- Consolidated comp store sales increased
5%, over last year’s 3% increase
- Customer traffic was the primary driver
of the consolidated comp sales increase and was up at all four
major divisions
- Net sales increased 7% to $9.3
billion
- Diluted EPS of $.57
- Increased Fiscal 2020 EPS guidance
- Returned $589 million to shareholders
in the first quarter through share repurchases and dividends
- Increased the Company’s quarterly
dividend by 18% in the first quarter
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 first quarter ended
May 4, 2019. Net sales for the first quarter of Fiscal 2020
increased 7% to $9.3 billion. Consolidated comparable store sales
increased 5% over last year’s 3% increase. Net income for the first
quarter was $700 million, and diluted earnings per share were $.57,
versus the prior year’s $.56.
Ernie Herrman, Chief Executive Officer and President of The TJX
Companies, Inc., stated, “We are very pleased with our continued
strong performance in the first quarter, as both our consolidated
comparable store sales increase of 5% and earnings per share of
$.57 came in well above our expectations. It is terrific to see the
continued strength of our largest division, Marmaxx, with an
outstanding 6% comp increase. Further, Marmaxx’s apparel and home
categories were both very strong. Once again this quarter, customer
traffic was the primary driver of our consolidated comp increase
and was up at each of our four major divisions. We believe this is
a great indicator of the enduring appeal of our great values on an
eclectic and exciting mix of merchandise and our treasure-hunt
shopping experience, as well as the resiliency of our off-price
retail model. With our above-plan first quarter results, we are
raising our full-year earnings per share outlook. We are in an
excellent position to take advantage of the abundant buying
opportunities we are seeing in the marketplace for quality, branded
merchandise and to keep flowing fresh, exciting assortments to our
stores and online. We have many initiatives underway to keep
driving sales and customer traffic, and feel great about our
ability to continue gaining market share around the world!”
Sales by Business
Segment
The Company’s comparable store sales and net sales by division,
in the first quarter, were as follows:
First Quarter First
Quarter Comparable Store Sales1,2
Net
Sales ($ in millions)3,4 FY2020
FY2019 FY2020 FY2019
Marmaxx
(U.S.)5,6 +6% +4% $5,802
$5,381 HomeGoods (U.S.)7 +1% +2%
$1,397 $1,269 TJX Canada 0% +3%
$848 $854 TJX International (Europe & Australia)
+8% +1% $1,231 $1,185
TJX +5% +3%
$9,278 $8,689
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 T.J. 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 first quarter of Fiscal 2020 versus the prior year. The
overall net impact of foreign currency exchange rates had a neutral
impact on first quarter Fiscal 2020 earnings per share, compared
with a $.01 positive impact last year.
A table detailing the impact of foreign currency on TJX 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 first quarter of Fiscal 2020, the Company’s consolidated
pretax profit margin was 10.1%, a 0.9 percentage point decrease
versus 11.0% in the prior year.
Gross profit margin for the first quarter of Fiscal 2020 was
28.5%, a 0.4 percentage point decrease versus the prior year. As
expected, gross margin was negatively impacted by increased supply
chain and freight costs.
Selling, general and administrative (SG&A) costs as a
percent of sales for the first quarter were 18.3%, a 0.5 percentage
point increase versus the prior year. The increase in SG&A was
primarily due to store wage increases, an unfavorable
year-over-year comparison on a gain related to a lease buyout last
year, and incremental IT investments.
Inventory
Total inventories as of May 4, 2019, were $5.1 billion, compared
with $4.4 billion at the end of the first quarter last year.
Consolidated inventories on a per-store basis as of May 4, 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 second quarter, the Company is in an excellent
position to take advantage of the terrific opportunities it sees in
the marketplace for quality, branded merchandise.
Shareholder
Distributions
During the first quarter, the Company returned a total of $589
million to shareholders. The Company repurchased a total of $350
million of TJX stock, retiring 6.7 million shares, and paid $239
million in shareholder dividends. The Company continues to expect
to repurchase approximately $1.75 to $2.25 billion of TJX stock in
Fiscal 2020. The Company may adjust this amount up or down
depending on various factors. In addition, the Company increased
its dividend by 18% in the first quarter, marking the 23rd
consecutive year of dividend increases. The Company remains
committed to returning cash to its shareholders while continuing to
reinvest in the business to support the near- and long-term growth
of TJX.
Second Quarter and Full-Year Fiscal
2020 Outlook
For the second quarter of Fiscal 2020, the Company expects
diluted earnings per share to be in the range of $.61 to $.62, a 5%
to 7% increase over the prior year’s $.58. The Company expects the
combination of incremental freight costs and store wage increases
to negatively impact second quarter EPS growth by 2% to 3%. 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
is raising its guidance for 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 now 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
guidance reflects an assumption that the combination of incremental
freight costs and store wage increases will negatively impact EPS
growth by 3% to 4%. 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 second quarter and
full-year Fiscal 2020 assumes that currency exchange rates will
remain unchanged from the levels at the beginning of the second
quarter.
Stores by Concept
During the first quarter ended May 4, 2019, the Company
increased its store count by 75 stores to a total of 4,381 stores.
The Company increased square footage by 4% over the same period
last year.
Store Locations1 Gross
Square Feet2 First Quarter First Quarter
(in millions)
Beginning End Beginning
End In the U.S.:
T.J. Maxx
1,252 1,257 34.5 34.6 Marshalls
1,091 1,102 31.6 31.8 HomeGoods
749 770 17.5 18.0 Sierra
35 39 0.8 0.9 Homesense
16 22 0.4 0.6
In
Canada:
Winners 271 273
7.5 7.5 HomeSense 125 132
2.9 3.0 Marshalls 88 91
2.4 2.4
In Europe:
T.K. Maxx 567
575 16.3 16.4 Homesense
68 72 1.3 1.4
In Australia:
T.K. Maxx 44 48 1.0
1.0
TJX 4,306
4,381 116.2 117.6
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 May 4,
2019, the end of the Company’s first quarter, the Company operated
a total of 4,381 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 1,257 T.J. Maxx, 1,102 Marshalls, 770 HomeGoods, 39 Sierra,
and 22 Homesense stores, as well as tjmaxx.com and sierra.com in
the United States; 273 Winners, 132 HomeSense, and 91 Marshalls
stores in Canada; 575 T.K. Maxx and 72 Homesense stores, as well as
tkmaxx.com, in Europe; and 48 T.K. Maxx stores in Australia. TJX’s
press releases and financial information are available at
tjx.com.
Fiscal 2020 First 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 first 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, May 28, 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 May 4,2019
May 5,2018 Net sales $ 9,277,585 $ 8,688,720
Cost of sales, including buying and occupancy costs
6,637,885 6,178,239 Selling, general and administrative expenses
1,702,401 1,550,775 Interest expense, net 817 4,148
Income before provision for income taxes 936,482 955,558 Provision
for income taxes 236,304 239,177 Net income $ 700,178
$ 716,381 Diluted earnings per share $ 0.57 $ 0.56
Cash dividends declared per share $ 0.230 $ 0.195
Weighted average common shares – diluted 1,233,407 1,268,872
The TJX Companies, Inc. and Consolidated Subsidiaries
Condensed Balance Sheets (Unaudited) (In Millions)
May 4,2019 May 5,2018 ASSETS Current assets:
Cash and cash equivalents $ 2,235.1 $ 2,681.1 Short-term
investments — 435.9 Accounts receivable and other current assets
774.9 935.4 Merchandise inventories 5,057.2 4,369.9
Total current assets 8,067.2 8,422.3 Net property at
cost 5,018.6 5,026.1 Operating lease right of use assets
8,810.4 — Goodwill 96.7 98.6 Other assets 496.2 460.1
TOTAL ASSETS $ 22,489.1 $ 14,007.1 LIABILITIES AND
SHAREHOLDERS’ EQUITY Current liabilities: Accounts payable $
2,578.4 $ 2,509.1 Accrued expenses and other current liabilities
2,659.4 2,467.8 Current portion of operating lease liabilities
1,343.2 — Total current liabilities 6,581.0
4,976.9 Other long-term liabilities 753.0 1,275.8
Non-current deferred income taxes, net 167.3 260.6 Long-term
operating lease liabilities 7,621.5 — Long-term debt 2,234.4
2,231.4 Shareholders’ equity 5,131.9 5,262.4
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 22,489.1 $
14,007.1 The TJX Companies, Inc. and Consolidated
Subsidiaries Condensed Statements of Cash Flows (Unaudited) (In
Millions) Thirteen Weeks Ended May 4,2019
May 5,2018 CASH FLOWS FROM OPERATING ACTIVITIES: Net
income $ 700.2 $ 716.4 Depreciation and amortization 212.2 192.3
Deferred income tax provision 8.1 7.3 Share-based compensation 25.7
24.0 (Increase) decrease in accounts receivable and other assets
(61.6 ) 175.7 (Increase) in merchandise inventories (487.1 ) (225.2
) (Decrease) increase in accounts payable (60.5 ) 44.0 (Decrease)
in accrued expenses and other liabilities (201.9 ) (184.9 ) Other
14.2
(24.7 ) Net cash provided by operating activities
149.3
724.9 CASH FLOWS FROM INVESTING ACTIVITIES:
Property additions (316.9 ) (265.0 ) Purchases of investments (14.6
) (148.2 ) Sales and maturities of investments 4.8 192.7
Net cash (used in) investing activities (326.7 ) (220.5 )
CASH FLOWS FROM FINANCING ACTIVITIES: Payments for
repurchase of common stock (397.3 ) (395.4 ) Proceeds from issuance
of common stock 59.8 84.6 Cash dividends paid (238.8 ) (197.3 )
Other (23.3 ) (17.9 ) Net cash (used in) financing activities
(599.6 ) (526.0 ) Effect of exchange rate changes on cash
(18.1
) (55.8 ) Net (decrease) in cash and cash equivalents (795.1
) (77.4 ) Cash and cash equivalents at beginning of year 3,030.2
2,758.5 Cash and cash equivalents at end of
period $ 2,235.1 $ 2,681.1 The TJX
Companies, Inc. and Consolidated Subsidiaries Selected Information
by Major Business Segment (Unaudited) (In Thousands)
Thirteen Weeks Ended May 4,2019 May 5,2018 Net sales:
In the United States: Marmaxx $ 5,801,760 $ 5,380,918 HomeGoods
1,396,865 1,269,331 TJX Canada 847,735 853,836 TJX International
1,231,225 1,184,635 Total net sales $ 9,277,585 $
8,688,720 Segment profit: In the United States: Marmaxx $
795,993 $ 750,456 HomeGoods 136,785 147,360 TJX Canada 97,032
125,184 TJX International 28,487 40,826 Total segment profit
1,058,297 1,063,826 General corporate expense 120,998
104,120 Interest expense, net 817 4,148 Income before
provision for income taxes $ 936,482 $ 955,558
The TJX Companies, Inc. and Consolidated
SubsidiariesNotes to Consolidated Condensed Statements
- During the first quarter ended
May 4, 2019, TJX repurchased and retired 6.7 million shares of
its common stock at a cost of $350 million on a "trade date" 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/20190521005514/en/
The TJX Companies, Inc.Debra McConnellGlobal Communications(508)
390-2323
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