10-QPeriod: Q2 FY2020

TJX COMPANIES INC /DE/ Quarterly Report for Q2 Ended Aug 3, 2019

Filed August 30, 2019For Securities:TJX

Summary

TJX Companies reported solid performance for the second quarter and first half of fiscal year 2020, with net sales increasing by 5% to $9.8 billion for the quarter and 6% to $19.1 billion for the first half. This growth was driven by a 2% comparable store sales increase in the quarter and a 4% increase for the first half, primarily fueled by higher customer traffic across all major segments. Diluted earnings per share (EPS) rose to $0.62 for the quarter and $1.19 for the first half, showing an improvement over the prior year. The company's strategic focus on off-price retail continues to resonate with consumers, as evidenced by the consistent traffic growth. While the cost of sales, including buying and occupancy costs, increased slightly as a percentage of net sales, this was partially offset by a decrease in selling, general, and administrative (SG&A) expenses as a percentage of net sales. Despite some margin pressures in specific segments, the overall financial health appears stable, supported by strong operating cash flows and ongoing shareholder returns through share repurchases and dividends.

Financial Highlights

48 data points
Beta

Revenue

$9.78B

28.2% Gross Margin

Net Income

$758.96M

7.8% Net Margin

EPS (Diluted)

$0.62

Total Assets

$22.85B

Cash & Equivalents

$2.19B

Free Cash Flow

$488.90M

Financial Statements
Beta
Revenue$9.78B
Cost of Revenue$7.03B
Gross Profit$2.76B
SG&A Expenses$1.73B
Net Income$758.96M
EPS (Basic)$0.63
EPS (Diluted)$0.62
Shares Outstanding (Basic)1.21B
Shares Outstanding (Diluted)1.23B

Key Highlights

  • 1Net sales increased by 5% to $9.8 billion for the second quarter and 6% to $19.1 billion for the first half of fiscal year 2020.
  • 2Comparable store sales increased by 2% for the second quarter and 4% for the first half, driven by customer traffic.
  • 3Diluted earnings per share (EPS) improved to $0.62 for the second quarter and $1.19 for the first half.
  • 4SG&A expenses as a percentage of net sales decreased by 0.5 percentage points to 17.7% in the second quarter.
  • 5The company returned $579 million to shareholders in the second quarter through share repurchases and dividends.
  • 6Inventories on a per-store basis increased by 6% year-over-year, reflecting strong inventory management.
  • 7The company continues to execute its growth strategy with a 5% increase in store count and 4% increase in selling square footage year-over-year.

Frequently Asked Questions

TJX reported a 2% increase in comparable store sales for the thirteen weeks ended August 3, 2019, and a 4% increase for the twenty-six weeks ended August 3, 2019. This growth was primarily driven by an increase in customer traffic across all major divisions.

The adoption of the new lease accounting standard resulted in the recording of significant operating lease right-of-use assets and lease liabilities on the Consolidated Balance Sheets. As of February 2, 2019, approximately $9 billion in ROU assets and lease liabilities were recognized, impacting accounts such as 'Operating lease right of use assets', 'Current portion of operating lease liabilities', and 'Long-term operating lease liabilities'.

Merchandise inventories increased by 6% on a reported basis and 7% on a constant currency basis per store at the end of the second quarter of fiscal year 2020 compared to the prior year. This increase reflects TJX's strategy to maintain a robust inventory to meet customer demand, balanced with their ongoing inventory management practices.

TJX is actively returning capital to shareholders through share repurchases and dividend payments. In the second quarter of fiscal 2020, the company returned $579 million to shareholders. For the first six months of fiscal 2020, cash payments for dividends totaled $0.5 billion, and approximately $0.7 billion was used for share repurchases.