The TJX Companies, Inc. Reports Above-Plan Q4 and FY16 Results; Q4 Comp Sales up 6% and EPS up 6%; Announces Plans to Increase Dividend 24% and Buy Back $1.5B to $2.0B of Stock; Provides FY17 Guidance
For the 52-week fiscal year ended
Herrman continued, “The year is off to a strong start and we have many
initiatives planned to continue driving sales and traffic. Our business
is very healthy, and similar to last year, our plans for earnings per
share growth reflect the negative impact of foreign currency and our
previously announced wage initiative. We plan to continue to balance our
growth with investments, develop new seeds for growth, and strengthen
our leadership positions across the globe. We now operate in nine
countries, across three continents, and are excited about the
opportunities we see both in our existing regions and new international
markets. As always, we have a management team that is laser focused on
achieving its plans and passionate about surpassing them. We are
confident that we are making the right decisions and investments today
that position us extremely well to continue capturing market share and
reach
Shareholder Distributions
The Company intends to increase the regular quarterly dividend on its
common stock to be declared in
The Company also announced today its plan to repurchase approximately
Sales by Business Segment
The Company’s comparable store sales and net sales by division, in the fourth quarter, were as follows:
Fourth Quarter | Fourth Quarter | |||||||||||
Comparable Store Sales1,2 | Net Sales ($ in millions)3,4 | |||||||||||
FY2016 | FY2015 | FY2016 | FY2015 | |||||||||
Marmaxx (U.S.)5,6 | +6% | +3% | $5,720 | $5,286 | ||||||||
HomeGoods (U.S.) | +7% | +11% | $1,180 | $1,033 | ||||||||
TJX Canada | +14% | +7% | $781 | $788 | ||||||||
TJX International (Europe & Australia)7 | +1% | +2% | $1,280 | $1,198 | ||||||||
TJX | +6% | +4% | $8,962 | $8,304 | ||||||||
|
1Comparable store sales outside the U.S. calculated on a
constant currency basis, which removes the effect of changes in currency
exchange rates. 2Comparable store sales exclude
Sales by Business Segment (continued)
The Company’s comparable store sales and net sales by division for the full year were as follows:
Full Year | Full Year | |||||||||||
Comparable Store Sales1,2 | Net Sales ($ in millions)3,4 | |||||||||||
FY2016 | FY2015 | FY2016 | FY2015 | |||||||||
Marmaxx (U.S.)5,6 | +4% | +1% | $19,948 | $18,688 | ||||||||
HomeGoods (U.S.) | +8% | +7% | $3,915 | $3,414 | ||||||||
TJX Canada | +12% | +3% | $2,855 | $2,884 | ||||||||
TJX International (Europe & Australia)7 | +4% | +3% | $4,227 | $4,092 | ||||||||
TJX | +5% | +2% | $30,945 | $29,078 | ||||||||
|
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.
The movement in foreign currency exchange rates had a three percentage
point negative impact on consolidated net sales growth in the fourth
quarter of Fiscal 2016 versus the prior year. The overall net impact of
foreign currency exchange rates had a neutral impact on fourth quarter
Fiscal 2016 earnings per share, compared with a
The movement in foreign currency exchange rates had a three percentage
point negative impact on consolidated net sales growth for the full
Fiscal 2016 year versus the prior year. The overall net impact of
foreign currency exchange rates had an
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 Investor Information section of the Company’s website, 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 fourth quarter of Fiscal 2016, the Company’s consolidated pretax profit margin was 11.9%, a 0.5 percentage point decrease compared with the prior year.
Gross profit margin for the fourth quarter of Fiscal 2016 was 28.7%, up
0.5 percentage points versus the prior year. The increase was primarily
driven by an increase in merchandise margin and strong buying and
occupancy leverage on the 6% comp growth. This was partially offset by
the negative impact of transactional foreign exchange at
Selling, general and administrative costs as a percent of sales were 16.7%, up 1.0 percentage points versus the prior year’s ratio, primarily due to the Company’s wage initiative, as the Company had anticipated, as well as contributions to TJX’s charitable foundations, higher incentive compensation accruals due to the Company’s above-plan performance and increased supply chain costs.
For the full year Fiscal 2016, the Company’s consolidated pretax profit margin was 11.8%, a 0.5 percentage point decrease compared with the prior year’s adjusted 12.3%. The gross profit margin for Fiscal 2016 was 28.8%, a 0.3 percentage point increase versus the prior year, and merchandise margins increased. Selling, general and administrative costs as a percent of sales were 16.8%, up 0.7 percentage points versus the prior year’s ratio, primarily due to the Company’s wage initiative and increased supply chain costs.
Inventory
Total inventories as of
Full Year and First Quarter Fiscal 2017 Outlook
For the fiscal year ending
For the first quarter of Fiscal 2017, the Company expects diluted
earnings per share to be in the range of
The Company’s earnings guidance for the first quarter and full year Fiscal 2017 assumes that currency exchange rates will remain unchanged from the levels at the beginning of the first quarter.
Stores by Concept
During the fiscal year ended
Store Locations | Gross Square Feet* | |||||||||||
FY2016 | FY2016 | |||||||||||
(in millions) | ||||||||||||
Beginning | End | Beginning | End | |||||||||
In the U.S.: | ||||||||||||
T.J. Maxx | 1,119 | 1,156 | 32.1 | 32.9 | ||||||||
Marshalls | 975 | 1,007 | 29.7 | 30.4 | ||||||||
HomeGoods | 487 | 526 | 12.1 | 13.0 | ||||||||
Sierra Trading Post | 6 | 8 | 0.2 | 0.2 | ||||||||
In Canada: | ||||||||||||
Winners | 234 | 245 | 6.7 | 6.9 | ||||||||
HomeSense | 96 | 101 | 2.3 | 2.4 | ||||||||
Marshalls | 38 | 41 | 1.2 | 1.2 | ||||||||
In Europe: | ||||||||||||
T.K. Maxx | 407 | 456 | 12.6 | 13.8 | ||||||||
HomeSense | 33 | 39 | 0.7 | 0.8 | ||||||||
In Australia: | ||||||||||||
Trade Secret | N/A | 35 | N/A | 0.8 | ||||||||
TJX | 3,395 | 3,614 | 97.5 | 102.6 | ||||||||
*Square feet figures may not foot due to rounding.
About
Fourth Quarter and Fiscal 2016 Earnings Conference Call
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 Investor Information 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 Investor Information 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; marketing,
advertising and promotional programs; competition; personnel
recruitment, training and retention; labor costs and workforce
challenges; economic conditions and consumer spending; data security;
information systems and new technology; adverse or unseasonable weather;
serious disruptions or catastrophic events; seasonal influences;
corporate and retail banner reputation; merchandise quality and safety;
expanding international operations; merchandise importing; commodity
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;
changes in laws and regulations; outcomes of litigation, legal matters
and proceedings; 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 |
||||||||||||||||
13 Weeks Ended | 52 Weeks Ended | |||||||||||||||
January 30, |
January 31, |
January 30, |
January 31, |
|||||||||||||
Net sales | $ | 8,962,075 | $ | 8,303,953 | $ | 30,944,938 | $ | 29,078,407 | ||||||||
Cost of sales, including buying and occupancy costs | 6,388,192 | 5,959,037 | 22,034,523 | 20,776,522 | ||||||||||||
Selling, general and administrative expenses | 1,497,119 | 1,306,279 | 5,205,715 | 4,695,384 | ||||||||||||
Loss on early extinguishment of debt | - | - | - | 16,830 | ||||||||||||
Interest expense, net | 10,963 | 9,002 | 46,400 | 39,787 | ||||||||||||
Income before provision for income taxes | 1,065,801 | 1,029,635 | 3,658,300 | 3,549,884 | ||||||||||||
Provision for income taxes | 399,335 | 381,405 | 1,380,642 | 1,334,756 | ||||||||||||
Net income | $ | 666,466 | $ | 648,230 | $ | 2,277,658 | $ | 2,215,128 | ||||||||
Diluted earnings per share | $ | 0.99 | $ | 0.93 | $ | 3.33 | $ | 3.15 | ||||||||
Cash dividends declared per share | $ | 0.21 | $ | 0.175 | $ | 0.84 | $ | 0.70 | ||||||||
Weighted average common shares – diluted | 674,676 | 695,928 | 683,251 | 703,545 | ||||||||||||
The TJX Companies, Inc. and Consolidated Subsidiaries |
|||||||||
January 30, |
January 31, |
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ASSETS | |||||||||
Current assets: | |||||||||
Cash and cash equivalents | $ | 2,095.5 | $ | 2,493.8 | |||||
Short-term investments | 352.3 | 282.6 | |||||||
Accounts receivable and other current assets | 629.7 | 583.1 | |||||||
Merchandise inventories | 3,695.1 | 3,217.9 | |||||||
Total current assets | 6,772.6 | 6,577.4 | |||||||
Property, net of depreciation | 4,159.9 | 3,868.4 | |||||||
Other assets | 209.4 | 210.5 | |||||||
Non-current deferred income taxes, net | 13.8 | 22.6 | |||||||
Goodwill and tradename, net of amortization | 343.8 | 309.9 | |||||||
TOTAL ASSETS | $ | 11,499.5 | $ | 10,988.8 | |||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||
Current liabilities: | |||||||||
Accounts payable | $ | 2,203.0 | $ | 2,007.5 | |||||
Accrued expenses and other current liabilities | 2,199.2 | 1,922.1 | |||||||
Total current liabilities | 4,402.2 | 3,929.6 | |||||||
Other long-term liabilities | 881.0 | 888.2 | |||||||
Non-current deferred income taxes, net | 285.1 | 282.9 | |||||||
Long-term debt | 1,624.1 | 1,623.9 | |||||||
Shareholders’ equity | 4,307.1 | 4,264.2 | |||||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 11,499.5 | $ | 10,988.8 | |||||
The TJX Companies, Inc. and Consolidated Subsidiaries |
|||||||||||
52 Weeks Ended | |||||||||||
January 30, |
January 31, |
||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||
Net income | $ | 2,277.7 | $ | 2,215.1 | |||||||
Depreciation and amortization | 616.7 | 589.0 | |||||||||
Loss on early extinguishment of debt | - | 16.8 | |||||||||
Deferred income tax provision | 31.2 | 102.1 | |||||||||
Share-based compensation | 94.1 | 88.0 | |||||||||
(Increase) in accounts receivable and other assets | (67.5 | ) | (17.8 | ) | |||||||
(Increase) in merchandise inventories | (506.6 | ) | (332.3 | ) | |||||||
Increase in accounts payable | 216.3 | 285.2 | |||||||||
Increase in accrued expenses and other liabilities | 352.9 | 165.8 | |||||||||
Other | (54.9 | ) | (103.5 | ) | |||||||
Net cash provided by operating activities | 2,959.9 | 3,008.4 | |||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||
Property additions | (911.9 | ) | (911.5 | ) | |||||||
Cash paid for acquisition of Trade Secret | (57.1 | ) | - | ||||||||
Purchases of investments | (798.0 | ) | (431.2 | ) | |||||||
Sales and maturities of investments | 681.4 | 388.0 | |||||||||
Net cash (used in) investing activities | (1,085.6 | ) | (954.7 | ) | |||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||
Proceeds from issuance of long-term debt | - | 749.5 | |||||||||
Payments on early extinguishment of debt | - | (416.4 | ) | ||||||||
Payments for repurchase of common stock | (1,828.3 | ) | (1,650.7 | ) | |||||||
Proceeds from issuance of common stock | 132.0 | 143.0 | |||||||||
Cash dividends paid | (544.3 | ) | (465.9 | ) | |||||||
Other | 64.7 | 81.0 | |||||||||
Net cash (used in) financing activities | (2,175.9 | ) | (1,559.5 | ) | |||||||
Effect of exchange rate changes on cash | (96.7 | ) | (150.1 | ) | |||||||
Net (decrease) increase in cash and cash equivalents | (398.3 | ) | 344.1 | ||||||||
Cash and cash equivalents at beginning of year | 2,493.8 | 2,149.7 | |||||||||
Cash and cash equivalents at end of year | $ | 2,095.5 | $ | 2,493.8 | |||||||
The TJX Companies, Inc. and Consolidated Subsidiaries |
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13 Weeks Ended | 52 Weeks Ended | ||||||||||||||||
January 30, |
January 31, |
January 30, |
January 31, |
||||||||||||||
Net sales: | |||||||||||||||||
In the United States: | |||||||||||||||||
Marmaxx | $ | 5,720,427 | $ | 5,285,529 | $ | 19,948,227 | $ | 18,687,880 | |||||||||
HomeGoods | 1,179,806 | 1,033,083 | 3,915,221 | 3,414,351 | |||||||||||||
TJX Canada | 781,428 | 787,794 | 2,854,617 | 2,883,863 | |||||||||||||
TJX International | 1,280,414 | 1,197,547 | 4,226,873 | 4,092,313 | |||||||||||||
Total net sales | $ | 8,962,075 | $ | 8,303,953 | $ | 30,944,938 | $ | 29,078,407 | |||||||||
Segment profit: | |||||||||||||||||
In the United States: | |||||||||||||||||
Marmaxx | $ | 812,588 | $ | 748,077 | $ | 2,858,780 | $ | 2,736,694 | |||||||||
HomeGoods | 181,334 | 152,431 | 549,318 | 463,193 | |||||||||||||
TJX Canada | 97,301 | 118,095 | 375,306 | 393,622 | |||||||||||||
TJX International | 124,420 | 128,218 | 316,939 | 337,406 | |||||||||||||
Total segment profit | 1,215,643 | 1,146,821 | 4,100,343 | 3,930,915 | |||||||||||||
General corporate expense | 138,879 | 108,184 | 395,643 | 324,414 | |||||||||||||
Loss on early extinguishment of debt | - | - | - | 16,830 | |||||||||||||
Interest expense, net | 10,963 | 9,002 | 46,400 | 39,787 | |||||||||||||
Income before provision for income taxes | $ | 1,065,801 | $ | 1,029,635 | $ | 3,658,300 | $ | 3,549,884 | |||||||||
Notes to
Consolidated Condensed Statements
1. During the fourth quarter ended
2. On
3. During last year’s second quarter, the Company issued
View source version on businesswire.com: http://www.businesswire.com/news/home/20160224005790/en/
Source:
The TJX Companies, Inc.
Debra McConnell
Global Communications
(508)
390-2323