John Klinger: Yes. I mean — so right now, the what we see in total is unchanged. It’s just almost just under 6,300 stores we see as the potential. And as far as store availability, we play — we want to make sure that the stores that we’re opening across all our banners are the right stores for what we — for us. So we’re not necessarily going to pick a number and then shoot for that number. We make sure that the stores we’re looking at fit right within our store mix. And we’re quite pleased with the performance when they do open. So when we see these store openings performance, we’re quite pleased with that as well. The other thing that gives us that really works well with us are the relocations that we do. So this year, we’re planning 40 relocations.
And here, we’re actually finding better locations in the store trading areas that we’re in for stores that are coming due as far as leases. So we’re able to relocate those stores to the better shopping pitch in the area. So we see a definite improvement in the performance as we do move those stores. In Europe, we see more opportunity in Germany to open up stores in the U.K. for more of our relocations. And in the U.S. and Canada, we’re also — as we see more department stores close we see the opportunity to — if we don’t have stores in those areas to put stores in some of those areas to be the department stores of that. So we’re seeing opportunities there for new store growth. So that’s kind of what we’re seeing for the strategy.
John Kernan: Understood. I guess 1 quick follow-up would be just on other categories outside of apparel, home, you spoke about quite a bit on the prior question. Just what about beauty. It feels like it’s much more elevated in-store than has been in the past. What’s the opportunity within beauty and the elevation of that category?
Ernie Herrman: Yes, I’ll jump in here, John. Yes, the beauty business is obviously, you can see from the presentation in the store that’s been very healthy for us. And I would tell you, we see big upside there, obviously. And we’re continuing to go after that. We have done something with the presentation, but you’ve seen the assortments expand as well. So as you can imagine, that’s one of the businesses we feel has a lot more upside. If you look at things that go along with that health and wellness and beauty thing, some of those other categories in the store, obviously kind of go along with that, if you know what I mean. So beauty is the more noticeable one you’re calling out, but that trend kind of spills over, I would say, to some other categories in the store that we’re going after.
And I think we’ve talked about this before. We don’t just do it we love that our stores are very flexible. So you’re bringing out beauty. One thing you probably noticed is the way we’ve done the beauty thing we still can flex the departments around it. And so that is an advantage. Again, as always, I’d like to point that out, when our buyers are able to — in our planning organization, we’re able to go after the HUD business and flex it in the store very quickly, and it doesn’t take as much labor or capital to redo the stores because there aren’t any walls, et cetera. So great question now.
Operator: Next, we’ll go to the line of Alex Straton from Morgan Stanley.
Alex Straton: Perfect. I wanted to focus on the HomeGoods real quick here. So ended the year at just under a 10% margin. I was wondering if you could speak to kind of what’s constraining that business below your long-term goal of low double digits and when you think it gets there. And then secondly, just on the ability to take market share over time. Just wondering if there’s any color you could provide on particular categories or changes in the market landscape that are going to enable that going forward. Are Yes. So I mean I’ll start off.
Ernie Herrman: Yes. So with Home Goods, I mean it’s a couple of things. I mean HomeGoods was impacted by freight more than some of the other divisions. But for HomeGoods, it’s about continuing to drive that top line sales growth, while well, looking at the cost structure of that freight and continuing to try to be as efficient as possible on that freight line. The HomeGoods team executes very, very well, and it’s just about continuing to focus on execution, drive that top line and be as efficient as we can.
John Klinger: And Alex, if you look when you’re asking about one of the things that’s going to also help with the margin is the market share and sales growth opportunity that we strongly believe that we have there. If you look at — if you look at the year that we had there in HomeGoods, dramatic first half to second half. And then even as you went to Q4, you could see how powerful the HomeGoods sales trend is relative to competition. And so it’s an unusual thing when the whole business years ago, we’ve had really strong home goods and home trends for years. Typically, yes, we’d be outpacing competition, but not as dramatically as recently. And so that just shows you that the market share, which is, I think, like a third part of your question, the market share is really up for grabs.
And fortunately, what’s going on, I think, in the landscape is you have the e-com players on home as well as the brick-and-mortar are creating additional opportunity for our home business because of their execution and the lack of excitement. We do believe — like our Marmaxx, we believe HomeGoods is one of the most exciting store shopping experiences on the planet, really. And you’ve seen whether you look on TikTok or any of the — with third-party endorsements that come out on different talk shows and had segments on home goods lately. It’s become a it’s become a bit of a cult because people know that you can’t go in there and spend less than a couple of hundred dollars, even though you’re planning on doing it just for a bed pillow. So it’s — that’s why we’re so bullish.
We also corporately, it’s one of our most collaborative arenas. Our home merchants are so linked up across all the organizations, which is why we’re bullish on total TJX Home business which, as you know, we’ve talked in the past, over 1/3 of our business will be home business in TJX this year, heading to a higher percentage over the next few years, that’s what we believe. So you’re touching on it, what I think is a competitive advantage and future continuing to be traffic driver for TJX.
Operator: Next, we’ll go to the line of Michael Binetti from Evercore ISI.
Michael Binetti : Congrats on a great quarter. I just want to ask a little bit on the margins. I know you’ve talked about it a little bit today, but it’s remarkable to see the profitability you guys are putting up, particularly when competitors are looking at stores and saying, look, the economics are going the other way, and we’re going to close a few stores. So as we think about Marmaxx, that was a 14% to 15% margin business at its peak with labor and supply chain stabilizing a bit now and you have you have this pricing lever that you didn’t really have or flex before COVID or are there any reasons why Marmaxx is in a structurally higher business in the long term, given it’s now above 2019 levels? And then I guess as a follow-up, John, you did mention earlier that the long-term 3% to 4% same-store sales growth is flat to 10% — or sorry, flat to 10 basis point leverage algo.
But this year is flat to 10 basis points on a 2% to 3% comp something is a little better this year and then it normalizes next year. And if we get out to the middle of the year and you’re running above the 2% to 3% again any reason it wouldn’t flow through at a better rate on a point of comp than the 15 basis points that you mentioned?
Ernie Herrman: Yes. I mean — so I’ll pick up the last part of your question first. Yes, we had some onetime headwind. So whether it’s the incentive accruals or homegoods.com that negatively impacted us last year that helped us to offset what we see as continued wage pressure. So we were able to be at flat to up 10% on a 2% to 3% versus a 3% to 4%. Does that make sense?
Michael Binetti: Yes, it does, yes. In this year, does it — in this year, is the flow-through still the same though on a point of upside? Or is it also different margin profile?
Ernie Herrman: That’s 15 basis points holds true in FY ’25 as well for every point of comp opportunity. And then as far as Marmaxx goes, a 13.7% pretax profit. Yes. I mean, obviously, we had a huge improvement during the year, up 100 basis points. And a lot of that has to do with, again, the lower freight rates. Even though freight is not back to where it was in FY ’20, we’re still 100 basis points off where we were. So we’ve had to — through the merchandise margin has been able to offset some of that headwind. And again, we’ve talked about this in the past, we don’t anticipate freight to come back all the way just because of the wage increases that we’ve seen in particularly domestic freight, whether it’s people that work on the rail or in trucks.
But we are looking for — we continue to look for ways to be more efficient on how we move our freight, and that’s really where we see the opportunity moving forward. But again, similar to when we talk about HomeGoods, with Marmaxx, it’s — again, it’s about that strong execution, driving that top line and continuing to improve the merchandise margin through better buying.
Operator: And for our final question, we’ll go to the line of Marni Shapiro from Retail Tracker.
Marni Shapiro: Congrats on a fantastic year. And a lot of my questions have been asked. I do want to dig into 1 smaller part of your business. Can we talk a little bit about your credit card business lately as I’ve been in your stores, I’ve had some associates asking me if I want a credit card. I’m curious what percentage of your business is done on your own store credit cards? Is there an opportunity there? Is there a data capture that has been helpful to you? Is there an opportunity or a loyalty? Or does that just not really matter because everyone’s so addicted, they don’t need to actually — you don’t need to do loyalty because it’s a physical addiction? Could you just dig into this part of the business a little bit? It’s not something you guys usually talk about.
Ernie Herrman: Yes. As far as our credit card goes, we don’t get into the amount that goes through on our credit card. But I will say this that it’s our penetration is not as high as some of the other retailers that offer incentives to use the card, our everyday value is our everyday value, and we don’t want to train the customers into waiting on a discount day to use the credit card. So we’re highly focused on making sure that the messaging for our — the model itself is not affected. That being said, the — it is the one way that customers can get. When they use the credit card, they get coupons back and that drives volume back into our stores. So we definitely see it as a positive for our driving customers back to our stores.
And let’s face it. It pleases with the customers when they get that coupon, they — so — but everybody’s read the reports about whether it’s delinquencies or the potential for having the late fees reduced that will impact us, but not as much as some of the other retailers that rely much more heavily on the credit card.
Marni Shapiro: Is there an opportunity to grow that penetration? Is that something you guys would look to do? Because I would think there’s probably some level of loyalty and increased visitation with those customers.
Ernie Herrman: So, Marni, just — we have been growing that penetration over a number of years or so. So as much as — yes. As much as John pointed out, we’re not at what other retailers doing their — almost their credit card programs, but we are — their amount higher than we were a handful of years ago. So, yes. Rightfully so. And those shoppers, right, John tend to also cross shop our different brands more and retain more. And so there’s a lot of benefits in our sales, and as John said, when they do, it is the only way to get any type of a rebate from us, and it does create that extra visit. So yes, you’re right. And we still — by the way, that’s why you get asked in the store. We’re trying to still grow that percentage.
Ernie Herrman: All right. Well, I think that was our last question. Thank you all for joining us today. We look forward to updating you again on our first quarter earnings call in May. Thank you, everybody.
Operator: Ladies and gentlemen, that concludes your conference call for today. You may disconnect at this time, and thank you for participating.
