01—Abstract
Summary
Summary of the 10-K filed March 29, 2023. Cited figures are marked; the original filing is the authoritative source.
TJX Companies' fiscal 2023 10-K (year ended January 28, 2023) shows a business that recovered strongly from pandemic disruption but saw margin pressure in its core U.S. home business.
Net sales rose 3% to $49.9 billiona, and diluted EPS was $2.97, up from $2.70 in fiscal 2022 (which carried a $0.15 debt extinguishment charge). Pre-tax margin improved to 9.3% from 9.1%, though this included a $218 million write-down of its Familia investment in Russia, which the company fully divested. Net income reached $3.5 billion, and the company generated $4.1 billion in operating cash flow, funding $1.5 billion of capital expenditures and $3.6 billion of shareholder returns through buybacks and dividends.
The quality of growth was mixed. U.S. comparable store sales were flat, with traffic declining but average ticket rising. Marmaxx (T.J.
Maxx and Marshalls) grew net sales 4%b with segment margin slipping to 12.7%. HomeGoods was the weak spot, with comparable sales down 11%, net sales down 8%, and segment margin collapsing from 10.1% to 6.3% on deleverage, incremental freight costs, and markdowns. Offsetting this, TJX Canada (margin up to 14.0%) and TJX International (margin up to 5.6%) both improved sharply on a fully open store base and recovery from COVID closures.
Gross cost of sales rose to 72.4% of sales from 71.5%, driven by freight and shrink, while SG&A fell to 17.9% of sales from 18.7%. Looking forward, management guided to 45 net new Marmaxx stores, up to 50 HomeGoods stores, and capital expenditures of $1.7 to $1.9 billionc for fiscal 2024. It plans $2 to $2.5 billion of buybacks and a 13% dividend increase to $1.33 per share annualized.
The balance sheet remains conservative, with $5.5 billiond in cash, $3.4 billion of debt, and a $1.5 billion undrawn revolver. Key risks flagged include inventory shrink and theft, freight and fuel cost volatility, currency translation, and reliance on opportunistic buying and lean inventory execution.
02—Key points
Key Highlights
- Net sales grew 3% to $49.9 billion, and diluted EPS rose to $2.97 from $2.70, despite a $0.14 per-share write-off tied to the Familia divestiture.
- U.S. comparable store sales were flat: higher average ticket offset lower customer traffic, and apparel strength masked a decline in home fashions.
- HomeGoods was the weak point, with comparable sales down 11% and segment margin falling to 6.3% from 10.1% on deleverage, freight costs, and markdowns.
- Marmaxx remained the profit engine, with $30.5 billion in sales and $3.9 billion segment profit, though its margin eased to 12.7% from 12.9%.
- TJX Canada and TJX International both recovered sharply, with segment margins of 14.0% and 5.6%, up from 11.2% and 2.8%.
- Operating cash flow was $4.1 billion, and the company returned $3.6 billion to shareholders through $2.3 billion of buybacks and $1.3 billion of dividends.
- Fiscal 2024 guidance calls for roughly 45 Marmaxx and up to 50 HomeGoods net new stores, $1.7-1.9 billion of capex, $2-2.5 billion of buybacks, and a 13% dividend increase.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2023filed March 29, 2023Financial Statements
FY2023 against FY2022
| Line item | FY2023FY2022 | Change |
|---|---|---|
| Revenue | $49.94B$48.55B | +2.9% |
| Cost of Revenue | $36.15B$34.71B | +4.1% |
| Gross Profit | $13.79B$13.84B | −0.4% |
| SG&A Expenses | $8.93B$9.08B | −1.7% |
| Interest Expense | $91.00M$123.00M | −26.0% |
| Net Income | $3.50B$3.28B | +6.6% |
| EPS (Basic) | $3.00$2.74 | +9.5% |
| EPS (Diluted) | $2.97$2.70 | +10.0% |
| Shares Outstanding (Basic) | 1.17B1.20B | −2.8% |
| Shares Outstanding (Diluted) | 1.18B1.22B | −3.1% |
05—Questions
Frequently Asked Questions
Why did HomeGoods profitability decline so sharply in fiscal 2023?
HomeGoods comparable store sales fell 11% as customer traffic dropped, and the segment's fixed occupancy and administrative costs deleveraged on lower sales. Merchandise margin was also hit by roughly 3 percentage points of incremental freight costs and higher markdowns, pulling segment margin down to 6.3% from 10.1%.
How much did the Familia divestiture affect results?
TJX wrote off its entire minority stake in Familia, a Russian off-price retailer, recording a $218 million impairment in the first quarter. A $54 million tax benefit was realized on the divestiture, leaving a net $0.14 per-share hit to fiscal 2023 earnings. The charge was a one-time item and is excluded from the underlying trend.
Is TJX's balance sheet and capital return capacity strong?
Yes. TJX held $5.5 billion in cash at year end, had no short-term borrowings or commercial paper outstanding, and carried $3.4 billion of long-term debt with a $1.5 billion undrawn revolver. Management plans $2-2.5 billion of buybacks and a dividend of $1.33 per share for fiscal 2024, funded by operating cash flow, though the company will repay the $500 million 2.5% notes maturing in May 2023.
What are the main margin pressures heading into fiscal 2024?
Cost of sales rose to 72.4% of sales from 71.5%, driven by about 1.2 percentage points of incremental freight costs, higher markdowns, and shrink. Management also cited inventory shrink and theft, fuel and transportation cost volatility, and currency fluctuations as ongoing risks, along with the effects of the Russia-Ukraine conflict on supply chain costs.
What growth is management planning for fiscal 2024?
The company expects to add about 45 net new Marmaxx stores, up to 50 HomeGoods stores, roughly 11 Canadian stores, and about 24 net new stores in Europe and Australia combined. Management estimates long-term store potential of 3,000 for Marmaxx, 1,500 for HomeGoods, 650 for TJX Canada, and 1,125 for TJX International, implying substantial runway for unit growth.
06—Continue