The TJX Companies, Inc. Reports Strong 18% Increase in Q2 FY14 EPS; Raises Full-Year Guidance
For the first half of Fiscal 2014, 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 | Net Sales ($ in millions)2,3 | ||||
FY2014 | FY2013 | FY2014 | FY2013 | ||
In the U.S.: | |||||
Marmaxx4,5 | +4% | +7% | $4,295 | $3,976 | |
HomeGoods | +8% | +9% | $690 | $598 | |
International: | |||||
TJX Canada | +2% | +5% | $679 | $661 | |
TJX Europe | +6% | +10% | $778 | $711 | |
TJX | +4% | +7% | $6,442 | $5,946 |
1Comparable store sales outside the U.S. calculated on a
constant currency basis, which removes the effect of changes in currency
exchange rates. 2Sales in
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 affect the magnitude of these translations and adjustments, and can have a material impact 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 second quarter of Fiscal 2014 versus the prior year. The overall net impact of foreign currency exchange rates had a neutral impact on second quarter Fiscal 2014 earnings per share, compared with a neutral 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 Investor Information section of the Company’s website, www.tjx.com.
Margins
For the second quarter of Fiscal 2014, the Company’s consolidated pretax profit margin was 12.0%, up 0.5 percentage points over the prior year.
The gross profit margin for the second quarter of Fiscal 2014 was 28.8%, 0.7 percentage points above last year’s margin. This increase was driven primarily by strong merchandise margin improvement and buying and occupancy expense leverage on the above-plan sales.
Selling, general and administrative costs as a percent of sales were
16.7% in the second quarter, a 0.2 percentage point increase over last
year’s ratio, primarily due to increased investments in marketing and
the Company’s e-commerce businesses, as well as the Company’s
contribution to
Inventory
Total inventories as of
Shareholder Distributions
During the second quarter, the Company repurchased a total of
Third Quarter and Full Year Fiscal 2014 Outlook
For the third quarter of Fiscal 2014, the Company expects diluted
earnings per share to be in the range of
As mentioned above, for the fiscal year ending
The Company’s earnings guidance for the third quarter and full year Fiscal 2014 assumes that currency exchange rates will remain unchanged from current levels.
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.: | ||||||||
T.J. Maxx | 1,047 | 1,052 | 30.5 | 30.6 | ||||
Marshalls | 911 | 914 | 28.2 | 28.3 | ||||
HomeGoods | 426 | 430 | 10.7 | 10.8 | ||||
Sierra Trading Post | 4 | 4 | 0.1 | 0.1 | ||||
TJX Canada: | ||||||||
Winners | 226 | 226 | 6.6 | 6.6 | ||||
HomeSense | 89 | 89 | 2.1 | 2.1 | ||||
Marshalls | 21 | 22 | 0.7 | 0.7 | ||||
TJX Europe: | ||||||||
T.K. Maxx | 352 | 355 | 11.1 | 11.2 | ||||
HomeSense | 24 | 27 | 0.5 | 0.6 | ||||
TJX | 3,100 | 3,119 | 90.4 | 90.9 |
*Square feet figures may not foot due to rounding.
About
Fiscal 2014
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 at the Investor Information section of www.tjx.com after they are no longer available by telephone as well as 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 www.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 expansion and management of large size
and scale; customer trends and preferences; market, banner, geographic
and category expansion; marketing, advertising and promotional programs;
competition; personnel recruitment and retention and costs of labor;
global economic conditions and consumer spending; data security;
information systems and new technology; seasonal influences; adverse or
unseasonable weather; serious disruptions and catastrophic events;
corporate and 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; acquisitions,
business investments and divestitures; 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 |
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Financial Summary |
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(Unaudited) |
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(In Thousands Except Per Share Amounts) |
||||||||||||
13 Weeks Ended | 26 Weeks Ended | |||||||||||
August 3,
2013 |
July 28,
2012 |
August 3,
2013 |
July 28,
2012 |
|||||||||
Net sales | $ | 6,442,424 | $ | 5,945,559 | $ | 12,632,033 | $ | 11,743,645 | ||||
Cost of sales, including buying and occupancy costs | 4,586,739 | 4,275,073 | 9,020,272 | 8,440,801 | ||||||||
Selling, general and administrative expenses | 1,074,320 | 978,514 | 2,093,229 | 1,920,640 | ||||||||
Interest expense, net | 8,919 | 9,182 | 14,201 | 18,009 | ||||||||
Income before provision for income taxes | 772,446 | 682,790 | 1,504,331 | 1,364,195 | ||||||||
Provision for income taxes | 292,887 | 261,698 | 571,882 | 523,903 | ||||||||
Net income | $ | 479,559 | $ | 421,092 | $ | 932,449 | $ | 840,292 | ||||
Diluted earnings per share | $ | 0.66 | $ | 0.56 | $ | 1.28 | $ | 1.11 | ||||
Cash dividends declared per share | $ | 0.145 | $ | 0.115 | $ | 0.29 | $ | 0.23 | ||||
Weighted average common shares – diluted | 728,599 | 751,243 | 730,750 | 753,721 | ||||||||
The TJX Companies, Inc. and Consolidated Subsidiaries |
||||||
Condensed Balance Sheets |
||||||
(Unaudited) |
||||||
(In Millions) |
||||||
August 3, |
July 28, |
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ASSETS | ||||||
Current assets: | ||||||
Cash and cash equivalents | $ | 1,858.8 | $ | 1,620.4 | ||
Short-term investments | 231.2 | 176.3 | ||||
Accounts receivable and other current assets | 580.2 | 452.8 | ||||
Current deferred income taxes, net | 91.5 | 83.5 | ||||
Merchandise inventories | 3,188.5 | 3,007.7 | ||||
Total current assets | 5,950.2 | 5,340.7 | ||||
Property and capital leases, net of depreciation | 3,377.8 | 2,855.8 | ||||
Other assets | 283.9 | 260.1 | ||||
Goodwill and tradename, net of amortization | 314.1 | 180.0 | ||||
TOTAL ASSETS | $ | 9,926.0 | $ | 8,636.6 | ||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||
Current liabilities: | ||||||
Accounts payable | $ | 1,940.3 | $ | 1,863.1 | ||
Accrued expenses and other current liabilities | 1,502.6 | 1,362.4 | ||||
Total current liabilities | 3,442.9 | 3,225.5 | ||||
Other long-term liabilities | 983.5 | 860.1 | ||||
Non-current deferred income taxes, net | 375.3 | 386.5 | ||||
Long-term debt | 1,274.2 | 774.5 | ||||
Shareholders’ equity | 3,850.1 | 3,390.0 | ||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 9,926.0 | $ | 8,636.6 | ||
The TJX Companies, Inc. and Consolidated Subsidiaries |
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Condensed Statements of Cash Flows |
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(Unaudited) |
||||||||
(In Millions) |
||||||||
26 Weeks Ended | ||||||||
August 3, |
July 28, |
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CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net income | $ | 932.4 | $ | 840.3 | ||||
Depreciation and amortization | 266.0 | 246.5 | ||||||
Deferred income tax provision | 42.8 | 30.8 | ||||||
Share-based compensation | 35.7 | 29.9 | ||||||
(Increase) decrease in accounts receivable and other assets | (34.2 | ) | 32.6 | |||||
(Increase) in merchandise inventories | (198.4 | ) | (59.7 | ) | ||||
Increase in accounts payable | 24.3 | 218.6 | ||||||
(Decrease) in accrued expenses and other liabilities | (226.6 | ) | (10.7 | ) | ||||
Other | (30.7 | ) | (20.6 | ) | ||||
Net cash provided by operating activities | 811.3 | 1,307.7 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Property additions | (497.0 | ) | (438.9 | ) | ||||
Purchases of short-term investments | (196.2 | ) | (136.6 | ) | ||||
Sales and maturities of short-term investments | 189.4 | 54.0 | ||||||
Other | 2.7 | 0.5 | ||||||
Net cash (used in) investing activities | (501.1 | ) | (521.0 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Proceeds from issuance of long-term debt | 499.6 | - | ||||||
Payments for repurchase of common stock | (627.6 | ) | (597.0 | ) | ||||
Proceeds from issuance of common stock | 64.3 | 61.3 | ||||||
Cash dividends paid | (187.3 | ) | (155.7 | ) | ||||
Other | 28.9 | 24.5 | ||||||
Net cash (used in) financing activities | (222.1 | ) | (666.9 | ) | ||||
Effect of exchange rate changes on cash | (41.3 | ) | (6.5 | ) | ||||
Net increase in cash and cash equivalents | 46.8 | 113.3 | ||||||
Cash and cash equivalents at beginning of year | 1,812.0 | 1,507.1 | ||||||
Cash and cash equivalents at end of period | $ | 1,858.8 | $ | 1,620.4 | ||||
The TJX Companies, Inc. and Consolidated Subsidiaries |
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Selected Information by Major Business Segment |
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(Unaudited) |
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(In Thousands) |
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13 Weeks Ended | 26 Weeks Ended | ||||||||||||
August 3, 2013 |
July 28,
2012 |
August 3,
2013 |
July 28,
2012 |
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Net sales: | |||||||||||||
In the United States: | |||||||||||||
Marmaxx | $ | 4,295,346 | $ | 3,976,051 | $ 8,431,095 | $ | 7,865,109 | ||||||
HomeGoods | 690,123 | 597,714 | 1,379,653 | 1,193,436 | |||||||||
TJX Canada | 679,364 | 660,703 | 1,324,860 | 1,300,912 | |||||||||
TJX Europe | 777,591 | 711,091 | 1,496,425 | 1,384,188 | |||||||||
Total net sales | $ | 6,442,424 | $ | 5,945,559 | $ 12,632,033 | $ | 11,743,645 | ||||||
Segment profit: | |||||||||||||
In the United States: | |||||||||||||
Marmaxx | $ | 647,978 | $ | 581,379 | $ 1,282,278 | $ | 1,186,007 | ||||||
HomeGoods | 81,170 | 60,531 | 170,233 | 129,964 | |||||||||
TJX Canada | 90,776 | 92,661 | 165,082 | 163,726 | |||||||||
TJX Europe | 40,529 | 24,724 | 56,893 | 36,453 | |||||||||
Total segment profit | 860,453 | 759,295 | 1,674,486 | 1,516,150 | |||||||||
General corporate expenses | 79,088 | 67,323 | 155,954 | 133,946 | |||||||||
Interest expense, net | 8,919 | 9,182 | 14,201 | 18,009 | |||||||||
Income before provision for income taxes | $ | 772,446 | $ | 682,790 | $ 1,504,331 | $ | 1,364,195 | ||||||
Notes to
Consolidated Condensed Statements
-
During the second quarter ended
August 3, 2013 , TJX repurchased 6.4 million shares of its common stock at a cost of$325 million . During the six months endedAugust 3, 2013 , TJX repurchased 12.9 million shares of its common stock at a cost of$625 million . OnFebruary 5, 2013 the Board of Directors approved an additional$1.5 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. -
On
December 21, 2012 TJX purchasedSierra Trading Post (STP), an off-price internet retailer for approximately$200 million , subject to customary post-closing adjustments. The operating results of STP since the date of acquisition are not material and have been included with the Company’s Marmaxx segment. -
On
May 2, 2013 TJX issued$500 million of 2.50% ten year notes. The Company intends to use the proceeds from the notes offering for working capital and other general corporate purposes.
THE
Reconciliation of GAAP and Non-GAAP
measures
The Company reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP). However, management believes that certain non-GAAP financial measures used in managing the business may provide users of this financial information with additional meaningful comparisons between current results and results in prior operating periods. Management believes excluding certain items that impact the overall comparability among periods can provide additional information on underlying trends of the business. Management also uses these non-GAAP financial measures in making financial, operating and planning decisions and in evaluating the Company's performance. The table here provides supplemental financial data and corresponding reconciliations to GAAP financial measures. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the Company’s reported results prepared in accordance with GAAP.
Reconciliation of GAAP Basis Earnings Per Share from Continuing Operations
First Six Months | |||||
FY2014 | FY2013 | FY2012 | |||
Reported EPS | $1.28 | $1.11 | $0.79 | ||
Y/Y Growth | 15% | 41% | |||
Adjusted for non-operating items: | |||||
Impact of A.J. Wright Store Closing | - | - | $0.04 | ||
Store Conversion/Grand Re-Openings Costs | - | - | $0.02 | ||
Adjusted EPS from continuing operations |
$1.28 | $1.11 | $0.84 | ||
Y/Y Growth (Adjusted Basis) | 15% | 32% |
Note: Figures may not foot due to rounding.
Source:
The TJX Companies, Inc.
Sherry Lang or Debra McConnell
Global
Communications
(508) 390-2323