The TJX Companies, Inc. reported earnings rose 14 percent in the fourth quarter ended January 28 on a 4 percent same-store gain. Sales came in ahead of guidance while earnings were at the upper end of plan.

Net sales for the fourth quarter were $14.5 billion, an increase of 5 percent versus the fourth quarter of Fiscal 2022. U.S. comp store sales increased 4 percent versus a 13 percent increase in U.S. open-only comp store sales in the fourth quarter of Fiscal 2022. Net income for the fourth quarter of Fiscal 2023 was $1.0 billion and diluted earnings per share were 89 cents a share, a 14 percent increase versus $.78 in the fourth quarter of Fiscal 2022.

Guidance had called for EPS in the range of 85 cents to 89 cents and U.S. comparable store sales to be flat to up 1 percent.

For the full year Fiscal 2023, net sales were $49.9 billion, an increase of 3 percent versus the full year Fiscal 2022. Full-year Fiscal 2023 U.S. comp store sales were flat versus a 17 percent increase in U.S. open-only comp store sales in Fiscal 2022. Net income for the full year of Fiscal 2023 was $3.5 billion. For the full year Fiscal 2023, diluted earnings per share were $2.97, a 10 percent increase versus $2.70 in Fiscal 2022. Full-year Fiscal 2023 adjusted diluted earnings per share were $3.11, which excluded a $.14 net of tax charge related to a write-down and the divestiture of the company’s minority investment in Familia. This was a 9 percent increase versus full-year Fiscal 2022 adjusted diluted earnings per share of $2.85, which excluded a $.15 debt extinguishment charge.

CEO and President Comments
Ernie Herrman, CEO and president of The TJX Companies, Inc., stated, “I am so proud of the outstanding performance and execution of our teams again in 2022. By staying focused on our off-price fundamentals, which have served us well through many kinds of retail and macro environments, we continued to bring customers around the world exciting values and a treasure-hunt shopping experience, every day. Our eclectic, rapidly changing mix of gift-giving assortments clearly resonated with consumers this holiday season. We saw fourth-quarter U.S. comp store sales growth of 4 percent, well above our plan, and U.S. customer traffic increase. Marmaxx delivered a very strong 7 percent comp increase, its highest quarterly comp of the year, driven by excellent sales in its apparel and accessories categories.”

Herrman continued, “For the full year, total sales neared $50 billion, U.S. comp store sales were flat, and overall profitability improved. During the year, our apparel businesses, including accessories, across the company were strong. Sales at our home businesses overall were softer as we saw extraordinary growth during the two prior years when consumers focused on purchases for their homes. At our international divisions, we saw total sales increases and improved profitability for the year. Fiscal 2024 is off to a strong start and we remain confident in improving our profitability this year and reaching our pretax profit margin target of 10.6 percent by Fiscal 2025. We are energized for the year ahead and our plans to keep bringing customers around the globe with ever-changing selections of great fashions and brands at excellent value. Longer term, I am confident that we are on track to becoming an increasingly profitable $60 billion-plus company.”

U.S. Comparable Store Sales (FY2023) and U.S. Open-Only Comparable Store Sales (FY2022)
The company’s U.S. comparable store sales by division in the fourth quarter of Fiscal 2023 and full year Fiscal 2023, and U.S. open-only comparable store sales by division in the fourth quarter of Fiscal 2022 and full year Fiscal 2022 were as follows:

Marmaxx (TJX, Marshalls and Sierra) saw 7 percent growth on a same-store basis and 10 percent growth on an open-only same-store basis. For the full year, Marmaxx saw 3 percent growth on a same-store basis and 13 percent growth on an open-only same-store basis.

The HomeGoods segment  saw negative 7 percent growth on a same-store basis and positive 22 percent growth on an open-only same-store basis. For the full year, HomeGoods saw negative 11 percent growth on a same-store basis and positive 32 percent growth on an open-only same-store basis.

Net Sales By Division
The company’s net sales by division in the fourth quarter of Fiscal 2023 were as follows:

Sales at Marmaxx (U.S.) reached $8.98 billion in the quarter, up 8 percent. Sales at HomeGoods (U.S.) were $2.42 billion, down 4 percent. Total U.S. sales were $11.4 billion, up 6 percent.  TJX Canada sales were $1.3 billion, up 3 percent on a reported basis and 10 percent on a currency-neutral basis. TJX International sales were $1.82 billion, up 1 percent on a reported basis and 11 percent on a currency-neutral basis.

Total company sales in the quarter were $14.5 billion, up 5 percent on a reported basis and 7 percent on a currency-neutral basis. 

For the year, TJX’s total sales were $49,936 million, up 3 percent on a reported basis and 5 percent on a currency-neutral basis. 

Margins
For the fourth quarter of Fiscal 2023, the company’s pretax profit margin was 9.2 percent, a 0.2 percentage point increase versus last year’s fourth quarter pretax profit margin of 9.0 percent. Merchandise margin decreased slightly and includes an unplanned 0.6 percentage point shrink charge versus last year. The company’s fourth-quarter guidance had contemplated that shrink would be a 0.5 percentage point benefit to pretax profit margin versus the prior year.

Gross profit margin for the fourth quarter of Fiscal 2023 was 26.1 percent, a 1.0 percentage point decrease versus the fourth quarter of Fiscal 2022. Selling, general and administrative (SG&A) costs as a percent of sales for the fourth quarter of Fiscal 2023 were 17.0 percent, a 1.0 percentage point decrease versus the fourth quarter of Fiscal 2022.

For the full year Fiscal 2023, the company’s pretax profit margin was 9.3 percent, a 0.2 percentage point increase versus last year’s pretax profit margin of 9.1 percent. For the full year Fiscal 2023, the company’s adjusted pretax profit margin was 9.7 percent, which excludes a 0.4 percentage point charge related to a write-down of the company’s minority investment in Familia. This is a 0.1 percentage point increase versus the company’s full-year Fiscal 2022 adjusted pretax profit margin of 9.6 percent, which excluded a 0.5 percentage point debt extinguishment charge. Full-year Fiscal 2023 pretax profit margin included an unplanned 0.3 percentage point shrink charge. The company’s most recent full-year Fiscal 2023 guidance had contemplated that shrink would be neutral to the pretax profit margin versus the prior year.

Gross profit margin for the full year Fiscal 2023 was 27.6 percent, a 0.9 percentage point decrease versus the prior year. Selling, general and administrative (SG&A) costs as a percent of sales for the full year Fiscal 2023 were 17.9 percent, a 0.8 percentage point decrease versus the prior year.

Impact Of Foreign Currency Exchange Rates
The movement in foreign currency exchange rates had a two percentage point negative impact on the company’s net sales growth in the fourth quarter of Fiscal 2023 versus the prior year. The overall net impact of foreign currency exchange rates had a $.03 negative impact on fourth quarter Fiscal 2023 diluted earnings per share.

The movement in foreign currency exchange rates had a two percentage point negative impact on the company’s net sales growth in the full year Fiscal 2023 versus the prior year. The overall net impact of foreign currency exchange rates had a $.06 negative impact on the full year Fiscal 2023 diluted earnings per share.

Inventory
Total inventories as of January 28, 2023, were $5.8 billion, compared with $6.0 billion at the end of Fiscal 2022. Consolidated inventories on a per-store basis as of January 28, 2023, including distribution centers, but excluding inventory in transit, the company’s e-commerce sites, and Sierra stores, were up 1 percent on a reported basis (with inventory on a constant currency basis up 2 percent, which reflects inventory adjusted for the impact of foreign currency exchange rates, as described above). The company is well-positioned to take advantage of the outstanding availability of quality, branded merchandise in the marketplace and flow fresh merchandise to its stores and online this spring.

Cash And Shareholder Distributions
For the fourth quarter of Fiscal 2023, the company generated $3.0 billion of operating cash flow. For the full year Fiscal 2023, the company generated $4.1 billion of operating cash flow and ended the year with $5.5 billion of cash.

During the fourth quarter, the company returned $791 million to shareholders. The company repurchased a total of $450 million of TJX stock, retiring 5.7 million shares, and paid $341 million in shareholder dividends during the quarter. In Fiscal 2023, the company returned a total of $3.6 billion to shareholders, which includes repurchasing a total of $2.25 billion of TJX stock, retiring 34.8 million shares, and paying $1.34 billion in shareholder dividends.

With the company’s continued strong cash flow, TJX announced today that it intends to increase the regular quarterly dividend on its common stock expected to be declared in March 2023 and payable in June 2023 to $.3325 per share, subject to the approval of the company’s Board of Directors. This would represent a 13 percent increase over the current per-share dividend.

The company is also announcing today its plan to repurchase approximately $2.0 to $2.5 billion of TJX stock during the fiscal year ending February 3, 2024. With $1.5 billion remaining at Fiscal 2023 year-end under the company’s existing stock repurchase program, the company’s Board of Directors approved a new stock repurchase program that authorizes the repurchase of up to an additional $2.0 billion of TJX common stock from time to time. The new authorization represents approximately 2.2 percent of the company’s outstanding shares at current prices. The new stock repurchase program marks the 23rd program approved by the Board since 1997. Under the company’s repurchase programs, share repurchases may be made from time to time in market or private transactions and may include derivative transactions. The repurchase program announced today has no time limit and may be suspended or discontinued at any time.

Divestiture Of Familia
During Fiscal 2023, the company announced and completed the divestiture of its minority investment in Familia. As a result, the company recorded an impairment charge of $217.6 million in the first quarter of Fiscal 2023, which negatively impacted first quarter Fiscal 2023 diluted earnings per share by $.19. Additionally, the company realized a $54 million tax benefit in the third quarter of Fiscal 2023, which increased third quarter Fiscal 2023 diluted earnings per share by $.05. The combination of the first quarter impairment charge and the related third quarter tax benefit negatively impacted full year Fiscal 2023 diluted earnings per share by $.14.

First Quarter and Full Year Fiscal 2024 Outlook
For the first quarter of Fiscal 2024, the company is planning overall comparable store sales to be up 2 percent to 3 percent. For the first quarter of Fiscal 2024, the company expects the pretax profit margin to be in the range of 9.2 percent to 9.5 percent and diluted earnings per share to be in the range of $.68 to $.71.

For the fiscal year ending February 3, 2024, the company is planning overall comparable store sales to be up 2 percent to 3 percent. For the 53-week fiscal year ending February 3, 2024, the company expects the pretax profit margin to be in the range of 10.1 percent to 10.3 percent and diluted earnings per share to be in the range of $3.39 to $3.51. The company’s full-year guidance includes an expected pretax margin benefit of approximately 0.1 percentage points and diluted earnings per share benefit of approximately $.10 due to the 53rd week in the company’s Fiscal 2024 calendar. Excluding these expected benefits, the company expects full-year Fiscal 2024 adjusted pretax profit margin to be in the range of 10.0 percent to 10.2 percent and adjusted diluted earnings per share to be in the range of $3.29 to $3.41.