Moody’s Investors Service affirmed TJX Companies, Inc.’s senior unsecured rating at A2 and commercial paper rating at Prime-1. The rating outlook was changed to stable from negative.
The change in outlook to stable and the affirmations reflect governance considerations including the company’s maintenance of a conservative financial strategy evidenced through its plan to repay debt. The company has redeemed $750 million senior notes due June 2021 and has also repaid approximately $2 billion of additional senior notes in June 2021. Nonetheless, TJX has reinstated its dividend and share repurchases, which were curtailed at the onset of the pandemic, as operating performance recovers. The company maintains excellent liquidity and has $8.8 billion of cash at May 1, 2021.
Ratings Rationale
Moody’s said, “TJX’s A2/Prime-1 ratings reflect its leadership position in US off-price retail, a sector that Moody’s views as strongly positioned to continue to gain market share as the retail sector continues to recover from the disruption caused by the COVID-19 pandemic. The rating reflects TJX’s benefits from scale as the largest global off-price retailer, its flexible supply chain and extensive vendor relationships which Moody’s believes are formidable competitive advantages. TJX’s ratings are supported by its solid credit metrics and conservative financial policies. The ratings are constrained by its relatively narrow sales concentration in the highly fragmented apparel and home goods space and the inherent cyclicality of demand in these categories.
“The stable rating outlook reflects its industry leadership position and its operational capabilities which support its ability to continue to grow and gain share from alternative channels as store traffic and apparel demand recovers. The outlook is also supported by its excellent liquidity and conservative financial policy.”
Photo courtesy TJX
