The TJX Companies, Inc. Reports Above-Plan Q2 FY19 Results with Comp Sales Growth of 6% and EPS of $1.17; Raises Full-Year EPS and Comp Guidance
- Consolidated comp store sales increased 6% over last year’s 3% increase
-
Net sales increased 12% to
$9.3 billion over last year’s 6% increase -
Diluted EPS of
$1.17 compared with$.85 in the prior year - Customer traffic was the primary driver of the comp sales increases at every division
- Increased full-year Fiscal 2019 diluted EPS and comparable store sales guidance
-
Returned
$844 million to shareholders in the second quarter through share repurchases and dividends
For the first half of Fiscal 2019, net sales were
Sales by Business Segment
The Company’s comparable store sales and net sales by division, in the second quarter, were as follows:
Second Quarter |
Second Quarter | |||||||||||||
Comparable Store Sales1,2 | Net Sales ($ in millions)3,4 | |||||||||||||
FY2019 | FY2018 | FY2019 | FY2018 | |||||||||||
Marmaxx5,6 | +7% | +2% | $5,848 | $5,285 | ||||||||||
HomeGoods7 | +3% | +7% | $1,327 | $1,156 | ||||||||||
TJX Canada | +6% | +7% | $938 | $832 | ||||||||||
TJX International (Europe & Australia) | +4% | +1% | $1,218 | $1,085 | ||||||||||
TJX | +6% | +3% | $9,331 | $8,358 |
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. 3Net sales in TJX Canada and TJX International include the impact of foreign currency exchange rates. See below. 4Figures may not foot due to rounding. 5Combination of T.J. Maxx and Marshalls. 6Net sales include Sierra Trading Post. 7Net sales in FY2019 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.
The movement in foreign currency exchange rates had a one percentage
point positive impact on consolidated net sales growth in the second
quarter of Fiscal 2019 versus the prior year. The overall net impact of
foreign currency exchange rates had a neutral impact on second quarter
Fiscal 2019 earnings per share, compared with a
The movement in foreign currency exchange rates had a two percentage
point positive impact on consolidated net sales growth in the first half
of Fiscal 2019 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 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 the Company refers to as “transactional foreign exchange.”
Margins
For the second quarter of Fiscal 2019, the Company’s consolidated pretax profit margin was 10.6%, a 0.1 percentage point decrease compared with the prior year’s 10.7%.
Gross profit margin for the second quarter of Fiscal 2019 was 28.9%, up 0.4 percentage points versus the prior year. This was primarily due to a favorable year-over-year comparison related to the Company’s inventory hedges.
Selling, general and administrative (SG&A) costs as a percent of sales for the second quarter were 18.2%, up 0.4 percentage points versus the prior year’s ratio. This was primarily due to previously announced IT restructuring costs and expected wage increases.
Inventory
Total inventories as of
Shareholder Distributions
During the second quarter, the Company returned a total of
Third Quarter and Full-Year Fiscal 2019 Outlook
For the third quarter of Fiscal 2019, the Company expects diluted
earnings per share to be in the range of
The Company is raising its full-year guidance to reflect its strong
second quarter results. For the 52-week fiscal year ending
The Company’s earnings guidance for the third quarter and full-year Fiscal 2019 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 Locations1 | Gross Square Feet2 | |||||||||||||
Second Quarter | Second Quarter | |||||||||||||
(in millions) | ||||||||||||||
Beginning | End | Beginning | End | |||||||||||
In the U.S.: | ||||||||||||||
T.J. Maxx | 1,231 | 1,236 | 34.2 | 34.3 | ||||||||||
Marshalls | 1,073 | 1,077 | 31.4 | 31.4 | ||||||||||
HomeGoods | 690 | 716 | 16.3 | 16.8 | ||||||||||
Sierra Trading Post | 32 | 33 | 0.7 | 0.7 | ||||||||||
Homesense | 4 | 8 | 0.1 | 0.2 | ||||||||||
In Canada: | ||||||||||||||
Winners | 269 | 270 | 7.4 | 7.5 | ||||||||||
HomeSense | 119 | 120 | 2.8 | 2.8 | ||||||||||
Marshalls | 78 | 79 | 2.1 | 2.2 | ||||||||||
In Europe: | ||||||||||||||
T.K. Maxx | 549 | 552 | 16.0 | 16.1 | ||||||||||
Homesense | 55 | 61 | 1.1 | 1.2 | ||||||||||
In Australia: |
||||||||||||||
T.K. Maxx | 41 | 42 | 0.9 | 0.9 | ||||||||||
TJX | 4,141 | 4,194 | 113.1 | 114.0 |
1Store counts above include both banners within a combo or a superstore. |
2Square feet figures may not foot due to rounding. |
About
Fiscal 2019
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 implementation of new technologies; economic
conditions and consumer spending; adverse or unseasonable weather;
serious disruptions or catastrophic events; corporate and retail banner
reputation; quality, safety and other issues with our merchandise;
compliance with laws, regulations and orders and changes in laws,
regulations and applicable accounting standards; expanding international
operations; merchandise sourcing and transport; 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; outcomes of litigation, legal proceedings and
other legal or regulatory matters; tax matters; disproportionate impact
of disruptions in the second half of the fiscal year; real estate
activities; inventory or asset loss; cash flow and other factors that
may be described in our filings with the
The TJX Companies, Inc. and Consolidated Subsidiaries |
||||||||||||||||||
Thirteen Weeks Ended | Twenty-Six Weeks Ended | |||||||||||||||||
August 4, 2018 |
July 29, 2017 |
August 4, 2018 |
July 29, 2017 |
|||||||||||||||
Net sales | $ | 9,331,115 | $ | 8,357,700 | $ | 18,019,835 | $ | 16,141,724 | ||||||||||
Cost of sales, including buying and occupancy costs | 6,635,815 | 5,972,675 | 12,814,054 | 11,502,747 | ||||||||||||||
Selling, general and administrative expenses | 1,699,714 | 1,483,648 | 3,250,489 | 2,895,251 | ||||||||||||||
Interest expense, net | 3,029 | 9,677 | 7,177 | 19,518 | ||||||||||||||
Income before provision for income taxes | 992,557 | 891,700 | 1,948,115 | 1,724,208 | ||||||||||||||
Provision for income taxes | 252,931 | 338,743 | 492,108 | 634,972 | ||||||||||||||
Net income | $ | 739,626 | $ | 552,957 | $ | 1,456,007 | $ | 1,089,236 | ||||||||||
Diluted earnings per share | $ | 1.17 | $ | 0.85 | $ | 2.30 | $ | 1.67 | ||||||||||
Cash dividends declared per share | $ | 0.39 | $ |
0.3125 |
$ | 0.78 | $ |
0.625 |
||||||||||
Weighted average common shares – diluted | 632,960 | 648,317 | 633,684 | 651,892 | ||||||||||||||
The TJX Companies, Inc. and Consolidated Subsidiaries (In Millions) |
||||||||||
August 4, 2018 |
July 29, 2017 |
|||||||||
ASSETS | ||||||||||
Current assets: | ||||||||||
Cash and cash equivalents | $ | 2,872.7 | $ | 2,449.3 | ||||||
Short-term investments | — | 502.8 | ||||||||
Accounts receivable and other current assets | 1,068.8 | 751.2 | ||||||||
Merchandise inventories | 4,498.5 | 3,864.5 | ||||||||
Total current assets | 8,440.0 | 7,567.8 | ||||||||
Net property at cost | 5,100.5 | 4,744.7 | ||||||||
Goodwill | 98.1 | 197.5 | ||||||||
Other assets | 472.8 | 425.6 | ||||||||
TOTAL ASSETS | $ | 14,111.4 | $ | 12,935.6 | ||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||
Current liabilities: | ||||||||||
Accounts payable | $ | 2,683.3 | $ | 2,346.5 | ||||||
Accrued expenses and other current liabilities | 2,454.5 | 2,310.0 | ||||||||
Total current liabilities | 5,137.8 | 4,656.5 | ||||||||
Other long-term liabilities | 1,289.3 | 1,116.5 | ||||||||
Non-current deferred income taxes, net | 225.1 | 392.7 | ||||||||
Long-term debt | 2,232.1 | 2,229.1 | ||||||||
Shareholders’ equity | 5,227.1 | 4,540.8 | ||||||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 14,111.4 | $ | 12,935.6 | ||||||
The TJX Companies, Inc. and Consolidated Subsidiaries |
|||||||||||
Twenty-Six Weeks Ended | |||||||||||
August 4, 2018 |
July 29, 2017 |
||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||
Net income | $ | 1,456.0 | $ | 1,089.2 | |||||||
Depreciation and amortization | 396.3 | 348.1 | |||||||||
Deferred income tax (benefit) provision | (18.2 | ) | 38.9 | ||||||||
Share-based compensation | 49.9 | 49.5 | |||||||||
Decrease (Increase) in accounts receivable and other assets |
40.6 |
|
(109.3 | ) | |||||||
(Increase) in merchandise inventories | (385.6 | ) | (168.8 | ) | |||||||
Increase in accounts payable | 237.7 | 84.6 | |||||||||
(Decrease) in accrued expenses and other liabilities |
(180.5 |
) | (270.1 | ) | |||||||
Other | (35.5 | ) | 40.9 | ||||||||
Net cash provided by operating activities | 1,560.7 | 1,103.0 | |||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||
Property additions | (573.9 | ) | (506.9 | ) | |||||||
Purchases of investments | (152.9 | ) | (426.5 | ) | |||||||
Sales and maturities of investments | 629.1 | 480.6 | |||||||||
Other | 26.6 | — | |||||||||
Net cash (used in) investing activities | (71.1 | ) | (452.8 | ) | |||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||
Payments for repurchase of common stock | (990.0 | ) | (884.7 | ) | |||||||
Proceeds from issuance of common stock | 163.5 | 60.8 | |||||||||
Cash dividends paid | (440.9 | ) | (369.5 | ) | |||||||
Other | (18.2 | ) | (18.3 | ) | |||||||
Net cash (used in) financing activities | (1,285.6 | ) | (1,211.7 | ) | |||||||
Effect of exchange rate changes on cash | (89.8 | ) | 81.0 | ||||||||
Net increase (decrease) in cash and cash equivalents | 114.2 | (480.5 | ) | ||||||||
Cash and cash equivalents at beginning of year | 2,758.5 | 2,929.8 | |||||||||
Cash and cash equivalents at end of period | $ | 2,872.7 | $ | 2,449.3 | |||||||
The TJX Companies, Inc. and Consolidated Subsidiaries |
||||||||||||||||||
Thirteen Weeks Ended | Twenty-Six Weeks Ended | |||||||||||||||||
August 4, 2018 |
July 29, 2017 |
August 4, 2018 |
July 29, 2017 |
|||||||||||||||
Net sales: | ||||||||||||||||||
In the United States: | ||||||||||||||||||
Marmaxx | $ | 5,847,721 | $ | 5,284,639 | $ | 11,228,639 | $ | 10,251,774 | ||||||||||
HomeGoods | 1,327,346 | 1,156,398 | 2,596,677 | 2,277,667 | ||||||||||||||
TJX Canada | 937,736 | 832,026 | 1,791,572 | 1,570,797 | ||||||||||||||
TJX International | 1,218,312 | 1,084,637 | 2,402,947 | 2,041,486 | ||||||||||||||
Total net sales | $ | 9,331,115 | $ | 8,357,700 | $ | 18,019,835 | $ | 16,141,724 | ||||||||||
Segment profit: | ||||||||||||||||||
In the United States: | ||||||||||||||||||
Marmaxx | $ | 830,315 | $ | 746,881 | $ | 1,580,771 | $ | 1,434,046 | ||||||||||
HomeGoods | 142,090 | 141,345 | 289,450 | 293,437 | ||||||||||||||
TJX Canada | 138,735 | 83,229 | 263,919 | 186,109 | ||||||||||||||
TJX International | 48,691 | 38,967 | 89,517 | 45,827 | ||||||||||||||
Total segment profit | 1,159,831 | 1,010,422 | 2,223,657 | 1,959,419 | ||||||||||||||
General corporate expense | 164,245 | 109,045 | 268,365 | 215,693 | ||||||||||||||
Interest expense, net | 3,029 | 9,677 | 7,177 | 19,518 | ||||||||||||||
Income before provision for income taxes | $ | 992,557 | $ | 891,700 | $ | 1,948,115 | $ | 1,724,208 | ||||||||||
Notes to
Consolidated Condensed Statements
-
During the second quarter ended August 4, 2018, TJX repurchased 6.4
million shares of its common stock at a cost of
$0.6 billion on a "trade date" basis. During the six months ended August 4, 2018, TJX repurchased and retired 11.3 million shares of its common stock at a cost of$1.0 billion , on a "trade date" basis. InFebruary 2018 , the Company announced that the Board of Directors had approved a new stock repurchase program that authorizes the repurchase of up to an additional$3.0 billion of TJX common stock from time to time. 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. -
During the fourth quarter ended
February 3, 2018 , the Company recorded a$99.3 million impairment charge, primarily goodwill, related toSierra Trading Post .
View source version on businesswire.com: https://www.businesswire.com/news/home/20180821005388/en/
Source:
The TJX Companies, Inc.
Debra McConnell
Global Communications
(508)
390-2323