The TJX Companies, Inc. Reports First Quarter Fiscal 2015 Results
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 | Net Sales ($ in millions)2,3 | |||||||
| FY2015 | FY2014 | FY2015 | FY2014 | |||||
| In the U.S.: | ||||||||
| Marmaxx4,5 | 0% | +1% | $4,235 | $4,136 | ||||
| HomeGoods | +3% | +7% | $757 | $690 | ||||
| International: | ||||||||
| TJX Canada | -1% | -1% | $608 | $645 | ||||
| TJX Europe | +8% | +4% | $891 | $719 | ||||
| TJX | +1% | +2% | $6,491 | $6,190 | ||||
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 neutral impact on
consolidated net sales growth in the first quarter of Fiscal 2015 versus
the prior year. 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 Investor Information section of the Company’s website, tjx.com.
Margins
For the first quarter of Fiscal 2015, the Company’s consolidated pretax profit margin was 11.3%, a 0.5 percentage point decrease compared with the prior year’s 11.8% margin. Gross profit margin for the first quarter of Fiscal 2015 was 27.9%, down 0.5 percentage points versus the prior year. This decline was primarily due to lower merchandise margins versus strong improvement last year and expense deleverage on the 1% consolidated comparable store sales increase. Selling, general and administrative costs as a percent of sales were 16.5%, unchanged from the prior year.
Inventory
Total inventories as of
Shareholder Distributions
During the first quarter, the Company repurchased a total of
Second Quarter and Full Year Fiscal 2015 Outlook
For the second quarter of Fiscal 2015, the Company expects diluted
earnings per share to be in the range of
The Company is updating its full year guidance to reflect its first
quarter results. For the fiscal year ending
The Company’s earnings guidance for the second quarter and full year Fiscal 2015 assumes that currency exchange rates will remain unchanged from current levels.
Stores by Concept
During the first quarter ended
| Store Locations | Gross Square Feet* | |||||||
| First Quarter | First Quarter | |||||||
| (in millions) | ||||||||
| Beginning | End | Beginning | End | |||||
| In the U.S.: | ||||||||
| T.J. Maxx | 1,079 | 1,085 | 31.2 | 31.3 | ||||
| Marshalls | 942 | 947 | 28.9 | 29.0 | ||||
| HomeGoods | 450 | 458 | 11.3 | 11.4 | ||||
| Sierra Trading Post | 4 | 4 | 0.1 | 0.1 | ||||
| TJX Canada: | ||||||||
| Winners | 227 | 230 | 6.6 | 6.7 | ||||
| HomeSense | 91 | 92 | 2.2 | 2.2 | ||||
| Marshalls | 27 | 32 | 0.8 | 1.0 | ||||
| TJX Europe: | ||||||||
| T.K. Maxx | 371 | 380 | 11.6 | 11.9 | ||||
| HomeSense | 28 | 28 | 0.6 | 0.6 | ||||
| TJX | 3,219 | 3,256 | 93.3 | 94.3 | ||||
*Square feet figures may not foot due to rounding.
About
Fiscal 2015
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 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 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
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 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
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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) |
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| 13 Weeks Ended | ||||||
| May 3, 2014 | May 4, 2013 | |||||
| Net sales | $ | 6,491,176 | $ | 6,189,609 | ||
| Cost of sales, including buying and occupancy costs | 4,678,000 | 4,433,533 | ||||
| Selling, general and administrative expenses | 1,073,050 | 1,018,909 | ||||
| Interest expense, net | 9,595 | 5,282 | ||||
| Income before provision for income taxes | 730,531 | 731,885 | ||||
| Provision for income taxes | 276,214 | 278,995 | ||||
| Net income | $ | 454,317 | $ | 452,890 | ||
| Diluted earnings per share | $ | 0.64 | $ | 0.62 | ||
| Cash dividends declared per share | $ | 0.175 | $ | 0.145 | ||
| Weighted average common shares – diluted | 712,902 | 732,555 | ||||
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The TJX Companies, Inc. and Consolidated Subsidiaries |
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|
Condensed Balance Sheets |
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|
(Unaudited) |
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|
(In Millions) |
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|
May 3, |
May 4, |
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| ASSETS | ||||||
| Current assets: | ||||||
| Cash and cash equivalents | $ | 2,059.3 | $ | 1,989.8 | ||
| Short-term investments | 259.9 | 238.0 | ||||
| Accounts receivable and other current assets | 574.7 | 549.1 | ||||
| Current deferred income taxes, net | 133.1 | 107.7 | ||||
| Merchandise inventories | 3,208.5 | 3,091.5 | ||||
| Total current assets | 6,235.5 | 5,976.1 | ||||
| Property, net of depreciation | 3,645.6 | 3,273.3 | ||||
| Other assets | 236.7 | 278.0 | ||||
| Goodwill and tradename, net of amortization | 312.1 | 313.0 | ||||
| TOTAL ASSETS | $ | 10,429.9 | $ | 9,840.4 | ||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||
| Current liabilities: | ||||||
| Accounts payable | $ | 1,956.4 | $ | 1,846.6 | ||
| Accrued expenses and other current liabilities | 1,748.9 | 1,652.0 | ||||
| Total current liabilities | 3,705.3 | 3,498.6 | ||||
| Other long-term liabilities | 691.9 | 936.8 | ||||
| Non-current deferred income taxes, net | 475.0 | 368.2 | ||||
| Long-term debt | 1,274.2 | 1,274.1 | ||||
| Shareholders’ equity | 4,283.5 | 3,762.7 | ||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 10,429.9 | $ | 9,840.4 | ||
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The TJX Companies, Inc. and Consolidated Subsidiaries |
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|
Condensed Statements of Cash Flows |
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|
(Unaudited) |
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|
(In Millions) |
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| 13 Weeks Ended | ||||||||
|
May 3, |
May 4, |
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| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net income | $ | 454.3 | $ | 452.9 | ||||
| Depreciation and amortization | 144.2 | 130.5 | ||||||
| Deferred income tax provision | (6.7 | ) | 8.7 | |||||
| Share-based compensation | 19.8 | 16.5 | ||||||
| (Increase) in accounts receivable and other assets | (26.2 | ) | (5.4 | ) | ||||
| (Increase) in merchandise inventories | (226.0 | ) | (84.9 | ) | ||||
| Increase (decrease) in accounts payable | 175.4 | (79.0 | ) | |||||
| (Decrease) in accrued expenses and other liabilities | (46.6 | ) | (148.5 | ) | ||||
| Other | (14.4 | ) | (10.1 | ) | ||||
| Net cash provided by operating activities | 473.8 | 280.7 | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Property additions | (193.4 | ) | (238.5 | ) | ||||
| Purchases of short-term investments | (81.8 | ) | (80.7 | ) | ||||
| Sales and maturities of short-term investments | 120.1 | 75.0 | ||||||
| Other | - | 2.6 | ||||||
| Net cash (used in) investing activities | (155.1 | ) | (241.6 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Proceeds from issuance of long-term debt | - | 499.6 | ||||||
| Payments for repurchase of common stock | (360.0 | ) | (302.6 | ) | ||||
| Proceeds from sale and issuance of common stock | 20.5 | 34.7 | ||||||
| Cash dividends paid | (102.1 | ) | (83.2 | ) | ||||
| Other | 12.8 | 10.6 | ||||||
| Net cash (used in) provided by financing activities | (428.8 | ) | 159.1 | |||||
| Effect of exchange rate changes on cash | 19.7 | (20.4 | ) | |||||
| Net (decrease) increase in cash and cash equivalents | (90.4 | ) | 177.8 | |||||
| Cash and cash equivalents at beginning of year | 2,149.7 | 1,812.0 | ||||||
| Cash and cash equivalents at end of period | $ | 2,059.3 | $ | 1,989.8 | ||||
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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 | ||||||
| May 3, 2014 | May 4, 2013 | |||||
| Net sales: | ||||||
| In the United States: | ||||||
| Marmaxx | $ | 4,234,755 | $ | 4,135,749 | ||
| HomeGoods | 757,152 | 689,530 | ||||
| TJX Canada | 608,420 | 645,496 | ||||
| TJX Europe | 890,849 | 718,834 | ||||
| Total net sales | $ | 6,491,176 | $ | 6,189,609 | ||
| Segment profit: | ||||||
| In the United States: | ||||||
| Marmaxx | $ | 623,074 | $ | 634,300 | ||
| HomeGoods | 98,205 | 89,063 | ||||
| TJX Canada | 44,023 | 74,306 | ||||
| TJX Europe | 38,261 | 16,364 | ||||
| Total segment profit | 803,563 | 814,033 | ||||
| General corporate expenses | 63,437 | 76,866 | ||||
| Interest expense, net | 9,595 | 5,282 | ||||
| Income before provision for income taxes | $ | 730,531 | $ | 731,885 | ||
Notes to
Consolidated Condensed Statements
-
During the first quarter ended
May 3, 2014 , TJX repurchased 6.0 million shares of its common stock at a cost of$360 million . As ofMay 3, 2014 , there was$610 million remaining under the current$1.5 billion stock repurchase program approved inFebruary 2013 and onJanuary 31, 2014 the Company’s Board of Directors approved an additional$2 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
May 2, 2013 TJX issued$500 million of 2.50% ten year notes. The Company used the proceeds from the notes offering for working capital and other general corporate purposes.
Reconciliation of GAAP and Non-GAAP measures
The Company reports its financial results in accordance with accounting principles generally accepted in the U.S. (GAAP). However, management believes that certain non-GAAP financial measures used in managing the business may provide users of this financial information additional meaningful comparisons between current results and results in prior operating periods and expectations for future periods. Management believes that these non-GAAP financial measures can provide additional meaningful reflection of underlying trends of the business because they provide a comparison of historical information that excludes certain items that impact overall comparability. Management also uses these non-GAAP financial measures in making financial, operating and planning decisions and in evaluating the Company's performance. The tables below provide supplemental non-GAAP 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.
Presented below is a reconciliation of reported and estimated earnings per share:
| FY 14 | FY 15 | |||||
| Actual | Guidance | |||||
| Low | High | |||||
| Diluted earnings per share, net income | $2.94 | $3.05 | $3.17 | |||
| year-over-year growth | 15% | 4% | 8% | |||
| Adjustments for items impacting comparability: | ||||||
| Tax benefits(1) | (0.11) | - | - | |||
| Adjusted diluted earnings per share, net income | $2.83 | $3.05 | $3.17 | |||
| year-over-year growth (adjusted basis) | 15% | 8% | 12% | |||
(1) Due to reversal of state, federal and foreign tax reserves and allowances.
Source:
The TJX Companies, Inc.
Debra McConnell
Global Communications
(508)
390-2323