The TJX Companies, Inc. Reports Fiscal Year and Fourth Quarter 2009 Results Wednesday February 25, 8:36 am ET
The TJX Companies, Inc. had net sales for fiscal year ended Jan. 31, 2009 of $18.99 billion, a 4.0% increase over the prior year. Consolidated comparable store sales on a constant currency and 52-week basis increased 1% versus a 2% increase last year. Net income from continuing operations for the 53-week fiscal year was $915 million, and diluted earnings per share from continuing operations were $2.08, compared with $1.68 last year.
Adjusted diluted earnings per share from continuing operations for the fiscal year on a 53-week basis were $2.01, a 4% increase over the adjusted $1.93 in the prior year.
For the 14-week fourth quarter ended Jan. 31, 2009, net sales were $5.38 billion, flat with last year. Consolidated comparable store sales on a constant currency and 13-week basis decreased 2% in the fourth quarter versus a 2% increase in the same period last year. Net income from continuing operations was $251 million, and diluted earnings per share from continuing operations were 58 cents, compared with 67 cents last year.
Adjusted diluted earnings per share from continuing operations for the fourth quarter on a 14-week basis were 55 cents compared to the adjusted 65 cents in the prior year and above the companys previous estimate of 50 cents to 51 cents.
Carol Meyrowitz, president and CEO of The TJX Companies, Inc., stated, “Since the Fall, given the extraordinary challenges that the economy has presented, we have held our own, with customer traffic being up. This speaks to our ability to maintain a compelling value proposition even in an extremely promotional environment and gain market share. We believe that our excellent values, as well as our business model, which is one of the most flexible in the world, and our very strong financial position, lie at the root of our ability to weather challenging times, today as they have in past recessions. For 2009, we will manage the business with conservative sales expectations, very lean inventories and aggressive cost control, which we believe will best position us in the short term. We are confident in our ability to endure this recession and believe that we will emerge from it in an even more advantageous competitive position, poised to continue pursuing our growth opportunities in North America and Europe.”
For the full year Fiscal 2009, the cCompanys consolidated pretax profit margin from continuing operations was 7.6% compared with 6.9% last year. Pretax profit margin in the full year was positively impacted by 0.1 percentage points by a reduction in the computer intrusion reserve, while prior years pretax profit margin was negatively impacted by 1.0 percentage points by a charge related to that reserve. Excluding these items, pretax profit margins decreased 0.4 percentage points.
The gross profit margin from continuing operations for the full year Fiscal 2009 was 24.2%, which was 0.3 percentage points below the prior year. Increased merchandise margins and the benefit of the 53rd week (0.2 percentage points) were more than offset by buying and occupancy cost deleverage on the 1% comparable store sales increase. Selling, general and administrative costs as a percent of sales were 16.7%, a 0.1 percentage point increase over prior year, with expense deleverage on below-plan comparable store sales partially offset by the companys ongoing cost containment efforts.
For the fourth quarter of Fiscal 2009, the companys consolidated pretax profit margin from continuing operations was 7.4% compared with 9.1% last year, a decrease of 1.7 percentage points. Reductions to the computer intrusion(s) reserve in both years did not materially impact pretax margin comparisons.
The gross profit margin from continuing operations for the fourth quarter was 22.7%, which was 1.8 percentage points below the prior year. Mark-to-market adjustments from the companys inventory-related hedges negatively impacted gross margin comparisons by 1.0 percentage points. The remainder of the gross profit decrease primarily reflects buying and occupancy cost deleverage on the 2% comparable store sales decrease, partially offset by the benefit of the 53rd week (0.7 percentage points). Selling, general and administrative costs as a percent of sales were 15.6%, a 0.1 percentage point decrease from prior year, which was favorable to plan.
Inventory
Total inventories as of Jan. 31, 2009, were $2.6 billion, compared with $2.7 billion at the same time in the prior year. Consolidated inventories on a per-store basis, including the warehouses, at Jan. 31, 2009, were down 5% versus being up 2% at the same time last year. At the Marmaxx division, the total inventory commitment, including the warehouses, stores and merchandise on order, was down versus last year on a per-store basis. The company remains very comfortable with the liquidity in its inventory levels which positions it very well to begin a new year with fresh merchandise assortments at great values.
Share Repurchases
During the fourth quarter, the company spent a total of $65 million in repurchases of TJX stock, retiring 2.7 million shares. As previously reported, the company reduced its spending in the fourth quarter to repurchase shares, reflecting its conservative approach to managing liquidity in the current, uncertain economic environment. In Fiscal 2009, the company spent a total of $741 million to repurchase TJX stock, retiring 24.0 million shares.
For Fiscal 2010, the company currently anticipates spending up to approximately $250 million to repurchase its stock. At current prices, this represents slightly less than 3% of the companys outstanding shares. The company may adjust the amount of this spending up or down depending upon the economic environment.
Discontinued Operations
In the third quarter of Fiscal 2009, the company sold Bobs Stores and recorded an after-tax loss of approximately $18 million, or $.04 per share. Historical results have been adjusted to reflect the Bobs Stores business segment as discontinued operations. Accordingly, the loss on the sale and the operating losses related to Bobs Stores will not impact results from continuing operations. For Fiscal 2009, including the impact of discontinued operations, net income was $881 million and diluted earnings per share were $2.00.
First Quarter and Full Year Fiscal 2010 Outlook
The company will provide sales and earnings guidance for the first quarter of Fiscal 2010. However, for the full year, given the uncertain economic environment, the company will not provide specific sales and earnings guidance.
The company expects the first half of Fiscal 2010 to be considerably more challenging than the second half, given the more difficult comparable store sales comparisons and the more significant negative impact of foreign currency expected during the first half of the year. Further, the major cost reductions that the company will be implementing will not begin to have a significant impact until the second quarter. For the first quarter of Fiscal 2010, the Company expects earnings per share from continuing operations in the range of 32 cents to 38 cents on a reported basis, versus 44 cents per share last year. The first quarter outlook includes an estimated net 2 cents per share negative impact from foreign currency. Prior years results included a 2 cents benefit from non-recurring FIN 48 tax adjustments as well as a 1 cents negative impact from inventory-related hedges. The first quarter outlook is based upon an estimated consolidated comparable stores sales decline in the range of 2% to 4%. It should be noted that first quarter expectations are not indicative of the Companys outlook for the full year, given the more challenging first half.
Stores by Concept
During the fiscal year ended Jan. 31, 2009, the company added a total of 123 stores, net of closings, to end the year with 2,652 stores, and increased square footage by 4% over the same period last year.
The TJX Companies, Inc. and Consolidated Subsidiaries
Financial Summary
(Unaudited)
(Dollars In Thousands Except Per Share Amounts)
14 Weeks Ended
13 Weeks Ended
53 Weeks Ended
52 Weeks Ended
January 31, 2009
January 26, 2008
January 31, 2009
January 26, 2008
Net sales
$
5,380,025
$
5,391,876
$
18,999,505
$
18,336,726
Cost of sales, including buying and occupancy costs
4,160,712
4,072,797
14,394,756
13,841,695
Selling, general and administrative expenses
839,531
848,126
3,170,018
3,039,520
Provision (credit) for Computer Intrusion related costs
(23,500
)
(18,900
)
(30,500
)
197,022
Interest expense (income), net
4,527
(1,175
)
14,291
(1,598
)
Income from continuing operations before provision for income taxes
398,755
491,028
1,450,940
1,260,087
Provision for income taxes
148,059
187,165
536,054
477,655
Income from continuing operations
250,696
303,863
914,886
782,432
Income (loss) from discontinued operations, net of income taxes
