The TJX Companies, Inc. reported strong January sales and, as a result, now estimates that its earnings per share for the fourth quarter will exceed its previously disclosed range. In addition, the Company announced a one-time tax benefit from the repatriation of foreign earnings, as well as its decision to early-adopt stock option expensing, both of which will impact its fourth quarter ended January 28, 2006. Details on January sales as well as the impact of the one-time tax benefit and stock option expensing are provided below.
Consolidated net sales for the month of January were $946 million, up 11% over $853 million achieved during the four-week period ended January 29, 2005. For the 52 weeks ended January 28, 2006, sales reached $16.1 billion, an increase of 8% over $14.9 billion achieved last year. Consolidated comparable store sales for the four-week period ended January 28, 2006, were up 5% over the same period last year. For the 13-week fourth quarter, consolidated comparable store sales increased 3% above last year's fourth quarter. For the 52-week, year-to-date period, consolidated comparable store sales increased 2% over last year.
Ben Cammarata, Chairman and Acting Chief Executive Officer of The TJX Companies, Inc., stated, “Our comparable store sales increase of 5% in January exceeded our expectations and came on top of a 5% comparable store sales increase in January last year. Solid execution of off-price fundamentals, namely maintaining liquid inventories, making the right buys late in the season, and flowing fresh product at compelling values, led to a strong finish to the year. Inventories are in excellent shape as we enter the new year and we remain focused on driving profitable sales across all divisions of the Company.”
The Company expects that fourth quarter earnings per share will exceed its previously disclosed range of $.41 – $.43, before the net positive impact of the one-time tax benefit and stock option expensing described below.
The Company also today announced that it expects to realize a one-time tax benefit from the repatriation of foreign earnings in the fourth quarter and the fiscal year ended January 28, 2006. The TJX Board of Directors approved the repatriation of approximately US$260 million of accumulated earnings from its Canadian subsidiary, Winners, which was completed during January 2006. Recent U.S. tax legislation allows multinationals a one-time opportunity to repatriate accumulated earnings from foreign subsidiaries at a significantly reduced income tax rate. As a result, TJX's repatriation of foreign earnings will result in a one-time tax benefit to net income of approximately $47 million, or $.10 per share, which the Company will recognize in the fourth quarter of the current fiscal year, ended January 28, 2006.
Separately, The TJX Companies 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 the current fiscal year, which the Company expects will reduce earnings per share by $.03 in the fourth quarter of fiscal 2006 and by $.12 for the full fiscal 2006 year. The Company has elected the modified retrospective transition method. Accordingly, prior period financial statements will be 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 will be adjusted to reflect the related stock option expense.
