10-QPeriod: Q2 FY2015

TJX COMPANIES INC /DE/ Quarterly Report for Q2 Ended Aug 2, 2014

Filed August 29, 2014For Securities:TJX

Summary

The TJX Companies, Inc. reported strong performance for the fiscal second quarter and first half of fiscal 2015, ending August 2, 2014. Net sales increased by 7% and 6% respectively for the quarter and six-month period, driven by a combination of increased store count and a 3% and 2% rise in same-store sales, respectively. Diluted earnings per share saw significant growth, increasing by 11% to $0.73 in the quarter and 7% to $1.37 in the first half, demonstrating effective cost management and operational execution. The company's strategic focus on off-price retail continues to resonate with consumers, as evidenced by the growth across its various segments. While the cost of sales ratio saw a slight increase, this was largely attributed to inventory-related hedge adjustments and e-commerce impact, with merchandise margins remaining stable or slightly improving. Notably, selling, general, and administrative expenses improved as a percentage of net sales due to favorable insurance loss reserve adjustments and other cost savings, contributing positively to profitability.

Financial Highlights

47 data points
Beta

Revenue

$6.92B

28.6% Gross Margin

Net Income

$517.62M

7.5% Net Margin

EPS (Diluted)

$0.36

Total Assets

$10.92B

Cash & Equivalents

$2.18B

Free Cash Flow

$373.67M

Financial Statements
Beta
Revenue$6.92B
Gross Profit$1.98B
SG&A Expenses$1.12B
Operating Income$930.89M
Net Income$517.62M
EPS (Basic)$0.38
EPS (Diluted)$0.36
Shares Outstanding (Basic)1.39B
Shares Outstanding (Diluted)1.41B

Key Highlights

  • 1Net sales grew 7% to $6.9 billion for the second quarter and 6% to $13.4 billion for the first six months, indicating strong top-line momentum.
  • 2Diluted EPS increased 11% to $0.73 for the second quarter and 7% to $1.37 for the first six months, reflecting improved profitability.
  • 3Same-store sales increased by 3% for the quarter and 2% for the six-month period, driven by higher average ticket values.
  • 4The company repurchased approximately $800 million of its common stock in the first six months, demonstrating a commitment to returning capital to shareholders and potentially boosting EPS.
  • 5The Marmaxx and HomeGoods segments in the U.S. showed consistent sales growth, with Marmaxx segment profit margin improving to 15.3% and HomeGoods segment profit margin increasing to 12.2%.
  • 6TJX Europe experienced robust sales growth of 23% for both the quarter and six-month period, aided by a positive impact from currency exchange rates.
  • 7Selling, general, and administrative expenses as a percentage of net sales improved due to favorable insurance reserves and other cost savings, positively impacting margins.

Frequently Asked Questions

TJX's sales growth was driven by a combination of new store openings and a 3% increase in same-store sales for the second quarter and a 2% increase for the first six months. The growth in same-store sales was primarily attributed to an increase in the average ticket value, while customer traffic was relatively flat in the quarter and down slightly year-to-date.

TJX demonstrated effective expense management, particularly in selling, general, and administrative (SG&A) expenses, which improved as a percentage of net sales. This improvement was largely due to a significant reduction in casualty insurance loss reserves from favorable claims experience, along with other cost savings initiatives. These factors helped offset a slight increase in the cost of sales ratio, leading to improved profitability and stronger earnings per share growth.

TJX continued its active share repurchase program, buying back approximately $800 million worth of its common stock in the first six months of fiscal 2015. The company has significant authorization remaining under its existing repurchase programs. This strategy reflects a commitment to returning value to shareholders and can also contribute to increasing earnings per share.

TJX Europe showed particularly strong performance with a 23% increase in net sales for both the quarter and the six-month period, benefiting from currency exchange rates. TJX Canada's net sales saw a slight increase of 2% in the quarter but a decrease of 2% for the six months, with currency translation having a negative impact on reported sales growth.