The TJX Companies, Inc. Reports Q3 FY18 Results
-
Net sales increased 6% to
$8.8 billion over last year’s 7% increase - Consolidated comparable store sales were flat compared to last year’s 5% increase
- Consolidated customer traffic and merchandise margin were up
-
Diluted EPS was
$1.00 , at the high end of Company’s guidance -
Diluted EPS of
$1.00 was a 20% increase over the prior year’s GAAP EPS of$.83 and a 10% increase over the prior year’s adjusted EPS of$.91 , which excludes the combined$.08 impact from a debt extinguishment charge and a pension settlement charge -
Q3 FY18 EPS includes an estimated
$.03 negative impact due to the hurricanes during the third quarter - Maintains high end of full year Fiscal 2018 EPS and comparable store sales growth outlook
-
Returned
$547 million to shareholders in the third quarter through share repurchases and dividends
For the first nine months of Fiscal 2018, net sales were
“Looking ahead, the fourth quarter is off to a strong start and we see numerous opportunities for the holiday selling season across our retail banners. We have excellent inventory liquidity to capitalize on the plentiful opportunities we are seeing for quality, branded merchandise in the marketplace. We will be offering consumers eclectic gift selections from around the world, at compelling, off-price values, and shipping fresh assortments to our stores and online throughout December and beyond. We have many initiatives underway to drive sales and traffic and are excited about our marketing campaigns. We are confident that we will achieve our goals for 2017 and as always, we will strive to surpass them. We have enormous confidence in the continued, successful growth of TJX!”
Sales by Business Segment
The Company’s comparable store sales and net sales by division, in the third quarter, were as follows:
| Third Quarter | Third Quarter | |||||||||||||||
| Comparable Store Sales1,2,3 | Net Sales ($ in millions)4,5 | |||||||||||||||
| FY2018 | FY2017 | FY2018 | FY2017 | |||||||||||||
| Marmaxx6,7 | -1% | +5% | $5,298 | $5,253 | ||||||||||||
| HomeGoods8 | +3% | +6% | $1,229 | $1,078 | ||||||||||||
| TJX Canada | +4% | +8% | $983 | $855 | ||||||||||||
| TJX International (Europe & Australia) | +1% |
0% |
$1,252 | $1,105 | ||||||||||||
| TJX | 0% | +5% | $8,762 | $8,292 | ||||||||||||
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.
For the third quarter of Fiscal 2018, the movement in foreign currency
exchange rates had a one percentage point positive impact on
consolidated net sales growth. The overall net impact of foreign
currency exchange rates had a
For the first nine months of Fiscal 2018, 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 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 we refer to as “transactional foreign exchange.”
Margins
For the third quarter of Fiscal 2018, the Company’s consolidated pretax profit margin was 11.6%. This was a 0.9 percentage point increase compared with the prior year’s 10.7% margin and down 0.1 percentage point compared with the prior year’s adjusted 11.7% margin, which excluded a debt extinguishment charge and pension settlement charge.
Gross profit margin for the third quarter of Fiscal 2018 was 29.8%, up 0.3 percentage points versus the prior year. This was due to gains related to the Company’s inventory hedges as well as an increase in merchandise margin, partially offset by higher supply chain costs and expense deleverage on the flat consolidated comparable store sales.
Selling, general and administrative costs as a percent of sales were 18.1%, up 0.5 percentage points versus the prior year’s ratio, primarily due to expenses from hurricanes and wage increases.
Inventory
Total inventories as of
Shareholder Distributions
During the third quarter, the Company repurchased a total of
Fourth Quarter and Full Year Fiscal 2018 Outlook
For the fourth quarter of Fiscal 2018, the Company expects diluted
earnings per share to be in the range of
For the 53-week fiscal year ending
The Company’s earnings guidance for the fourth quarter and full year Fiscal 2018 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.: | ||||||||||||||||
| TJ Maxx | 1,194 | 1,219 | 33.6 | 34.0 | ||||||||||||
| Marshalls | 1,043 | 1,057 | 30.9 | 31.0 | ||||||||||||
| HomeGoods | 619 | 660 | 14.9 | 15.7 | ||||||||||||
| Sierra Trading Post | 16 | 26 | 0.4 | 0.6 | ||||||||||||
| Homesense | 0 | 3 | 0.0 | 0.1 | ||||||||||||
| In Canada: | ||||||||||||||||
| Winners | 258 | 265 | 7.2 | 7.4 | ||||||||||||
| HomeSense | 112 | 117 | 2.6 | 2.7 | ||||||||||||
| Marshalls | 63 | 72 | 1.8 | 2.0 | ||||||||||||
| In Europe: | ||||||||||||||||
| TK Maxx | 522 | 540 | 15.5 | 15.8 | ||||||||||||
| Homesense | 51 | 55 | 1.1 | 1.1 | ||||||||||||
| In Australia: | ||||||||||||||||
| TK Maxx | 35 | 38 | 0.8 | 0.8 | ||||||||||||
| TJX | 3,913 | 4,052 | 108.7 | 111.3 | ||||||||||||
*Store counts above include both banners within a combo or a superstore.
**Square
feet figures may not foot due to rounding.
About
Fiscal 2018
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 new technology; economic conditions and consumer
spending; adverse or unseasonable weather; serious disruptions or
catastrophic events; disruptions in the second half of the fiscal year;
corporate and retail banner reputation; quality, safety and other issues
with merchandise; expanding international operations; merchandise
importing; 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; compliance with laws,
regulations and orders and changes in laws, regulations and applicable
accounting standards; outcomes of litigation, legal proceedings and
other legal or regulatory matters; 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 Financial Summary (Unaudited) (In Thousands Except Per Share Amounts) |
||||||||||||||||||||
| 13 Weeks Ended | 39 Weeks Ended | |||||||||||||||||||
|
October 28, 2017 |
October 29, 2016 |
October 28, 2017 |
October 29, 2016 |
|||||||||||||||||
| Net sales | $ | 8,762,220 | $ | 8,291,688 | $ | 24,903,944 | $ | 23,716,097 | ||||||||||||
| Cost of sales, including buying and occupancy costs | 6,150,020 | 5,843,873 | 17,652,767 | 16,778,977 | ||||||||||||||||
| Selling, general and administrative expenses | 1,584,219 | 1,462,574 | 4,479,470 | 4,190,872 | ||||||||||||||||
| Loss on early extinguishment of debt | - | 51,773 | - | 51,773 | ||||||||||||||||
| Pension settlement charge | - | 31,173 | - | 31,173 | ||||||||||||||||
| Interest expense, net | 7,981 | 12,462 | 27,499 | 33,918 | ||||||||||||||||
| Income before provision for income taxes | 1,020,000 | 889,833 | 2,744,208 | 2,629,384 | ||||||||||||||||
| Provision for income taxes | 378,564 | 340,047 | 1,013,536 | 1,009,078 | ||||||||||||||||
| Net income | $ | 641,436 | $ | 549,786 | $ | 1,730,672 | $ | 1,620,306 | ||||||||||||
| Diluted earnings per share | $ | 1.00 | $ | 0.83 | $ | 2.67 | $ | 2.43 | ||||||||||||
| Cash dividends declared per share | $ | 0.31 | $ | 0.26 | $ | 0.94 | $ | 0.78 | ||||||||||||
| Weighted average common shares – diluted | 642,881 | 661,721 | 648,672 | 666,632 | ||||||||||||||||
|
The TJX Companies, Inc. and Consolidated Subsidiaries Condensed Balance Sheets (Unaudited) (In Millions) |
||||||||||
|
October 28, 2017 |
October 29, |
|||||||||
| ASSETS | ||||||||||
| Current assets: | ||||||||||
| Cash and cash equivalents | $ | 2,364.2 | $ | 2,375.5 | ||||||
| Short-term investments | 511.6 | 450.8 | ||||||||
| Accounts receivable and other current assets | 788.3 | 731.8 | ||||||||
| Merchandise inventories | 4,725.9 | 4,384.2 | ||||||||
| Total current assets | 8,390.0 | 7,942.3 | ||||||||
| Property, net of depreciation | 4,858.3 | 4,318.8 | ||||||||
| Goodwill | 196.4 | 196.0 | ||||||||
| Other assets | 433.0 | 409.7 | ||||||||
| TOTAL ASSETS | $ | 13,877.7 | $ | 12,866.8 | ||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||
| Current liabilities: | ||||||||||
| Accounts payable | $ | 2,986.4 | $ | 2,686.8 | ||||||
| Accrued expenses and other current liabilities | 2,481.6 | 2,207.7 | ||||||||
| Total current liabilities | 5,468.0 | 4,894.5 | ||||||||
| Other long-term liabilities | 1,160.0 | 1,098.5 | ||||||||
| Non-current deferred income taxes, net | 374.3 | 317.1 | ||||||||
| Long-term debt | 2,229.8 | 2,226.9 | ||||||||
| Shareholders’ equity | 4,645.6 | 4,329.8 | ||||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 13,877.7 | $ | 12,866.8 | ||||||
|
The TJX Companies, Inc. and Consolidated Subsidiaries Condensed Statements of Cash Flows (Unaudited) (In Millions) |
||||||||||||
| 39 Weeks Ended | ||||||||||||
|
October 28, 2017 |
October 29, |
|||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||||
| Net income | $ | 1,730.7 | $ | 1,620.3 | ||||||||
| Depreciation and amortization | 532.4 | 492.4 | ||||||||||
| Loss in early extinguishment of debt | - | 51.8 | ||||||||||
| Pension settlement charge | - | 31.2 | ||||||||||
| Deferred income tax provision | 35.8 | 52.6 | ||||||||||
| Share-based compensation | 77.2 | 77.4 | ||||||||||
| (Increase) in accounts receivable and other assets | (138.7 | ) | (115.0 | ) | ||||||||
| (Increase) in merchandise inventories | (1,042.7 | ) | (758.6 | ) | ||||||||
| Increase in accounts payable | 733.3 | 525.0 | ||||||||||
| Increase (decrease) in accrued expenses and other liabilities | (3.8 | ) | 213.9 | |||||||||
| Other | 5.2 | (78.7 | ) | |||||||||
| Net cash provided by operating activities | 1,929.4 | 2,112.3 | ||||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||||
| Property additions | (827.5 | ) | (767.2 | ) | ||||||||
| Purchases of investments | (630.1 | ) | (533.8 | ) | ||||||||
| Sales and maturities of investments | 658.2 | 432.0 | ||||||||||
| Other | - | (2.3 | ) | |||||||||
| Net cash (used in) investing activities | (799.4 | ) | (871.3 | ) | ||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||||
| Proceeds from issuance of long-term debt | - | 992.5 | ||||||||||
| Cash payments for extinguishment of debt | - | (425.6 | ) | |||||||||
| Payments for repurchase of common stock | (1,239.0 | ) | (1,175.0 | ) | ||||||||
| Proceeds from issuance of common stock | 89.2 | 110.9 | ||||||||||
| Cash dividends paid | (566.9 | ) | (481.8 | ) | ||||||||
| Other | (19.1 | ) | 22.3 | |||||||||
| Net cash (used in) financing activities | (1,735.8 | ) | (956.7 | ) | ||||||||
| Effect of exchange rate changes on cash | 40.2 | (4.2 | ) | |||||||||
| Net (decrease) increase in cash and cash equivalents | (565.6 | ) | 280.1 | |||||||||
| Cash and cash equivalents at beginning of year | 2,929.8 | 2,095.4 | ||||||||||
| Cash and cash equivalents at end of period | $ | 2,364.2 | $ | 2,375.5 | ||||||||
|
The TJX Companies, Inc. and Consolidated Subsidiaries Selected Information by Major Business Segment (Unaudited) (In Thousands) |
||||||||||||||||||||
| 13 Weeks Ended | 39 Weeks Ended | |||||||||||||||||||
|
October 28, 2017 |
October 29, 2016 |
October 28, 2017 |
October 29, 2016 |
|||||||||||||||||
| Net sales: | ||||||||||||||||||||
| In the United States: | ||||||||||||||||||||
| Marmaxx | $ | 5,298,479 | $ | 5,252,815 | $ | 15,550,253 | $ | 15,217,188 | ||||||||||||
| HomeGoods | 1,228,768 | 1,078,373 | 3,506,435 | 3,075,472 | ||||||||||||||||
| TJX Canada | 983,236 | 855,473 | 2,554,033 | 2,297,831 | ||||||||||||||||
| TJX International | 1,251,737 | 1,105,027 | 3,293,223 | 3,125,606 | ||||||||||||||||
| Total net sales | $ | 8,762,220 | $ | 8,291,688 | $ | 24,903,944 | $ | 23,716,097 | ||||||||||||
| Segment profit: | ||||||||||||||||||||
| In the United States: | ||||||||||||||||||||
| Marmaxx | $ | 666,092 | $ | 703,092 | $ | 2,100,138 | $ | 2,154,238 | ||||||||||||
| HomeGoods | 163,835 | 149,739 | 457,272 | 415,996 | ||||||||||||||||
| TJX Canada | 206,472 | 142,491 | 392,581 | 321,942 | ||||||||||||||||
| TJX International | 87,066 | 87,821 | 132,893 | 145,047 | ||||||||||||||||
| Total segment profit | 1,123,465 | 1,083,143 | 3,082,884 | 3,037,223 | ||||||||||||||||
| General corporate expense | 95,484 | 97,902 | 311,177 | 290,975 | ||||||||||||||||
| Loss on early extinguishment of debt | - | 51,773 | - | 51,773 | ||||||||||||||||
| Pension settlement charge | - | 31,173 | - | 31,173 | ||||||||||||||||
| Interest expense, net | 7,981 | 12,462 | 27,499 | 33,918 | ||||||||||||||||
| Income before provision for income taxes | $ | 1,020,000 | $ | 889,833 | $ | 2,744,208 | $ | 2,629,384 | ||||||||||||
Notes to
Consolidated Condensed Statements
1. During the third quarter ended
2. On
In addition, during the third quarter ended
The company has presented non-GAAP measures in this earnings release excluding the impact of these two third quarter charges.
View source version on businesswire.com: http://www.businesswire.com/news/home/20171114005999/en/
Source:
The TJX Companies, Inc.
Debra McConnell
Global Communications
(508)
390-2323