10-QPeriod: Q2 FY2011

TJX COMPANIES INC /DE/ Quarterly Report for Q2 Ended Jul 31, 2010

Filed August 27, 2010For Securities:TJX

Summary

TJX Companies reported strong financial results for the second quarter and first half of fiscal year 2011, reflecting robust sales growth and improved profitability. Net sales increased by 7% in the quarter and 11% year-to-date, driven by a 3% increase in same-store sales for the quarter and 6% for the year-to-date period, indicating sustained customer traffic and appeal across various demographics. The company also saw significant improvements in pre-tax margins, which rose to 9.8% in the quarter and 10.2% year-to-date, attributed to enhanced merchandise margins, effective inventory management, and expense leverage. Net income per diluted share increased to $0.74 for the quarter and $1.54 for the six-month period, up from $0.61 and $1.09, respectively, in the prior year, supported by these operational improvements and ongoing share repurchase programs. Operations across most segments performed well, with Marmaxx and TJX Canada showing particularly strong growth in net sales and segment profit. HomeGoods also delivered solid results with an 8% increase in same-store sales for the quarter. While TJX Europe experienced a decline in same-store sales and segment profit due to execution issues and expansion costs, the overall performance indicates the company's ability to navigate the retail landscape effectively. TJX continues to focus on its off-price model, offering value to customers, and is actively managing its capital through significant share repurchases.

Financial Highlights

46 data points
Beta

Revenue

$5.07B

26.6% Gross Margin

Net Income

$304.98M

6.0% Net Margin

EPS (Diluted)

$0.18

Total Assets

$7.69B

Cash & Equivalents

$1.38B

Free Cash Flow

-$39.21M

Financial Statements
Beta
Revenue$5.07B
Gross Profit$1.35B
SG&A Expenses$853.80M
Net Income$304.98M
EPS (Basic)$0.19
EPS (Diluted)$0.18
Shares Outstanding (Basic)1.61B
Shares Outstanding (Diluted)1.64B

Key Highlights

  • 1Net sales increased by 7% to $5.1 billion for the second quarter and 11% to $10.1 billion for the first six months of fiscal 2011, driven by same-store sales growth of 3% and 6%, respectively.
  • 2Pre-tax margin improved significantly, reaching 9.8% for the quarter and 10.2% year-to-date, up from 8.7% and 8.3% in the prior year, respectively.
  • 3Diluted earnings per share rose to $0.74 in the second quarter and $1.54 in the first six months, compared to $0.61 and $1.09 in the prior year.
  • 4Merchandise inventories were managed effectively, with consolidated per-store inventories down 13% year-over-year.
  • 5The company repurchased 8.2 million shares of common stock for $355.5 million during the second quarter, and 13.7 million shares for $589.6 million year-to-date.
  • 6Marmaxx and TJX Canada segments demonstrated robust performance with substantial increases in net sales and segment profit.
  • 7A credit of $11.6 million for Computer Intrusion related costs positively impacted pre-tax income and earnings per share.

Frequently Asked Questions

TJX Companies reported a 7% increase in net sales to $5.1 billion for the second quarter ended July 31, 2010, and an 11% increase to $10.1 billion for the six-month period ended July 31, 2010, compared to the same periods in the prior year. This growth was primarily driven by a 3% increase in same-store sales for the quarter and a 6% increase for the six-month period, along with contributions from new stores.

Profitability improved due to a combination of factors including higher merchandise margins resulting from better inventory management (leaner inventories and faster turns), expense leverage from strong same-store sales growth, and ongoing cost reduction programs. The company also benefited from a credit of $11.6 million related to Computer Intrusion costs.

TJX is actively managing its inventory by operating with leaner inventories and buying closer to need, which has resulted in increased inventory turns. Consolidated per-store inventories were down 13% year-over-year at the end of the second quarter of fiscal 2011.

TJX continues to actively repurchase its common stock, viewing it as a way to return value to shareholders and enhance earnings per share. During the second quarter of fiscal 2011, the company repurchased 8.2 million shares for $355.5 million, and for the first six months, 13.7 million shares for $589.6 million. TJX has significant amounts remaining under its authorized stock repurchase programs.