TJX Comps Climb 14 Percent In Third Quarter

The TJX Companies Inc. reported net income for the third quarter was $1.0 billion, or 84 cents a share, a 24 percent increase over 68 cents per share in the third quarter of Fiscal 2020. Q3 FY22 overall open-only comp-store sales increased 14 percent over Q3 FY20

The quarter marked the third consecutive quarter that overall open-only comp-store sales increased mid-teens or better. Q3 FY22 net sales were $12.5 billion, an increase of 20 percent year-over-year.

EPS of 84 cents a share topped Wall Street’s consensus target of 81 cents. Sales of $12.5 billion surpassed Wall Street’s consensus target of $12.27 billion.

For the first nine months of Fiscal 2022, net sales were $34.7 billion, an increase of 64 percent versus the first nine months of Fiscal 2021. Stores were closed for approximately 27 percent of the first nine months of Fiscal 2021 due to the pandemic. Net sales for the first nine months of Fiscal 2022 increased 18 percent versus the first nine months of Fiscal 2020. Overall open-only comp-store sales increased 17 percent compared to the first nine months of Fiscal 2020. Net income for the first nine months of Fiscal 2022 was $2.3 billion. For the first nine months of Fiscal 2022, diluted earnings per share were $1.92, which includes a second-quarter debt extinguishment charge of $.15 per share. The company estimates that temporary store closures for approximately 6 percent of the first nine months of Fiscal 2022 negatively impacted earnings per share by about $.27 to $.32, based on the company’s estimates of profit dollars on lost sales of approximately $1.43 billion to $1.59 billion.

Company CEO and President Comments
Ernie Herrman, president and CEO, The TJX Companies, Inc., said, “I am extremely pleased with the continued strength of our business, with our overall open-only comp-store sales up a very strong 14 percent over Fiscal 2020, and earnings per share of $.84, well above our plan. We saw robust trends throughout the quarter, with comp sales exiting the quarter as strong as the beginning of the quarter. Further, our home businesses across all of our divisions continued their phenomenal performance, and overall apparel open-only comp-store sales increased mid-single-digits. I want to recognize the extraordinary work and dedication of our global associates, especially our store and distribution center associates, who are physically coming into work to serve our customers and the teams throughout the company that have driven these outstanding results despite the global supply chain challenges. We are extremely well-positioned for the holiday selling season, and overall open-only comp-store sales to start the fourth quarter are up mid-teens. We feel great about our ability to deliver customers an exciting mix of gift-giving merchandise and amazing brands and values throughout the holiday selling period. We are in an excellent inventory position, with most of the products needed for the holiday season either on-hand or scheduled to arrive at our stores and online in time for the holidays. We are very confident in our ability to continue to gain market share, improve our profitability in the medium to long term, and reach our strategic vision of TJX becoming a $60 billion company.”

Sales By Business Segment
By segment, same-store sales at Marmaxx, which includes T.J. Maxx, Marshalls and Sierra, were up 11 percent on an open-only basis against a gain of 4 percent in the year-ago quarter. Open-only same-store sales of HomeGoods jumped 34 percent against a one percent gain the prior year. Open-only same-store sales at TJX Canada jumped 8 percent against a 2 percent gain the prior year. Open-only same-store sales of TJX International (Europe and Australia) jumped 10 percent against a 6 percent gain the prior year.

The open-only measure reports the sales increase or decrease of stores for the days the stores were open in the third quarter of Fiscal 2022 against sales of those stores for the same days in Fiscal 2020, prior to the emergence of the pandemic, which the company believes is a more useful comparison than against the third quarter of Fiscal 2021.

Margins
For the third quarter of Fiscal 2022, the company’s consolidated pretax profit margin was 11.0 percent, a 0.3 percentage point increase versus the third quarter of Fiscal 2020. The company’s very strong sales and merchandise margin increase more than offset incremental freight expense of 1.6 percentage points as well as substantial investments to expand distribution capacity, higher incentive accruals, and wage increases. Net COVID costs negatively impacted its pretax margin by an additional 0.5 percentage points.

Gross profit margin for the third quarter of Fiscal 2022 was 29.5 percent, a 0.7 percentage point increase versus the third quarter of Fiscal 2020. Selling, general and administrative (SG&A) costs as a percent of sales for the third quarter of Fiscal 2022 were 18.3 percent, a 0.3 percentage point increase versus the third quarter of Fiscal 2020.

Inventory
Total inventories as of October 30, 2021 were $6.6 billion, compared with $6.3 billion at the end of the third quarter of Fiscal 2020. Overall availability of quality, branded merchandise in the marketplace remains excellent. The company is in a strong position to deliver a consistent flow of fresh gift assortments throughout the holiday season as most of the inventory needed has already been delivered to the company or is scheduled to arrive in its stores and online in time for the holidays.

Cash and Shareholder Distributions
During the third quarter of Fiscal 2022, the company generated $1.0 billion of operating cash flow and ended the quarter with $6.8 billion of cash. During the third quarter, the company returned a total of $1.1 billion to shareholders. The company repurchased a total of $800 million of TJX stock, retiring 11.7 million shares, and paid $313 million in shareholder dividends. For the first nine months of Fiscal 2022, the company returned a total of $2.0 billion to shareholders. During the first nine months, the company repurchased a total of $1.1 billion of TJX stock, retiring 16.3 million shares, and paid $942 million in shareholder dividends.

The company now expects to repurchase approximately $1.75 billion to $2.0 billion of TJX stock in Fiscal 2022, an increase of $500 million versus its prior plan. The company may adjust this amount up or down depending on various factors. The company also expects to declare a $.26 per share dividend in the fourth quarter of Fiscal 2022, subject to Board approval.

Outlook
For the start of the fourth quarter of Fiscal 2022, overall open-only comp-store sales growth is up mid-teens over the fourth quarter of Fiscal 2020. Due to the continued uncertainty of the current environment with the pandemic, the company is not providing financial guidance at this time.

As of October 30, the company operated a total of 4,684 stores in nine countries, the United States, Canada, the United Kingdom, Ireland, Germany, Poland, Austria, the Netherlands, and Australia, and five e-commerce sites. These include 1,285 T.J. Maxx, 1,148 Marshalls, 850 HomeGoods, 55 Sierra, and 39 Homesense stores, as well as tjmaxx.com, marshalls.com, homegoods.com, and sierra.com, in the United States; 292 Winners, 147 HomeSense and 106 Marshalls stores in Canada; 618 T.K. Maxx and 78 Homesense stores, as well as tkmaxx.com, in Europe; and 66 T.K. Maxx stores in Australia.

Photo courtesy TJX