- Consolidated comp store sales increased 2%, over last year’s 6%
increase
- Customer traffic was the primary driver of the consolidated
comp store sales increase and was up at all four major
divisions
- Net sales increased 5% to $9.8 billion
- Diluted EPS of $.62 at high end of Company’s guidance
- Company maintains full year Fiscal 2020 outlook for comp store
sales and earnings per share
- Returned $579 million to shareholders in the second quarter
through share repurchases and dividends
The TJX Companies, Inc. (NYSE: TJX), the leading off-price
apparel and home fashions retailer in the U.S. and worldwide, today
announced sales and earnings results for the second quarter ended
August 3, 2019. Net sales for the second quarter of Fiscal 2020
increased 5% to $9.8 billion. Consolidated comparable store sales
increased 2%, over last year’s 6% increase. Net income for the
second quarter was $759 million, and diluted earnings per share
were $.62, up 7% versus the prior year’s $.58.
For the first half of Fiscal 2020, net sales were $19.1 billion,
a 6% increase over the same period last year. Consolidated
comparable store sales for the first half of Fiscal 2020 increased
4%. Net income for the first half of Fiscal 2020 was $1.5 billion,
and diluted earnings per share were $1.19, versus the prior year’s
$1.15.
Ernie Herrman, Chief Executive Officer and President of The TJX
Companies, Inc., stated, “For the second quarter, earnings per
share were $.62, at the high end of our expectations, and our
consolidated comparable store sales increased 2% versus last year’s
6% growth, which was in line with our guidance. We were very
pleased that customer traffic drove our consolidated comp and was
up at each of our four major divisions. This quarter marks the 20th
straight quarter of customer traffic increases at TJX and Marmaxx.
This speaks to the consistency and fundamental strength of our
treasure-hunt shopping experience through many types of retail and
economic environments. The third quarter is off to a solid start.
We feel great about the terrific availability we are seeing in the
marketplace for branded, quality merchandise and our ability to
capitalize on the opportunities. We are excited about our many
initiatives underway to keep driving sales and customer traffic
throughout the fall and holiday selling season, and have great
confidence in our potential to keep gaining market share around the
world!”
Sales by Business
Segment
The Company’s comparable store sales and net sales by division,
in the second quarter, were as follows:
Second Quarter
Second Quarter
Comparable Store
Sales1,2
Net Sales ($ in
millions)3,4
FY2020
FY2019
FY2020
FY2019
Marmaxx (U.S.)5,6
+2%
+7%
$6,107
$5,848
HomeGoods (U.S.)7
0%
+3%
$1,425
$1,327
TJX Canada
+1%
+6%
$967
$938
TJX International (Europe &
Australia)
+6%
+4%
$1,283
$1,218
TJX
+2%
+6%
$9,782
$9,331
1Comparable store sales outside the U.S. calculated on a
constant currency basis, which removes the effect of changes in
currency exchange rates. 2Comparable store sales exclude e-commerce
sites (tjmaxx.com, sierra.com, and tkmaxx.com) and include Sierra
stores. 3Net sales in TJX Canada and TJX International include the
impact of foreign currency exchange rates. See below. 4Figures may
not foot due to rounding. 5Combination of TJ Maxx and Marshalls.
6Net sales include Sierra’s e-commerce and store sales. 7Includes
Homesense stores in the U.S.
Impact of Foreign Currency Exchange
Rates
Changes in foreign currency exchange rates affect the
translation of sales and earnings of the Company’s international
businesses into U.S. dollars for financial reporting purposes. In
addition, ordinary course, inventory-related hedging instruments
are marked to market at the end of each quarter. Changes in
currency exchange rates can have a material effect on the magnitude
of these translations and adjustments when there is significant
volatility in currency exchange rates.
The movement in foreign currency exchange rates had a one
percentage point negative impact on consolidated net sales growth
in the second quarter of Fiscal 2020 versus the prior year. The
overall net impact of foreign currency exchange rates had a neutral
impact on second quarter Fiscal 2020 earnings per share, compared
with a neutral impact last year.
The movement in foreign currency exchange rates had a one
percentage point negative impact on consolidated net sales growth
in the first half of Fiscal 2020 versus the prior year. The overall
net impact of foreign currency exchange rates had a neutral impact
on the first half of Fiscal 2020 earnings per share, compared with
a $.01 positive impact last year.
A table detailing the impact of foreign currency on TJX’s pretax
earnings and margins, as well as those of its international
businesses, can be found in the Investors section of tjx.com.
The foreign currency exchange rate impact to earnings per share
does not include the impact currency exchange rates have on various
transactions, which the Company refers to as “transactional foreign
exchange.”
Margins
For the second quarter of Fiscal 2020, the Company’s
consolidated pretax profit margin was 10.4%, a 0.2 percentage point
decrease versus 10.6% in the prior year.
Gross profit margin for the second quarter of Fiscal 2020 was
28.2%, a 0.7 percentage point decrease versus the prior year, in
line with the Company's guidance. This was primarily due to a
decrease in merchandise margin and higher supply chain costs.
Selling, general and administrative (SG&A) costs as a
percent of sales for the second quarter were 17.7%, a 0.5
percentage point decrease versus the prior year. This was primarily
due to a favorable year-over-year comparison from IT restructuring
costs last year and a benefit from insurance claim settlements
received this year.
Inventory
Total inventories as of August 3, 2019, were $5.1 billion,
compared with $4.5 billion at the end of the second quarter last
year. Consolidated inventories on a per-store basis as of August 3,
2019, including the distribution centers, but excluding inventory
in transit, the Company’s e-commerce sites, and Sierra stores, were
up 6% on a reported basis (up 7% on a constant currency basis).
Entering the third quarter, the Company is well positioned to take
advantage of the plentiful buying opportunities it sees in the
marketplace for branded, fashionable merchandise.
Shareholder
Distributions
During the second quarter, the Company returned a total of $579
million to shareholders. The Company repurchased a total of $300
million of TJX stock, retiring 5.6 million shares, and paid $279
million in shareholder dividends. For the first half of Fiscal
2020, the Company repurchased a total of $650 million of TJX stock,
retiring 12.3 million shares, and paid $517 million in shareholder
dividends. The Company expects to repurchase approximately $1.75
billion of TJX stock in Fiscal 2020. The Company may adjust this
amount up or down depending on various factors.
Third Quarter and Full-Year Fiscal 2020
Outlook
For the third quarter of Fiscal 2020, the Company expects
diluted earnings per share to be in the range of $.63 to $.65
versus the prior year’s EPS of $.61, and the prior year’s adjusted
EPS of $.63 which excluded a $.02 negative impact from a pension
settlement charge. This EPS outlook is based upon estimated
comparable store sales growth of 1% to 2% on a consolidated basis
versus a 7% increase in the prior year. The Company is also
estimating comparable store sales growth of 1% to 2% at Marmaxx
versus a 9% increase last year.
For the 52-week fiscal year ending February 1, 2020, the Company
continues to expect diluted earnings per share to be in the range
of $2.56 to $2.61. This would represent a 5% to 7% increase over
the prior year’s $2.43, which included a $.02 negative impact from
a pension settlement charge. The Company expects diluted earnings
per share to increase 4% to 7% over the prior year’s adjusted
$2.45, which excluded the pension settlement charge. This EPS
outlook is based upon estimated comparable store sales growth of 2%
to 3% on a consolidated basis and at Marmaxx.
The Company’s earnings guidance for the third quarter and
full-year Fiscal 2020 assumes that currency exchange rates will
remain unchanged from the levels at the beginning of the third
quarter.
Stores by Concept
During the second quarter ended August 3, 2019, the Company
increased its store count by 31 stores to a total of 4,412 stores.
The Company increased square footage by 4% over the same period
last year.
Store Locations1
Gross Square Feet2
Second Quarter
Second Quarter
(in millions)
Beginning
End
Beginning
End
In the U.S.:
TJ Maxx
1,257
1,260
34.6
34.7
Marshalls
1,102
1,107
31.8
31.9
HomeGoods
770
783
18.0
18.3
Sierra
39
39
0.9
0.9
Homesense
22
23
0.6
0.6
In Canada:
Winners
273
274
7.5
7.5
HomeSense
132
132
3.0
3.0
Marshalls
91
91
2.4
2.4
In Europe:
TK Maxx
575
580
16.4
16.5
Homesense
72
72
1.4
1.4
In Australia:
TK Maxx
48
51
1.0
1.1
TJX
4,381
4,412
117.6
118.4
1Store counts above include both banners within a combo or a
superstore. 2Square feet figures may not foot due to rounding.
About The TJX Companies,
Inc.
The TJX Companies, Inc. is the leading off-price retailer of
apparel and home fashions in the U.S. and worldwide. As of August
3, 2019, the end of the Company’s second quarter, the Company
operated a total of 4,412 stores in nine countries, the United
States, Canada, the United Kingdom, Ireland, Germany, Poland,
Austria, the Netherlands, and Australia, and three e-commerce
sites. These include 1,260 TJ Maxx, 1,107 Marshalls, 783 HomeGoods,
39 Sierra, and 23 Homesense stores, as well as tjmaxx.com and
sierra.com in the United States; 274 Winners, 132 HomeSense, and 91
Marshalls stores in Canada; 580 TK Maxx and 72 Homesense stores, as
well as tkmaxx.com, in Europe; and 51 TK Maxx stores in Australia.
TJX’s press releases and financial information are available at
tjx.com.
Fiscal 2020 Second Quarter Earnings
Conference Call
At 11:00 a.m. ET today, Ernie Herrman, Chief Executive Officer
and President of TJX, will hold a conference call to discuss the
Company’s second quarter Fiscal 2020 results, operations and
business trends. A real-time webcast of the call will be available
to the public at tjx.com. A replay of the call will also be
available by dialing (866) 367-5577 through Tuesday, August 27,
2019, or at tjx.com.
Non-GAAP Financial
Information
The Company has used non-GAAP financial measures in this press
release. Adjusted financial measures refer to financial information
adjusted to exclude from financial measures prepared in accordance
with accounting principles generally accepted in the United States
(GAAP) items identified in this press release. The Company believes
that the presentation of adjusted financial results provides
additional information on comparisons between periods including
underlying trends of its business by excluding certain items that
affect overall comparability. Non-GAAP financial measures should be
considered in addition to, and not as an alternative for, the
Company’s reported results prepared in accordance with GAAP.
Important Information at
Website
Archived versions of the Company’s conference calls are
available in the Investors section of tjx.com after they are no
longer available by telephone, as are reconciliations of non-GAAP
financial measures to GAAP financial measures and other financial
information. The Company routinely posts information that may be
important to investors in the Investors section at tjx.com. The
Company encourages investors to consult that section of its website
regularly.
Forward-looking
Statement
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995: Various statements made in this release are
forward-looking and involve a number of risks and uncertainties.
All statements that address activities, events or developments that
we intend, expect or believe may occur in the future are
forward-looking statements. The following are some of the factors
that could cause actual results to differ materially from the
forward-looking statements: execution of buying strategy and
inventory management; operational and business expansion and
management of large size and scale; customer trends and
preferences; various marketing efforts; competition; personnel
recruitment, training and retention; labor costs and workforce
challenges; data security and maintenance and development of
information technology systems; economic conditions and consumer
spending; corporate and retail banner reputation; quality, safety
and other issues with our merchandise; compliance with laws,
regulations and orders and changes in laws, regulations and
applicable accounting standards; serious disruptions or
catastrophic events and adverse or unseasonable weather; expanding
international operations; merchandise sourcing and transport;
commodity availability and pricing; fluctuations in currency
exchange rates; fluctuations in quarterly operating results and
market expectations; mergers, acquisitions, or business investments
and divestitures, closings or business consolidations; outcomes of
litigation, legal proceedings and other legal or regulatory
matters; tax matters; disproportionate impact of disruptions in the
second half of the fiscal year; real estate activities; inventory
or asset loss; cash flow and other factors that may be described in
our filings with the Securities and Exchange Commission. We do not
undertake to publicly update or revise our forward-looking
statements even if experience or future changes make it clear that
any projected results expressed or implied in such statements will
not be realized.
The TJX Companies, Inc. and
Consolidated Subsidiaries
Financial Summary
(Unaudited)
(In Thousands Except Per Share
Amounts)
Thirteen Weeks Ended
Twenty-Six Weeks Ended
August 3, 2019
August 4, 2018
August 3, 2019
August 4, 2018
Net sales
$
9,781,596
$
9,331,115
$
19,059,181
$
18,019,835
Cost of sales, including buying and
occupancy costs
7,026,057
6,635,815
13,663,942
12,814,054
Selling, general and administrative
expenses
1,731,335
1,699,714
3,433,736
3,250,489
Interest expense, net
2,897
3,029
3,714
7,177
Income before provision for income
taxes
1,021,307
992,557
1,957,789
1,948,115
Provision for income taxes
262,345
252,931
498,649
492,108
Net income
$
758,962
$
739,626
$
1,459,140
$
1,456,007
Diluted earnings per share
$
0.62
$
0.58
$
1.19
$
1.15
Cash dividends declared per share
$
0.230
$
0.195
$
0.460
$
0.390
Weighted average common shares –
diluted
1,228,986
1,265,920
1,231,211
1,267,367
The TJX Companies, Inc. and
Consolidated Subsidiaries
Condensed Balance Sheets
(Unaudited)
(In Millions)
August 3, 2019
August 4, 2018
ASSETS
Current assets:
Cash and cash equivalents
$
2,186.4
$
2,872.7
Accounts receivable and other current
assets
995.2
1,068.8
Merchandise inventories
5,087.0
4,498.5
Total current assets
8,268.6
8,440.0
Net property at cost
5,041.9
5,100.5
Operating lease right of use assets
8,944.3
—
Goodwill
95.9
98.1
Other assets
504.3
472.8
TOTAL ASSETS
$
22,855.0
$
14,111.4
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable
$
2,607.7
$
2,683.3
Accrued expenses and other current
liabilities
2,639.3
2,454.5
Current portion of operating lease
liabilities
1,353.7
—
Total current liabilities
6,600.7
5,137.8
Other long-term liabilities
776.7
1,289.3
Non-current deferred income taxes, net
197.0
225.1
Long-term operating lease liabilities
7,742.9
—
Long-term debt
2,235.1
2,232.1
Shareholders’ equity
5,302.6
5,227.1
TOTAL LIABILITIES AND SHAREHOLDERS’
EQUITY
$
22,855.0
$
14,111.4
The TJX Companies, Inc. and
Consolidated Subsidiaries
Condensed Statements of Cash
Flows
(Unaudited)
(In Millions)
Twenty-Six Weeks Ended
August 3, 2019
August 4, 2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income
$
1,459.1
$
1,456.0
Depreciation and amortization
427.8
396.3
Deferred income tax provision
37.9
(18.2
)
Share-based compensation
55.4
49.9
(Increase) decrease in accounts receivable
and other assets
(276.0
)
40.6
(Increase) in merchandise inventories
(560.4
)
(385.6
)
(Decrease) increase in accounts
payable
(6.8
)
237.7
(Decrease) in accrued expenses and other
liabilities
(230.3
)
(180.5
)
Other
(7.5
)
(35.5
)
Net cash provided by operating
activities
899.2
1,560.7
CASH FLOWS FROM INVESTING ACTIVITIES:
Property additions
(578.0
)
(573.9
)
Purchases of investments
(19.0
)
(152.9
)
Sales and maturities of investments
9.4
629.1
Other
7.4
26.6
Net cash (used in) investing
activities
(580.2
)
(71.1
)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments for repurchase of common
stock
(699.8
)
(990.0
)
Proceeds from issuance of common stock
102.5
163.5
Cash dividends paid
(517.4
)
(440.9
)
Other
(23.3
)
(18.2
)
Net cash (used in) financing
activities
(1,138.0
)
(1,285.6
)
Effect of exchange rate changes on
cash
(24.8
)
(89.8
)
Net (decrease) increase in cash and cash
equivalents
(843.8
)
114.2
Cash and cash equivalents at beginning of
year
3,030.2
2,758.5
Cash and cash equivalents at end of
period
$
2,186.4
$
2,872.7
The TJX Companies, Inc. and
Consolidated Subsidiaries
Selected Information by Major
Business Segment
(Unaudited)
(In Thousands)
Thirteen Weeks Ended
Twenty-Six Weeks Ended
August 3, 2019
August 4, 2018
August 3, 2019
August 4, 2018
Net sales:
In the United States:
Marmaxx
$
6,106,697
$
5,847,721
$
11,908,457
$
11,228,639
HomeGoods
1,424,836
1,327,346
2,821,701
2,596,677
TJX Canada
967,460
937,736
1,815,195
1,791,572
TJX International
1,282,603
1,218,312
2,513,828
2,402,947
Total net sales
$
9,781,596
$
9,331,115
$
19,059,181
$
18,019,835
Segment profit:
In the United States:
Marmaxx
$
855,199
$
830,315
$
1,651,192
$
1,580,771
HomeGoods
128,942
142,090
265,727
289,450
TJX Canada
118,217
138,735
215,249
263,919
TJX International
50,459
48,691
78,946
89,517
Total segment profit
1,152,817
1,159,831
2,211,114
2,223,657
General corporate expense
128,613
164,245
249,611
268,365
Interest expense, net
2,897
3,029
3,714
7,177
Income before provision for income
taxes
$
1,021,307
$
992,557
$
1,957,789
$
1,948,115
The TJX Companies, Inc. and Consolidated
Subsidiaries Notes to Consolidated Condensed Statements
- During the second quarter ended August 3, 2019, TJX repurchased
and retired 5.6 million shares of its common stock at a cost of
$300 million on a "trade date" basis. During the six months ended
August 3, 2019, TJX repurchased and retired 12.3 million shares of
its common stock at a cost of $650 million, on a "trade basis". In
February 2019, the Company announced that the Board of Directors
had approved a new stock repurchase program that authorizes the
repurchase of up to an additional $1.5 billion of TJX common stock
from time to time. TJX records the repurchase of its stock on a
cash basis, and the amounts reflected in the financial statements
may vary from the above amounts due to the timing of settlement of
repurchases.
- TJX adopted ASU No. 2016-02, Leases (Topic 842) as of February
3, 2019 under the modified retrospective approach and, therefore,
we have not revised the consolidated balance sheets for comparative
periods.
- In fiscal 2019, we completed a two-for-one stock split of the
Company’s common stock in the form of a stock dividend. As a
result, all historical per share amounts and references to common
stock activity, as well as basic and diluted share amounts utilized
in the calculation of earnings per share have been adjusted to
reflect this stock split.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190820005460/en/
The TJX Companies, Inc. Debra McConnell Global Communications
(508) 390-2323
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