10-QPeriod: Q3 FY2021

TJX COMPANIES INC /DE/ Quarterly Report for Q3 Ended Oct 31, 2020

Filed December 1, 2020For Securities:TJX

Summary

The TJX Companies, Inc. reported its third-quarter results for the period ending October 31, 2020. Despite a challenging retail environment influenced by the COVID-19 pandemic, the company demonstrated resilience, with net sales decreasing by a modest 3% to $10.1 billion compared to the prior year. Diluted earnings per share (EPS) saw an increase to $0.71 from $0.68 in the same quarter last year, primarily driven by a lower effective tax rate. The company ended the quarter with a strong cash position of $10.6 billion, underscoring its financial stability. Significant actions were taken to manage liquidity, including increased borrowing capacity and prudent expense management. While the company temporarily suspended its share repurchase program and did not declare a dividend in the first nine months of fiscal 2021, it anticipates declaring a dividend in the fourth quarter. The company also provided an update on its ongoing efforts to navigate the pandemic, including store reopenings with enhanced safety protocols and a focus on managing inventory and operational costs.

Financial Highlights

48 data points
Beta

Revenue

$10.12B

30.2% Gross Margin

Net Income

$866.66M

8.6% Net Margin

EPS (Diluted)

$0.71

Total Assets

$31.57B

Cash & Equivalents

$10.58B

Free Cash Flow

$3.96B

Financial Statements
Beta
Revenue$10.12B
Cost of Revenue$7.06B
Gross Profit$3.06B
SG&A Expenses$1.99B
Net Income$866.66M
EPS (Basic)$0.72
EPS (Diluted)$0.71
Shares Outstanding (Basic)1.20B
Shares Outstanding (Diluted)1.21B

Key Highlights

  • 1Net sales for the third quarter decreased by 3% to $10.1 billion compared to $10.5 billion in the prior year's third quarter.
  • 2Diluted earnings per share increased to $0.71 in the third quarter, up from $0.68 in the same period last year.
  • 3The company ended the quarter with a substantial cash and cash equivalents balance of $10.6 billion, indicating strong liquidity.
  • 4TJX experienced a net loss of $235 million for the first nine months of fiscal 2021, a significant shift from a net income of $2.3 billion in the same period of fiscal 2020, largely due to the impact of COVID-19 store closures.
  • 5The company's cost of sales ratio improved to 69.8% in Q3 2021 from 71.2% in Q3 2020, indicating better cost management relative to sales.
  • 6Selling, General & Administrative (SG&A) expenses as a percentage of net sales increased to 19.6% in Q3 2021 from 18.0% in Q3 2020, primarily due to incremental COVID-19 related costs and bonuses.
  • 7The company has been actively managing its debt, issuing new notes and initiating tender offers to refinance existing debt subsequent to the quarter end.

Frequently Asked Questions

The COVID-19 pandemic significantly impacted TJX's financial performance. While the company began reopening stores in May 2020 after temporary closures, some stores, primarily in Europe, remained temporarily closed due to local mandates. This led to a 28% decrease in net sales for the first nine months of fiscal 2021 compared to the prior year and a net loss of $235 million for the year-to-date period. The company incurred incremental costs related to health and safety protocols, store reopenings, and bonuses for associates.

TJX ended the third quarter of fiscal 2021 with a strong cash and cash equivalents balance of $10.6 billion. The company also increased its borrowing capacity by entering into a new $500 million revolving credit facility, bringing the total available under its revolving credit facilities to $1.5 billion. To preserve liquidity, TJX suspended its share repurchase program and did not declare a dividend in the first nine months of fiscal 2021, though it anticipates declaring one in the fourth quarter. The company has also been prudent with expenses and capital spending.

TJX took significant steps to manage its debt and capital structure. In April 2020, the company issued $4.0 billion in aggregate principal amount of notes. Subsequent to the quarter end, it issued an additional $1.0 billion in long-term debt and commenced tender offers to repurchase up to $750.0 million of certain existing notes. The company also drew down $1.0 billion on its revolving credit facilities in the first quarter but repaid these borrowings in the second quarter.

During the first nine months of fiscal 2021, TJX did not declare a dividend. However, the company announced that it expects a quarterly dividend of $0.26 per share to be declared in the fourth quarter of fiscal 2021, payable in March 2021, subject to Board approval. The company suspended its share repurchase program in March 2020 due to the COVID-19 pandemic and does not intend to repurchase additional shares for the remainder of fiscal 2021. As of October 31, 2020, approximately $3.0 billion remained available under previously announced stock repurchase programs.