01—Abstract
Summary
Summary of the 10-K filed March 30, 2022. Cited figures are marked; the original filing is the authoritative source.
TJX Companies' fiscal 2022 (year ended January 29, 2022) was a strong rebound from the COVID-disrupted fiscal 2021.
Net sales rose 51% to $48.5 billiona from $32.1 billion, and net income rose to $3.3 billion, or $2.70 per diluted share, versus $0.07 in fiscal 2021. Pre-tax margin recovered to 9.1% from 0.3%. Stores were closed for only about 4% of the year, compared with about 24% in fiscal 2021, and the U.S. stayed open throughout.
Fiscal 2022 results were also roughly 16% above fiscal 2020 on net sales, with open-only comparable store sales up 15% versus pre-pandemic levels, showing that the rebound reflects underlying demand and not just reopening. The balance sheet and capital return picture are solid but shifted. Cash fell to $6.2 billionb from $10.5 billion as TJX repaid $2.75 billion of debt, repurchased $2.2 billion of stock, and paid $1.3 billion in dividends.
Inventory rose about 37% to $6.0 billionc as the company rebuilt stock, and operating cash flow declined to $3.1 billion from $4.6 billion, largely because of working capital swings. Management plans fiscal 2023 buybacks of $2.25 to $2.5 billion, capital expenditures of $1.7 to $1.9 billion, and a 13% dividend increase to $1.18 per share annualized. Investors should watch the planned divestiture of the 25% Familia stake in Russia, where TJX may record an investment loss of up to $225 million, and the company's exposure to supply chain costs, freight, and currency swings.
The company is the leading off-price apparel and home fashions retailer, operating nearly 4,700 stores across the U.S., Canada, Europe, and Australia. Its value proposition is goods priced 20% to 60% below full-price retailers, supported by opportunistic buying, lean inventory, and low operating costs. Management reports the pandemic still creates uncertainty, particularly in Europe and Canada, and it reported a non-trivial $242 milliond debt extinguishment charge in the year.
02—Key points
Key Highlights
- Net sales of $48.5 billion, up 51% from $32.1 billion in fiscal 2021 and up 16% from $41.7 billion in fiscal 2020, as stores were open for nearly the full year.
- Diluted EPS of $2.70 (including a $0.15 debt extinguishment charge) versus $0.07 in fiscal 2021; net income of $3.3 billion versus $0.1 billion.
- Pre-tax margin of 9.1%, up from 0.3% in fiscal 2021, though slightly below the 10.6% in fiscal 2020; SG&A ratio improved to 18.7% from 21.8%.
- Marmaxx (T.J. Maxx and Marshalls) generated $29.5 billion in sales at a 12.9% segment margin; HomeGoods reached $9.0 billion at a 10.1% margin, with strong growth in home fashions.
- Capital returns of $3.4 billion in fiscal 2022 ($2.2 billion in buybacks and $1.3 billion in dividends); about $3.8 billion remained under repurchase authorizations, and a new $3.0 billion program was approved in February 2022.
- Balance sheet deleveraging: total debt reduced by $2.75 billion to about $3.4 billion, and cash declined to $6.2 billion; the company had $1.5 billion of undrawn revolving credit capacity.
- Fiscal 2023 guidance includes capex of $1.7 to $1.9 billion, a planned 55 Marmaxx and 60 HomeGoods store openings, and a 13% dividend increase to $1.18 annualized per share.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2022filed March 30, 2022Financial Statements
FY2022 against FY2021
| Line item | FY2022FY2021 | Change |
|---|---|---|
| Revenue | $48.55B$32.14B | +51.1% |
| Cost of Revenue | $34.71B$24.53B | +41.5% |
| Gross Profit | $13.84B$7.60B | +82.0% |
| SG&A Expenses | $9.08B$7.02B | +29.3% |
| Interest Expense | $123.00M$199.00M | −38.2% |
| Net Income | $3.28B$90.00M | +3547.6% |
| EPS (Basic) | $2.74$0.08 | +3325.0% |
| EPS (Diluted) | $2.70$0.07 | +3757.1% |
| Shares Outstanding (Basic) | 1.20B1.20B | 0.0% |
| Shares Outstanding (Diluted) | 1.22B1.22B | +0.1% |
05—Questions
Frequently Asked Questions
How did TJX perform compared with the pandemic-affected fiscal 2021 and pre-pandemic fiscal 2020?
Against fiscal 2021, results rebounded sharply: net sales rose 51% and diluted EPS rose to $2.70 from $0.07, because stores were closed for about 4% of fiscal 2022 versus about 24% in fiscal 2021. Compared with pre-pandemic fiscal 2020, net sales grew 16% and open-only comparable store sales rose 15%, with U.S. comps up 17%. Pre-tax margin of 9.1% remained below fiscal 2020's 10.6%, mainly due to higher freight, supply chain, and store payroll costs.
What is the financial exposure from the Familia investment in Russia?
TJX holds a 25% non-controlling stake in Familia, an off-price retailer with more than 400 stores in Russia, carried at $186 million at year-end. Following Russia's invasion of Ukraine, TJX committed to divest the stake and may recognize an investment loss of up to $225 million, with a possible impairment charge before the sale. Two TJX executives resigned from Familia's board in early March 2022. The amount is modest relative to TJX's roughly $5.4 billion pre-tax income, but it is a one-time item that could affect reported earnings.
Why did operating cash flow decline and cash balances fall in fiscal 2022?
Operating cash flow fell to $3.1 billion from $4.6 billion, mainly because of a $4.7 billion swing in inventory net of accounts payable. TJX rebuilt inventory (up about 37% to $6.0 billion) after fiscal 2021, when it had delayed merchandise payments. Cash also fell to $6.2 billion from $10.5 billion because financing outflows reached $6.2 billion, including $2.75 billion of debt repayment, $2.2 billion of share repurchases, and $1.3 billion of dividends, against $1.0 billion of investing outflows, mostly capital expenditures.
What are the main risks TJX highlights for its outlook?
Key risks include continued COVID-19 disruption, particularly in Europe and Canada where some shopping restrictions remained in March 2022; global supply chain and freight cost pressure, which hurt merchandise margins; higher labor and wage costs; currency exchange volatility, notably the Canadian dollar, British pound, and euro; and geopolitical risks from the Russia-Ukraine conflict, including fuel price impacts and sanctions. TJX also cites its dependence on opportunistic buying and on attracting and retaining store associates, along with its large lease commitments, which total about $9.2 billion in lease liabilities.
What growth plans and capital allocation priorities does management outline for fiscal 2023?
Management expects to open about 55 Marmaxx stores, 60 HomeGoods stores, 10 Canadian stores, and about 25 stores in Europe and Australia, adding roughly 6,275 long-term store potential across its four segments. Planned capital expenditures are $1.7 to $1.9 billion, mostly for offices and distribution centers and store renovations. TJX plans $2.25 to $2.5 billion of share repurchases and a 13% dividend increase to $1.18 per share annualized, funded from existing cash and internally generated cash flow.
06—Continue