10-QPeriod: Q2 FY2017

TJX COMPANIES INC /DE/ Quarterly Report for Q2 Ended Jul 30, 2016

Filed August 26, 2016For Securities:TJX

Summary

TJX Companies, Inc. reported solid financial results for the second quarter and first half of fiscal year 2017, ending July 30, 2016. Net sales increased by 7% to $7.9 billion in the quarter and 8% to $15.4 billion for the first half, driven by a 4% increase in same-store sales for the quarter and 6% for the half, with customer traffic being a key driver. Diluted earnings per share saw a healthy rise of 5% to $0.84 for the quarter and 10% to $1.60 for the first half, demonstrating effective profit generation. The company continued its strategic expansion, with a 6% increase in store count and a 5% increase in selling square footage year-over-year. Despite a slight decrease in pre-tax margin due to increased SG&A expenses (largely from wage increases and growth investments), the company's cost of sales ratio improved due to better merchandise margins and currency hedges. TJX also actively returned capital to shareholders through substantial share repurchases and dividends, indicating strong confidence in its financial health and future prospects.

Financial Highlights

48 data points
Beta

Revenue

$7.88B

29.4% Gross Margin

Net Income

$562.17M

7.1% Net Margin

EPS (Diluted)

$0.42

Total Assets

$11.67B

Cash & Equivalents

$1.80B

Free Cash Flow

$496.15M

Financial Statements
Beta
Revenue$7.88B
Gross Profit$2.32B
SG&A Expenses$1.39B
Operating Income$1.04B
Net Income$562.17M
EPS (Basic)$0.42
EPS (Diluted)$0.42
Shares Outstanding (Basic)1.32B
Shares Outstanding (Diluted)1.33B

Key Highlights

  • 1Net sales increased by 7% to $7.9 billion in Q2 FY17 and 8% to $15.4 billion for the first half of FY17.
  • 2Same-store sales increased by 4% in Q2 FY17 and 6% for the first half, driven primarily by increased customer traffic.
  • 3Diluted earnings per share (EPS) rose to $0.84 in Q2 FY17 (up 5% from $0.80) and $1.60 for the first half (up 10% from $1.49).
  • 4The company expanded its physical footprint, with stores in operation increasing by 6% and selling square footage by 5% year-over-year.
  • 5Cost of sales as a percentage of net sales improved due to better merchandise margins and foreign currency gains on inventory hedges.
  • 6Selling, general, and administrative expenses as a percentage of net sales increased due to higher payroll costs from wage increases and investments in growth.
  • 7TJX repurchased approximately $400 million of common stock in Q2 FY17, continuing its capital return strategy.

Frequently Asked Questions

For the thirteen weeks ended July 30, 2016, TJX reported consolidated net sales of $7.9 billion, a 7% increase compared to the same period last year. For the twenty-six weeks ended July 30, 2016, consolidated net sales were $15.4 billion, an 8% increase year-over-year.

Same-store sales increased by 4% for the thirteen weeks ended July 30, 2016, and by 6% for the twenty-six weeks ended July 30, 2016. This growth was primarily driven by an increase in customer traffic.

Diluted earnings per share were $0.84 for the thirteen weeks ended July 30, 2016, representing a 5% increase from $0.80 in the prior year's comparable period. For the twenty-six weeks ended July 30, 2016, diluted EPS was $1.60, up 10% from $1.49 in the prior year's comparable period. Share repurchases contributed to this EPS growth.

The cost of sales as a percentage of net sales improved due to better merchandise margins and favorable foreign currency impacts on inventory hedges. However, selling, general, and administrative expenses as a percentage of net sales increased, mainly due to higher employee payroll costs stemming from wage increases and investments to support business growth.