- Net sales increased 6% to $8.8 billion
over last year’s 7% increase
- Consolidated comparable store sales
were flat compared to last year’s 5% increase
- Consolidated customer traffic and
merchandise margin were up
- Diluted EPS was $1.00, at the high end
of Company’s guidance
- Diluted EPS of $1.00 was a 20% increase
over the prior year’s GAAP EPS of $.83 and a 10% increase over the
prior year’s adjusted EPS of $.91, which excludes the combined $.08
impact from a debt extinguishment charge and a pension settlement
charge
- Q3 FY18 EPS includes an estimated $.03
negative impact due to the hurricanes during the third quarter
- Maintains high end of full year Fiscal
2018 EPS and comparable store sales growth outlook
- Returned $547 million to shareholders
in the third quarter through share repurchases and dividends
The TJX Companies, Inc. (NYSE: TJX), the leading off-price
retailer of apparel and home fashions in the U.S. and worldwide,
today announced sales and earnings results for the third quarter
ended October 28, 2017. Net sales for the third quarter of Fiscal
2018 increased 6% to $8.8 billion and consolidated comparable store
sales were flat compared to last year’s 5% increase. Net income for
the third quarter was $641 million. Diluted earnings per share were
$1.00, a 20% increase over the prior year’s GAAP EPS of $.83 and a
10% increase over the prior year’s adjusted EPS of $.91, which
excludes the combined $.08 impact of last year’s debt
extinguishment charge and pension settlement charge.
For the first nine months of Fiscal 2018, net sales were $24.9
billion, a 5% increase over last year’s 8% increase. Consolidated
comparable store sales increased 1% over last year’s 5% increase.
Net income for the first nine months of Fiscal 2018 was $1.7
billion and diluted earnings per share were $2.67, a 10% increase
over the prior year’s GAAP EPS of $2.43 and a 6% increase over the
prior year’s adjusted EPS of $2.51.
Ernie Herrman, Chief Executive Officer and President of The TJX
Companies, Inc., stated, “For the third quarter, consolidated
comparable store sales were flat versus last year’s strong 5%
increase. Earnings per share were $1.00, which was at the high end
of our plan. Certainly, the hurricanes had a negative impact during
the quarter. Our greatest concern is the well-being of our
Associates, their families, our customers and everyone affected by
these natural disasters, and our hearts go out to the people who
have been impacted. Additionally, we believe that warmer
temperatures in the U.S. during the quarter dampened demand for
apparel at our Marmaxx division. While sales were not as strong as
we would have liked, we were pleased that sales trends at Marmaxx
improved as the weather turned more seasonable. Further, customer
traffic, or transactions, were strong and up at every major
division. Importantly, our consolidated merchandise margin
increased, which we believe speaks to the flexibility of our
off-price business model. Overall, our organization sharply
executed our off-price fundamentals of opportunistic buying, lean
inventory discipline, and being strategic and targeted in the flow
of merchandise to our stores, which helped drive margins.
“Looking ahead, the fourth quarter is off to a strong start and
we see numerous opportunities for the holiday selling season across
our retail banners. We have excellent inventory liquidity to
capitalize on the plentiful opportunities we are seeing for
quality, branded merchandise in the marketplace. We will be
offering consumers eclectic gift selections from around the world,
at compelling, off-price values, and shipping fresh assortments to
our stores and online throughout December and beyond. We have many
initiatives underway to drive sales and traffic and are excited
about our marketing campaigns. We are confident that we will
achieve our goals for 2017 and as always, we will strive to surpass
them. We have enormous confidence in the continued, successful
growth of TJX!”
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 Sales1,2,3
Net Sales ($ in
millions)4,5 FY2018
FY2017 FY2018
FY2017
Marmaxx6,7 -1% +5%
$5,298 $5,253 HomeGoods8
+3% +6%
$1,229 $1,078 TJX Canada
+4% +8% $983
$855 TJX International (Europe & Australia)
+1%
0%
$1,252 $1,105
TJX
0% +5%
$8,762 $8,292
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 Sierra
Trading Post, tjmaxx.com and tkmaxx.com. 3FY2018 comparable store
sales exclude 37 stores (primarily in Puerto Rico) that were
significantly impacted by hurricanes during the quarter. 4Net sales
in TJX Canada and TJX International include the impact of foreign
currency exchange rates. See below. 5Figures may not foot due to
rounding. 6Combination of TJ Maxx and Marshalls. 7Net sales include
Sierra Trading Post. 8Net sales in FY2018 include 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.
For the third quarter of Fiscal 2018, the movement in foreign
currency exchange rates had a one percentage point positive impact
on consolidated net sales growth. The overall net impact of foreign
currency exchange rates had a $.04 positive impact on third quarter
Fiscal 2018 earnings per share, compared with a neutral impact last
year.
For the first nine months of Fiscal 2018, the movement in
foreign currency exchange rates had a neutral impact on
consolidated net sales growth. The overall net impact of foreign
currency exchange rates had a $.01 positive impact on earnings per
share in the first nine months of Fiscal 2018, compared with a $.01
negative 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 we refer to as “transactional foreign
exchange.”
Margins
For the third quarter of Fiscal 2018, the Company’s consolidated
pretax profit margin was 11.6%. This was a 0.9 percentage point
increase compared with the prior year’s 10.7% margin and down 0.1
percentage point compared with the prior year’s adjusted 11.7%
margin, which excluded a debt extinguishment charge and pension
settlement charge.
Gross profit margin for the third quarter of Fiscal 2018 was
29.8%, up 0.3 percentage points versus the prior year. This was due
to gains related to the Company’s inventory hedges as well as an
increase in merchandise margin, partially offset by higher supply
chain costs and expense deleverage on the flat consolidated
comparable store sales.
Selling, general and administrative costs as a percent of sales
were 18.1%, up 0.5 percentage points versus the prior year’s ratio,
primarily due to expenses from hurricanes and wage increases.
Inventory
Total inventories as of October 28, 2017, were $4.7 billion,
compared with $4.4 billion at the end of the third quarter last
year. Consolidated inventories on a per-store basis as of October
28, 2017, including the distribution centers, but excluding
inventory in transit and the Company’s e-commerce businesses, were
down 2% on a reported basis and down 4% on a constant currency
basis. The Company enters the fourth quarter in an excellent
inventory position, and has plenty of liquidity to take advantage
of the plentiful buying opportunities in the marketplace and ship
constantly changing gift assortments to its stores throughout the
holiday season.
Shareholder
Distributions
During the third quarter, the Company repurchased a total of
$350 million of TJX stock, retiring 4.9 million shares. During the
first nine months of the year, the Company repurchased a total of
$1.25 billion of TJX stock, retiring 16.9 million shares. The
Company continues to expect to repurchase approximately $1.5 to
$1.8 billion of TJX stock in Fiscal 2018. The Company may adjust
this amount up or down depending on various factors. Through its
dividend program, under which the current per share dividend
represents a 20% increase versus last year, the Company returned to
shareholders $197 million in the third quarter and $567 million in
the first nine months of the year.
Fourth Quarter and Full Year Fiscal
2018 Outlook
For the fourth quarter of Fiscal 2018, the Company expects
diluted earnings per share to be in the range of $1.25 to $1.27, a
21% to 23% increase over the prior year’s EPS of $1.03. Excluding
an approximate $.11 benefit from the extra week in the fourth
quarter, the Company expects adjusted earnings per share to be in
the range of $1.14 to $1.16, an 11% to 13% increase over the prior
year. This guidance reflects an assumption that wage increases will
negatively impact EPS growth by 1%. The Company also anticipates
that the combination of foreign currency and transactional foreign
exchange will positively impact EPS growth by 1%. This EPS outlook
is based upon estimated consolidated comparable store sales growth
of 1% to 2%.
For the 53-week fiscal year ending February 3, 2018, the Company
is maintaining the high end of its earnings per share guidance. The
Company expects diluted earnings per share in the range of $3.91 to
$3.93. This represents a 13% to 14% increase over the prior year’s
EPS of $3.46. The Company’s full-year guidance includes an expected
benefit of approximately $.11 per share from the 53rd week in the
Company’s Fiscal 2018 calendar. Excluding this benefit, the Company
expects adjusted diluted earnings per share to be in the range of
$3.80 to $3.82. This would represent an 8% increase over the prior
year’s adjusted EPS of $3.53, which excludes the combined $.07
impact of last year’s debt extinguishment and pension settlement
charges from GAAP EPS of $3.46. This guidance reflects an
assumption that wage increases will negatively impact EPS growth by
2%. The Company also anticipates that the combination of foreign
currency and transactional foreign exchange will positively impact
EPS growth by 1% and that the change in accounting rules for
share-based compensation will positively impact EPS growth by 1%.
This EPS outlook is based upon estimated consolidated comparable
store sales growth of 1% to 2%.
The Company’s earnings guidance for the fourth quarter and full
year Fiscal 2018 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 October 28, 2017, the Company
increased its store count by 139 stores to a total of 4,052 stores.
The Company increased square footage by 5% over the same period
last year.
Store
Locations* Gross Square Feet**
Third Quarter Third Quarter
(in millions)
Beginning
End
Beginning End In the
U.S.:
TJ Maxx
1,194 1,219
33.6 34.0 Marshalls
1,043 1,057 30.9
31.0 HomeGoods 619
660 14.9
15.7 Sierra Trading Post 16
26 0.4 0.6
Homesense 0 3
0.0 0.1
In Canada:
Winners
258 265 7.2
7.4 HomeSense 112
117 2.6 2.7
Marshalls 63 72
1.8 2.0
In Europe:
TK Maxx
522 540 15.5
15.8 Homesense 51
55 1.1 1.1
In Australia:
TK Maxx 35 38
0.8 0.8
TJX
3,913 4,052 108.7
111.3
*Store counts above include both banners within a combo or a
superstore.**Square 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 October
28, 2017, the end of the Company’s third quarter, the Company
operated a total of 4,052 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 1,219 TJ Maxx, 1,057 Marshalls, 660 HomeGoods,
26 Sierra Trading Post, and 3 Homesense stores, as well as
tjmaxx.com and sierratradingpost.com in the United States; 265
Winners, 117 HomeSense, and 72 Marshalls stores in Canada; 540 TK
Maxx and 55 Homesense stores, as well as tkmaxx.com, in Europe; and
38 TK Maxx stores in Australia. TJX’s press releases and financial
information are also available at tjx.com.
Fiscal 2018 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 2018 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, November 21,
2017, 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; information systems and new technology;
economic conditions and consumer spending; adverse or unseasonable
weather; serious disruptions or catastrophic events; disruptions in
the second half of the fiscal year; corporate and retail banner
reputation; quality, safety and other issues with merchandise;
expanding international operations; merchandise importing;
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; compliance
with laws, regulations and orders and changes in laws, regulations
and applicable accounting standards; outcomes of litigation, legal
proceedings and other legal or regulatory matters; tax matters;
real estate activities; 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)
13 Weeks Ended 39 Weeks Ended
October 28,
2017
October 29,
2016
October 28,
2017
October 29,
2016
Net sales $ 8,762,220 $
8,291,688 $ 24,903,944 $ 23,716,097 Cost of sales, including
buying and occupancy costs 6,150,020 5,843,873 17,652,767
16,778,977 Selling, general and administrative expenses 1,584,219
1,462,574 4,479,470 4,190,872 Loss on early extinguishment of debt
- 51,773 - 51,773 Pension settlement charge - 31,173 - 31,173
Interest expense, net 7,981 12,462 27,499
33,918 Income before provision for income taxes
1,020,000 889,833 2,744,208 2,629,384 Provision for income taxes
378,564 340,047 1,013,536 1,009,078
Net income $ 641,436 $ 549,786 $ 1,730,672 $ 1,620,306
Diluted earnings per share $ 1.00 $ 0.83 $ 2.67 $ 2.43
Cash dividends declared per share $ 0.31 $ 0.26 $ 0.94 $
0.78 Weighted average common shares – diluted 642,881
661,721 648,672 666,632
The TJX Companies, Inc. and Consolidated
Subsidiaries
Condensed Balance Sheets
(Unaudited)
(In Millions)
October 28,
2017
October 29,2016
ASSETS Current assets: Cash and cash equivalents $ 2,364.2 $
2,375.5 Short-term investments 511.6 450.8 Accounts receivable and
other current assets 788.3 731.8 Merchandise inventories
4,725.9 4,384.2 Total current assets 8,390.0
7,942.3 Property, net of depreciation 4,858.3 4,318.8
Goodwill 196.4 196.0 Other assets 433.0 409.7
TOTAL ASSETS $ 13,877.7 $ 12,866.8 LIABILITIES AND
SHAREHOLDERS’ EQUITY Current liabilities: Accounts payable $
2,986.4 $ 2,686.8 Accrued expenses and other current liabilities
2,481.6 2,207.7 Total current liabilities
5,468.0 4,894.5 Other long-term liabilities
1,160.0 1,098.5 Non-current deferred income taxes, net 374.3 317.1
Long-term debt 2,229.8 2,226.9 Shareholders’ equity
4,645.6 4,329.8 TOTAL LIABILITIES AND SHAREHOLDERS’
EQUITY $ 13,877.7 $ 12,866.8
The TJX Companies, Inc. and Consolidated
Subsidiaries
Condensed Statements of Cash Flows
(Unaudited)
(In Millions)
39 Weeks Ended
October 28,
2017
October 29,2016
CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 1,730.7 $
1,620.3 Depreciation and amortization 532.4 492.4 Loss in early
extinguishment of debt - 51.8 Pension settlement charge - 31.2
Deferred income tax provision 35.8 52.6 Share-based compensation
77.2 77.4 (Increase) in accounts receivable and other assets (138.7
) (115.0 ) (Increase) in merchandise inventories (1,042.7 ) (758.6
) Increase in accounts payable 733.3 525.0 Increase (decrease) in
accrued expenses and other liabilities (3.8 ) 213.9 Other
5.2 (78.7 ) Net cash provided by operating
activities 1,929.4 2,112.3 CASH
FLOWS FROM INVESTING ACTIVITIES: Property additions (827.5 ) (767.2
) Purchases of investments (630.1 ) (533.8 ) Sales and maturities
of investments 658.2 432.0 Other - (2.3 ) Net
cash (used in) investing activities (799.4 ) (871.3 )
CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance
of long-term debt - 992.5 Cash payments for extinguishment of debt
- (425.6 ) Payments for repurchase of common stock (1,239.0 )
(1,175.0 ) Proceeds from issuance of common stock 89.2 110.9 Cash
dividends paid (566.9 ) (481.8 ) Other (19.1 ) 22.3
Net cash (used in) financing activities (1,735.8 )
(956.7 ) Effect of exchange rate changes on cash
40.2 (4.2 ) Net (decrease) increase in
cash and cash equivalents (565.6 ) 280.1 Cash and cash equivalents
at beginning of year 2,929.8 2,095.4
Cash and cash equivalents at end of period $ 2,364.2
$ 2,375.5
The TJX Companies, Inc. and Consolidated
Subsidiaries
Selected Information by Major Business
Segment
(Unaudited)
(In Thousands)
13 Weeks Ended 39 Weeks Ended
October 28,
2017
October 29,
2016
October 28,
2017
October 29,
2016
Net sales: In the United
States: Marmaxx $ 5,298,479 $ 5,252,815 $ 15,550,253 $ 15,217,188
HomeGoods 1,228,768 1,078,373 3,506,435 3,075,472 TJX Canada
983,236 855,473 2,554,033 2,297,831 TJX International
1,251,737 1,105,027 3,293,223 3,125,606 Total
net sales $ 8,762,220 $ 8,291,688 $ 24,903,944 $ 23,716,097
Segment profit: In the United States: Marmaxx $ 666,092 $ 703,092 $
2,100,138 $ 2,154,238 HomeGoods 163,835 149,739 457,272 415,996 TJX
Canada 206,472 142,491 392,581 321,942 TJX International
87,066 87,821 132,893 145,047 Total segment
profit 1,123,465 1,083,143 3,082,884 3,037,223 General
corporate expense 95,484 97,902 311,177 290,975 Loss on
early extinguishment of debt - 51,773 - 51,773 Pension settlement
charge - 31,173 - 31,173 Interest expense, net 7,981
12,462 27,499 33,918 Income before provision
for income taxes $ 1,020,000 $ 889,833 $ 2,744,208 $ 2,629,384
The TJX Companies, Inc. and Consolidated
SubsidiariesNotes to Consolidated Condensed Statements
1. During the third quarter ended October 28, 2017, TJX
repurchased 4.9 million shares of its common stock at a cost of
$350 million. For the nine months ended October 28, 2017, TJX
repurchased 16.9 million shares of its common stock at a cost of
$1.25 billion. In February 2017, the Company announced that the
Board of Directors approved an additional $1 billion stock
repurchase program. 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.
2. On September 7, 2016 TJX issued $1.0 billion of 2.250% ten
year notes. The Company used a portion of the proceeds to redeem
its $375 million 6.950% notes prior to their scheduled maturity of
April 15, 2019. On October 12, 2016 the Company completed the
redemption of these notes and recorded a pre-tax loss on the early
extinguishment of debt of $51.8 million.
In addition, during the third quarter ended October 29, 2016 TJX
offered eligible, former TJX Associates, who had not yet commenced
receiving their pension benefit, an opportunity to receive a lump
sum payout of their vested pension benefit. On October 21, 2016 the
Company’s pension plan paid $103.7 million from pension plan assets
to those who accepted this offer, thereby reducing its pension
benefit obligations. The transaction had no cash impact on TJX but
did result in a non-cash pre-tax pension settlement charge of $31.2
million.
The company has presented non-GAAP measures in this earnings
release excluding the impact of these two third quarter
charges.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20171114005999/en/
The TJX Companies, Inc.Debra McConnellGlobal Communications(508)
390-2323
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