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Financial, Retail

The TJX Companies Reports Strong Comp Store Sales Growth

The TJX Companies, Inc. reports U.S. open-only comp store sales growth of 13 percent for Q4 FY22 vs. Q4 FY20, and FY22 U.S. open-only comp sales up 17 percent.

2/24/2022
FRAMINGHAM, Mass. -- The TJX Companies, Inc. (NYSE: TJX), the leading off-price apparel and home fashions retailer in the U.S. and worldwide, today announced sales and operating results for the fourth quarter ended January 29, 2022. Net sales for the fourth quarter of Fiscal 2022 were $13.9 billion, an increase of 27% versus the fourth quarter of Fiscal 2021. Stores were closed for approximately 13% of the fourth quarter of Fiscal 2021. Net sales for the fourth quarter of Fiscal 2022 increased 14% versus the fourth quarter of Fiscal 2020. U.S. open-only comp store sales (defined below) increased 13% over a 6% increase in the fourth quarter of Fiscal 2020. Overall open-only comp store sales increased 10% over a 6% increase in the fourth quarter of Fiscal 2020. Net income for the fourth quarter was $940 million and diluted earnings per share were $.78 versus $.81 per share in the fourth quarter of Fiscal 2020.

For the full year Fiscal 2022, net sales were $48.5 billion, an increase of 51% versus the full year Fiscal 2021. Stores were closed for approximately 4% of Fiscal 2022 and 24% of Fiscal 2021 due to the COVID-19 global pandemic. Net sales for the full year Fiscal 2022 increased 16% versus Fiscal 2020. Full year U.S. open-only comp store sales increased 17% compared to Fiscal 2020. Full year Fiscal 2022 overall open-only comp store sales increased 15% compared to Fiscal 2020. Net income for the full year Fiscal 2022 was $3.3 billion. Full year Fiscal 2022 diluted earnings per share were $2.70 versus $2.67 in Fiscal 2020. Full year Fiscal 2022 adjusted diluted earnings per share were $2.85, which excludes the negative impact of a second quarter debt extinguishment charge of $.15 per share.

CEO and President Comments

Ernie Herrman, chief executive officer and president of The TJX Companies, Inc., stated, “As I reflect on 2021, I could not be prouder of our Associates and teams around the world. Together, they persevered through the challenges that COVID-19 presented for yet another year and kept the health and safety of our Associates and customers a top priority. I especially want to recognize our store and distribution center Associates, who have been physically coming into work to serve our customers. I also want to thank our global teams that met the supply chain challenges head-on to ensure a consistent flow of exciting merchandise for our customers this holiday season and throughout the year. Our global organization worked together as “One TJX,” and thanks to their dedication and talent, we delivered excellent results in 2021.”

Herrman continued, “For the year, U.S. open-only comp sales were up 17% and overall open-only comp store sales increased 15% over Fiscal 2020, with double-digit increases for both the U.S. businesses and overall TJX every quarter of the year. For the fourth quarter, we saw a 13% open-only comp sales increase for the U.S. and a 10% increase in overall open-only comps, both over 6% comp sales increases in the fourth quarter of Fiscal 2020. Fourth quarter sales were trending higher before the surges in Omicron. During the holiday selling season and throughout the year, our shoppers responded to our amazing brands, excellent values, and inspiring treasure hunt shopping experience. Our home businesses across all of our divisions delivered phenomenal open-only comp store sales performance, and overall apparel open-only comp store sales increased high-single digits in Fiscal 2022. While freight and wage cost pressures remain elevated, we are pleased that our retail pricing strategy is working very well. This gives us confidence in improving our profitability when the macro environment normalizes, while continuing to offer exceptional values to customers every day. In a year when we grew sales to nearly $50 billion, we are very confident in our goal of TJX becoming an increasingly profitable, $60 billion-plus company.”

Margins

For the fourth quarter of Fiscal 2022, the Company’s consolidated pretax profit margin was 9.0%, a 1.9 percentage point decrease versus the fourth quarter of Fiscal 2020. The Company benefited from buying and occupancy leverage due to its strong open-only comp store sales results. Within the Company’s merchandise margin, markon was extremely strong and markdown levels were significantly lower for the fourth quarter of Fiscal 2022 versus the fourth quarter of Fiscal 2020. However, merchandise margin was down primarily due to 2.8 percentage points of incremental freight expense, which was more than the Company expected. The combination of incremental investments to expand distribution capacity and wage increases reduced pretax profit margin by an additional 1.6 percentage points. Net COVID costs also negatively impacted pretax profit margin by 0.5 percentage points.

Gross profit margin for the fourth quarter of Fiscal 2022 was 27.1%, a 1.3 percentage point decrease versus the fourth quarter of Fiscal 2020. Selling, general and administrative (SG&A) costs as a percent of sales for the fourth quarter of Fiscal 2022 were 18.0%, a 0.5 percentage point increase versus the fourth quarter of Fiscal 2020.

For the full year Fiscal 2022, the Company’s consolidated pretax profit margin was 9.1%. Excluding a 0.5 percentage point negative impact due to a second quarter debt extinguishment charge of $242 million, full year Fiscal 2022 adjusted pretax profit margin was 9.6%. Gross profit margin for the full year Fiscal 2022 was 28.5%. Full year Fiscal 2022 merchandise margin was up despite 2.0 percentage points of incremental freight expense. SG&A costs as a percent of sales for the full year Fiscal 2022 were 18.7%.

Inventory

Total inventories as of January 29, 2022 increased to $6.0 billion, compared with $4.9 billion at the end of Fiscal 2020, primarily due to higher in-transit inventory. Overall availability of quality, branded merchandise in the marketplace remains excellent, and the Company is well positioned to flow fresh spring merchandise to its stores and online.

Cash and Shareholder Distributions

For the full year Fiscal 2022, the Company generated $3.1 billion of operating cash flow and ended the year with $6.2 billion of cash.

During the fourth quarter, the Company returned a total of $1.4 billion to shareholders. The Company repurchased a total of $1.1 billion of TJX stock, retiring 15.2 million shares, and paid $310 million in shareholder dividends during the quarter. In Fiscal 2022, the Company returned a total of $3.4 billion to shareholders. In Fiscal 2022, the Company repurchased a total of $2.2 billion of TJX stock, retiring 31.5 million shares, and paid $1.25 billion in shareholder dividends.

With the Company’s continued strong cash flow, TJX announced today that it intends to increase the regular quarterly dividend on its common stock expected to be declared in March 2022 and payable in June 2022 to $.295 per share, subject to the approval of the Company’s Board of Directors. This would represent a 13% increase over the current per share dividend.

The Company is also announcing today its plan to repurchase approximately $2.25 to $2.50 billion of TJX stock during the fiscal year ending January 28, 2023. With $0.8 billion remaining at Fiscal 2022 year end under the Company’s existing stock repurchase programs, the Company’s Board of Directors approved a new stock repurchase program that authorizes the repurchase of up to an additional $3.0 billion of TJX common stock from time to time. The new authorization represents approximately 4% of the Company’s outstanding shares at current prices. The new stock repurchase program marks the 22nd program approved by the Board since 1997. Under the Company’s repurchase programs, share repurchases may be made from time to time in market or private transactions and may include derivative transactions. The repurchase program announced today has no time limit and may be suspended or discontinued at any time.

First Quarter and Full Year Fiscal 2023 Outlook

For the first quarter of Fiscal 2023, the Company is planning U.S. comparable store sales to be up 1% to 3% over an outsized 17% U.S. open-only comp store sales increase in the first quarter of Fiscal 2022. The Company is very pleased with its strong U.S. comparable store sales growth (defined below) to start the first quarter of Fiscal 2023. The Company’s first quarter Fiscal 2023 U.S. comparable store sales outlook takes into account the cadence of U.S. open-only comp stores sales growth in the first quarter of Fiscal 2022, which was up low to mid-single digits to start the quarter and then accelerated to a 20%-plus increase in March and April combined. For the first quarter of Fiscal 2023, the Company expects diluted earnings per share to be in the range of $.58 to $.61 versus earnings per share of $.44 in the prior year.

For the full year Fiscal 2023, the Company is planning U.S. comparable store sales to be up 3% to 4% over an outsized 17% U.S. open-only comp store sales increase in Fiscal 2022. At this time, the Company is not providing full year Fiscal 2023 diluted earnings per share guidance given the current uncertainty around how long elevated expense pressures may persist.

Fiscal 2022 Impact of Temporary Store Closures

The Company’s results for the full year 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 throughout Fiscal 2022, stores in Europe were closed for approximately 19% of Fiscal 2022, stores in Canada were closed for approximately 12% of Fiscal 2022, and stores in Australia were closed for approximately 19% of Fiscal 2022. In total, the Company had stores closed for approximately 4% of Fiscal 2022 due to the COVID-19 global pandemic (see table below). The Company estimates that these closures may have resulted in approximately $1.45 billion to $1.61 billion in lost sales during Fiscal 2022. Based on management’s estimate of profit dollars on this range of lost sales, the Company estimates that its Fiscal 2022 earnings per share were negatively impacted by approximately $.27 to $.32.

Fiscal 2022 Open-Only Comp Store Sales

Due to the temporary closing of stores as a result of the COVID-19 global pandemic, the Company’s historical definition of comp store sales is not applicable for the fourth quarter and full year Fiscal 2022. In order to provide a performance indicator for its stores, the Company has been temporarily reporting open-only comp store sales. The Company’s open-only comp store sales calculation includes stores initially classified as comp stores at the beginning of Fiscal 2021. This measure reports the sales increase or decrease of these stores for the days the stores were open in the fourth quarter and full year Fiscal 2022 against sales for the same days in Fiscal 2020, prior to the emergence of the global pandemic. The Company does not intend to report open-only comparable store measures in Fiscal 2023.

Fiscal 2023 U.S. Comparable Store Sales

For Fiscal 2023, the Company intends to return to its historical definition of comparable store sales. While stores in the U.S. were open for all of Fiscal 2022, a significant number of stores in TJX Canada and TJX International (Europe and Australia) experienced COVID-related temporary store closures and government-mandated shopping restrictions during Fiscal 2022. Therefore, the Company cannot measure year-over-year comparable store sales with Fiscal 2022 in these geographies in a meaningful way. As a result, the comparable stores included in the Fiscal 2023 measure will consist of U.S. stores only, which, for clarity, the Company intends to refer to as U.S. comparable store sales and will be calculated against sales for the comparable periods in Fiscal 2022.

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