FRAMINGHAM, Mass.--(BUSINESS WIRE)--The TJX Companies, Inc. (NYSE: TJX), the leading off-price apparel and home fashions retailer in the U.S. and worldwide, today announced sales and earnings results for the third quarter ended November 2, 2019. Net sales for the third quarter of Fiscal 2020 increased 6% to $10.5 billion. Consolidated comparable store sales increased 4%, over last year’s 7% increase. Net income for the third quarter was $828 million, and diluted earnings per share were $.68 versus $.61 in the prior year. This was an 8% increase versus the prior year’s adjusted $.63, which excluded a $.02 pension settlement charge.
For the first nine months of Fiscal 2020, net sales were $29.5 billion, a 6% increase over the same period last year. Consolidated comparable store sales for the first nine months of Fiscal 2020 increased 4%. Net income for the first nine months of Fiscal 2020 was $2.3 billion, and diluted earnings per share were $1.86.
Ernie Herrman, Chief Executive Officer and President of The TJX Companies, Inc., stated, “We are extremely pleased with our strong performance in the third quarter as both sales and earnings per share exceeded our expectations. Consolidated comp store sales increased 4% over a very strong 7% increase last year, and earnings per share were $.68. We are especially pleased that Marmaxx, HomeGoods, and TJX Canada each delivered a sequential increase in their comp store sales growth, and TJX International maintained its strong momentum driven by excellent performance in Europe. Further, customer traffic was the primary driver of the comp store sales increases at each of these four major divisions. With our above-guidance third quarter results, we are raising our full-year earnings per share guidance. Looking ahead, the fourth quarter is off to a solid start and we have many initiatives underway to keep driving traffic and sales to our stores and online during the holiday season and beyond. We are convinced our holiday marketing campaigns will position us as a top shopping destination for exciting gifts at amazing prices. We are seeing fantastic, widespread availability of quality, branded merchandise and are in a great position to capitalize on these opportunities. Longer term, we are confident that we can gain additional market share and continue the successful growth of TJX in the U.S. and internationally!”
Sales by Business Segment
The Company’s comparable store sales and net sales by division, in the third quarter, were as follows:
|
Third Quarter |
Third Quarter |
||
|
Comparable Store Sales1,2 |
Net Sales ($ in millions)3,4 |
||
|
FY2020 |
FY2019 |
FY2020 |
FY2019 |
|
|
|
|
|
Marmaxx (U.S.)5,6 |
+4% |
+9% |
$6,354 |
$5,973 |
HomeGoods (U.S.)7 |
+1% |
+7% |
$1,582 |
$1,464 |
TJX Canada |
+2% |
+5% |
$1,082 |
$1,037 |
TJX International (Europe & Australia) |
+6% |
+3% |
$1,433 |
$1,352 |
|
|
|
|
|
TJX |
+4% |
+7% |
$10,451 |
$9,826 |
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 e-commerce sites (tjmaxx.com, marshalls.com, sierra.com, and tkmaxx.com) and include Sierra stores. 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 TJ Maxx and Marshalls. 6Net sales include Sierra’s e-commerce and store sales. 7Includes 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 negative impact on consolidated net sales growth in the third quarter of Fiscal 2020 versus the prior year. The overall net impact of foreign currency exchange rates had a $.01 negative impact on third quarter Fiscal 2020 earnings per share, compared with a neutral impact last year.
The movement in foreign currency exchange rates had a one percentage point negative impact on consolidated net sales growth for the first nine months of Fiscal 2020 versus the prior year. The overall net impact of foreign currency exchange rates had a $.01 negative impact on the first nine months of Fiscal 2020 earnings per share, compared with a $.01 positive impact last year.
A table detailing the impact of foreign currency on TJX’s 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 third quarter of Fiscal 2020, the Company’s consolidated pretax profit margin was 10.7%. This was flat versus the prior year’s 10.7% and a 0.3 percentage point decrease versus the prior year’s adjusted 11.0%, which excluded a negative 0.3 percentage point impact from a pension settlement charge.
Gross profit margin for the third quarter of Fiscal 2020 was 28.8%, a 0.1 percentage point decrease versus the prior year. Selling, general and administrative (SG&A) costs as a percent of sales for the third quarter were 18.0%, a 0.1 percentage point increase versus the prior year.
Inventory
Total inventories as of November 2, 2019, were $6.3 billion, compared with $5.5 billion at the end of the third quarter last year. Consolidated inventories on a per-store basis as of November 2, 2019, including the distribution centers, but excluding inventory in transit, the Company’s e-commerce sites, and Sierra stores, were up 9% on a reported basis and constant currency basis. The Company is well-positioned to take advantage of the fantastic buying opportunities it sees in the marketplace and ship ever-changing gift assortments to its stores and online throughout the holiday season.
Shareholder Distributions
During the third quarter, the Company returned a total of $778 million to shareholders. The Company repurchased a total of $500 million of TJX stock, retiring 9.0 million shares, and paid $278 million in shareholder dividends. For the first nine months of Fiscal 2020, the Company repurchased a total of $1.15 billion of TJX stock, retiring 21.3 million shares, and paid $795 million in shareholder dividends. The Company expects to repurchase $1.5 to $1.75 billion of TJX stock in Fiscal 2020. The Company may adjust this amount up or down depending on various factors.
Investment in Familia
On November 18, 2019, the Company completed an investment of $225 million for a 25% ownership stake in privately held Familia, Russia’s only major off-price apparel and home fashions retailer. TJX’s investment represents a non-controlling, minority position. Familia currently operates more than 275 stores throughout Russia. This transaction gives TJX an opportunity to invest in an established, off-price retailer with significant growth potential in the Russian market. The Company’s ownership in Familia is expected to be slightly accretive to earnings per share beginning in Fiscal 2021. The Company will record this investment using the equity method of accounting from the date of the investment. Further, TJX will report its share of Familia’s financial results on a one quarter delay. BofA Securities acted as financial advisor and Ropes & Gray LLP provided legal counsel to the Company in connection with this transaction.
Fourth Quarter and Full-Year Fiscal 2020 Outlook
For the fourth quarter of Fiscal 2020, the Company expects diluted earnings per share to be in the range of $.74 to $.76 versus earnings per share of $.68 in the prior year. This EPS outlook is based upon estimated comparable store sales growth of 2% to 3% on a consolidated basis and at Marmaxx.
For the 52-week fiscal year ending February 1, 2020, the Company now expects diluted earnings per share to be in the range of $2.61 to $2.63. This would represent a 7% to 8% increase over the prior year’s $2.43, which included a $.02 negative impact from a pension settlement charge. The Company expects diluted earnings per share to increase 7% over the prior year’s adjusted $2.45, which excluded the pension settlement charge. This EPS outlook is based upon estimated comparable store sales growth of 3% on a consolidated basis and 3% to 4% at Marmaxx.
The Company’s earnings guidance for the fourth quarter and full-year Fiscal 2020 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 November 2, 2019, the Company increased its store count by 107 stores to a total of 4,519 stores. The Company increased square footage by 4% over the same period last year.
|
Store Locations1 |
Gross Square Feet2 |
||
|
Third Quarter |
Third Quarter |
||
|
|
(in millions) |
||
|
Beginning |
End |
Beginning |
End |
In the U.S.: |
|
|
|
|
TJ Maxx |
1,260 |
1,271 |
34.7 |
34.8 |
Marshalls |
1,107 |
1,125 |
31.9 |
32.3 |
HomeGoods |
783 |
807 |
18.3 |
18.8 |
Sierra |
39 |
46 |
0.9 |
1.0 |
Homesense |
23 |
32 |
0.6 |
0.9 |
In Canada: |
|
|
|
|
Winners |
274 |
279 |
7.5 |
7.6 |
HomeSense |
132 |
136 |
3.0 |
3.1 |
Marshalls |
91 |
97 |
2.4 |
2.6 |
In Europe: |
|
|
|
|
TK Maxx |
580 |
594 |
16.5 |
16.7 |
Homesense |
72 |
78 |
1.4 |
1.5 |
In Australia: |
|
|
|
|
TK Maxx |
51 |
54 |
1.1 |
1.2 |
|
|
|
|
|
TJX |
4,412 |
4,519 |
118.4 |
120.5 |
1Store counts above include both banners within a combo or a superstore.
2Square feet figures may not foot due to rounding.
About The TJX Companies, Inc.
The TJX Companies, Inc. is the leading off-price retailer of apparel and home fashions in the U.S. and worldwide. As of November 2, 2019, the end of the Company’s third quarter, the Company operated a total of 4,519 stores in nine countries, the United States, Canada, the United Kingdom, Ireland, Germany, Poland, Austria, the Netherlands, and Australia, and four e-commerce sites. These include 1,271 TJ Maxx, 1,125 Marshalls, 807 HomeGoods, 46 Sierra, and 32 Homesense stores, as well as tjmaxx.com, marshalls.com, and sierra.com in the United States; 279 Winners, 136 HomeSense, and 97 Marshalls stores in Canada; 594 TK Maxx and 78 Homesense stores, as well as tkmaxx.com, in Europe; and 54 TK Maxx stores in Australia. TJX’s press releases and financial information are available at tjx.com.
Fiscal 2020 Third Quarter Earnings Conference Call
At 11:00 a.m. ET today, Ernie Herrman, Chief Executive Officer and President of TJX, will hold a conference call to discuss the Company’s third quarter Fiscal 2020 results, operations and business trends. A real-time webcast of the call will be available to the public at tjx.com. A replay of the call will also be available by dialing (866) 367-5577 (U.S. only) or (203) 369-0233 through Tuesday, November 26, 2019, or at tjx.com.
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 the United States (GAAP) items identified in this press release. The Company believes that the presentation of adjusted financial results provides additional information on comparisons between periods including underlying trends of its business by excluding certain items that affect overall comparability. Non-GAAP financial measures should be considered in addition to, and not as an alternative for, the Company’s reported results prepared in accordance with GAAP.
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 and maintenance and development of information technology systems; economic conditions and consumer spending; 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; serious disruptions or catastrophic events and adverse or unseasonable weather; 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 Securities and Exchange Commission. We do not undertake to publicly update or revise our forward-looking statements even if experience or future changes make it clear that any projected results expressed or implied in such statements will not be realized.
The TJX Companies, Inc. and Consolidated Subsidiaries
|
||||||||
|
Thirteen Weeks Ended |
Thirty-Nine Weeks Ended |
||||||
|
November 2,
|
November 3,
|
November 2,
|
November 3,
|
||||
|
|
|
|
|
||||
Net sales |
$ |
10,451,334 |
$ |
9,825,759 |
$ |
29,510,515 |
$ |
27,845,594 |
|
|
|
|
|
||||
Cost of sales, including buying and occupancy costs |
7,440,033 |
6,983,483 |
21,103,975 |
19,797,537 |
||||
Selling, general and administrative expenses |
1,885,923 |
1,756,448 |
5,319,659 |
5,006,937 |
||||
Pension settlement charge |
— |
36,122 |
— |
36,122 |
||||
Interest expense, net |
3,259 |
3,188 |
6,973 |
10,365 |
||||
|
|
|
|
|
||||
Income before provision for income taxes |
1,122,119 |
1,046,518 |
3,079,908 |
2,994,633 |
||||
Provision for income taxes |
293,856 |
284,265 |
792,505 |
776,373 |
||||
|
|
|
|
|
||||
Net income |
$ |
828,263 |
$ |
762,253 |
$ |
2,287,403 |
$ |
2,218,260 |
|
|
|
|
|
||||
Diluted earnings per share |
$ |
0.68 |
$ |
0.61 |
$ |
1.86 |
$ |
1.75 |
|
|
|
|
|
||||
Cash dividends declared per share |
$ |
0.23 |
$ |
0.195 |
$ |
0.69 |
$ |
0.585 |
|
|
|
|
|
||||
Weighted average common shares – diluted |
1,224,288 |
1,257,562 |
1,228,903 |
1,264,100 |
||||
The TJX Companies, Inc. and Consolidated Subsidiaries
|
||||
|
November 2,
|
November 3,
|
||
|
|
|
||
ASSETS |
|
|
||
Current assets: |
|
|
||
Cash and cash equivalents |
$ |
2,060.2 |
$ |
2,711.8 |
Accounts receivable and other current assets |
1,039.6 |
1,061.8 |
||
Merchandise inventories |
6,274.8 |
5,543.4 |
||
|
|
|
||
Total current assets |
9,374.6 |
9,317.0 |
||
|
|
|
||
Net property at cost |
5,251.0 |
5,165.9 |
||
|
|
|
||
Operating lease right of use assets |
9,069.1 |
— |
||
Goodwill |
96.3 |
97.3 |
||
Other assets |
497.7 |
445.0 |
||
|
|
|
||
TOTAL ASSETS |
$ |
24,288.7 |
$ |
15,025.2 |
|
|
|
||
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
||
Current liabilities: |
|
|
||
Accounts payable |
$ |
3,447.4 |
$ |
3,340.6 |
Accrued expenses and other current liabilities |
2,827.4 |
2,673.2 |
||
Current portion of operating lease liabilities |
1,412.3 |
— |
||
|
|
|
||
Total current liabilities |
7,687.1 |
6,013.8 |
||
|
|
|
||
Other long-term liabilities |
797.6 |
1,284.9 |
||
Non-current deferred income taxes, net |
203.5 |
236.7 |
||
Long-term operating lease liabilities |
7,822.1 |
— |
||
Long-term debt |
2,235.9 |
2,232.9 |
||
|
|
|
||
Shareholders’ equity |
5,542.5 |
5,256.9 |
||
|
|
|
||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY |
$ |
24,288.7 |
$ |
15,025.2 |
|
|
|
||
The TJX Companies, Inc. and Consolidated Subsidiaries
|
||||
|
Thirty-Nine Weeks Ended |
|||
|
November 2,
|
November 3,
|
||
|
|
|
||
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
||
Net income |
$ |
2,287.4 |
$ |
2,218.3 |
Depreciation and amortization |
647.4 |
601.2 |
||
Pension settlement charge |
— |
36.1 |
||
Deferred income tax provision (benefit) |
42.1 |
(15.6) |
||
Share-based compensation |
86.6 |
77.4 |
||
(Increase) decrease in accounts receivable and other assets |
(331.4) |
26.9 |
||
(Increase) in merchandise inventories |
(1,701.7) |
(1,442.6) |
||
Increase in accounts payable |
805.8 |
902.5 |
||
Increase in accrued expenses and other liabilities |
2.2 |
64.4 |
||
Other |
35.2 |
9.2 |
||
Net cash provided by operating activities |
1,873.6 |
2,477.8 |
||
|
|
|
||
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
||
Property additions |
(992.7) |
(873.0) |
||
Purchase of investments |
(24.1) |
(157.2) |
||
Sales and maturities of investments |
11.6 |
634.3 |
||
Other |
7.4 |
26.7 |
||
Net cash (used in) investing activities |
(997.8) |
(369.2) |
||
|
|
|
||
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
||
Cash payments for repurchase of common stock |
(1,190.4) |
(1,591.4) |
||
Proceeds from issuance of common stock |
175.3 |
239.6 |
||
Cash dividends paid |
(795.1) |
(682.3) |
||
Other |
(23.3) |
(21.5) |
||
Net cash (used in) financing activities |
(1,833.5) |
(2,055.6) |
||
|
|
|
||
Effect of exchange rate changes on cash |
(12.3) |
(99.7) |
||
|
|
|
||
Net (decrease) in cash and cash equivalents |
(970.0) |
(46.7) |
||
Cash and cash equivalents at beginning of year |
3,030.2 |
2,758.5 |
||
|
|
|
||
Cash and cash equivalents at end of period |
$ |
2,060.2 |
$ |
2,711.8 |
|
|
|
||
The TJX Companies, Inc. and Consolidated Subsidiaries
|
||||||||
|
Thirteen Weeks Ended |
Thirty-Nine Weeks Ended |
||||||
|
November 2,
|
November 3,
|
November 2,
|
November 3,
|
||||
Net sales: |
|
|
|
|
||||
In the United States: |
|
|
|
|
||||
Marmaxx |
$ |
6,353,987 |
$ |
5,973,476 |
$ |
18,262,444 |
$ |
17,202,115 |
HomeGoods |
1,582,411 |
1,463,892 |
4,404,112 |
4,060,569 |
||||
TJX Canada |
1,081,522 |
1,036,884 |
2,896,717 |
2,828,456 |
||||
TJX International |
1,433,414 |
1,351,507 |
3,947,242 |
3,754,454 |
||||
Total net sales |
$ |
10,451,334 |
$ |
9,825,759 |
$ |
29,510,515 |
$ |
27,845,594 |
|
|
|
|
|
||||
Segment profit: |
|
|
|
|
||||
In the United States: |
|
|
|
|
||||
Marmaxx |
$ |
820,430 |
$ |
762,911 |
$ |
2,471,622 |
$ |
2,343,682 |
HomeGoods |
173,212 |
166,090 |
438,939 |
455,540 |
||||
TJX Canada |
170,264 |
182,170 |
385,513 |
446,089 |
||||
TJX International |
99,397 |
102,432 |
178,343 |
191,949 |
||||
Total segment profit |
1,263,303 |
1,213,603 |
3,474,417 |
3,437,260 |
||||
|
|
|
|
|
||||
General corporate expense |
137,925 |
127,775 |
387,536 |
396,140 |
||||
Pension settlement charge |
— |
36,122 |
— |
36,122 |
||||
Interest expense, net |
3,259 |
3,188 |
6,973 |
10,365 |
||||
Income before provision for income taxes |
$ |
1,122,119 |
$ |
1,046,518 |
$ |
3,079,908 |
$ |
2,994,633 |
The TJX Companies, Inc. and Consolidated Subsidiaries
Notes to Consolidated Condensed Statements
- During the third quarter ended November 2, 2019, TJX repurchased and retired 9.0 million shares of its common stock at a cost of $500 million on a "trade date" basis. During the nine months ended November 2, 2019, TJX repurchased and retired 21.3 million shares of its common stock at a cost of $1.15 billion, on a "trade date" basis. 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.
- In February 2019, the Company announced that the Board of Directors had approved a stock repurchase program that authorizes the repurchase of up to $1.5 billion of TJX common stock from time to time, all of which remained available at November 2, 2019. In February 2018, the Company announced that the Board of Directors approved the repurchase of $3.0 billion of TJX common stock from time to time, under which $0.5 billion remained available as of November 2, 2019.
- TJX adopted ASU No. 2016-02, Leases (Topic 842) as of February 3, 2019 under the modified retrospective approach and, therefore, we have not revised the consolidated balance sheets for comparative periods.
- During the third quarter ended November 3, 2018, the Company purchased a group annuity contract pursuant to which the pension benefit obligations for certain U.S. retirees and beneficiaries under the Company's pension plan were transferred to an insurer in exchange for $207 million in pension plan assets. As a result of this transaction, the pension plan's total liability has been remeasured, resulting in a non-cash settlement charge to the Company that reduced third quarter fiscal 2019 pretax income by $36.1 million and earnings per share by $0.02.
