10-KPeriod: FY2021

TJX COMPANIES INC /DE/ Annual Report, Year Ended Jan 30, 2021

Filed March 31, 2021For Securities:TJX

Summary

TJX Companies, Inc. (TJX) reported its fiscal year 2021 results on March 30, 2021, reflecting significant impacts from the COVID-19 pandemic. The company experienced a substantial decrease in net sales, down 23% to $32.1 billion, and diluted earnings per share dropped to $0.07 from $2.67 in the prior year. This was primarily due to widespread temporary store closures, which impacted operations for approximately 24% of the fiscal year, and subsequent changes in consumer behavior and operational modifications. Despite these challenges, TJX maintained a strong liquidity position, ending the year with $10.5 billion in cash and secured substantial financing through debt issuances. The company also managed inventory effectively, with a 21% decrease in average per store inventories. While strategic actions like suspending share repurchases and not declaring dividends for the first nine months were necessary, the company declared a quarterly dividend in Q4 fiscal 2021, signaling a return to shareholder distributions. Looking ahead, TJX planned for a return to normal capital spending and modest store expansion in fiscal 2022.

Financial Highlights

28 data points
Beta

Revenue

$32.14B

23.7% Gross Margin

Net Income

$90.00M

0.3% Net Margin

EPS (Diluted)

$0.07

Free Cash Flow

$3.99B

Financial Statements
Beta
Revenue$32.14B
Cost of Revenue$24.53B
Gross Profit$7.60B
SG&A Expenses$7.02B
Interest Expense$199.00M
Net Income$90.00M
EPS (Basic)$0.08
EPS (Diluted)$0.07
Shares Outstanding (Basic)1.20B
Shares Outstanding (Diluted)1.22B

Key Highlights

  • 1Net sales decreased by 23% to $32.1 billion in fiscal 2021, heavily impacted by COVID-19 related store closures which accounted for approximately 24% of potential store operating days.
  • 2Diluted earnings per share (EPS) significantly declined to $0.07 in fiscal 2021, compared to $2.67 in fiscal 2020, reflecting the impact of reduced sales and increased operating expenses.
  • 3The company maintained a strong cash position of $10.5 billion at the end of fiscal 2021, supported by significant debt issuances totaling $4 billion in Q1 and $1 billion in Q4 fiscal 2021 to bolster liquidity.
  • 4TJX saw a notable decrease in inventory levels, with average per store inventories down 21% year-over-year, reflecting effective inventory management amidst fluctuating demand.
  • 5Operating expenses increased as a percentage of net sales, with Cost of Sales rising to 76.3% and SG&A expenses to 21.8%, largely due to COVID-19 related costs such as enhanced safety protocols, appreciation bonuses, and fixed occupancy costs on lower sales.
  • 6The company suspended its share repurchase program in March 2020 due to the pandemic, and dividends were also affected, with no dividends declared for the first nine months of fiscal 2021, though a quarterly dividend was resumed in Q4.
  • 7TJX International segment experienced a significant loss of $504 million, primarily due to extensive store closures (36% of the fiscal year) and operational challenges.

Frequently Asked Questions

The COVID-19 pandemic had a substantial negative impact on TJX's financial performance in fiscal 2021. The company reported a 23% decrease in net sales to $32.1 billion and a sharp decline in diluted EPS to $0.07 from $2.67. This was primarily due to temporary store closures, which accounted for about 24% of potential store operating days across the company, as well as increased operational costs for health and safety measures and modified consumer behavior.

TJX maintained a strong liquidity position, ending fiscal 2021 with $10.5 billion in cash. To manage liquidity and operational needs during the pandemic, the company issued approximately $4 billion in aggregate principal amount of notes in the first quarter of fiscal 2021 and an additional $1 billion in the fourth quarter. They also had $1.5 billion available under revolving credit facilities. A significant debt extinguishment charge of $0.3 billion was recognized due to tender offers for existing notes.

TJX managed its inventory effectively, with average per store inventories decreasing by 21% compared to the prior year. This lean inventory approach is core to their off-price model. However, the overall cost of sales as a percentage of net sales increased by 4.8 percentage points to 76.3%. This increase was driven by fixed occupancy costs on lower sales, higher distribution costs per unit, increased markdowns, and rising freight costs, partially offset by strong mark-on. Increased COVID-19 related expenses also contributed to higher operating costs.

For fiscal 2022, TJX planned for a return to more normal operations. Capital expenditures were expected to be in the range of $1.2 billion to $1.4 billion, supporting infrastructure, distribution centers, and store renovations. The company also planned for modest store expansion, with approximately 120 net new store openings anticipated. The share repurchase program remained suspended, but a quarterly dividend was resumed in Q4 fiscal 2021.