The TJX Companies, Inc. Reports Above-Plan Q2 FY18 Results with 3% Comp Sales Growth and EPS of $.85; Raises Full Year Guidance
-
Net sales increased 6% to
$8.4 billion over last year’s 7% increase - Consolidated comp store sales increased 3% over last year’s 4% increase
-
Diluted EPS of
$.85 compared with$.84 in the prior year -
EPS results include a
$.04 negative impact from foreign currency exchange rates this year, compared with a$.03 positive impact last year -
The Company now estimates Fiscal 2018 diluted GAAP EPS to be in the
range of
$3.89 to $3.93 and adjusted EPS to be in the range of$3.78 to$3.82 , which excludes an expected benefit of$.11 per share from the 53rd week in the Company’s Fiscal 2018 calendar -
Returned
$751 million to shareholders in the second quarter through share repurchases and dividends
For the first half of Fiscal 2018, net sales were
Sales by Business Segment
The Company’s comparable store sales and net sales by division, in the second quarter, were as follows:
Second Quarter | Second Quarter | |||||||||||
Comparable Store Sales1,2 | Net Sales ($ in millions)3,4 | |||||||||||
FY2018 | FY2017 | FY2018 | FY2017 | |||||||||
Marmaxx5,6 | +2% | +4% | $5,285 | $5,099 | ||||||||
HomeGoods | +7% | +5% | $1,156 | $987 | ||||||||
TJX Canada | +7% | +9% | $832 | $757 | ||||||||
TJX International (Europe & Australia) | +1% | +2% | $1,085 | $1,040 | ||||||||
TJX | +3% | +4% | $8,358 | $7,882 |
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
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 second quarter of Fiscal 2018, the movement in foreign currency
exchange rates had a one percentage point negative impact on
consolidated net sales growth. The overall net impact of foreign
currency exchange rates had a
For the first six months of Fiscal 2018, the movement in foreign
currency exchange rates had a one percentage point negative impact on
consolidated net sales growth. The overall net impact of foreign
currency exchange rates had a
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 second quarter of Fiscal 2018, the Company’s consolidated pretax profit margin was 10.7%, a 0.9 percentage point decrease compared with the prior year.
Gross profit margin for the second quarter of Fiscal 2018 was 28.5%, down 0.9 percentage points versus the prior year. This was primarily due to losses related to the Company’s inventory hedges. Importantly, merchandise margin increased again this quarter.
Selling, general and administrative costs as a percent of sales were 17.8%, up 0.1 percentage points versus the prior year’s ratio, primarily due to wage increases, as the Company had anticipated.
Inventory
Total inventories as of
Shareholder Distributions
During the second quarter, the Company repurchased a total of
Third Quarter and Full Year Fiscal 2018 Outlook
For the third quarter of Fiscal 2018, the Company expects diluted
earnings per share to be in the range of
For the 53-week fiscal year ending
The Company’s earnings guidance for the third quarter and full year Fiscal 2018 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
Store Locations* | Gross Square Feet** | |||||||||||
Second Quarter | Second Quarter | |||||||||||
(in millions) | ||||||||||||
Beginning | End | Beginning | End | |||||||||
In the U.S.: | ||||||||||||
TJ Maxx | 1,191 | 1,194 | 33.6 | 33.6 | ||||||||
Marshalls | 1,039 | 1,043 | 30.9 | 30.9 | ||||||||
HomeGoods | 596 | 619 | 14.5 | 14.9 | ||||||||
Sierra Trading Post | 12 | 16 | 0.3 | 0.4 | ||||||||
In Canada: | ||||||||||||
Winners | 258 | 258 | 7.2 | 7.2 | ||||||||
HomeSense | 109 | 112 | 2.6 | 2.6 | ||||||||
Marshalls | 61 | 63 | 1.8 | 1.8 | ||||||||
In Europe: | ||||||||||||
TK Maxx | 515 | 522 | 15.3 | 15.5 | ||||||||
Homesense | 46 | 51 | 0.9 | 1.1 | ||||||||
In Australia: | ||||||||||||
TK Maxx | 35 | 35 | 0.8 | 0.8 | ||||||||
TJX | 3,862 | 3,913 | 107.8 | 108.7 |
*Store counts above include both banners within a combo or a superstore.
**Square
feet figures may not foot due to rounding.
About
Fiscal 2018
At
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
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
The TJX Companies, Inc. and Consolidated Subsidiaries Financial Summary (Unaudited) (In Thousands Except Per Share Amounts) |
||||||||||||||||
13 Weeks Ended | 26 Weeks Ended | |||||||||||||||
July 29,
2017 |
July 30,
2016 |
July 29,
2017 |
July 30, 2016 |
|||||||||||||
Net sales | $ | 8,357,700 | $ | 7,882,053 | $ | 16,141,724 | $ | 15,424,409 | ||||||||
Cost of sales, including buying and occupancy costs | 5,972,675 | 5,562,961 | 11,502,747 | 10,935,104 | ||||||||||||
Selling, general and administrative expenses | 1,483,648 | 1,393,248 | 2,895,251 | 2,728,298 | ||||||||||||
Interest expense, net | 9,677 | 11,262 | 19,518 | 21,456 | ||||||||||||
Income before provision for income taxes | 891,700 | 914,582 | 1,724,208 | 1,739,551 | ||||||||||||
Provision for income taxes | 338,743 | 352,408 | 634,972 | 669,031 | ||||||||||||
Net income | $ | 552,957 | $ | 562,174 | $ | 1,089,236 | $ | 1,070,520 | ||||||||
Diluted earnings per share | $ | 0.85 | $ | 0.84 | $ | 1.67 | $ | 1.60 | ||||||||
Cash dividends declared per share | $ | 0.3125 | $ | 0.26 | $ | 0.625 | $ | 0.52 | ||||||||
Weighted average common shares – diluted | 648,317 | 666,606 | 651,892 | 668,754 | ||||||||||||
The TJX Companies, Inc. and Consolidated Subsidiaries Condensed Balance Sheets (Unaudited) (In Millions) |
||||||||
July 29,
2017 |
July 30, |
|||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 2,449.3 | $ | 1,803.6 | ||||
Short-term investments | 502.8 | 421.2 | ||||||
Accounts receivable and other current assets | 751.3 | 715.3 | ||||||
Merchandise inventories | 3,864.4 | 3,870.6 | ||||||
Total current assets | 7,567.8 | 6,810.7 | ||||||
Property, net of depreciation | 4,744.7 | 4,263.4 | ||||||
Goodwill | 197.5 | 196.0 | ||||||
Other assets | 425.6 | 400.6 | ||||||
TOTAL ASSETS | $ | 12,935.6 | $ | 11,670.7 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 2,346.5 | $ | 2,258.3 | ||||
Accrued expenses and other current liabilities | 2,310.0 | 2,055.9 | ||||||
Total current liabilities | 4,656.5 | 4,314.2 | ||||||
Other long-term liabilities | 1,116.5 | 929.0 | ||||||
Non-current deferred income taxes, net | 392.7 | 360.2 | ||||||
Long-term debt | 2,229.1 | 1,615.9 | ||||||
Shareholders’ equity | 4,540.8 | 4,451.4 | ||||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 12,935.6 | $ | 11,670.7 | ||||
The TJX Companies, Inc. and Consolidated Subsidiaries Condensed Statements of Cash Flows (Unaudited) (In Millions) |
||||||||||
26 Weeks Ended | ||||||||||
July 29,
2017 |
July 30, |
|||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||
Net income | $ | 1,089.2 | $ | 1,070.5 | ||||||
Depreciation and amortization | 348.1 | 324.8 | ||||||||
Deferred income tax provision | 38.9 | 47.1 | ||||||||
Share-based compensation | 49.5 | 50.0 | ||||||||
(Increase) in accounts receivable and other assets | (109.3 | ) | (92.5 | ) | ||||||
(Increase) in merchandise inventories | (168.8 | ) | (190.9 | ) | ||||||
Increase in accounts payable | 84.6 | 62.2 | ||||||||
(Decrease) in accrued expenses and other liabilities | (270.1 | ) | (37.6 | ) | ||||||
Other | 40.9 | (50.0 | ) | |||||||
Net cash provided by operating activities | 1,103.0 | 1,183.6 | ||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||
Property additions | (506.9 | ) | (508.4 | ) | ||||||
Purchases of investments | (426.5 | ) | (380.3 | ) | ||||||
Sales and maturities of investments | 480.6 | 323.5 | ||||||||
Other | - | (2.3 | ) | |||||||
Net cash (used in) investing activities | (452.8 | ) | (567.5 | ) | ||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||
Payments for repurchase of common stock | (884.7 | ) | (756.2 | ) | ||||||
Proceeds from issuance of common stock | 60.8 | 90.0 | ||||||||
Cash dividends paid | (369.5 | ) | (311.5 | ) | ||||||
Other | (18.3 | ) | 24.8 | |||||||
Net cash (used in) financing activities | (1,211.7 | ) | (952.9 | ) | ||||||
Effect of exchange rate changes on cash | 81.0 | 45.0 | ||||||||
Net (decrease) in cash and cash equivalents | (480.5 | ) | (291.8 | ) | ||||||
Cash and cash equivalents at beginning of year | 2,929.8 | 2,095.4 | ||||||||
Cash and cash equivalents at end of period | $ | 2,449.3 | $ | 1,803.6 | ||||||
The TJX Companies, Inc. and Consolidated Subsidiaries Selected Information by Major Business Segment (Unaudited) (In Thousands) |
||||||||||||||||
13 Weeks Ended | 26 Weeks Ended | |||||||||||||||
July 29,
2017 |
July 30,
2016 |
July 29,
2017 |
July 30,
2016 |
|||||||||||||
Net sales: | ||||||||||||||||
In the United States: | ||||||||||||||||
Marmaxx | $ | 5,284,639 | $ | 5,098,998 | $ | 10,251,774 | $ | 9,964,373 | ||||||||
HomeGoods | 1,156,398 | 986,663 | 2,277,667 | 1,997,099 | ||||||||||||
TJX Canada | 832,026 | 756,781 | 1,570,797 | 1,442,358 | ||||||||||||
TJX International | 1,084,637 | 1,039,611 | 2,041,486 | 2,020,579 | ||||||||||||
Total net sales | $ | 8,357,700 | $ | 7,882,053 | $ | 16,141,724 | $ | 15,424,409 | ||||||||
Segment profit: | ||||||||||||||||
In the United States: | ||||||||||||||||
Marmaxx | $ | 746,881 | $ | 742,289 | $ | 1,434,046 | $ | 1,451,146 | ||||||||
HomeGoods | 141,345 | 128,047 | 293,437 | 266,257 | ||||||||||||
TJX Canada | 83,229 | 121,979 | 186,109 | 179,451 | ||||||||||||
TJX International | 38,967 | 42,879 | 45,827 | 57,226 | ||||||||||||
Total segment profit | 1,010,422 | 1,035,194 | 1,959,419 | 1,954,080 | ||||||||||||
General corporate expense | 109,045 | 109,350 | 215,693 | 193,073 | ||||||||||||
Interest expense, net | 9,677 | 11,262 | 19,518 | 21,456 | ||||||||||||
Income before provision for income taxes | $ | 891,700 | $ | 914,582 | $ | 1,724,208 | $ | 1,739,551 | ||||||||
Notes to
Consolidated Condensed Statements
1. During the second quarter ended
2. In
View source version on businesswire.com: http://www.businesswire.com/news/home/20170815005564/en/
Source:
The TJX Companies, Inc.
Debra McConnell
Global Communications
(508)
390-2323