markdowns, which were compared to exceptionally low markdowns last year. Freight was a benefit in the fourth quarter. Further, we had an unplanned shrink charge of 60 basis points versus last year. I want to note that our fourth quarter pretax profit margin guidance contemplated an expected 50 basis point benefit from shrink due to the elevated charge in the fourth quarter of last year.

Therefore, the negative impact of shrink versus our pretax profit margin guidance was 110 basis points. Lastly, we’re pleased that earnings per share were $0.89, up 14% at the high end of our plans. Moving to our fourth quarter divisional performance. At Marmaxx, fourth quarter comp store sales increased a very strong 7% over a 10% open-only comp increase last year. Marmaxx’s comp increase was driven by apparel and accessory categories, which had a high single-digit comp increase. Further, in the fourth quarter, customer traffic was the main driver of the comp increase and average basket also increased. Marmaxx’s fourth quarter segment profit margin was 11.6%. HomeGoods fourth quarter comp store sales decrease of 7% versus an outsized 22% open-only comp increase last year.

HomeGoods fourth quarter segment profit margin was 7.3%. Internationally, we’re pleased with the performance of both our TJX Canada and TJX International divisions in the fourth quarter. At our Canadian division, net sales were up 10% on a constant currency basis versus last year. Segment profit margin on a constant currency basis was up 12.5%, which exceeded their fiscal ’20 margin. And at our International division, net sales on a constant currency basis were up 11% versus last year. Segment profit margin on a constant currency basis was up 7.2% — excuse me, segment profit margin on a constant currency basis was 7.2%. Now to our full year consolidated fiscal 2023 results. U.S. comp sales were flat versus a 17% U.S. open-only comp sales increase last year.

TJX net sales grew to $49.9 billion, up 3% compared to fiscal ’22 despite a significant impact from unfavorable foreign currency exchange. Full year adjusted pretax profit margin was 9.7%, a 10 basis point increase versus last year’s adjusted 9.6% and merchandise margin was down. Within merchandise margin, strong mark-on was more than offset by 120 basis points of incremental freight costs and higher markdowns, which, again, were up against exceptionally low markdowns last year. Shrink expense negatively impacted full year merchandise margin by approximately 30 basis points and was not contemplated in our most recent full year guidance. Full year adjusted earnings per share were $3.11 at the high end of our plan and up 9% versus last year’s adjusted $2.85.

Moving to inventory. Balance sheet inventory was down 2% versus the fourth quarter of fiscal ’22. We are confident that we are strongly positioned to both capitalize on the abundant merchandise in the marketplace and flow fresh assortments to our stores and online this spring. I’ll finish with our liquidity and shareholder distributions. For the fourth quarter, we generated $3 billion in operating cash flow. For the full year, we generated $4.1 billion in operating cash flow. We ended the year with $5.5 billion in cash. In fiscal ’23, we returned $3.6 billion to shareholders through our buyback and dividend programs. Now I’ll turn it back to Ernie.

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Ernie Herrman: Thanks, John. I’ll pick it up with some full year divisional highlights. Before I begin to speak to them, however, individually, I want to highlight the outstanding performance of our teams across each of our divisions in 2022, while they navigated historic levels of inflation and an uncertain retail environment. All year long, each of our retail banners delivered shoppers an excellent assortment of apparel, accessories and home merchandise and offered great value every day. Beginning with Marmaxx. Full year comp store sales increased 3% and total divisional sales reached $30 billion. Marmaxx’s apparel and accessories businesses were very strong all year long with a mid-single-digit comp increase. For the year, average basket was up significantly and customer traffic increased slightly.

Marmaxx’s full year segment profit margin was 12.7%. During the year, we opened a combined 50 T.J. Maxx and Marshalls stores. Further, we remodeled approximately 225 stores, and the feedback from customers has been terrific. We are extremely pleased with the performance of our largest division and see a significant opportunity to continue growing the top and bottom lines. At HomeGoods, full year comp store sales decreased 11%. It is important to remember that last year, HomeGoods had a remarkable 32% comp sales increase as we saw consumers spend an outsized amount in home-related categories. While HomeGoods customer traffic was down for the year, average basket increased. HomeGoods full year segment profit margin was 6.3%. In 2022, we surpassed 900 stores for this division with the opening of over 50 HomeGoods and HomeSense stores.

Long term, we continue to see the potential for HomeGoods to open over 500 additional stores and for profitability to significantly improve. At TJX Canada, net sales were nearly $5 billion and increased 18% on a constant currency basis. Segment profit margin increased to a very strong 14%. Our Canadian business operates more than 550 total stores and is very well penetrated throughout the country. TJX Canada is one of the top apparel, accessories and home retailers in that country and a sharper destination for several signature categories. We remain confident that TJX Canada is well positioned to capture additional market share over the short and long term. At TJX International, net sales surpassed $6 billion and increased 22% on a constant currency basis.

Segment profit margin improved to 5.7% on a constant currency basis. In Europe, we believe we significantly outperformed many other major brick-and-mortar retailers as our values resonated with consumers in a heightened inflationary environment. In Australia, sales were very strong, and we continued expanding our store footprint across the country. Going forward, we believe that we can grow our market share in each country that we operate in and continue to improve this division’s profitability. As to e-commerce, we added new categories and brands to each of our online banners in 2022. While e-commerce only represents a very small percentage of our overall net sales, it allows us to offer shoppers our great brands and values 24 hours a day.

As we look ahead, we are convinced that the characteristics of our business and the depth of talent in our organization will allow us to capitalize on the opportunities that we see to further grow our top and bottom lines. First, we are in an excellent position to continue offering consumers great value and freshness every day. We have a team of more than 1,200 buyers who source from a universe of approximately 21,000 vendors last year, including many new ones. Our ability to buy goods across good, better and best categories gives us tremendous flexibility in the vendor marketplace. Again, availability of merchandise is phenomenal, and we are confident that we’ll have plenty of quality branded goods going forward. Second, we are convinced that the appeal of our touch and field treasure hunt shopping experience will continue to resonate with consumers.

Giving us confidence is the continued strength of our customer satisfaction scores. Further, our leadership and flexibility allows us to take advantage of the best opportunities and the hottest trends in the marketplace. This allows us to offer our shoppers an assortment of merchandise to surprise and excite them every time they visit. We are also focused on being a gift-giving destination all year long. Third, our convenient, easy-to-access store locations attract consumers across a wide income demographic. Our eclectic mix of good, better and best merchandise across categories allows us to offer a branded, fashionable mix across a wide span of price points. We see these as key advantages as we continue to expand our store footprint. Long term, we see the potential to open more than 1,400 additional stores across our current geographies, which we believe will attract even more shoppers to our great assortments and values.

Next, our marketing has been very effective in targeting consumers with broad reaching and compelling brand campaigns across different channels and platforms where consumers are currently spending their time. Our messaging is continuing to reinforce our value leadership and demonstrate that we are one of the best choices for consumers during the current economic environment. We are particularly pleased that we continue to attract an outsized number of younger customers to our stores, which we believe bodes well for the future. As to our profitability outlook, we are planning an increase in our fiscal 2024 adjusted pretax profit margin to a range of 10.0% to 10.2%. Beyond this year, our target remains to return to our fiscal 2020 pretax profit margin level of 10.6% by fiscal 2025.

Giving us confidence are the sales, better buying and strategic retailing opportunities we see going forward at each division. John will outline the other assumptions embedded in our plans in a moment. Turning to corporate responsibility. We continue to focus our global corporate responsibility efforts under our 4 key pillars: workplace, communities, environmental sustainability and responsible business. Last quarter, I noted that TJX published its 2022 Global Corporate Responsibility Report which summarizes the company’s ESG efforts and progress across these 4 reporting areas. And as a reminder, in fiscal 2023, we set expanded and accelerated global environmental goals, including a goal to achieve net zero GHG emissions in our operations by 2040.

We are working hard to make progress toward our goals and help mitigate our impact on the environment. I’d also like to take a moment to speak about the work our teams are doing in our communities. In fiscal 2023, we helped support more than 2,000 nonprofit organizations globally. We’re very proud of the impact this has had, including helping to provide more than 25 million meals to individuals experiencing food insecurity and helping with access to educational opportunities for more than 1 million students from under-resourced communities. We also continue to support nonprofits working towards racial justice through new grants to several national organizations. Finally, for the first time since the beginning of the pandemic, we were able to restart our in-person community relations programs and have seen a resurgence in volunteering across our organization.

In the past 6 months alone, our U.S. associates provided more than 2,400 hours of service to their communities. I’m grateful to our teams around the globe for the work they do to support our global corporate responsibility priorities and we are proud to continue to make progress across our many programs and initiatives. As always, we invite you to visit tjx.com to learn more. Summing up, we feel great about our performance in 2022 and our momentum heading into 2023. I am confident that the strength and resiliency of our flexible off-price business model and the depth of expertise and knowledge of our teams, set us apart from many other major retailers and will continue to serve us well. I want to again recognize the exceptional talent we have across the organization.

It is their collective efforts and execution of our off-price fundamentals that bring our business to life for our shoppers every day. As an off-price leader in every country we operate in, I’m excited about the market share opportunities we see ahead in both the U.S. and internationally. I am very confident in our plans to grow TJX into an increasingly profitable $6 billion-plus revenue company over the long term. Now I’ll turn the call back to John to cover our full year and first quarter guidance and then we’ll open it up for questions.

John Klinger: Thanks again, Ernie. Before I start, I want to remind you that our guidance includes a 53rd week in the fiscal 2024 calendar. Additionally, in fiscal ’24, we are returning to reporting overall comp store sales growth versus fiscal ’23 as we now have a baseline for our TJX Canada and TJX International divisions. Now to our full year guidance. We are planning overall comp store sales growth to be up 2% to 3%. As a reminder, our comp guidance will exclude sales from the 53rd week. We expect full year consolidated sales to be in the range of $52.5 billion to $53.2 billion, a 5% to 7% increase over the prior year. This guidance assumes approximately $800 million of additional revenue from the 53rd week. We’re planning full year pretax profit margin to be in the range of 10.1% to 10.3%, excluding an expected benefit of approximately 10 basis points from the 53rd week, we expect adjusted pretax profit margin to be in the range of 10.0% to 10.2%.

This would represent an increase of 30 to 50 basis points versus fiscal ’23’s adjusted pretax profit margin of 9.7%. Our pretax profit margin guidance assumes that we will see a benefit of about 80 to 100 basis points from lower freight expenses as well as a continued benefit from better buying and strategic retailing. We’re planning these benefits to more than offset continuing headwinds from incremental wage and supply chain costs. Also contemplated in our guidance is that shrink will be similar to last year. For modeling purposes, we’re currently anticipating a full year tax rate of 26.1%, net interest income of about $116 million and a weighted average share count of approximately 1.16 billion. We expect full year earnings per share to be in the range of $3.39 to $3.51, excluding an expected benefit of approximately $0.10 from the 53rd week, we expect adjusted earnings per share to be in the range of $3.29 to $3.41.

This would represent an increase of 6% to 10% versus fiscal ’23 adjusted earnings per share of $3.11. Moving to the first quarter. We are planning overall comp store sales growth to be up 2% to 3%. We expect first quarter consolidated sales to be in the range of $11.7 billion to $11.8 billion, a 3% to 4% increase over the prior year. We’re planning first quarter pretax profit margin to be in the range of 9.2% to 9.5%. This guidance includes an expected benefit from freight of 130 basis points in headwinds from a combination of incremental wage and supply chain and the timing of some expenses. For modeling purposes, we’re currently anticipating a first quarter tax rate of 26.4%, net interest income of about $29 million a weighted average share count of approximately 1.17 billion.

Lastly, we expect first quarter earnings per share to be in the range of $0.68 to $0.71. Moving on to our fiscal ’23 capital plans. We expect capital expenditures to be in the range of $1.7 billion to $1.9 billion. This includes opening new stores, remodels and relocations and investments in our distribution network and infrastructure to support our growth. For new stores, we plan to add about 150 net new stores which would bring our year-end total to nearly 5,000 stores. This would represent a store growth of about 3%. In the U.S., our plans call for us to add about 45 net stores at Marmaxx, 50 stores at HomeGoods, including 18 at including 18 HomeSense stores. At Sierra, we’re planning to open 18 stores. In Canada, we plan to add 11 new stores.

And at TJX International, we plan to open 18 net stores in Europe and 6 net stores in Australia. Lastly, we also plan to remodel 400 stores and relocate approximately 55 stores in fiscal ’24. As to our fiscal ’24 cash distribution plans, we remain committed to returning cash to shareholders. As we outlined in today’s press release, we expect that our Board of Directors will increase our quarterly dividend by 13% to $0.3325 per share. Additionally, in fiscal ’24, we currently expect to buy back 2 billion to 2.5 billion of TJX stock. I’ll finish by highlighting the assumptions we’ve included in our fiscal ’25 pretax profit margin target of 10.6%. First, our outlook assumes that overall comp store sales will increase 3% to 4%. Secondly, as I just highlighted, we’re expecting freight to be a significant tailwind in fiscal ’24, with a smaller benefit expected in fiscal ’25.

Third, we expect that incremental wage and supply chain cost will continue to be headwinds in both fiscal ’24 and fiscal ’25. Further, our plans assume that shrink will remain similar to fiscal ’23 over the next 2 years. Next, as Ernie highlighted, our plans assume additional merchandise margin opportunities across all our divisions. Lastly, I’ll mention that certain macro factors we haven’t made assumptions for could change our plans such as geopolitical events, foreign exchange volatility, consumer behavior or a worsening shrink environment. In closing, I want to emphasize that we have a very strong balance sheet and continue to generate a tremendous amount of cash. We are in an excellent financial position to invest in the growth in our business while simultaneously returning cash to our shareholders.

Now we are happy to take your questions. As we do every quarter, we’re going to ask that you please limit your questions to one per person so we can keep the call on schedule and answer as many questions as we can. Thanks, and now we’ll open it up for questions.

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Q&A Session

Operator: . Our first question comes from Michael Binetti from Credit Suisse.

Michael Binetti: So I guess just on a modeling cleanup. Would you mind helping us quantify the swing in incentive comp dollars in 2022? And how much that we should anticipate that coming back in 2023? I guess on a bigger picture on the margin as we look out to the North Star getting back to the 2019 pretax margin of 10.6%. This year, it was 9.7%, you mentioned. But you probably have — I think we do the math right, about 300 basis points or more of cumulative freight embedded in 2022. And I think shrink was only about a 30 basis point headwind versus 2019. You have — obviously, you know your leverage pricing is a new lever since then. So maybe you can help us think about what are the other incremental headwinds we should consider that would cap the endpoint of the recovery at 10.6% next year?

Ernie Herrman: So Michael, you’re asking about — you’re going to the 10.6% and what would be the challenges of getting there?

Michael Binetti: Well, yes, with starting at 9.7% and you have 300 basis points of freight, you’ll recapture some of that and then shrinks only a 30 basis point headwind. I think it just seems like — it seems like there’s opportunity to go above 10.6%, but I would love to hear what you should think about for our models to that ?

Ernie Herrman: I like your attitude. Yes. I mean part of this comes down to — as always, we’re going to plan — as witnessed by this year, right, we did not plan on the shrink impact. On the flip side, to your point, our sales certainly in Q4, showing that we have some really strong momentum and perhaps we’re planning conservatively on that line. It’s just a little early to call based on the environment that’s around us. Yes, we had Marmaxx have a 7 comp in the quarter. So we are feeling very bullish as well as all the divisions and all the different metrics throughout all the performance metrics throughout TJX are extremely healthy other than the shrink surprise. To your point, and I’m just going to try to explain why we are where we are in the plan.

To your point, shrink was the only component of our operational performance that wasn’t very strong. Everything else, sales, merchandise margin, the way we’re retailing and buying goods, the way we operate and manage expenses and distribution in stores, all of those metrics are extremely healthy. So now we have a situation where we’re looking at and John will touch on it, we’re essentially planning our shrink flat okay, for this coming year. So when we’re putting in tactics and strategies to try to ensure that we get there, I do think we’re being judicious, I think, on that plan and not trying to go to either extreme either way and expect too much or too little in terms of how we manage that. We do think we — how do we put this — we’re feeling very good about the where position going in because I feel on the retailing of goods and the buying of goods, we’re probably in a little better position where there might be some upside there to your point.

The strengthening that’s happening in the dynamic of this is — this is part of the art form is the vendor community right now because of a lot of store closures as well as the slowdown in the e-com business across the board, is obviously creating an influx of inventory and better brands than we’ve seen even versus our last call. Every call we’re talking about, you could see we purposely said phenomenal in terms of availability because the environment right now is more phenomenal availability — I would say, in terms of branded content across good, better and best. So again, I’m giving you the merchandising side and the top line side. We just feel as though we don’t want to go out with too aggressive sales plan when it’s very difficult to forecast on the volatility as witnessed by last year, we still early on, didn’t do the sales were figuring on.

We have HomeGoods, which — we’re still trying to figure out the home trend nationally. We might have another couple of quarters across our home businesses, which just aren’t in HomeGoods that could keep our top line down a little. So Q4, right, we ran on minus 7% in home goods. We still had a 4% in TJX driven by Marmaxx in Canada and Europe. And so bottom line is we’re being conservative in our plans, but I think judicious given the environment. I’ll let John get into some of the financial modeling margin question.

John Klinger: Yes. So Michael, just on the — getting to that 10.6%, I mean, in FY ’25, again, it does assume a 3% to 4% comp and continued benefit from better buying an average retail. Now we do anticipate a benefit in freight in FY ’25, albeit lower than what we’re seeing in FY ’24. And that’s really a function of the — when our domestic contracts renew and so there would be a little bit of year-over-year benefit as we cycle a full year of that freight savings along with things we’re doing internally to reduce our shrink rate, wage and supply chain costs, we expect those to moderate in FY ’25. So we’re adding a distribution center in all of our brands this year. So there will be some, again, year-over-year, the annualization of those costs in FY ’25, but we do expect those costs to moderate.

And again, shrink flat over the next 2 years. Beyond FY ’25, we do expect to be able to hold or slightly increased pretax margin on a 3% to 4% comp. And again, it assumes a slight improvement from better buying in average retail with no outsized expense headwinds and some favorability from shrink going forward. But we still feel very good about the fundamentals of the business.

Operator: Next, we’ll go to the line of Omar Saad.

Omar Saad: A couple of follow-ups. Maybe Ernie, you could talk a little bit about the comment you just made about e-com, that as a source of that channel slowing down across the board as a source of inventory. And then maybe also talk about the fact, at least on a multiyear basis, it seems like you’re HomeGoods business is stabilizing, and you’re seeing a little bit maybe more of a predictable pattern at home. At the same time, as apparel and accessories accelerate, we talk about that dynamic. And you have kind of both the pandemic winner and the post-pandemic winner working at the same time, both those kind of 2 sets of categories.

Ernie Herrman: Omar, great questions. Let me — I’ll go with the e-comm one first. Yes. So I agree, and I think you were starting to hint at that. So it creates a sales opportunity for us certainly as e-com business has slowed across the board. By the way, in our e-com business is very complementary and additive to us, but it’s such a small 2%. We’re not a player there per se in terms of the key component. However, it does help our branding and our current feel for our younger customer base as well as the older customer base for our brick-and-mortar. So we are high on our e-comm business. It’s just the external businesses that are so big have been running into you, as you know, and some of them are home related, some of them are apparel related and they’re running into, I think, given the inflation, they’re running into, obviously, top line slowdowns, they might have hit saturation points within certain market — within certain merchandise categories.

And that does create, and I think you were getting an additional inventory supply for us ironically that we have been taking advantage of. And when I was referring earlier when Michael had asked the question about our positioning, et cetera, and I was mentioning in the script, the phenomenal availability, we know that a chunk of that availability is actually e-com spill off availability from many of the other e-com players. So it’s a tremendous source and also some good brands in there as well because some of the vertical e-com players, as you can imagine, tough to forecast with their sales — that their sales were going to be that hit that hard that they were going to yield this much goods, which is why we are very bullish on the branded content of our mix, specifically even on the better and best levels.

We have lulls every now and there but key to our success, we believe, is carrying ranges of good, better and best merchandise across all the categories consistently as much as possible and e-com has been a great supplier of that. Yes. So HomeGoods, Michael, is it’s very interesting. So you could see our decrease there in Q4, it’s getting a little better. And I think Omar, I mean, the way you were referring to it, I think, Omar, as we look out, we’re kind of watching the next couple of quarters and seeing where we’re going to go with that business. What I would say here is talk about store closures and e-com declines in that arena, that is going to create — all we have to do there is weather the storm and keep HomeGoods and home in our Marmaxx business going.

And we think we come out the other side here and even a bigger player in a fashion home business than anybody thought we would be. The key is we have to — everyone has to go to this lull in the demand. But I think that creates a shakeout that actually, to your point, we see light at the end of the tunnel. It’s just — we’re not seeing it right now. HomeGoods still down 11% for the year, down 7% in the quarter. The interesting thing is if you look at total TJX we still ran a 4% with HomeGoods down 7% because we have everything else clicking, which is one of the best parts about our portfolio is we’re so diverse that we’re able to flex and we talk about our flexible business model all the time. This is the time when that flexible business model really shines.

And I think when you have a category like home, which is a roller coaster ride, we’re able to mitigate the ups and downs by the rest of our business. Great question.