The TJX Companies, Inc. Reports First Quarter Fiscal 2015 Results

  The TJX Companies, Inc. Reports First Quarter Fiscal 2015 Results

Business Wire

FRAMINGHAM, Mass. -- May 20, 2014

The TJX Companies, Inc. (NYSE: TJX), the leading off-price retailer of apparel
and home fashions in the U.S. and worldwide, today announced sales and
earnings results for the first quarter ended May 3, 2014. Net sales for the
first quarter of Fiscal 2015 increased 5% to $6.5 billion, and consolidated
comparable store sales increased 1%. Net income for the first quarter was $454
million, and diluted earnings per share were $.64 versus last year’s $.62.

Carol Meyrowitz, Chief Executive Officer of The TJX Companies, Inc., stated,
“For the first quarter, our consolidated comparable store sales increased 1%,
and our earnings per share of $.64 were slightly below our expectations with a
negative impact from foreign currency exchange rates that was larger than our
guidance assumed. While sales were not as strong as we would have liked,
predominantly in our apparel business, I was very pleased that overall
business trends improved as the quarter progressed. Further, our inventories
and expenses were well managed, which helped protect our margins. We enter the
second quarter in an excellent position. We like our lean inventory levels,
which enable us to capitalize on the plentiful buying opportunities we are
seeing in the marketplace and ship great fashions, brands and quality
merchandise to our stores at amazing values. Additionally, we have exciting
marketing initiatives planned to drive customer traffic. We are very confident
in our ability to achieve our plans for the remainder of 2014 and beyond as we
continue to bring value around the world!”

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 Sales^1  Net Sales ($ in millions)^2,3
               FY2015        FY2014     FY2015            FY2014
In the U.S.:                                            
Marmaxx^4,5     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 Canada and Europe include the impact of foreign currency exchange rates.
See below. ^3Figures may not foot due to rounding. ^4Combination of T.J. Maxx
and Marshalls. ^ 5Net sales include Sierra Trading Post.

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
$.02 negative impact on first quarter Fiscal 2015 earnings per share, compared
with a $.01 negative impact last year.

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 May 3, 2014, were $3.2 billion, compared with $3.1
billion at the end of the first quarter last year. Consolidated inventories on
a per-store basis as of May 3, 2014, including the distribution centers, but
excluding inventory in transit and the Company’s e-commerce businesses, were
flat on a reported basis (down 1% on a constant currency basis). The Company
enters the second quarter with lean inventory levels and well positioned to
take advantage of the plentiful buying opportunities for branded, quality
merchandise it is seeing in the marketplace.

Shareholder Distributions

During the first quarter, the Company repurchased a total of $360 million of
TJX stock, retiring 6.0 million shares. The Company continues to expect to
repurchase approximately $1.6 to $1.7 billion of TJX stock in Fiscal 2015. The
Company may adjust the amount of this spending up or down depending on various
factors. Additionally, the Company increased its dividend by 21% in the first
quarter, as it remains committed to returning cash to its shareholders while
reinvesting in the business to support the near- and long-term growth of TJX.

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 $.70 to $.74 which would represent a 6% to 12%
increase over last year’s $.66 per share. This outlook is based upon estimated
consolidated comparable store sales growth of 2% to 3%.

The Company is updating its full year guidance to reflect its first quarter
results. For the fiscal year ending January 31, 2015, the Company now expects
diluted earnings per share to be in the range of $3.05 to $3.17 versus $2.94
in Fiscal 2014. Excluding an $.11 tax benefit in Fiscal 2014, this guidance
would represent an 8% to 12% increase over the adjusted $2.83 in Fiscal 2014.
This outlook continues to be based upon estimated consolidated comparable
store sales growth of 1% to 2%.

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 May 3, 2014, the Company increased its store
count by a net of 37 stores. The Company increased square footage by 4% over
the same period last year.

                                       
                      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 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 May 3, 2014, the end of the
Company’s first quarter, the Company operated a total of 3,256 stores in six
countries, the United States, Canada, the United Kingdom, Ireland, Germany,
and Poland, and three e-commerce sites. These include 1,085 T.J. Maxx, 947
Marshalls, 458 HomeGoods and 4 Sierra Trading Post stores, as well as
tjmaxx.com and sierratradingpost.com, in the United States; 230 Winners, 92
HomeSense, and 32 Marshalls stores in Canada; and 380 T.K. Maxx and 28
HomeSense stores, as well as tkmaxx.com, in Europe. TJX’s press releases and
financial information are also available at tjx.com.

Fiscal 2015 First Quarter Earnings Conference Call

At 11:00 a.m. ET today, Carol Meyrowitz, Chief Executive Officer of TJX, will
hold a conference call with stock analysts to discuss the Company’s first
quarter Fiscal 2015 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 through Tuesday, May
27, 2014, 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
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 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
Financial Summary
(Unaudited)
(In Thousands Except Per Share Amounts)

                                                    13 Weeks Ended
                                                     May 3, 2014  May 4, 2013
                                                                 
Net sales                                            $ 6,491,176   $ 6,189,609
                                                                   
Cost of sales, including buying and occupancy          4,678,000     4,433,533
costs
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
                                                                     


The TJX Companies, Inc. and Consolidated Subsidiaries
Condensed Balance Sheets
(Unaudited)
(In Millions)

                                                May 3,      May 4,
                                                 2014         2013
                                                              
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
                                                                


The TJX Companies, Inc. and Consolidated Subsidiaries
Condensed Statements of Cash Flows
(Unaudited)
(In Millions)

                                                    13 Weeks Ended
                                                     May 3,       May 4,
                                                     2014          2013
                                                                   
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               (46.6   )     (148.5  )
liabilities
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              (428.8  )    159.1   
activities
                                                                   
Effect of exchange rate changes on cash               19.7        (20.4   )
                                                                   
Net (decrease) increase in cash and cash               (90.4   )     177.8
equivalents
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 
                                                                             


The TJX Companies, Inc. and Consolidated Subsidiaries
Selected Information by Major Business Segment
(Unaudited)
(In Thousands)

                                          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
                                                           

            The TJX Companies, Inc. and Consolidated Subsidiaries
                  Notes to Consolidated Condensed Statements

1.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 of May 3, 2014,
    there was $610 million remaining under the current $1.5 billion stock
    repurchase program approved in February 2013 and on January 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.
2.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.

Contact:

The TJX Companies, Inc.
Debra McConnell
Global Communications
(508) 390-2323
 
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