01—Abstract
Summary
Summary of the 10-K filed March 31, 2021. Cited figures are marked; the original filing is the authoritative source.
TJX Companies' fiscal 2021 (ended January 30, 2021) was a severe COVID-19 year.
Net sales fell 23% to $32.1 billiona from $41.7 billion, as stores were closed for roughly 24% of the year in aggregate. Pre-tax margin collapsed to 0.3% from 10.6%, and diluted EPS dropped to $0.07 from $2.67. The company still posted a small net profit of $90 million, helped by about $0.5 billion of government program benefits and a $0.3 billion loss on early debt extinguishment that weighed on results.
Open-only comp store sales were down 4%, with home fashions outperforming apparel. Segment profit was hit hardest in TJX International (a $504 millionb loss) and TJX Canada, while Marmaxx and HomeGoods were far more resilient. The balance sheet and liquidity picture is much stronger than the income statement suggests.
TJX generated $4.6 billionc of operating cash flow, aided by a $2.1 billion increase in accounts payable from extended supplier payment terms and a $0.6 billion inventory reduction. It ended the year with $10.5 billion of cash against $6.1 billion of total debt, after issuing $5 billion of notes and tendering $1.1 billion of higher-coupon notes. Management suspended buybacks in March 2020, reinstated a $0.26 quarterly dividend in Q4, and declared a similar dividend for Q1 fiscal 2022.
Capital spending was cut to $568 milliond from $1.2 billion, and fiscal 2022 guidance calls for roughly 120 net new stores and $1.2 to $1.4 billion of capex. The outlook remains uncertain. As of March 30, 2021, about 580 stores, mostly in Europe, were closed by government mandate, and management expects Q1 fiscal 2022 to be affected by closures covering about 71% of the quarter in Europe and 12% in Canada.
Cash-flow tailwinds from supplier payment timing and rent deferrals are expected to reverse as those obligations come due. Brexit adds structural cost pressure in Europe. Investors should weigh the strong liquidity and recovery potential of the off-price model against near-term margin and cash-flow normalization risk.
02—Key points
Key Highlights
- Net sales fell 23% to $32.1B (FY2021) from $41.7B, with stores closed about 24% of the year; e-commerce was only about 3% of sales.
- Diluted EPS was $0.07 versus $2.67 in FY2020; pre-tax margin fell to 0.3% from 10.6%, including a $312M loss on early debt extinguishment (about $0.19 per share).
- Operating cash flow was $4.6B, supported by a $2.1B increase in accounts payable and a $0.6B inventory reduction, which partly reflect extended supplier payment terms that will reverse.
- Liquidity is strong: $10.5B of cash, $1.5B of undrawn revolving credit facilities, and $5.3B of long-term debt after new notes issued in 2020 and 2021.
- Segment divergence: Marmaxx segment margin was 4.6% and HomeGoods 8.4%, while TJX International posted a segment loss of $504M (-13.1% margin) and TJX Canada margin fell to 4.4%.
- Shareholder returns were cut: buybacks were suspended in March 2020, FY2021 dividends totaled $0.26 per share declared (versus $0.92 in FY2020), and about $3.0B remains under existing repurchase authorizations.
- FY2022 plan calls for roughly 120 net new stores and $1.2–1.4B of capex, with a covenant regime that steps down to 3.50x funded debt to EBITDAR by Q4 FY2022.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2021filed March 31, 2021Financial Statements
FY2021 against FY2020
| Line item | FY2021FY2020 | Change |
|---|---|---|
| Revenue | $32.14B$41.72B | −23.0% |
| Cost of Revenue | $24.53B$29.85B | −17.8% |
| Gross Profit | $7.60B$11.87B | −36.0% |
| SG&A Expenses | $7.02B$7.45B | −5.8% |
| Interest Expense | $199.00M$61.40M | +224.1% |
| Net Income | $90.00M$3.27B | −97.2% |
| EPS (Basic) | $0.08$2.71 | −97.0% |
| EPS (Diluted) | $0.07$2.67 | −97.4% |
| Shares Outstanding (Basic) | 1.20B1.21B | −0.7% |
| Shares Outstanding (Diluted) | 1.22B1.23B | −0.9% |
05—Questions
Frequently Asked Questions
How much did COVID-19 affect TJX's fiscal 2021 results?
Substantially. Stores were closed for about 24% of fiscal 2021 in aggregate (36% in TJX International and 29% in TJX Canada). Net sales fell 23%, the pre-tax margin dropped to 0.3%, and diluted EPS was $0.07 versus $2.67. Government programs offset roughly $0.5 billion of expenses, while incremental COVID-related payroll, cleaning, and PPE costs weighed on margins.
Is TJX financially secure despite the profit collapse?
Liquidity is strong. TJX ended the year with $10.5B of cash and $1.5B of available revolver capacity, and it raised about $5B of long-term notes in 2020–2021, with maturities staggered through 2050. Management stated its cash and credit facilities are adequate for the next fiscal year. The company remained in compliance with its covenants, though those covenants tighten beginning in fiscal 2022.
Will the strong operating cash flow in fiscal 2021 persist?
Probably not at this level. About $2.1B of the cash flow benefit came from higher accounts payable due to temporarily extended supplier payment terms, and deferred rent payments are largely due in fiscal 2022. Management expects operating cash flow to be negatively affected as payment terms normalize and deferred amounts are paid.
What is the outlook for fiscal 2022 and beyond?
Management expects closures in Europe and Canada to hurt Q1 fiscal 2022 (about 71% and 12% of the quarter closed, respectively). Pandemic-related expenses are expected to continue into fiscal 2022. The company plans roughly 120 net new stores, capex of $1.2–1.4B, and has resumed a $0.26 quarterly dividend, while buybacks remain suspended. Brexit-related customs and immigration changes are expected to pressure European profitability in the near term.
Which segments are driving the company's results and risks?
Marmaxx (T.J. Maxx and Marshalls, about 60% of sales) and HomeGoods were the most resilient, with HomeGoods open-only comp sales up 13% and home fashions outperforming apparel across segments. TJX International, with a $504M segment loss, and TJX Canada were the weakest, reflecting longer closures and heavier fixed occupancy costs. Investors should watch European store reopening and the segment margin recovery as key indicators.
06—Continue