10-QPeriod: Q2 FY2013

TJX COMPANIES INC /DE/ Quarterly Report for Q2 Ended Jul 28, 2012

Filed August 24, 2012For Securities:TJX

Summary

TJX Companies, Inc. reported a strong second quarter and first half of fiscal year 2013, demonstrating robust financial performance. Net sales saw a significant increase of 9% for the quarter and 10% for the year-to-date period, driven by a healthy rise in comparable store sales of 7% and 8%, respectively, coupled with increased customer traffic. The company also reported substantial growth in earnings per share (EPS), with diluted EPS rising 24% for the quarter and 41% for the first six months, highlighting effective cost management and the benefit of share repurchases. Profitability improved across all segments, particularly in Marmaxx and HomeGoods, with notable strength in TJX Europe showing a significant turnaround. The company effectively managed its cost of sales and selling, general, and administrative expenses as a percentage of net sales, leading to improved pre-tax margins. TJX also continued its commitment to returning value to shareholders through a $2 billion stock repurchase program, signaling confidence in its ongoing financial health and future prospects.

Financial Highlights

44 data points
Beta

Revenue

$5.95B

28.1% Gross Margin

Net Income

$421.09M

7.1% Net Margin

EPS (Diluted)

$0.28

Total Assets

$8.64B

Cash & Equivalents

$1.62B

Free Cash Flow

$418.53M

Financial Statements
Beta
Revenue$5.95B
Gross Profit$1.67B
SG&A Expenses$978.51M
Net Income$421.09M
EPS (Basic)$0.28
EPS (Diluted)$0.28
Shares Outstanding (Basic)1.47B
Shares Outstanding (Diluted)1.50B

Key Highlights

  • 1Net sales increased by 9% to $5.9 billion for the second quarter and 10% to $11.7 billion for the first six months of fiscal 2013, compared to the prior year.
  • 2Comparable store sales grew by 7% in Q2 and 8% in the first half, indicating strong customer demand and traffic.
  • 3Diluted earnings per share (EPS) increased by 24% to $0.56 for the quarter and 41% to $1.11 for the first six months, demonstrating improved profitability.
  • 4Pre-tax margin expanded by 1.3 percentage points to 11.5% in Q2 and 2.3 percentage points to 11.6% year-to-date, driven by higher merchandise margins and expense leverage.
  • 5All major segments (Marmaxx, HomeGoods, TJX Canada, and TJX Europe) reported strong performance, with TJX Europe showing a significant profit turnaround.
  • 6The company actively repurchased shares, spending $300 million in Q2 and $550 million in the first half of fiscal 2013, and announced a new $2 billion repurchase program.
  • 7Inventories on a per-store basis decreased by 12% at the end of the second quarter, suggesting efficient inventory management.

Frequently Asked Questions

TJX's sales growth was primarily driven by a strong increase in customer traffic, which led to a significant rise in comparable store sales. The company also saw a slight increase in the value of the average transaction. Growth in new store sales also contributed to the overall net sales increase.

TJX demonstrated effective expense management. The cost of sales as a percentage of net sales improved due to increased merchandise margins. Selling, general, and administrative expenses also decreased as a percentage of net sales, primarily due to expense leverage on strong sales and improved operational efficiency. These factors contributed to an expansion in pre-tax margins.

TJX is actively returning value to shareholders through its stock repurchase programs. In the first half of fiscal 2013, the company repurchased approximately $550 million of its common stock. Furthermore, TJX announced a new $2 billion stock repurchase program, indicating management's confidence in the company's financial position and its commitment to shareholder returns.

TJX Europe showed a significant improvement in performance. Net sales increased by 7% for the quarter and 11% for the six-month period, driven by a strong increase in same-store sales (10% and 11% respectively) after a weak prior year. Segment profit improved substantially to $24.7 million for the quarter and $36.5 million for the six months, a significant turnaround from a loss in the prior year's comparable period.