10-KPeriod: FY2011

TJX COMPANIES INC /DE/ Annual Report, Year Ended Jan 29, 2011

Filed March 30, 2011For Securities:TJX

Summary

The TJX Companies, Inc. (TJX) reported a solid performance for the fiscal year ending January 29, 2011, demonstrating resilience in its off-price retail model. The company saw an 8% increase in net sales to $21.9 billion, driven by a 4% rise in same-store sales, which built upon a strong 6% increase in the prior year. This growth was primarily fueled by an increase in customer transactions, indicating healthy customer traffic and demand for TJX's value-oriented offerings. The company continued its strategic store expansion, with total store count and selling square footage growing by 4%. A significant strategic decision was made to consolidate the A.J. Wright division by converting 90 stores to existing TJX banners (T.J. Maxx, Marshalls, HomeGoods) and closing the remaining 72 stores. While this consolidation incurred charges in the fourth quarter, it is expected to improve efficiency and focus resources on higher-return businesses. The company maintained a strong merchandise margin, supported by its opportunistic buying strategy and lean inventory management, which helped offset higher selling, general, and administrative expenses, partly due to the A.J. Wright consolidation impact.

Financial Highlights

26 data points
Beta

Revenue

$21.94B

Net Income

$1.34B

6.1% Net Margin

EPS (Diluted)

$0.82

Free Cash Flow

$1.27B

Financial Statements
Beta
Revenue$21.94B
SG&A Expenses$3.71B
Operating Income$10.30M
Interest Expense$49.01M
Net Income$1.34B
EPS (Basic)$0.84
EPS (Diluted)$0.82
Shares Outstanding (Basic)1.60B
Shares Outstanding (Diluted)1.63B

Key Highlights

  • 1Net sales increased by 8% to $21.9 billion, driven by a 4% increase in same-store sales.
  • 2The company is strategically consolidating its A.J. Wright division, converting 90 stores and closing 72, to focus resources on more profitable banners.
  • 3Same-store sales growth of 4% was achieved by increasing customer transactions, indicating strong customer traffic.
  • 4TJX continued its store expansion, with both store count and selling square footage increasing by 4% year-over-year.
  • 5Lean inventory management and opportunistic buying contributed to improved merchandise margins.
  • 6Diluted earnings per share from continuing operations rose to $3.30, up from $2.84 in the prior year, despite the A.J. Wright consolidation charges.
  • 7The company repurchased approximately $1.2 billion of its common stock during the fiscal year, enhancing shareholder value.

Frequently Asked Questions

TJX's primary strategy is operating as an off-price retailer, offering brand-name and designer merchandise at prices generally 20% to 60% below department and specialty store regular prices. This model relies on opportunistic buying, where merchants purchase inventory close to the selling season from vendors experiencing overruns, cancellations, or excess inventory. This differs from traditional retailers who typically order merchandise far in advance and operate with higher inventory levels and less flexibility.

The consolidation of the A.J. Wright division is a strategic move to improve operational efficiency and financial performance. By converting 90 A.J. Wright stores to more successful banners like T.J. Maxx, Marshalls, and HomeGoods, and closing the remaining 72 stores, TJX aims to better serve the target customer demographic, focus resources on higher-return businesses, and enhance overall growth prospects. While it resulted in significant charges in the reporting period, it is expected to streamline operations and strengthen the company's core brands.

TJX employs a 'lean inventory' and 'buying close to need' strategy. This approach allows them to quickly react to market trends and take advantage of opportunistic buys at discounted prices. This flexible model results in rapid inventory turns, creating a 'treasure hunt' shopping experience that drives customer traffic. Financially, this strategy leads to lower markdown exposure, improved merchandise margins, and better inventory efficiency, which are key drivers of their profitability.

TJX operates international segments in Canada (Winners, HomeSense, Marshalls) and Europe (T.K. Maxx, HomeSense). While TJX Canada showed strong sales growth and improved segment profit in fiscal 2011, TJX Europe experienced a decline in same-store sales and segment profit due to perceived execution issues and a decrease in perceived value by consumers. TJX plans to slow growth in Europe for fiscal 2012 to focus on correcting these execution issues while remaining confident in its long-term potential in the region.