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TJX COMPANIES INC /DE/ Annual Report, Year Ended Jan 25, 2003

Filing Date
Filed April 25, 2003
Period End
January 25, 2003
Security
TJX
In the record · 2016–202610-K1110-Q328-K102

TJX filed 11 annual reports (10-K), 32 quarterly reports (10-Q) and 102 current reports (8-K) between 2016 and 2026.

  1. Leadership change8-K · Nov ’16Nov ’16
  2. Leadership change8-K · Feb ’19Feb ’19
  3. FY2021 annual report10-K · Mar ’21Mar ’21
  4. Material agreement8-K · May ’25May ’25

01—Abstract

Summary

Summary of the 10-K filed April 25, 2003. Cited figures are marked; the original filing is the authoritative source.

TJX Companies (NYSE: TJX), the leading off-price apparel and home fashions retailer in the U.S. and internationally, closed fiscal 2003 (ended January 25, 2003) with net sales up 11.9% to $11.98 billiona and diluted EPS up 11% to $1.08 from $0.97 (per the $578.4 million net income, which was up 7.5% from fiscal 2002's $540.4 million from continuing operations).

Growth came from a 10.7% increase in store count to 1,843 stores plus 3% consolidated same-store sales growth. Profitability was mixed: the operating margin before taxes fell to 7.8% from 8.2%, driven by higher SG&A (including a $16 millionb charge for a tentative settlement of four California overtime lawsuits) and cost pressures at Marmaxx (T.J. Maxx and Marshalls), which remains the core profit engine with $888 million of segment profit, though its margin slipped to 9.4%.

Younger divisions improved sharply: T.K. Maxx and HomeGoods segment profit rose substantially, and Winners' merchandise margin recovered, while A.J. Wright still posted a segment loss.

Capital and shareholder returns remained strong. Operating cash flow was $908.6 millionc, capital expenditures were $396.7 million, and TJX repurchased $481.7 million of stock (25.9 million shares) while completing a $1 billion buyback and launching another $1 billion program. The annual dividend was raised to $0.12 per share from $0.09.

Long-term debt is modest at $664.8 milliond, with the bulk of it a zero-coupon convertible note whose holders have put options beginning in February 2004. Management guides to fiscal 2004 with 192 net new stores (a 10.4% increase), roughly 3% same-store sales growth, 13% total sales growth, and capex of about $430 million, and notes that fiscal 2004 will include a 53rd week.

Key risks for investors include reliance on a highly promotional retail environment and consumer demand, rising benefit and occupancy costs, exposure to discontinued-operations lease liabilities (House2Home and Ames, with an approximately $164 million contingent exposure in total), and the ongoing California wage litigation. Overall, the filing portrays a financially strong, cash-generative off-price leader executing an aggressive store expansion, with margin pressure at its largest division the main issue to watch.

02—Key points

Key Highlights

  1. Net sales rose 11.9% to $11.98 billion, driven by a 10.7% increase in store count to 1,843 and 3% consolidated same-store sales growth.
  2. Diluted EPS of $1.08 versus $0.97 in fiscal 2002; net income of $578.4 million, with a 38.3% effective tax rate.
  3. Pre-tax margin contracted to 7.8% from 8.2%, pressured by SG&A increases including a $16 million charge for California overtime lawsuit settlements.
  4. Marmaxx (T.J. Maxx and Marshalls) generated $888 million of segment profit on $9.49 billion of sales, though its segment margin fell to 9.4% from 10.1%.
  5. T.K. Maxx segment profit nearly tripled to $43.0 million, and HomeGoods segment profit rose to $32.1 million from $3.7 million; A.J. Wright still posted a $12.6 million loss.
  6. Operating cash flow of $908.6 million funded $396.7 million of capex and $481.7 million of share repurchases, with the dividend raised to $0.12 per share from $0.09.
  7. Fiscal 2004 guidance calls for 192 net new stores, about 3% same-store sales growth, 13% total sales growth, and capex near $430 million.

03—Questions

Frequently Asked Questions

  1. How strong is TJX's growth and profitability trend in fiscal 2003?

    Sales grew 11.9% to $11.98 billion and net income reached $578.4 million, up about 7% from continuing operations in fiscal 2002, with diluted EPS up 11% to $1.08. Growth was driven mainly by store expansion, which accounted for 80% of the sales increase. Pre-tax margin, however, declined to 7.8% from 8.2% due to higher SG&A and merchandise pressure at Marmaxx.

  2. What is driving the company's store expansion and what are the long-term targets?

    TJX plans 192 net new stores in fiscal 2004, a 10.4% increase. Management believes T.J. Maxx and Marshalls can ultimately support about 1,800 U.S. stores, Canada about 200 Winners and 80 HomeSense, the U.K. and Ireland 300 to 350 T.K. Maxx stores, and the U.S. about 1,000 or more A.J. Wright stores. The expansion is the main driver of capex and of the company's long-term growth outlook.

  3. Are there material legal or contingent liabilities investors should be aware of?

    TJX tentatively agreed to settle four California lawsuits alleging improper overtime exemption for store managers, with a $16 million pre-tax charge recorded. Separately, the company carries a $55.4 million reserve for discontinued operations, mainly House2Home and former Zayre leases, and has contingent lease exposure of about $164 million across assigned leases, sublets, and BJ's Wholesale Club leases. Management considers these not material to financial condition.

  4. How is TJX returning capital to shareholders and how healthy is its balance sheet?

    TJX spent $481.7 million repurchasing 25.9 million shares in fiscal 2003, completed a $1 billion buyback, and started a new $1 billion program. The dividend was raised to $0.12 per share from $0.09 and cash dividends totaled $60 million. Long-term debt is $664.8 million, mostly zero-coupon convertible notes with put dates starting February 2004, while cash was $492 million and shareholders' equity was $1.41 billion.

04—Continue

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