How did TJX perform financially in fiscal 1994?

TJX posted net sales of $3.63 billion, up 11.2%, and net income of $124.4 million, or $1.58 per fully diluted share, up from $1.38. Income from continuing operations rose to $1.62 per share from $1.40. Gross margin improved modestly, but higher SG&A from start-up ventures limited operating leverage.

What is driving TJX's growth, and how sustainable is it?

Growth came mainly from new store openings and from Chadwick's catalog expansion, which grew 45%. Same-store sales increased only 2%, and weather hurt results, so comparable-store momentum is weak. Future growth depends on continued T.J. Maxx expansion, larger store prototypes, and new ventures such as HomeGoods and T.K. Maxx in the U.K.

Are there any notable risks or concerns for investors?

Key concerns include weaker operating cash flow ($84.4 million versus $138.6 million), rising inventory levels, and higher SG&A from start-up costs for the U.K. and HomeGoods initiatives. The company also faces a Delaware class action over the 1989 merger, which management believes lacks merit. Contingent liabilities remain from the Ames bankruptcy, with $17.6 million in reserves.

How strong is TJX's balance sheet and liquidity position?

The balance sheet improved significantly, with equity rising to $590.9 million from $505.2 million, largely due to earnings and the 1992 debt conversion. Long-term debt is $210.9 million, and the company has $200 million in committed bank credit lines, all unused at year-end. Cash on hand fell to $58.1 million, reflecting heavy capital spending and dividends.

What is TJX's outlook for fiscal 1995?

Management plans capital expenditures of about $140 million, including roughly $60 million for new stores and $48 million for store improvements, primarily for T.J. Maxx. Planned openings include about 45 T.J. Maxx stores, 35 Hit or Miss stores, and 10 Winners stores, along with the first two to five T.K. Maxx stores in the U.K. The filing does not provide explicit earnings guidance.

TJX 10-K FY1994 Annual Report — Revenue, Net Income, EPS

01—Abstract

Summary

Summary of the 10-K filed April 22, 1994. Cited figures are marked; the original filing is the authoritative source.

The TJX Companies, Inc. (NYSE: TJX) reported fiscal 1994 (year ended January 29, 1994) net sales of $3.63 billion^a, up 11.2% from $3.26 billion, and net income of $124.4 million, or $1.58 per fully diluted share, versus $102.8 million in fiscal 1993.

Income from continuing operations before extraordinary and accounting-change items rose 22% to $127.0 million^b ($1.62 per share). Growth was led by the T.J. Maxx off-price family apparel segment, which generated $236.99 million of operating income (up 9.3%), and by Chadwick's of Boston, whose catalog sales grew 45% to $421 million.

Hit or Miss returned to modest profitability after losses in fiscal 1993. Same-store sales rose only 2%^c on a consolidated basis, with weather cited as a headwind, so the top-line growth came mainly from new stores and catalog expansion. Profitability improved at the gross margin line, where cost of sales fell to 75.1% of sales from 75.7%, but SG&A rose to 18.6% of sales from 18.2%, reflecting start-up costs for the U.K.

T.K. Maxx venture and the HomeGoods concept. Interest expense fell to $19.0 million^d from $26.3 million, aided by the 1992 conversion of convertible debentures and lower borrowing rates.

The effective tax rate was 40%, and the new 1993 federal tax law trimmed net income by about $0.02 per share. Cash flow from operations weakened to $84.4 million from $138.6 million because of higher tax payments and inventory build-up. Inventory rose to $772 million, 21.3% of sales, and capital expenditures were $125.8 million, with about $140 million planned for fiscal 1995.

The balance sheet strengthened, with shareholders' equity of $590.9 million (up from $505.2 million) and equity at 73.7% of long-term capital. Cash fell to $58.1 million, and long-term debt was $210.9 million. Management expects continued store growth in fiscal 1995, with about 45 new T.J.

Maxx stores, 35 Hit or Miss stores, 10 Winners stores, and initial T.K. Maxx openings in the U.K. The company also disclosed a class action over the 1989 merger of old TJX, with management saying it is without merit and not likely to be material.

02—Key points

Key Highlights

Net sales rose 11.2% to $3.63 billion in fiscal 1994; on a comparable 52-week basis, growth was 12.5%.
Net income increased 21% to $124.4 million; fully diluted EPS was $1.58, versus $1.38 in fiscal 1993.
T.J. Maxx remains the core earnings engine with 512 U.S. stores and $2.75 billion in divisional sales, but same-store sales grew only 2%.
Chadwick's of Boston catalog sales jumped 45% to $421 million and rose to 11.6% of consolidated sales, supporting the company's higher-margin mix shift.
Hit or Miss swung to a $5.0 million operating profit from a $5.5 million loss in fiscal 1993 after store closures and real estate repositioning.
Operating cash flow fell to $84.4 million from $138.6 million, while inventories rose to 21.3% of sales, a watch item for investors.
Shareholders' equity grew to $590.9 million, and the company's debt-to-capital position improved, with equity at 73.7% of long-term capital.

03—Questions

Frequently Asked Questions

How did TJX perform financially in fiscal 1994?
TJX posted net sales of $3.63 billion, up 11.2%, and net income of $124.4 million, or $1.58 per fully diluted share, up from $1.38. Income from continuing operations rose to $1.62 per share from $1.40. Gross margin improved modestly, but higher SG&A from start-up ventures limited operating leverage.
What is driving TJX's growth, and how sustainable is it?
Growth came mainly from new store openings and from Chadwick's catalog expansion, which grew 45%. Same-store sales increased only 2%, and weather hurt results, so comparable-store momentum is weak. Future growth depends on continued T.J. Maxx expansion, larger store prototypes, and new ventures such as HomeGoods and T.K. Maxx in the U.K.
Are there any notable risks or concerns for investors?
Key concerns include weaker operating cash flow ($84.4 million versus $138.6 million), rising inventory levels, and higher SG&A from start-up costs for the U.K. and HomeGoods initiatives. The company also faces a Delaware class action over the 1989 merger, which management believes lacks merit. Contingent liabilities remain from the Ames bankruptcy, with $17.6 million in reserves.
How strong is TJX's balance sheet and liquidity position?
The balance sheet improved significantly, with equity rising to $590.9 million from $505.2 million, largely due to earnings and the 1992 debt conversion. Long-term debt is $210.9 million, and the company has $200 million in committed bank credit lines, all unused at year-end. Cash on hand fell to $58.1 million, reflecting heavy capital spending and dividends.
What is TJX's outlook for fiscal 1995?
Management plans capital expenditures of about $140 million, including roughly $60 million for new stores and $48 million for store improvements, primarily for T.J. Maxx. Planned openings include about 45 T.J. Maxx stores, 35 Hit or Miss stores, and 10 Winners stores, along with the first two to five T.K. Maxx stores in the U.K. The filing does not provide explicit earnings guidance.

04—Continue

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