- Consolidated comp store sales increase of 4%, well above the
Company’s guidance and over last year’s 7% increase
- Customer traffic was the primary driver of the comp store sales
increase at all four major divisions
- Net sales increased 6% to $10.5 billion
- Diluted EPS of $.68, well above the Company’s guidance
- Increased full-year Fiscal 2020 EPS guidance
- Returned $778 million to shareholders in the third quarter
through share repurchases and dividends
- Completed investment of $225 million for a 25% ownership stake
in privately held Familia, Russia’s only major off-price apparel
and home fashions retailer. The Company’s investment represents a
non-controlling, minority position.
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 third quarter ended
November 2, 2019. Net sales for the third quarter of Fiscal 2020
increased 6% to $10.5 billion. Consolidated comparable store sales
increased 4%, over last year’s 7% increase. Net income for the
third quarter was $828 million, and diluted earnings per share were
$.68 versus $.61 in the prior year. This was an 8% increase versus
the prior year’s adjusted $.63, which excluded a $.02 pension
settlement charge.
For the first nine months of Fiscal 2020, net sales were $29.5
billion, a 6% increase over the same period last year. Consolidated
comparable store sales for the first nine months of Fiscal 2020
increased 4%. Net income for the first nine months of Fiscal 2020
was $2.3 billion, and diluted earnings per share were $1.86.
Ernie Herrman, Chief Executive Officer and President of The TJX
Companies, Inc., stated, “We are extremely pleased with our strong
performance in the third quarter as both sales and earnings per
share exceeded our expectations. Consolidated comp store sales
increased 4% over a very strong 7% increase last year, and earnings
per share were $.68. We are especially pleased that Marmaxx,
HomeGoods, and TJX Canada each delivered a sequential increase in
their comp store sales growth, and TJX International maintained its
strong momentum driven by excellent performance in Europe. Further,
customer traffic was the primary driver of the comp store sales
increases at each of these four major divisions. With our
above-guidance third quarter results, we are raising our full-year
earnings per share guidance. Looking ahead, the fourth quarter is
off to a solid start and we have many initiatives underway to keep
driving traffic and sales to our stores and online during the
holiday season and beyond. We are convinced our holiday marketing
campaigns will position us as a top shopping destination for
exciting gifts at amazing prices. We are seeing fantastic,
widespread availability of quality, branded merchandise and are in
a great position to capitalize on these opportunities. Longer term,
we are confident that we can gain additional market share and
continue the successful growth of TJX in the U.S. and
internationally!”
Sales by Business
Segment
The Company’s comparable store sales and net sales by division,
in the third quarter, were as follows:
Third Quarter
Third Quarter
Comparable Store
Sales1,2
Net Sales ($ in
millions)3,4
FY2020
FY2019
FY2020
FY2019
Marmaxx (U.S.)5,6
+4%
+9%
$6,354
$5,973
HomeGoods (U.S.)7
+1%
+7%
$1,582
$1,464
TJX Canada
+2%
+5%
$1,082
$1,037
TJX International (Europe &
Australia)
+6%
+3%
$1,433
$1,352
TJX
+4%
+7%
$10,451
$9,826
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, marshalls.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 third quarter of Fiscal 2020 versus the prior year. The
overall net impact of foreign currency exchange rates had a $.01
negative impact on third 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
for the first nine months of Fiscal 2020 versus the prior year. The
overall net impact of foreign currency exchange rates had a $.01
negative impact on the first nine months 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 third quarter of Fiscal 2020, the Company’s consolidated
pretax profit margin was 10.7%. This was flat versus the prior
year’s 10.7% and a 0.3 percentage point decrease versus the prior
year’s adjusted 11.0%, which excluded a negative 0.3 percentage
point impact from a pension settlement charge.
Gross profit margin for the third quarter of Fiscal 2020 was
28.8%, a 0.1 percentage point decrease versus the prior year.
Selling, general and administrative (SG&A) costs as a percent
of sales for the third quarter were 18.0%, a 0.1 percentage point
increase versus the prior year.
Inventory
Total inventories as of November 2, 2019, were $6.3 billion,
compared with $5.5 billion at the end of the third quarter last
year. Consolidated inventories on a per-store basis as of November
2, 2019, including the distribution centers, but excluding
inventory in transit, the Company’s e-commerce sites, and Sierra
stores, were up 9% on a reported basis and constant currency basis.
The Company is well-positioned to take advantage of the fantastic
buying opportunities it sees in the marketplace and ship
ever-changing gift assortments to its stores and online throughout
the holiday season.
Shareholder
Distributions
During the third quarter, the Company returned a total of $778
million to shareholders. The Company repurchased a total of $500
million of TJX stock, retiring 9.0 million shares, and paid $278
million in shareholder dividends. For the first nine months of
Fiscal 2020, the Company repurchased a total of $1.15 billion of
TJX stock, retiring 21.3 million shares, and paid $795 million in
shareholder dividends. The Company expects to repurchase $1.5 to
$1.75 billion of TJX stock in Fiscal 2020. The Company may adjust
this amount up or down depending on various factors.
Investment in Familia
On November 18, 2019, the Company completed an investment of
$225 million for a 25% ownership stake in privately held Familia,
Russia’s only major off-price apparel and home fashions retailer.
TJX’s investment represents a non-controlling, minority position.
Familia currently operates more than 275 stores throughout Russia.
This transaction gives TJX an opportunity to invest in an
established, off-price retailer with significant growth potential
in the Russian market. The Company’s ownership in Familia is
expected to be slightly accretive to earnings per share beginning
in Fiscal 2021. The Company will record this investment using the
equity method of accounting from the date of the investment.
Further, TJX will report its share of Familia’s financial results
on a one quarter delay. BofA Securities acted as financial advisor
and Ropes & Gray LLP provided legal counsel to the Company in
connection with this transaction.
Fourth Quarter and Full-Year Fiscal
2020 Outlook
For the fourth quarter of Fiscal 2020, the Company expects
diluted earnings per share to be in the range of $.74 to $.76
versus earnings per share of $.68 in the prior year. This EPS
outlook is based upon estimated comparable store sales growth of 2%
to 3% on a consolidated basis and at Marmaxx.
For the 52-week fiscal year ending February 1, 2020, the Company
now expects diluted earnings per share to be in the range of $2.61
to $2.63. This would represent a 7% to 8% 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 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 3% on a consolidated
basis and 3% to 4% at Marmaxx.
The Company’s earnings guidance for the fourth quarter and
full-year Fiscal 2020 assumes that currency exchange rates will
remain unchanged from the levels at the beginning of the fourth
quarter.
Stores by Concept
During the third quarter ended November 2, 2019, the Company
increased its store count by 107 stores to a total of 4,519 stores.
The Company increased square footage by 4% over the same period
last year.
Store Locations1
Gross Square Feet2
Third Quarter
Third Quarter
(in millions)
Beginning
End
Beginning
End
In the U.S.:
TJ Maxx
1,260
1,271
34.7
34.8
Marshalls
1,107
1,125
31.9
32.3
HomeGoods
783
807
18.3
18.8
Sierra
39
46
0.9
1.0
Homesense
23
32
0.6
0.9
In Canada:
Winners
274
279
7.5
7.6
HomeSense
132
136
3.0
3.1
Marshalls
91
97
2.4
2.6
In Europe:
TK Maxx
580
594
16.5
16.7
Homesense
72
78
1.4
1.5
In Australia:
TK Maxx
51
54
1.1
1.2
TJX
4,412
4,519
118.4
120.5
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 November
2, 2019, the end of the Company’s third quarter, the Company
operated a total of 4,519 stores in nine countries, the United
States, Canada, the United Kingdom, Ireland, Germany, Poland,
Austria, the Netherlands, and Australia, and four e-commerce sites.
These include 1,271 TJ Maxx, 1,125 Marshalls, 807 HomeGoods, 46
Sierra, and 32 Homesense stores, as well as tjmaxx.com,
marshalls.com, and sierra.com in the United States; 279 Winners,
136 HomeSense, and 97 Marshalls stores in Canada; 594 TK Maxx and
78 Homesense stores, as well as tkmaxx.com, in Europe; and 54 TK
Maxx stores in Australia. TJX’s press releases and financial
information are available at tjx.com.
Fiscal 2020 Third 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 third 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 (U.S. only) or (203) 369-0233
through Tuesday, November 26, 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
Thirty-Nine Weeks Ended
November 2, 2019
November 3, 2018
November 2, 2019
November 3, 2018
Net sales
$
10,451,334
$
9,825,759
$
29,510,515
$
27,845,594
Cost of sales, including buying and
occupancy costs
7,440,033
6,983,483
21,103,975
19,797,537
Selling, general and administrative
expenses
1,885,923
1,756,448
5,319,659
5,006,937
Pension settlement charge
—
36,122
—
36,122
Interest expense, net
3,259
3,188
6,973
10,365
Income before provision for income
taxes
1,122,119
1,046,518
3,079,908
2,994,633
Provision for income taxes
293,856
284,265
792,505
776,373
Net income
$
828,263
$
762,253
$
2,287,403
$
2,218,260
Diluted earnings per share
$
0.68
$
0.61
$
1.86
$
1.75
Cash dividends declared per share
$
0.23
$
0.195
$
0.69
$
0.585
Weighted average common shares –
diluted
1,224,288
1,257,562
1,228,903
1,264,100
The TJX Companies, Inc. and
Consolidated Subsidiaries Condensed Balance Sheets (Unaudited) (In
Millions)
November 2, 2019
November 3, 2018
ASSETS
Current assets:
Cash and cash equivalents
$
2,060.2
$
2,711.8
Accounts receivable and other current
assets
1,039.6
1,061.8
Merchandise inventories
6,274.8
5,543.4
Total current assets
9,374.6
9,317.0
Net property at cost
5,251.0
5,165.9
Operating lease right of use assets
9,069.1
—
Goodwill
96.3
97.3
Other assets
497.7
445.0
TOTAL ASSETS
$
24,288.7
$
15,025.2
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable
$
3,447.4
$
3,340.6
Accrued expenses and other current
liabilities
2,827.4
2,673.2
Current portion of operating lease
liabilities
1,412.3
—
Total current liabilities
7,687.1
6,013.8
Other long-term liabilities
797.6
1,284.9
Non-current deferred income taxes, net
203.5
236.7
Long-term operating lease liabilities
7,822.1
—
Long-term debt
2,235.9
2,232.9
Shareholders’ equity
5,542.5
5,256.9
TOTAL LIABILITIES AND SHAREHOLDERS’
EQUITY
$
24,288.7
$
15,025.2
The TJX Companies, Inc. and
Consolidated Subsidiaries Condensed Statements of Cash Flows
(Unaudited) (In Millions)
Thirty-Nine Weeks Ended
November 2, 2019
November 3, 2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income
$
2,287.4
$
2,218.3
Depreciation and amortization
647.4
601.2
Pension settlement charge
—
36.1
Deferred income tax provision
(benefit)
42.1
(15.6)
Share-based compensation
86.6
77.4
(Increase) decrease in accounts receivable
and other assets
(331.4)
26.9
(Increase) in merchandise inventories
(1,701.7)
(1,442.6)
Increase in accounts payable
805.8
902.5
Increase in accrued expenses and other
liabilities
2.2
64.4
Other
35.2
9.2
Net cash provided by operating
activities
1,873.6
2,477.8
CASH FLOWS FROM INVESTING ACTIVITIES:
Property additions
(992.7)
(873.0)
Purchase of investments
(24.1)
(157.2)
Sales and maturities of investments
11.6
634.3
Other
7.4
26.7
Net cash (used in) investing
activities
(997.8)
(369.2)
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash payments for repurchase of common
stock
(1,190.4)
(1,591.4)
Proceeds from issuance of common stock
175.3
239.6
Cash dividends paid
(795.1)
(682.3)
Other
(23.3)
(21.5)
Net cash (used in) financing
activities
(1,833.5)
(2,055.6)
Effect of exchange rate changes on
cash
(12.3)
(99.7)
Net (decrease) in cash and cash
equivalents
(970.0)
(46.7)
Cash and cash equivalents at beginning of
year
3,030.2
2,758.5
Cash and cash equivalents at end of
period
$
2,060.2
$
2,711.8
The TJX Companies, Inc. and
Consolidated Subsidiaries Selected Information by Major Business
Segment (Unaudited) (In Thousands)
Thirteen Weeks Ended
Thirty-Nine Weeks Ended
November 2, 2019
November 3, 2018
November 2, 2019
November 3, 2018
Net sales:
In the United States:
Marmaxx
$
6,353,987
$
5,973,476
$
18,262,444
$
17,202,115
HomeGoods
1,582,411
1,463,892
4,404,112
4,060,569
TJX Canada
1,081,522
1,036,884
2,896,717
2,828,456
TJX International
1,433,414
1,351,507
3,947,242
3,754,454
Total net sales
$
10,451,334
$
9,825,759
$
29,510,515
$
27,845,594
Segment profit:
In the United States:
Marmaxx
$
820,430
$
762,911
$
2,471,622
$
2,343,682
HomeGoods
173,212
166,090
438,939
455,540
TJX Canada
170,264
182,170
385,513
446,089
TJX International
99,397
102,432
178,343
191,949
Total segment profit
1,263,303
1,213,603
3,474,417
3,437,260
General corporate expense
137,925
127,775
387,536
396,140
Pension settlement charge
—
36,122
—
36,122
Interest expense, net
3,259
3,188
6,973
10,365
Income before provision for income
taxes
$
1,122,119
$
1,046,518
$
3,079,908
$
2,994,633
The TJX Companies, Inc. and Consolidated
Subsidiaries Notes to Consolidated Condensed Statements
- During the third quarter ended November 2, 2019, TJX
repurchased and retired 9.0 million shares of its common stock at a
cost of $500 million on a "trade date" basis. During the nine
months ended November 2, 2019, TJX repurchased and retired 21.3
million shares of its common stock at a cost of $1.15 billion, on a
"trade date" basis. 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.
- In February 2019, the Company announced that the Board of
Directors had approved a stock repurchase program that authorizes
the repurchase of up to $1.5 billion of TJX common stock from time
to time, all of which remained available at November 2, 2019. In
February 2018, the Company announced that the Board of Directors
approved the repurchase of $3.0 billion of TJX common stock from
time to time, under which $0.5 billion remained available as of
November 2, 2019.
- 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.
- During the third quarter ended November 3, 2018, the Company
purchased a group annuity contract pursuant to which the pension
benefit obligations for certain U.S. retirees and beneficiaries
under the Company's pension plan were transferred to an insurer in
exchange for $207 million in pension plan assets. As a result of
this transaction, the pension plan's total liability has been
remeasured, resulting in a non-cash settlement charge to the
Company that reduced third quarter fiscal 2019 pretax income by
$36.1 million and earnings per share by $0.02.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191119005581/en/
The TJX Companies, Inc. Debra McConnell Global Communications
(508) 390-2323
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