10-QPeriod: Q1 FY2020

TJX COMPANIES INC /DE/ Quarterly Report for Q1 Ended May 4, 2019

Filed May 31, 2019For Securities:TJX

Summary

TJX Companies reported a solid first quarter for fiscal year 2020, with net sales increasing by 7% to $9.3 billion, driven by a 5% increase in comparable store sales, primarily fueled by customer traffic across all major segments. Diluted earnings per share saw a modest rise to $0.57 from $0.56 in the prior year's first quarter. While top-line growth was strong, the company experienced a slight decrease in pre-tax margin to 10.1% from 11.0% year-over-year, attributed to increased cost of sales and SG&A expenses, including higher freight and supply chain costs, as well as incremental systems investments. Financially, TJX demonstrated robust liquidity, with $2.2 billion in cash and cash equivalents. The company returned significant value to shareholders through $589 million in share repurchases and dividends during the quarter, underscoring its commitment to capital return. The adoption of the new lease accounting standard (ASC 842) significantly impacted the balance sheet, introducing substantial operating lease right-of-use assets and liabilities, which is a key change for investors to note. Overall, the results reflect a healthy underlying business with continued strategic focus on value and growth.

Financial Highlights

48 data points
Beta

Revenue

$9.28B

28.5% Gross Margin

Net Income

$700.18M

7.5% Net Margin

EPS (Diluted)

$0.57

Total Assets

$22.49B

Cash & Equivalents

$2.24B

Free Cash Flow

-$167.67M

Financial Statements
Beta
Revenue$9.28B
Cost of Revenue$6.64B
Gross Profit$2.64B
SG&A Expenses$1.70B
Net Income$700.18M
EPS (Basic)$0.58
EPS (Diluted)$0.57
Shares Outstanding (Basic)1.21B
Shares Outstanding (Diluted)1.23B

Key Highlights

  • 1Net sales increased 7% to $9.3 billion, compared to $8.7 billion in the prior year's first quarter.
  • 2Comparable store sales grew 5%, with customer traffic being the primary driver across all major segments.
  • 3Diluted earnings per share (EPS) increased to $0.57 from $0.56 in the prior year's first quarter.
  • 4Pre-tax margin decreased to 10.1% from 11.0% year-over-year, driven by higher cost of sales and SG&A expenses.
  • 5The company returned $589 million to shareholders via share repurchases and dividends in the first quarter.
  • 6Adopted new lease accounting standard (ASC 842), resulting in significant increases in operating lease right-of-use assets and liabilities on the balance sheet.
  • 7Inventories increased 6% on a reported basis, reflecting expansion and a 7% increase in selling square footage.

Frequently Asked Questions

TJX reported a 7% increase in net sales, reaching $9.3 billion, compared to $8.7 billion in the same period last year. This growth was primarily driven by a 5% increase in comparable store sales, indicating strong customer traffic across its various segments.

While sales grew, the company's pre-tax margin decreased to 10.1% from 11.0% year-over-year. This was due to an increase in the cost of sales (including buying and occupancy costs) to 71.5% from 71.1%, and higher selling, general, and administrative (SG&A) expenses, which rose to 18.3% from 17.8%. Key drivers included higher freight and supply chain costs, as well as investments in systems and technology.

TJX demonstrated a strong commitment to returning capital to shareholders. In the first quarter, the company returned a total of $589 million through share repurchases and dividend payments. Additionally, the company has substantial availability under its ongoing stock repurchase programs.

The adoption of ASC 842 as of February 3, 2019, significantly impacted the balance sheet. It resulted in the recognition of approximately $9 billion in operating lease right-of-use assets and corresponding lease liabilities. This change is a significant structural shift on the balance sheet and has been applied using a modified retrospective method.