The TJX Companies, Inc. Reports Q3 FY15 Adjusted EPS Growth of 13% Over 21% Last Year; Updates Full Year EPS Guidance
For the first nine months of Fiscal 2015, net sales were
Sales by Business Segment
The Company’s comparable store sales and net sales by division, in the third quarter, were as follows:
Third Quarter | Third Quarter | |||||||
Comparable Store Sales1 | Net Sales ($ in millions)2,3 | |||||||
FY2015 | FY2014 | FY2015 | FY2014 | |||||
In the U.S.: | ||||||||
Marmaxx4,5 | +1% | +4% | $4,674 | $4,484 | ||||
HomeGoods | +7% | +10% | $851 | $740 | ||||
International: | ||||||||
TJX Canada | +3% | +2% | $792 | $786 | ||||
TJX Europe | -1% | +5% | $1,050 | $972 | ||||
TJX | +2% | +5% | $7,366 | $6,982 |
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 third quarter of Fiscal 2015 versus the prior year. The overall net impact of foreign currency exchange rates was neutral on third quarter Fiscal 2015 earnings per share, the same as last year’s neutral impact.
For the first nine months of Fiscal 2015, the movement in foreign
currency exchange rates had a neutral 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 Investor Information section of the Company’s website, tjx.com.
Margins
For the third quarter of Fiscal 2015, the Company’s consolidated pretax profit margin was 13.0%, up 0.4 percentage points over a strong increase in the prior year. The gross profit margin for the third quarter of Fiscal 2015 was 29.4%, up 0.1 percentage points versus strong growth the prior year. Selling, general and administrative costs as a percent of sales were 16.2% in the third quarter, a 0.4 percentage point improvement from the prior year, due to items in the third quarter last year and expense favorability.
Inventory
Total inventories as of
Shareholder Distributions
During the third quarter, the Company repurchased a total of
Fourth Quarter and Full Year Fiscal 2015 Outlook
For the fourth quarter of Fiscal 2015, the Company is updating its
diluted earnings per share guidance to be in the range of
The Company is updating its full year guidance range to reflect its
third quarter results and fourth quarter guidance. On a reported basis,
for the fiscal year ending
The Company’s earnings guidance for the fourth quarter and full year Fiscal 2015 assumes that currency exchange rates will remain unchanged from the levels at the beginning of the fourth quarter.
Stores by Concept
During the third quarter ended
Store Locations | Gross Square Feet* | |||||||
Third Quarter | Third Quarter | |||||||
(in millions) | ||||||||
Beginning | End | Beginning | End | |||||
In the U.S.: | ||||||||
T.J. Maxx | 1,090 | 1,113 | 31.4 | 32.0 | ||||
Marshalls | 956 | 973 | 29.3 | 29.6 | ||||
HomeGoods | 464 | 485 | 11.6 | 12.1 | ||||
Sierra Trading Post | 4 | 6 | 0.1 | 0.2 | ||||
TJX Canada: | ||||||||
Winners | 230 | 234 | 6.7 | 6.7 | ||||
HomeSense | 92 | 96 | 2.2 | 2.3 | ||||
Marshalls | 33 | 38 | 1.0 | 1.2 | ||||
TJX Europe: | ||||||||
T.K. Maxx | 382 | 407 | 12.0 | 12.6 | ||||
HomeSense | 28 | 33 | 0.6 | 0.7 | ||||
TJX | 3,279 | 3,385 | 94.8 | 97.3 |
*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 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
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
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 | 39 Weeks Ended | |||||||||||
November 1, |
November 2, |
November 1, |
November 2, |
|||||||||
Net sales | $ | 7,366,066 | $ | 6,981,876 | $ | 20,774,454 | $ | 19,613,909 | ||||
Cost of sales, including buying and occupancy costs | 5,203,629 | 4,934,465 | 14,817,485 | 13,954,737 | ||||||||
Selling, general and administrative expenses | 1,193,297 | 1,158,668 | 3,389,105 | 3,251,897 | ||||||||
Loss on early extinguishment of debt | - | - | 16,830 | - | ||||||||
Interest expense, net | 10,040 | 9,371 | 30,785 | 23,572 | ||||||||
Income before provision for income taxes | 959,100 | 879,372 | 2,520,249 | 2,383,703 | ||||||||
Provision for income taxes | 364,143 | 256,717 | 953,351 | 828,599 | ||||||||
Net income | $ | 594,957 | $ | 622,655 | $ | 1,566,898 | $ | 1,555,104 | ||||
Diluted earnings per share | $ | 0.85 | $ | 0.86 | $ | 2.22 | $ | 2.14 | ||||
Cash dividends declared per share | $ | 0.175 | $ | 0.145 | $ | 0.525 | $ | 0.435 | ||||
Weighted average common shares – diluted | 701,005 | 724,108 | 706,122 | 728,283 | ||||||||
The TJX Companies, Inc. and Consolidated Subsidiaries |
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Condensed Balance Sheets |
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(Unaudited) |
||||||
(In Millions) |
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November 1, |
November 2, |
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ASSETS | ||||||
Current assets: | ||||||
Cash and cash equivalents |
$ | 2,153.6 | $ | 2,010.8 | ||
Short-term investments | 277.2 | 251.3 | ||||
Accounts receivable and other current assets | 642.2 | 595.9 | ||||
Current deferred income taxes, net | 123.0 | 102.4 | ||||
Merchandise inventories | 3,958.6 | 3,663.2 | ||||
Total current assets | 7,154.6 | 6,623.6 | ||||
Property, net of depreciation | 3,849.8 | 3,540.5 | ||||
Other assets | 276.9 | 191.6 | ||||
Goodwill and tradename, net of amortization | 310.7 | 313.5 | ||||
TOTAL ASSETS | $ | 11,592.0 | $ | 10,669.2 | ||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||
Current liabilities: | ||||||
Accounts payable | $ | 2,554.4 | $ | 2,346.4 | ||
Accrued expenses and other current liabilities | 1,835.2 | 1,697.4 | ||||
Total current liabilities | 4,389.6 | 4,043.8 | ||||
Other long-term liabilities | 741.1 | 831.1 | ||||
Non-current deferred income taxes, net | 463.7 | 396.3 | ||||
Long-term debt | 1,623.8 | 1,274.2 | ||||
Shareholders’ equity | 4,373.8 | 4,123.8 | ||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 11,592.0 | $ | 10,669.2 | ||
The TJX Companies, Inc. and Consolidated Subsidiaries |
||||||||
Condensed Statements of Cash Flows |
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(Unaudited) |
||||||||
(In Millions) |
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39 Weeks Ended | ||||||||
November 1, |
November 2, |
|||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net income | $ | 1,566.9 | $ | 1,555.1 | ||||
Depreciation and amortization | 438.2 | 407.3 | ||||||
Loss on early extinguishment of debt | 16.8 | - | ||||||
Deferred income tax provision | 7.4 | 47.1 | ||||||
Share-based compensation | 67.7 | 56.6 | ||||||
(Increase) in accounts receivable and other assets | (87.4 | ) | (46.8 | ) | ||||
(Increase) in merchandise inventories | (1,019.4 | ) | (654.8 | ) | ||||
Increase in accounts payable | 800.0 | 417.7 | ||||||
Increase (decrease) in accrued expenses and other liabilities | 95.4 | (85.9 | ) | |||||
Other | (73.3 | ) | (62.9 | ) | ||||
Net cash provided by operating activities | 1,812.3 | 1,633.4 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Property additions | (705.9 | ) | (759.3 | ) | ||||
Purchases of short-term investments | (297.7 | ) | (307.1 | ) | ||||
Sales and maturities of short-term investments | 309.8 | 278.9 | ||||||
Other | - | 2.7 | ||||||
Net cash (used in) investing activities | (693.8 | ) | (784.8 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Proceeds from issuance of long-term debt | 749.5 | 499.6 | ||||||
Payments on early extinguishment of debt | (416.4 | ) | - | |||||
Payments for repurchase of common stock | (1,214.2 | ) | (998.1 | ) | ||||
Proceeds from issuance of common stock | 90.3 | 117.7 | ||||||
Cash dividends paid | (345.7 | ) | (291.0 | ) | ||||
Other | 45.9 | 53.5 | ||||||
Net cash (used in) financing activities | (1,090.6 | ) | (618.3 | ) | ||||
Effect of exchange rate changes on cash | (24.0 | ) | (31.5 | ) | ||||
Net increase in cash and cash equivalents | 3.9 | 198.8 | ||||||
Cash and cash equivalents at beginning of year | 2,149.7 | 1,812.0 | ||||||
Cash and cash equivalents at end of period | $ | 2,153.6 | $ | 2,010.8 | ||||
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 | 39 Weeks Ended | |||||||||||
November 1, |
November 2, |
November 1, |
November 2, |
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Net sales: | ||||||||||||
In the United States: | ||||||||||||
Marmaxx |
$ | 4,673,718 | $ | 4,484,174 | $ | 13,402,351 | $ | 12,915,269 | ||||
HomeGoods | 851,045 | 739,537 | 2,381,268 | 2,119,190 | ||||||||
TJX Canada | 791,725 | 785,883 | 2,096,069 | 2,110,743 | ||||||||
TJX Europe | 1,049,578 | 972,282 | 2,894,766 | 2,468,707 | ||||||||
Total net sales | $ | 7,366,066 | $ | 6,981,876 | $ | 20,774,454 | $ | 19,613,909 | ||||
Segment profit: | ||||||||||||
In the United States: | ||||||||||||
Marmaxx | $ | 679,929 | $ | 658,369 | $ | 1,988,617 | $ | 1,940,647 | ||||
HomeGoods | 117,922 | 96,937 | 310,762 | 267,170 | ||||||||
TJX Canada | 136,480 | 128,692 | 275,527 | 293,774 | ||||||||
TJX Europe | 115,313 | 101,043 | 209,188 | 157,936 | ||||||||
Total segment profit | 1,049,644 | 985,041 | 2,784,094 | 2,659,527 | ||||||||
General corporate expenses | 80,504 | 96,298 | 216,230 | 252,252 | ||||||||
Loss on early extinguishment of debt | - | - | 16,830 | - | ||||||||
Interest expense, net | 10,040 | 9,371 | 30,785 | 23,572 | ||||||||
Income before provision for income taxes | $ | 959,100 | $ | 879,372 | $ | 2,520,249 | $ | 2,383,703 | ||||
Notes to
Consolidated Condensed Statements
-
During the third quarter ended
November 1, 2014 , TJX repurchased 7.5 million shares of its common stock at a cost of$448 million . During the nine months endedNovember 1, 2014 , TJX repurchased 21.5 million shares of its common stock at a cost of$1.2 billion . 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.
InSeptember 2014 , TJX completed the$1.5 billion stock repurchase program authorized inFebruary 2013 under which TJX purchased 25.5 million shares of common stock. -
On
June 5, 2014 TJX issued$750 million of 2.75% seven year notes. The Company used the proceeds to redeem its$400 million 4.20% notes prior to their scheduled maturity ofAugust 15, 2015 and intends to use the balance of the proceeds from the notes offering for working capital and other general corporate purposes. OnJuly 8, 2014 the Company completed the redemption of the 4.2% notes pursuant to the terms of the indenture and recorded pre-tax loss on the early extinguishment of debt of$16.8 million . The charge for the early extinguishment of this debt reduced net income for the thirty-nine week period endedNovember 1, 2014 by$0.01 per share.
Source:
The TJX Companies, Inc.
Debra McConnell
Global Communications
(508)
390-2323