The TJX Companies, Inc. saw net sales for the fiscal year were $16.1 billion, an 8% increase over last year and consolidated comparable store sales increased 2%. Net income for the 52-week fiscal year was $690 million, and diluted earnings per share were $1.41 compared to $1.21 for the prior year. Excluding certain one-time items, pro forma full-year diluted earnings per share were $1.29 versus $1.25 last year.
For the 13-week fiscal 2006 fourth quarter, sales increased 9% to $4.7 billion. Consolidated comparable store sales increased 3% over last year. For the fourth quarter, net income was $289 million, and diluted earnings per share were 60 cents compared to 33 cents in the prior year. Excluding one-time items, pro forma diluted earnings per share were 46 cents, an above-plan 24% increase over last year's 37 cents in earnings per share.
Ben Cammarata, Chairman and Acting Chief Executive Officer of The TJX Companies, Inc., stated, “Through improved execution and a renewed focus on off-price disciplines, we brought 2005 to a very strong finish, with fourth quarter earnings results that significantly exceeded our expectations. The fourth quarter comparable store sales increase of 3% was achieved on top of a healthy increase last year, with merchandise margins that improved over the prior year despite a challenging competitive environment. During the quarter, we solidly executed our off-price concept by maintaining liquid inventories, making the right buys, and flowing great product at great values to our stores throughout the quarter. Additionally, we were effective in our marketing and managed expenses well. As we begin a new year, driving profitable sales growth continues to be our top priority. Inventories are in excellent shape and we remain extremely focused on executing all aspects of our business.”
Sales by Business Segment
The Company's comparable store sales and net sales by division in the fourth quarter were as follows:
Fourth Quarter Fourth Quarter
Comparable Store Sales Net Sales ($ in millions)
------------------------ -------------------------
FY2006 FY2005 FY2006 FY2005
----------------- ---------- ------------ ----------- ---------
Marmaxx(a) +4% +4% $3,128 $2,954
----------------- ---------- ------------ ----------- ---------
Winners/HomeSense +5% (US$) +4% (US$) $430 $372
+2% (C$) -4% (C$)
----------------- ---------- ------------ ----------- ---------
T.K. Maxx -2% (US$) +11% (US$) $487 $430
+7% (GBP) +3% (GBP)
----------------- ---------- ------------ ----------- ---------
HomeGoods +4% +3% $377 $316
----------------- ---------- ------------ ----------- ---------
A.J. Wright +6% +3% $206 $173
----------------- ---------- ------------ ----------- ---------
Bob's Stores NA NA $89 $85
----------------- ---------- ------------ ----------- ---------
----------------- ---------- ------------ ----------- ---------
TJX +3% +4% $4,716 $4,329
----------------- ---------- ------------ ----------- ---------
(a) Combination of T.J. Maxx and Marshalls
The company's comparable store sales and net sales by division in Fiscal 2006 were as follows:
Full Year Full Year
Comparable Store Sales Net Sales ($ in millions)
------------------------ -------------------------
FY2006 FY2005 FY2006 FY2005
----------------- ---------- ------------ ----------- ---------
Marmaxx(a) +2% +4% $10,957 $10,489
----------------- ---------- ------------ ----------- ---------
Winners/HomeSense +4% (US$) +10% (US$) $1,458 $1,285
-3% (C$) +4% (C$)
----------------- ---------- ------------ ----------- ---------
T.K. Maxx -1% (US$) +14% (US$) $1,517 $1,304
+1% (GBP) +3% (GBP)
----------------- ---------- ------------ ----------- ---------
HomeGoods +1% +1% $1,187 $1,013
----------------- ---------- ------------ ----------- ---------
A.J. Wright +3% +4% $651 $531
----------------- ---------- ------------ ----------- ---------
Bob's Stores NA NA $288 $291
----------------- ---------- ------------ ----------- ---------
----------------- ---------- ------------ ----------- ---------
TJX +2% +5% $16,058 $14,913
----------------- ---------- ------------ ----------- ---------
(a) Combination of T.J. Maxx and Marshalls
Early Adoption of Stock Option Expensing
The TJX Companies previously announced its early adoption of the Statement of Financial Accounting Standards (SFAS) No. 123R, relating to accounting for stock based compensation, in the fourth quarter of Fiscal 2006. All financial information attached to or discussed in this press release includes stock option expense, which reduced earnings per share by 3 cents in the fourth quarter and by 12 cents for the full fiscal 2006 year. The company has elected the modified retrospective transition method. Accordingly, prior period financial statements have been adjusted to reflect the effect of stock option expense on a consolidated basis, as previously disclosed in the pro forma footnote to the TJX financial statements. Additionally, segment data have been adjusted to reflect the related stock option expense for all periods presented.
Impact of One-Time Items
Results for the fourth quarter and full year of Fiscal 2006 include a previously announced one-time tax benefit of $47 million, or 10 cents per share, resulting from the company's repatriation of accumulated earnings from its foreign operations. Fiscal 2006 results also reflect the impact of certain previously announced, one-time third quarter events (described further in the company's SEC Form 10-Q for the period ended October 28, 2005), which reduced earnings per share by a net of 2 cents. In addition, during the fourth quarter of Fiscal 2006, TJX's tax provision and net income were favorably impacted by $22 million, or 4 cents per share, relating to the correction of a previously established deferred tax liability. This liability related to foreign exchange gains on a loan to one of its foreign subsidiaries, which are not taxable under U.S. tax regulations. Finally, results for the fourth quarter and full year of Fiscal 2005 include a one-time, non-cash charge related to lease accounting which reduced earnings per share by 4 cents.
The following table reconciles reported EPS to pro forma EPS (excluding one-time items):(b)
Fourth Quarter Full Year
FY2006 FY2005 FY2006 FY2005
------ ------ ------ ------
EPS as reported $0.60 $0.33 $1.41 $1.21
One-time items:
Cumulative lease accounting charge - $0.04 - $0.04
Correction to deferred tax liability ($0.04) - ($0.04) -
Repatriation tax benefit ($0.10) - ($0.10) -
Third quarter events - - $0.02 -
------ ----- ------ -----
Pro forma EPS $0.46 $0.37 $1.29 $1.25
===== ===== ===== =====
(b) Stock option expense included for all periods
Margins
During the fourth quarter of Fiscal 2006, the Company's pretax profit margin improved to 7.5%. The gross profit margin increased 1.0 percentage point to 23.1%, representing improved merchandise margins as well as the impact of the one-time lease accounting charge on last year's ratios, which accounts for 0.7 percentage points of this increase. Selling, general and administrative costs as a percent of sales improved 0.4 percentage points to 15.5%, primarily due to leverage from general, administrative and store operations costs.
For the full year fiscal 2006, consolidated pretax profit margin was 6.3%, down compared to the prior year, primarily due to the de-levering effect of low single digit comparable store sales on expense ratios.
Inventory
Total inventories as of January 28, 2006, were $2.4 billion compared with $2.4 billion at the same time last year. Consolidated inventories, on a per-store basis, including the warehouses, were down 11% from the prior year. At the Marmaxx division, average per-store inventories, including the warehouses, were down 10% from last year's levels. Including merchandise on order, Marmaxx's total inventory commitment was down on a per-store basis.
Share Repurchases
During the fourth quarter, the company spent a total of $85 million in repurchases of TJX stock, retiring 3.6 million shares. In Fiscal 2006, the company spent a total of $600 million in stock repurchases, as planned, and retired a total of 25.9 million shares of TJX stock. During the fourth quarter, the company completed its $1 billion share repurchase program that was initiated in 2004. As previously announced, in October 2005, the company's Board of Directors approved a new stock repurchase program that authorizes the repurchase of up to $1 billion of TJX common stock from time to time. At current prices, this would represent approximately 9% of the company's outstanding common shares.
2006 Outlook
For the fiscal year ended January 27, 2007, the company expects earnings per share in the range of $1.42 to $1.46, which represents a 10% to 13% increase over the pro forma $1.29 per share earned in Fiscal 2006, excluding one-time items. This is based upon estimated consolidated comparable store sales growth in the 2% to 3% range.
For the first quarter of Fiscal 2007, the company expects earnings per share in the range of 31 cents to 33 cents, versus 28 cents per share in the prior year, which is based upon estimated consolidated comparable store sales growth in the 2% to 3% range.
Stores by Concept
During the fiscal year ended January 28, 2006, the company added a total of 157 stores, net of closings, to end the year with 2,381 stores, and increased square footage by 8% over the same period last year. In the fourth quarter, the Company added a net 10 stores.
Store Locations Gross Square Feet
FY2006 FY2006
(in millions)
---------------- ----------------
Beginning End Beginning End
--------------------------- --------- ----- --------- ----
T.J. Maxx 771 799 22.8 23.8
--------------------------- --------- ----- --------- ----
Marshalls 697 715 21.9 22.7
--------------------------- --------- ----- --------- ----
Winners 168 174 4.9 5.1
--------------------------- --------- ----- --------- ----
HomeSense 40 58 1.0 1.4
--------------------------- --------- ----- --------- ----
HomeGoods 216 251 5.4 6.2
--------------------------- --------- ----- --------- ----
T.K. Maxx 170 197 4.8 5.9
--------------------------- --------- ----- --------- ----
A.J. Wright 130 152 3.3 3.9
--------------------------- --------- ----- --------- ----
Bob's Stores 32 35 1.5 1.6
--------------------------- --------- ----- --------- ----
--------------------------- --------- ----- --------- ----
TJX 2,224 2,381 65.5 70.5
--------------------------- --------- ----- --------- ----
THE TJX COMPANIES, INC. AND CONSOLIDATED SUBSIDIARIES
FINANCIAL SUMMARY
(Unaudited)
(Dollars In Thousands Except Per Share Amounts)
13 Weeks 13 Weeks
Ended Ended
----------- -----------
January 28, January 29,
2006 2005 (A)
---------- ----------
Net sales $4,716,327 $4,329,109
Cost of sales, including buying and
occupancy costs (See Note 3) 3,626,370 3,373,303
Selling, general and administrative
expenses 732,111 686,814
Interest expense, net 5,560 5,047
---------- ----------
Income before provision for income taxes 352,286 263,945
Provision for income taxes 63,583 98,965
---------- ----------
Net income $ 288,703 $ 164,980
========== ==========
Diluted earnings per share:
Net income $ .60 $ .33
Cash dividends declared per share $ .06 $ .045
Weighted average shares for diluted
earnings per share computation 485,452,273 507,231,935
(A) The periods ended January 29, 2005 have been adjusted to reflect
the adoption of SFAS No. 123R. See Note 1
