10-QPeriod: Q3 FY2011

TJX COMPANIES INC /DE/ Quarterly Report for Q3 Ended Oct 30, 2010

Filed November 24, 2010For Securities:TJX

Summary

TJX Companies, Inc. reported strong financial results for the thirteen and thirty-nine weeks ended October 30, 2010. Net sales increased by 5% to $5.5 billion in the third quarter and by 9% to $15.6 billion for the first nine months, driven by a 1% and 4% increase in same-store sales, respectively, alongside growth in new stores. Net income saw a significant rise to $372.3 million ($0.92 diluted EPS) in Q3 and $1.0 billion ($2.46 diluted EPS) for the year-to-date period, reflecting improved merchandise margins, expense leverage, and benefit from stock repurchases. The company highlighted operational strengths including continued execution of its off-price model, leading to improved merchandise margins and inventory turns. The Marmaxx and HomeGoods segments showed robust performance, while TJX Canada also delivered solid results. TJX Europe faced headwinds due to execution issues and expansion costs, leading to lower segment profit despite net sales growth. Management expressed confidence in the company's liquidity and capital resources, supported by operating cash flows and credit facilities, and anticipates strong performance to continue.

Financial Highlights

46 data points
Beta

Revenue

$5.53B

27.5% Gross Margin

Net Income

$372.31M

6.7% Net Margin

EPS (Diluted)

$0.23

Total Assets

$8.18B

Cash & Equivalents

$1.34B

Free Cash Flow

$219.73M

Financial Statements
Beta
Revenue$5.53B
Gross Profit$1.52B
SG&A Expenses$912.81M
Net Income$372.31M
EPS (Basic)$0.23
EPS (Diluted)$0.23
Shares Outstanding (Basic)1.59B
Shares Outstanding (Diluted)1.61B

Key Highlights

  • 1Net sales increased 5% to $5.5 billion in Q3 and 9% to $15.6 billion year-to-date, driven by same-store sales growth and new store expansion.
  • 2Net income grew to $372.3 million ($0.92 diluted EPS) in Q3 and $1.0 billion ($2.46 diluted EPS) year-to-date, indicating improved profitability.
  • 3Same-store sales increased 1% in Q3 and 4% year-to-date, indicating continued customer traffic and engagement.
  • 4Merchandise margins improved due to leaner inventory positions, faster inventory turns, and effective buying strategies.
  • 5Significant stock repurchase activity continued, with $845.3 million spent year-to-date, benefiting diluted EPS.
  • 6Marmaxx and HomeGoods segments demonstrated strong performance with increased net sales and segment profit.
  • 7TJX Canada reported sales growth and improved segment profit, while TJX Europe saw net sales growth but a decline in segment profit due to specific challenges.

Frequently Asked Questions

Revenue growth was primarily driven by an increase in net sales from new store openings (4% for the quarter and 9-month period) and a modest increase in same-store sales (1% for the quarter and 4% for the 9-month period). The company's off-price model continued to attract customers, leading to increased traffic.

Profitability improved significantly, with net income up in both the third quarter and year-to-date periods. This improvement was attributed to stronger merchandise margins (driven by leaner inventories and reduced markdowns), expense leverage from same-store sales growth, and effective cost reduction programs. Stock repurchase activities also provided a benefit to diluted earnings per share.

TJX Europe experienced a decline in segment profit despite net sales growth, due to execution issues and costs associated with expansion in Germany and Poland. Additionally, A.J. Wright saw a slight decrease in same-store sales in the third quarter, impacted by weather and increased markdowns. The company also faces challenging same-store sales comparisons in the upcoming fourth quarter due to strong performance in the prior year.

TJX continues to operate with leaner inventory positions, which are turning faster. This strategy allows the company to take advantage of market opportunities, make buying decisions with more visibility, and results in higher markon and reduced markdowns, ultimately leading to stronger merchandise margins.