The TJX Companies, Inc. announced net sales for fiscal 2003 were $12.0 billion, up 12% over the previous year, and consolidated comparable store sales increased 3%. For the 52-week fiscal year, net income reached $578 million and diluted earnings per share were $1.08, an 11% increase over $.97 per share from continuing operations in fiscal 2002. The $1.08 per share earned this year reflects the previously announced $.02 per share charge for the tentative settlement of claims related to California lawsuits.
For the fiscal 2003 fourth quarter, sales were $3.5 billion, up 9% over last year. Consolidated comparable store sales were flat to last year’s 6% increase. Net income for the fourth quarter was $154 million and diluted earnings per share were $.29, up slightly over the prior year’s fourth quarter of $.28.
Edmond English, President and Chief Executive Officer of The TJX Companies, Inc. commented, “With a weak economy and geopolitical concerns, which dampened consumer confidence, as well as a highly promotional retail landscape, 2002 was certainly a very difficult business environment. Despite these external challenges, we have once again proven our ability to grow substantially in difficult times. I am pleased that we achieved our sales goals for the year, growing sales 12% to $12 billion and increasing comparable store sales 3%. Additionally, our earnings growth was within the range that we established one year ago. We achieved a 42% after-tax return on average shareholders equity and continued to generate significant excess cash. We added 178 stores company-wide, growing our store base by 11%, and I am very pleased with the performance of new stores across all of our divisions. It is also worth noting the power of our younger businesses, which continue to play an increasingly important role in our growth.
“At The Marmaxx Group, the combination of T. J. Maxx and Marshalls, total sales for the year were $9.5 billion, a 7% increase over last year, and comparable store sales for the year increased 2% over the prior year. Segment profit for 2002 was $888 million versus $894 million last year. While Marmaxx’s sales were only slightly less than our expectations for the year, profits were impacted by large increases in insurance and employee benefits costs and the previously mentioned charge for the tentative settlement of the California lawsuits. For the fourth quarter, comparable stores sales decreased 1%, against a strong increase of 6% last year. Segment profit in the quarter was $208 million, which was below the prior year’s exceptionally strong profits. Although we had higher expectations for Marmaxx in 2002, inventories were very well managed, which enabled us to respond quickly to opportunities in the marketplace and changes in the competitive landscape. Thus, merchandise margins at Marmaxx continued to hold strong, pointing to the fundamental strength of this business. We netted 73 additional stores in 2002 to end the year with 1,342 stores. Our plans are to increase store count for The Marmaxx Group by 79 stores in 2003.
“HomeGoods had an excellent year, far exceeding our sales and profit objectives, while at the same time growing its store count by 27%. Total sales reached $705 million, a 39% increase over last year, and comparable store sales increased 6% over an increase of 7% in the prior year. Segment profit increased nearly nine-fold to $32 million and profit margin grew substantially. For the fourth quarter, comparable store sales increased 2%, against a very strong 11% increase last year. Segment profit for the quarter increased 139%. HomeGoods was very successful in 2002 and made significant gains in merchandising, managing inventories, store operations and distribution. Our superstores, which combine HomeGoods with T.J. Maxx or Marshalls, continued to perform extremely well. We netted 30 additional HomeGoods stores during the year, bringing our year-end total to 142. We will continue rolling out new stores in the freestanding and superstore format in 2003, and expect to increase the HomeGoods chain by 37 stores, a 26% increase.”
English continued, “Winners, our Canadian division, had a great year, exceeding our expectations. Sales for the year totaled $793 million, a 20% increase, and comparable store sales increased by 5% in local currency. Segment profit increased 44% to $85 million, with a strong 10.8% profit margin. In the fourth quarter, comparable store sales in local currency increased 2%. Improved inventory management resulted in segment profit growing 42% and Winners achieving an 11.3% profit margin in the quarter. Winners did an excellent job of inventory management throughout the year, and with its College Park, Toronto, store, set a new-store-opening performance record. We added 15 Winners stores in 2002, bringing its year-end total to 146. In addition, this division successfully added 8 HomeSense stores, the Canadian version of HomeGoods, to end the year with 15 stores. In 2003, we plan to add 13 Winners and 8 HomeSense stores.
“T.K. Maxx, in the U.K. and Ireland, had a very successful year, bringing in sales and profits above our expectations, while growing its store base substantially. Sales for the year totaled $720 million, increasing 38%, and comparable store sales increased 5%. Segment profit was up 232% to $43 million and profit margins increased dramatically. I am very pleased with T.K. Maxx’s improvements in inventory management in 2002. While fourth quarter comparable store sales in local currency were flat to last year, these improvements in inventory management resulted in segment profit increasing by 323% and profit margins rising to 11.2% for the fourth quarter. T.K. Maxx added 22 stores in 2002 to end the year with 123 stores. We plan to open 30 T.K. Maxx stores in 2003, an increase of 24%.”
English continued, “A.J. Wright grew its store base in 2002 by 67%, entering new markets as well as filling in existing ones. For the year, this young business increased total sales by 76% and comparable store sales increased by 11%, over a strong 18% increase last year. Comparable store sales increased 8% in the fourth quarter, over a 17% increase last year. However, bottom-line results did not meet our objectives. While A.J. Wright’s bottom line exceeded expectations for the first half of the year, profitability in the back half was negatively impacted in part by strains put on this young organization by a very aggressive store opening program. That said, new A.J. Wright stores performed well and this division was successful in broadening its reach to the moderate-income customer. We continue to be confident in the strength of the A.J. Wright concept as a growth vehicle for TJX. This division netted 30 additional stores in 2002, ending the year with 75 stores. We plan to add 25 new A.J. Wright stores in 2003.
“Our financial strength continues to give us confidence in these challenging times. Our strong returns on investment continued to result in our generating significant excess cash, which in 2002, reached a level that exceeded our expectations. After funding all of our growth needs, this excess cash allowed us to continue our aggressive share buyback program at higher levels than we originally anticipated. In 2002, we completed our $1 billion share repurchase program begun in 2000 and initiated another $1 billion share buyback program. For the year, we spent $498 million on share repurchases and retired 26 million shares. In 2003, we are continuing our sizable buyback program with planned spending of an additional $500 million.”
English concluded, “Looking ahead at a year that presents many macro uncertainties, I continue to be confident in the strength of our Company and our ability to grow. As we begin 2003, inventories are in great shape across all divisions, which allows us to continue to take advantage of the plentiful buying opportunities in the marketplace. While we face challenging comparisons to last year, especially in the first quarter, our value-oriented concept and our ability to react quickly to the changing dynamics of the competitive environment, as well as our very strong financial position, continue to serve us well and reaffirm my confidence in 2003 and beyond.”
THE TJX COMPANIES, INC. AND CONSOLIDATED SUBSIDIARIES
FINANCIAL SUMMARY
(Unaudited)
(Dollars In Thousands Except Per Share Amounts)
13 Weeks Ended
January 25, January 26,
2003 2002
Net sales $ 3,505,481 $ 3,208,712
Cost of sales, including buying and
occupancy costs 2,721,877 2,481,606
Selling, general and administrative
expenses 527,646 467,955
Interest expense, net 5,903 7,202
Income from continuing operations
before provision for income taxes 250,055 251,949
Provision for income taxes 95,752 96,629
Income from continuing operations 154,303 155,320
Loss related to discontinued
operations, net of income taxes - -
Net income $ 154,303 $ 155,320
THE TJX COMPANIES, INC. AND CONSOLIDATED SUBSIDIARIES
FINANCIAL SUMMARY
(Unaudited)
(Dollars In Thousands Except Per Share Amounts)
52 Weeks Ended
January 25, January 26,
2003 2002
Net sales $ 11,981,207 $ 10,708,998
Cost of sales, including buying and
occupancy costs 9,079,579 8,122,922
Selling, general and administrative
expenses 1,938,531 1,686,389
Interest expense, net 25,373 25,643
Income from continuing operations
before provision for income taxes 937,724 874,044
Provision for income taxes 359,336 333,647
Income from continuing operations 578,388 540,397
Loss related to discontinued
operations, net of income taxes - (40,000)
Net income $ 578,388 $ 500,397
