10-QPeriod: Q1 FY2018

TJX COMPANIES INC /DE/ Quarterly Report for Q1 Ended Apr 29, 2017

Filed May 26, 2017For Securities:TJX

Summary

TJX Companies Inc. reported a solid first quarter for fiscal year 2018, with net sales increasing by 3% to $7.8 billion compared to the same period last year. This growth was driven by a 1% increase in same-store sales, primarily due to higher customer traffic, despite a slight decrease in the average transaction value. Diluted earnings per share (EPS) rose to $0.82 from $0.76 in the prior year's quarter, benefiting from a $0.03 per share impact from a change in accounting for share-based compensation. The company's pre-tax margin slightly decreased to 10.7% from 10.9%, attributed to a rise in selling, general, and administrative expenses (primarily higher payroll costs due to wage increases), which more than offset improvements in the cost of sales ratio. Inventory levels, a key metric for off-price retailers, saw a decrease of 9% on a reported basis, indicating efficient inventory management. TJX also continued its active share repurchase program, buying back approximately $350 million worth of stock during the quarter.

Financial Highlights

47 data points
Beta

Revenue

$7.78B

29.0% Gross Margin

Net Income

$536.28M

6.9% Net Margin

EPS (Diluted)

$0.41

Total Assets

$12.76B

Cash & Equivalents

$2.67B

Free Cash Flow

$189.92M

Financial Statements
Beta
Revenue$7.78B
Gross Profit$2.25B
SG&A Expenses$1.41B
Operating Income$949.00M
Net Income$536.28M
EPS (Basic)$0.41
EPS (Diluted)$0.41
Shares Outstanding (Basic)1.29B
Shares Outstanding (Diluted)1.31B

Key Highlights

  • 1Net sales increased 3% to $7.8 billion for the first quarter of fiscal 2018.
  • 2Same-store sales increased 1%, driven by higher customer traffic, although average transaction value declined.
  • 3Diluted Earnings Per Share (EPS) grew to $0.82, up from $0.76 in the prior year's quarter, aided by a favorable accounting change impacting share-based compensation.
  • 4Pre-tax margin saw a slight decrease to 10.7% due to increased SG&A expenses, mainly higher payroll costs.
  • 5Consolidated average per store inventories decreased by 9% on a reported basis, indicating effective inventory management.
  • 6The company repurchased approximately $350 million of its common stock during the quarter.
  • 7TJX International segment experienced a sales decrease of 2%, largely due to foreign currency translation impacts, while other segments showed growth.

Frequently Asked Questions

The primary driver of TJX's sales growth in the first quarter was a 1% increase in same-store sales, largely fueled by higher customer traffic across its brands. While the average transaction value saw a slight decrease, the increase in the number of transactions offset this, leading to overall net sales growth of 3%.

The adoption of a new accounting standard for share-based compensation in the first quarter of fiscal 2018 resulted in recognizing excess income tax benefits directly in the income statement. This change positively impacted TJX's diluted EPS by approximately $0.03 per share for the quarter.

The increase in SG&A expenses as a percentage of net sales was primarily due to higher store payroll costs stemming from wage increases. Additionally, the handling of an increased volume of units and higher supply chain costs contributed to this rise.

TJX reported a decrease of 9% in consolidated average per store inventories on a reported basis compared to the prior year. This reduction indicates efficient inventory management and a focus on maintaining optimal stock levels, which is crucial for an off-price retailer.