The TJX Companies, Inc. reported earnings and sales topped Wall Street’s expectations. Open-only comp-store sales increased 20 percent against the second quarter of 2019 with apparel ahead in the low-teens.

For the second quarter of fiscal 2022 earnings were $12.1 billion, an increase of 81 percent versus the second quarter of Fiscal 2021 in which stores were closed for approximately 31 percent of the quarter due to the pandemic.

Net sales for the second quarter of Fiscal 2022 increased 23 percent versus the second quarter of Fiscal 2020. Overall open-only comp-store sales increased 20 percent compared to the second quarter of Fiscal 2020. Net income for the second quarter was $786 million.

Second-quarter diluted earnings per share were $.64, which includes a debt extinguishment charge of $.15 per share, versus $.62 per share in the second quarter of Fiscal 2020. The company estimates that temporary store closures for approximately 3 percent of the second quarter negatively impacted earnings per share by about 5 cents to 7 cents, based on the company’s estimates of profit dollars on lost sales of approximately $300 million to $350 million.

Adjusted earnings of 79 cents topped Wall Street’s consensus estimate of 59 cents. Revenues of $12.1 million were ahead of Wall Street’s consensus estimate of $11.04 billion.

For the first half of Fiscal 2022, net sales were $22.2 billion, an increase of 100 percent versus the first half of Fiscal 2021 in which stores were closed for approximately 41 percent of the first half of the year due to the pandemic. Net sales for the first half of Fiscal 2022 increased 16 percent versus the first half of Fiscal 2020. Overall open-only comp-store sales increased 18 percent compared to the first half of Fiscal 2020. Net income for the first half of Fiscal 2022 was $1.3 billion. For the first half of Fiscal 2022, diluted earnings per share were $1.08, which includes a second-quarter debt extinguishment charge of $.15 per share. The company estimates that temporary store closures for approximately 8 percent of the first half of Fiscal 2022 negatively impacted earnings per share by about $.26 to $.31, based on the company’s estimates of profit dollars on lost sales of approximately $1.40 billion to $1.55 billion.

Ernie Herrman, CEO and president, The TJX Companies, Inc., said, “I am extremely pleased with our overall open-only comp-store sales increase of 20 percent over Fiscal 2020 and very strong bottom-line results, both of which were well above our plans for the second quarter. I am especially pleased with the sequential improvement to our pretax margin compared to the first quarter. The performance of our home businesses across all of our divisions continued to be phenomenal, and apparel continued to trend higher, with open-only comp sales increasing low-teens for the quarter. Our U.S. and international divisions delivered outstanding double-digit open-only comp-store sales increases, as our exciting and eclectic mix of merchandise, great brands and values, and treasure-hunt shopping experience continued to draw customers into our stores around the world. I want to recognize the extraordinary work and dedication of our global Associates across the organization, especially our store and distribution center Associates who are physically coming into work to bring great values to our customers. Sales are very strong as we start the third quarter, with overall open-only comp-store sales up mid-teens. While the environment remains uncertain, particularly with the Delta variant, we are convinced that TJX is in a position of strength. We see numerous opportunities to continue to gain market share and improve our profitability in the medium to longer term. We are confident in our ability to reach our long-term strategic vision of TJX becoming a $60 billion company.”

Sales By Business Segment
By segment, sales at Marmaxx (U.S.), which includes T.J. Maxx, Marshalls, and Sierra, nearly doubled to $7,349 million from
$3,959 million year-over-year and gained 18 percent on an open-only comp basis versus fiscal 2020.

HomeGoods (U.S.), which includes HomeGoods and Homesense, generated sales of $2,083 million versus $1,236 million a year ago. Open-online comp sales grew 36 percent versus fiscal 2020.

At TJX Canada, sales reached $1,022 against $592 million a year ago and gained +18 percent on an open-only comp basis versus fiscal 2020. TJX International (Europe & Australia) achieved revenues of $1,623 million against $880 million. Open-only comp sales grew 12 percent versus fiscal 2020.

Margins
For the second quarter of Fiscal 2022, the company’s consolidated pretax profit margin was 8.7 percent, which includes a 2.0 percentage point negative impact due to a debt extinguishment charge of $242 million, and an estimated 0.6 percentage point negative impact due to lost sales from temporary store closures. Net COVID-19 costs negatively impacted pretax margin by 0.3 percentage points, significantly less than the first quarter of Fiscal 2022. The company’s strong sales and excellent merchandise margin increase more than offset 1.5 percentage points of incremental freight expense as well as substantial supply chain and wage costs.

Inventory
Total inventories as of July 31, 2021 were $5.1 billion, compared with $5.1 billion at the end of the second quarter of Fiscal 2020. Overall product availability in the marketplace remains excellent, and the company is well-positioned to deliver a fresh assortment of merchandise to its stores and e-commerce sites for the back-to-school shopping season and throughout the fall.

Cash and Shareholder Distributions
During the second quarter of Fiscal 2022, the company generated $1.4 billion of operating cash flow and ended the quarter with $7.1 billion of cash. During the second quarter, the company returned a total of $614 million to shareholders. The company repurchased a total of $300 million of TJX stock, retiring 4.6 million shares. The company now expects to repurchase approximately $1.25 billion to $1.50 billion of TJX stock in Fiscal 2022, an increase of $250 million versus its prior plan. The company may adjust this amount up or down depending on various factors. The company also declared a quarterly dividend of $.26 per share in the second quarter of Fiscal 2022 and paid $314 million in shareholder dividends. The company expects to declare a similar dividend in the third quarter of Fiscal 2022, subject to Board approval.

Redemption Of Senior Notes and Debt Extinguishment Charge
On June 4, 2021, the company completed make-whole calls for its $1.25 billion principal outstanding, 3.50 percent Notes due April 15, 2025, and its $750 million principal outstanding, 3.75 percent Notes due April 15, 2027. As a result of these redemptions prior to their scheduled maturities, the company recorded a pre-tax debt extinguishment charge of $242 million in the second quarter of Fiscal 2022. Since the beginning of Fiscal 2022, the company has reduced its outstanding debt by $2.75 billion and reduced its annualized interest expense by more than $90 million.

Impact Of Temporary Store Closures
The company’s results for the second quarter of Fiscal 2022 were negatively impacted by the temporary closure of some of its stores due to the COVID-19 global pandemic. Although the company’s stores in the U.S. were open for the entire second quarter, stores in Canada were closed for approximately 22 percent of the second quarter, stores in Europe were closed for approximately 2 percent of the quarter and stores in Australia were closed for about 18 percent of the quarter. In total, the company had stores closed for approximately 3 percent of the second quarter due to the pandemic. The company estimates that these closures may have resulted in approximately $300 million to $350 million in lost sales during the second quarter of Fiscal 2022. This range of estimated lost sales assumes all Canadian, European and Australian stores operated at similar open-only comp-store sales trends as the first and second quarter of Fiscal 2022. Based on management’s estimate of profit dollars on this range of lost sales, the company estimates that second-quarter Fiscal 2022 earnings per share were negatively impacted by approximately $.05 to $.07. At the end of the second quarter, 4,649 of the company’s 4,665 stores were open.

The company’s results for the first half of Fiscal 2022 were negatively impacted by the temporary closure of some of its stores due to the COVID-19 global pandemic. Although the company’s stores in the U.S. were open for the first half of Fiscal 2022, stores in Europe were closed for approximately 39 percent of the first half, stores in Canada were closed for about 24 percent of the first half, and stores in Australia were closed for approximately 10 percent of the first half. In total, the company had stores closed for approximately 8 percent of the first half of Fiscal 2022 due to the pandemic. The company estimates that these closures may have resulted in approximately $1.40 billion to $1.55 billion in lost sales during the first half of Fiscal 2022. Based on management’s estimate of profit dollars on this range of lost sales, the company estimates that the first half of Fiscal 2022 earnings per share were negatively impacted by approximately $.26 to $.31.

Outlook
For the start of the third quarter of Fiscal 2022, sales are strong, with overall open-only comp-store sales up mid-teens over the third quarter of Fiscal 2020. Currently, all company stores in the U.S., Canada and Europe are open, and approximately 40 of its Australian stores are closed. While the company is currently not expecting any significant store closures during the third quarter, it could experience temporary closures again if new COVID-19-related regulations are put in place. Due to the continued uncertainty of the current environment, the company is not providing financial guidance at this time.

Photo courtesy TJX Cos.