10-KPeriod: FY2018

TJX COMPANIES INC /DE/ Annual Report, Year Ended Feb 3, 2018

Filed April 4, 2018For Securities:TJX

Summary

TJX Companies Inc. (TJX) reported strong performance for the fiscal year ended February 3, 2018, demonstrating resilience and continued growth within the off-price retail sector. The company saw an 8% increase in net sales, reaching $35.9 billion, driven by both comparable store sales growth and the addition of new stores across its diverse portfolio, which includes banners like T.J. Maxx, Marshalls, HomeGoods, Winners, and T.K. Maxx. This growth was primarily fueled by an increase in customer traffic across all segments, indicating the continued appeal of TJX's value proposition. Diluted earnings per share (EPS) saw a significant increase to $4.04 from $3.46 in the prior year, partly benefiting from the U.S. Tax Cuts and Jobs Act of 2017, which provided a net benefit of $0.17 per share. Despite some cost pressures, such as higher supply chain and payroll expenses, TJX managed its margins effectively, with merchandise margins remaining flat. The company also demonstrated a strong commitment to shareholder returns, repurchasing $1.7 billion of its stock and planning for significant future repurchases, alongside an expected increase in quarterly dividends. TJX's strategic focus on opportunistic buying, a flexible business model, and consistent store expansion positions it well for ongoing success in a competitive retail landscape.

Financial Highlights

51 data points
Beta

Revenue

$35.86B

28.9% Gross Margin

Net Income

$2.61B

7.3% Net Margin

EPS (Diluted)

$2.02

Total Assets

$14.06B

Cash & Equivalents

$2.76B

Free Cash Flow

$1.97B

Financial Statements
Beta
Revenue$35.86B
Cost of Revenue$25.50B
Gross Profit$10.36B
SG&A Expenses$6.38B
Operating Income$4.40B
Interest Expense$69.24M
Net Income$2.61B
EPS (Basic)$2.05
EPS (Diluted)$2.02
Shares Outstanding (Basic)1.27B
Shares Outstanding (Diluted)1.29B

Key Highlights

  • 1Net sales increased by 8% to $35.9 billion in fiscal year 2018, driven by comparable store sales growth and new store openings.
  • 2Diluted earnings per share (EPS) rose to $4.04, up from $3.46 in the prior year, with a positive impact from the Tax Cuts and Jobs Act of 2017.
  • 3Comparable store sales increased by 2% on a 52-week basis, primarily driven by higher customer traffic across all four segments.
  • 4The company repurchased approximately $1.7 billion of its common stock in fiscal year 2018 and authorized an additional $3.0 billion repurchase program.
  • 5TJX continues its store expansion strategy, with a total of 4,070 stores at year-end and plans for further growth across its banners and geographies.
  • 6The company maintained a strong merchandise margin, which was flat compared to the prior year, while managing increased supply chain and payroll costs.
  • 7A significant portion of cash ($1.8 billion) was held by foreign subsidiaries, with plans to repatriate over $1 billion from Canada in the upcoming fiscal year.

Frequently Asked Questions

TJX's core strategy is off-price retail, offering quality, fashionable, brand-name, and designer merchandise at prices generally 20% to 60% below full-price retailers. This is achieved through an opportunistic buying strategy, where buyers acquire merchandise from various sources like cancellations and overruns, rather than traditional advance ordering. This flexible model, combined with a 'treasure hunt' shopping experience and rapid inventory turnover, differentiates TJX from traditional retailers who typically rely on predictable inventory flow and markdowns.

The Tax Cuts and Jobs Act of 2017 had a notable impact on TJX's fiscal year 2018 results. It led to a reduction in the U.S. corporate income tax rate, resulting in a provisional tax benefit. TJX reinvested a portion of these savings through discretionary bonuses for associates, increased contributions to retirement plans, and donations to charitable foundations. The net effect was a benefit of $0.17 per share to diluted earnings per share for fiscal year 2018.

Store expansion is a key part of TJX's global growth strategy. The company operated over 4,000 stores across four main segments (Marmaxx, HomeGoods, TJX Canada, and TJX International) at the end of fiscal year 2018 and estimated long-term store growth potential of 6,100 stores. TJX continues to expand its presence within its current markets and has a strategy for entering new geographic regions and developing new channels, demonstrating a consistent focus on scaling its off-price model internationally and domestically.

TJX employs a highly flexible and opportunistic approach to inventory management. They aim for rapid inventory turns and a constantly changing assortment to create excitement for customers. Their buying strategy focuses on acquiring merchandise opportunistically throughout the year, buying closer to need to react to trends and pricing. Distribution centers are designed to be efficient and support global buying strategies, enabling quick and differentiated delivery of merchandise to stores. This lean inventory approach allows them to take advantage of market opportunities and minimize markdown exposure.