- Net sales increased 12% to $8.7
billion, over last year’s 3% increase
- Consolidated comp store sales increased
3%
- GAAP diluted EPS of $1.13, compared
with $.82 in the prior year
- Adjusted diluted EPS of $.96, which
excludes a $.17 benefit due to items related to the 2017 Tax Cuts
and Jobs Act (primarily the lower U.S. corporate income tax rate),
compared with $.82 in the prior year
- Adjusted diluted EPS $.09 above the
high-end of the Company’s plan primarily due to better than
expected operating results of $.05, as well as incremental benefits
from mark-to-market gains on inventory hedges of $.02 and
share-based compensation of $.02, versus the Company’s original
plan
- Increased low-end and maintained
high-end of full-year Fiscal 2019 GAAP EPS guidance
- Raised high-end of full-year adjusted
EPS guidance by $.02 to reflect strong first quarter results
- Returned $597 million to shareholders
in the first quarter through share repurchases and dividends
- Increased the Company’s dividend by 25%
in the first quarter
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 first quarter ended
May 5, 2018. Net sales for the first quarter of Fiscal 2019
increased 12% to $8.7 billion. Consolidated comparable store sales
increased 3% over the comparable period last year ending May 6,
2017. Net income for the first quarter was $716 million and diluted
earnings per share were $1.13. Adjusted diluted earnings per share
were $.96, a 17% increase over the prior year’s $.82.
Ernie Herrman, Chief Executive Officer and President of The TJX
Companies, Inc., stated, “We are very pleased with our first
quarter results as both our consolidated comp store sales growth of
3% and earnings per share exceeded our expectations. Marmaxx, our
largest division, delivered a strong 4% comparable store sales
increase as consumers were drawn to our great fashions and brands
at outstanding values! Customer traffic was once again the primary
driver of our comparable store sales increases at each of our four
large divisions. Based on our strong first quarter performance, we
are updating our outlook for full-year earnings per share. We
believe that the consistency of our customer traffic increases
demonstrates the strength and resiliency of our business and our
ability to succeed through many types of economic and retail
environments. Looking ahead, the second quarter is off to a strong
start and we see plentiful opportunities to capitalize on the
exciting fashions and brands available to us in the marketplace. We
are convinced that we will continue to gain market share and grow
successfully around the world.”
Sales by Business
Segment
The Company’s comparable store sales and net sales by division,
in the first quarter, were as follows:
First Quarter
First Quarter Comparable Store
Sales1,2,3
Net Sales ($ in millions)3,4
FY2019 FY2018
FY2019 FY2018
Marmaxx5,6
+4% 0% $5,381
$4,967 HomeGoods7 +2% +3%
$1,269 $1,121 TJX Canada +3%
+3% $854 $739 TJX
International (Europe & Australia) +1%
0% $1,185 $957
TJX +3% +1%
$8,689 $7,784
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 three
percentage point positive impact on consolidated net sales growth
in the first quarter of Fiscal 2019 versus the prior year. The
overall net impact of foreign currency exchange rates had a $.04
positive impact on first quarter Fiscal 2019 earnings per share,
compared with a $.01 positive 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 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 first quarter of Fiscal 2019, the Company’s consolidated
pretax profit margin was 11.0%, a 0.3 percentage point increase
compared with the prior year’s 10.7%.
Gross profit margin for the first quarter of Fiscal 2019 was
28.9%, down 0.1 percentage point versus the prior year. Selling,
general and administrative (SG&A) costs as a percent of sales
for the first quarter were 17.8%, down 0.3 percentage points versus
the prior year’s ratio, primarily due to expense savings and a
one-time gain related to a lease buyout.
Inventory
Total inventories as of May 5, 2018, were $4.4 billion, compared
with $3.7 billion at the end of the first quarter last year.
Consolidated inventories on a per-store basis as of May 5, 2018,
including the distribution centers, but excluding inventory in
transit and the Company’s e-commerce businesses, were up 7% on a
reported basis (up 6% on a constant currency basis, compared to a
decrease of 7% on a constant currency basis in the prior year). The
Company is in an excellent inventory position entering the second
quarter and has plenty of liquidity to take advantage of the
terrific opportunities it sees in the marketplace for quality,
branded merchandise.
Shareholder
Distributions
During the first quarter, the Company returned a total of $597
million to shareholders. The Company repurchased a total of $400
million of TJX stock, retiring 4.9 million shares, and paid $197
million in shareholder dividends. The Company continues to expect
to repurchase approximately $2.5 to $3.0 billion of TJX stock in
Fiscal 2019. The Company may adjust this amount up or down
depending on various factors. Additionally, the Company increased
its dividend by 25% in the first quarter, marking the 22nd
consecutive year of dividend increases. The Company remains
committed to returning cash to its shareholders while continuing to
reinvest in the business to support the near- and long-term growth
of TJX.
Second Quarter and Full Year Fiscal
2019 Outlook
For the second quarter of Fiscal 2019, the Company expects
diluted earnings per share to be in the range of $1.02 to $1.04.
Excluding an expected benefit of approximately $.15 per share due
to items related to the 2017 Tax Cuts and Jobs Act (primarily the
lower U.S. corporate income tax rate), the Company expects adjusted
earnings per share to be in the range of $.87 to $.89, compared to
$.85 last year. This guidance assumes that restructuring costs
within the Company’s IT department will negatively impact EPS
growth by 3% to 4%. These costs were contemplated in TJX’s original
full-year guidance provided in February 2018. The Company expects
that wage increases will negatively impact EPS growth by another
2%. The Company also anticipates that foreign currency will benefit
EPS growth by approximately 4%. This EPS outlook is based upon
estimated consolidated comparable store sales growth of 1% to
2%.
For the 52-week fiscal year ending February 2, 2019, the Company
now expects diluted earnings per share to be in the range of $4.75
to $4.83, which represents an 18% to 20% increase over the prior
year’s $4.04. The Company’s full-year guidance includes an expected
benefit of approximately $.72 to $.73 per share due to items
related to the 2017 Tax Cuts and Jobs Act (primarily the lower U.S.
corporate income tax rate), which is approximately $.02 lower than
previous guidance of $.73 to $.75 per share.
The Company is increasing the high-end of its Fiscal 2019
adjusted EPS guidance by $.02 to reflect its strong first quarter
results. The Company now expects adjusted diluted earnings per
share, which excludes the benefit from the 2017 Tax Cuts and Jobs
Act mentioned above, to be in the range of $4.04 to $4.10. This
guidance represents a 5% to 6% increase over the prior year’s
adjusted $3.85, which excludes a $.17 net benefit due to items
related to the 2017 Tax Cuts and Jobs Act, a benefit of
approximately $.11 from the extra week in the Company’s Fiscal 2018
calendar, and a $.10 impairment charge related to Sierra Trading
Post from GAAP EPS of $4.04. This guidance reflects an assumption
that wage increases will negatively impact EPS growth by 2%. This
EPS outlook continues to be based upon estimated consolidated
comparable store sales growth of 1% to 2%.
It is important to note that Fiscal 2019 full-year adjusted
guidance assumes that $.07 of the $.09 EPS benefit from the
above-plan first quarter will be offset by a combination of
factors. The Company now expects a $.03 negative impact to EPS due
to significantly higher planned freight costs than the Company
originally expected, partially offset by assumptions for stronger
operational performance. In addition, the Company now anticipates a
reversal of the $.02 above-plan first quarter gain on inventory
hedges, and an assumption that the benefit from translational
foreign exchange will be $.02 lower than originally planned for the
full year.
The Company’s earnings guidance for the second quarter and full
year Fiscal 2019 assumes that currency exchange rates will remain
unchanged from the levels at the beginning of the second
quarter.
Stores by Concept
During the first quarter ended May 5, 2018, the Company
increased its store count by 71 stores to a total of 4,141 stores.
The Company increased square footage by 5% over the same period
last year.
Store
Locations1 Gross Square
Feet2 First Quarter First Quarter
(in millions)
Beginning
End Beginning End
In the U.S.:
T.J. Maxx
1,223 1,231 34.1 34.2
Marshalls 1,062 1,073
31.2 31.4 HomeGoods 667
690 15.8 16.3 Sierra Trading Post
27 32 0.6
0.7 Homesense 4 4 0.1
0.1
In Canada:
Winners
264 269 7.4
7.4 HomeSense 117 119 2.7
2.8 Marshalls 73 78
2.0 2.1
In Europe:
T.K. Maxx 540 549
15.8 16.0 Homesense 55 55
1.1 1.1
In Australia:
T.K. Maxx 38 41
0.8 0.9
TJX
4,070 4,141 111.7
113.1
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 May 5,
2018, the end of the Company’s first quarter, the Company operated
a total of 4,141 stores in nine countries, the United States,
Canada, the United Kingdom, Ireland, Germany, Poland, Austria, the
Netherlands, and Australia, and three e-commerce sites. These
include 1,231 T.J. Maxx, 1,073 Marshalls, 690 HomeGoods, 32 Sierra
Trading Post, and 4 Homesense stores, as well as tjmaxx.com and
sierratradingpost.com in the United States; 269 Winners, 119
HomeSense, and 78 Marshalls stores in Canada; 549 T.K. Maxx and 55
Homesense stores, as well as tkmaxx.com, in Europe; and 41 T.K.
Maxx stores in Australia. TJX’s press releases and financial
information are available at tjx.com.
Fiscal 2019 First 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 first quarter Fiscal 2019 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 29, 2018,
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; 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 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 5,2018
April 29,2017
Net sales $ 8,688,720 $ 7,784,024 Cost of sales,
including buying and occupancy costs 6,178,239 5,530,072 Selling,
general and administrative expenses 1,550,775 1,411,603 Interest
expense, net 4,148 9,841 Income before
provision for income taxes 955,558 832,508 Provision for income
taxes 239,177 296,229 Net income $ 716,381 $
536,279 Diluted earnings per share $ 1.13 $ 0.82 Cash
dividends declared per share $ 0.39 $ 0.3125 Weighted
average common shares – diluted 634,436 654,799
The TJX Companies, Inc. and Consolidated
Subsidiaries
Condensed Balance Sheets
(Unaudited)
(In Millions)
May 5,2018
April 29,2017
ASSETS Current assets: Cash and cash equivalents $ 2,681.1 $
2,669.5 Short-term investments 435.9 457.1 Accounts receivable and
other current assets 935.4 685.8 Merchandise inventories
4,369.9 3,736.1 Total current assets 8,422.3
7,548.5 Net property at cost 5,026.1 4,601.0
Goodwill 98.6 195.6 Other assets 460.1 418.4
TOTAL ASSETS $ 14,007.1 $ 12,763.5 LIABILITIES AND
SHAREHOLDERS’ EQUITY Current liabilities: Accounts payable $
2,509.1 $ 2,174.7 Accrued expenses and other current liabilities
2,467.8 2,430.7 Total current liabilities
4,976.9 4,605.4 Other long-term liabilities
1,275.8 1,071.5 Non-current deferred income taxes, net 260.6 304.7
Long-term debt 2,231.4 2,228.4 Shareholders’ equity
5,262.4 4,553.5 TOTAL LIABILITIES AND SHAREHOLDERS’
EQUITY $ 14,007.1 $ 12,763.5
The TJX Companies, Inc. and Consolidated
Subsidiaries
Condensed Statements of Cash Flows
(Unaudited)
(In Millions)
13 Weeks Ended
May 5,2018
April 29,2017
CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 716.4 $
536.3 Depreciation and amortization 192.3 172.5 Deferred income tax
provision 7.3 8.2 Share-based compensation 24.0 24.1 Decrease
(increase) in accounts receivable and other assets 118.4 (38.9 )
(Increase) in merchandise inventories (225.2 ) (88.6 ) Increase
(decrease) in accounts payable 44.0 (57.0 ) (Decrease) in accrued
expenses and other liabilities (130.4 ) (104.4 ) Other (21.9
) (3.8 ) Net cash provided by operating activities
724.9 448.4 CASH FLOWS FROM
INVESTING ACTIVITIES: Property additions (265.0 ) (258.5 )
Purchases of investments (148.2 ) (233.1 ) Sales and maturities of
investments 192.7 289.9 Net cash (used
in) investing activities (220.5 ) (201.7 )
CASH FLOWS FROM FINANCING ACTIVITIES: Payments for repurchase of
common stock (395.4 ) (350.0 ) Proceeds from issuance of common
stock 84.6 52.0 Cash dividends paid (197.3 ) (168.6 ) Other
(17.9 ) (17.5 ) Net cash (used in) financing activities
(526.0 ) (484.1 ) Effect of exchange rate
changes on cash (55.8 ) (22.9 ) Net (decrease)
in cash and cash equivalents (77.4 ) (260.3 ) Cash and cash
equivalents at beginning of year 2,758.5
2,929.8 Cash and cash equivalents at end of period $
2,681.1 $ 2,669.5
The TJX Companies, Inc. and Consolidated
Subsidiaries
Selected Information by Major Business
Segment
(Unaudited)
(In Thousands)
13 Weeks Ended
May 5,2018
April 29,2017
Net sales: In the United States: Marmaxx $ 5,380,918 $
4,967,135 HomeGoods 1,269,331 1,121,269 TJX Canada 853,836 738,771
TJX International 1,184,635 956,849 Total net
sales $ 8,688,720 $ 7,784,024 Segment profit: In the
United States: Marmaxx $ 750,456 $ 687,165 HomeGoods 147,360
152,092 TJX Canada 125,184 102,880 TJX International 40,826
6,860 Total segment profit 1,063,826 948,997
General corporate expense 104,120 106,648 Interest expense, net
4,148 9,841 Income before provision for income
taxes $ 955,558 $ 832,508
The TJX Companies, Inc. and Consolidated
SubsidiariesNotes to Consolidated Condensed Statements
1. During the first quarter ended May 5, 2018, TJX repurchased
4.9 million shares of its common stock at a cost of $400 million.
In February 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.
2. During the fourth quarter ended February 3, 2018, the Company
recorded a $99.3 million impairment charge, primarily goodwill,
related to Sierra Trading Post.
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The TJX Companies, Inc.Debra McConnellGlobal Communications(508)
390-2323
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