The TJX Companies, Inc. Reports Strong Q1 FY14 EPS, Up 13% Over 41% Adjusted EPS Growth Last Year

The TJX Companies, Inc. Reports Strong Q1 FY14 EPS, Up 13% Over 41% Adjusted EPS Growth Last Year

FRAMINGHAM, Mass.--(BUSINESS WIRE)-- The TJX Companies, Inc. (NYS: TJX) , the leading off-price retailer of apparel and home fashions in the U.S. and worldwide, today announced sales and earnings results for the first quarter ended May 4, 2013. Net sales for the first quarter of Fiscal 2014 increased 7% to $6.2 billion. Consolidated comparable store sales for the quarter increased 2% over last year's reported 8% increase. Net income for the first quarter was $453 million. First quarter diluted earnings per share were $.62, a 13% increase over last year's $.55, which represented a 41% increase over the prior year's adjusted EPS.

Carol Meyrowitz, Chief Executive Officer of The TJX Companies, Inc., stated, "We are very pleased with our first quarter results, especially as they were achieved over the highest year-over-year comparisons for quarterly comp sales and EPS growth of this year. Consolidated comparable store sales increased 2% over an 8% reported increase last year and earnings per share grew 13% over last year's adjusted 41% increase. We believe the flexibility of our business model allowed us to achieve this growth despite the unfavorable weather patterns across most of our regions for much of the quarter. Flowing the right merchandise at the right time continued to be key to strong merchandise margins. The second quarter is off to a strong start and we are in an excellent position to buy into the enormous opportunities for quality merchandise that we are seeing in the marketplace. Longer term, we remain very confident in our continued ability to grow sales and profitability as we are well on the road to being a $40 billion-plus company!"


Sales by Business Segment

The Company's comparable store sales and net sales by division, in the first quarter, were as follows:

First Quarter

First Quarter

Comparable Store Sales1

Net Sales ($ in millions)2,3

FY2014

FY2013

FY2014

FY2013

In the U.S.:

Marmaxx4,5

+1%

+8%

$4,136

$3,889

HomeGoods

+7%

+9%

$690

$596

International:

TJX Canada

-1%

+6%

$645

$640

TJX Europe

+4%

+13%

$719

$673

TJX

+2%

+8%

$6,190

$5,798

1Comparable store sales outside the U.S. calculated on a constant currency basis, which removes the effect of changes in currency exchange rates. 2Sales in Canada and Europe include the impact of foreign currency exchange rates. See below. 3Figures may not foot due to rounding. 4Combination of T.J. Maxx and Marshalls. 5Net Sales for FY2014 include Sierra Trading Post.

Impact of Foreign Currency Exchange Rates

Changes in foreign currency exchange rates affect the translation of sales and earnings of the Company's international businesses into U.S. dollars for financial reporting purposes. In addition, ordinary-course, inventory-related hedging instruments are marked to market at the end of each quarter. Changes in currency exchange rates affect the magnitude of these translations and adjustments, and can have a material impact when there is significant volatility in currency exchange rates.

The movement in foreign currency exchange rates had a neutral impact on consolidated net sales growth in the first quarter of Fiscal 2014 versus the prior year. The overall net impact of foreign currency exchange rates had a $.01 per share negative impact on first quarter Fiscal 2014 earnings per share, compared with a $.01 per share negative impact last year.

A table detailing the impact of foreign currency on TJX pretax earnings and margins, as well as those of its international businesses, can be found in the Investor Information section of the Company's website, www.tjx.com.

Margins

For the first quarter of Fiscal 2014, the Company's consolidated pretax profit margin was 11.8%. This was flat to last year's first quarter margin, in which the consolidated pretax profit margin increased significantly by 2.2 percentage points over the prior year's adjusted margin.

The gross profit margin for the first quarter of Fiscal 2014 was 28.4%, 0.2 percentage points above last year's very strong margin. This increase was primarily driven by strong merchandise margin improvement.

Selling, general and administrative costs as a percent of sales were 16.5% in the first quarter, a 0.3 percentage point increase over last year's ratio primarily due to increased marketing spending and the impact of the Company's e-commerce businesses.

Inventory

Total inventories as of May 4, 2013, were $3.1 billion, compared with $2.9 billion at the end of the first quarter last year. Consolidated inventories on a per-store basis, including the distribution centers, but excluding the Company's e-commerce businesses, at May 4, 2013, were down 3%. The Company enters the second quarter with excellent inventory levels and in a great position to buy into the enormous opportunities it is seeing in the marketplace for quality merchandise.

Shareholder Distributions

During the first quarter, the Company repurchased a total of $300 million of TJX stock, retiring 6.5 million shares. The Company continues to expect to repurchase approximately $1.3 billion to $1.4 billion of TJX stock in Fiscal 2014. The Company may adjust the amount of this spending up or down depending on various factors. Additionally, the Company increased its dividend by 26% in the first quarter, as it remains committed to returning cash to its shareholders while reinvesting in the business to support the near- and long-term growth of TJX.

Second Quarter and Full Year Fiscal 2014 Outlook

For the second quarter of Fiscal 2014, the Company expects diluted earnings per share to be in the range of $.61 to $.63, which would represent a 9% to 13% increase over last year's $.56 per share. This outlook is based upon estimated consolidated comparable store sales growth of 2% to 3%.

For the fiscal year ending February 1, 2014, the Company is narrowing its expected range for diluted earnings per share to $2.70 to $2.78 versus $2.55 in Fiscal 2013. Excluding the approximately $.08 benefit from the 53rd week in the Company's Fiscal 2013 calendar, this guidance would represent a 9% to 13% increase over the adjusted $2.47 in Fiscal 2013. This outlook is based upon estimated consolidated comparable store sales growth of 1% to 2%.

The Company's earnings guidance for the second quarter and full year Fiscal 2014 assumes that currency exchange rates will remain unchanged from current levels.

Stores by Concept

During the first quarter ended May 4, 2013, the Company increased its store count by a net of 50 stores. The Company increased square footage by 5% over the same period last year.

Store Locations

Gross Square Feet*

First Quarter

First Quarter

(in millions)

Beginning

End

Beginning

End

In the U.S.:

T.J. Maxx

1,036

1,047

30.2

30.5

Marshalls

904

911

28.0

28.2

HomeGoods

415

426

10.4

10.7

Sierra Trading Post

4

4

0.1

0.1

TJX Canada:

Winners

222

226

6.5

6.6

HomeSense

88

89

2.1

2.1

Marshalls

14

21

0.5

0.7

TJX Europe:

T.K. Maxx

343

352

10.8

11.1

HomeSense

24

24

0.5

0.5

TJX

3,050

3,100

89.1

90.4

*Square feet figures may not foot due to rounding.

About The TJX Companies, Inc.

The TJX Companies, Inc. is the leading off-price retailer of apparel and home fashions in the U.S. and worldwide. The Company operates 1,047 T.J. Maxx, 911 Marshalls, 426 HomeGoods and 4 Sierra Trading Post stores as well as SierraTradingPost.com in the United States; 226 Winners, 89 HomeSense, and 21 Marshalls stores in Canada; and 352 T.K. Maxx and 24 HomeSense stores in Europe. TJX's press releases and financial information are also available at www.tjx.com.

Fiscal 2014 First Quarter Earnings Conference Call

At 11:00 a.m. ET today, Carol Meyrowitz, Chief Executive Officer of TJX, will hold a conference call with stock analysts to discuss the Company's first quarter Fiscal 2014 results, operations and business trends. A real-time webcast of the call will be available at www.tjx.com. A replay of the call will also be available by dialing (866) 367-5577 through Tuesday, May 28, 2013, or at www.tjx.com.

Non-GAAP Financial Information

The Company has used non-GAAP financial measures in this press release. Adjusted financial measures refer to financial information adjusted to exclude from financial measures prepared in accordance with accounting principles generally accepted in the United States (GAAP) items identified in the attached appendix. The Company believes that the presentation of adjusted financial results provides additional information on comparisons between periods including underlying trends of its business by excluding certain items that affect overall comparability. Non-GAAP financial measures should be considered in addition to, and not as an alternative for, the Company's reported results prepared in accordance with GAAP.

Important Information at Website

Archived versions of the Company's conference calls are available at the Investor Information section of www.tjx.com after they are no longer available by telephone as well as reconciliations of non-GAAP financial measures to GAAP financial measures, and other financial information. The Company routinely posts information that may be important to investors in the Investor Information section at www.tjx.com. The Company encourages investors to consult that section of its website regularly.

Forward-looking Statement

SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995: Various statements made in this release are forward-looking and involve a number of risks and uncertainties. All statements that address activities, events or developments that we intend, expect or believe may occur in the future are forward-looking statements. The following are some of the factors that could cause actual results to differ materially from the forward-looking statements: execution of buying strategy and inventory management; operational expansion and management of large size and scale; customer trends and preferences; market, banner, geographic and category expansion; marketing, advertising and promotional programs; competition; personnel recruitment and retention and costs of labor; global economic conditions and consumer spending; data security; information systems and new technology; seasonal influences; adverse or unseasonable weather; serious disruptions and catastrophic events; corporate and banner reputation; merchandise quality and safety; expanding international operations; merchandise importing; commodity pricing; fluctuations in currency exchange rates; fluctuations in quarterly operating results and market expectations; acquisitions, business investments and divestitures; compliance with laws, regulations and orders; changes in laws and regulations; outcomes of litigation, legal matters and proceedings; tax matters; real estate activities; cash flow and other factors that may be described in our filings with the Securities and Exchange Commission. We do not undertake to publicly update or revise our forward-looking statements even if experience or future changes make it clear that any projected results expressed or implied in such statements will not be realized.

The TJX Companies, Inc. and Consolidated Subsidiaries

Financial Summary

(Unaudited)

(In Thousands Except Per Share Amounts)

13 Weeks Ended

May 4, 2013

April 28, 2012

Net sales

$

6,189,609

$

5,798,086

Cost of sales, including buying and occupancy costs

4,433,533

4,165,728

Selling, general and administrative expenses

1,018,909

942,126

Interest expense, net

5,282

8,827

Income before provision for income taxes

731,885

681,405

Provision for income taxes

278,995

262,205

Net income

$

452,890

$

419,200

Diluted earnings per share

$

0.62

$

0.55

Cash dividends declared per share

$

0.145

$

0.115

Weighted average common shares - diluted

732,555

756,016

The TJX Companies, Inc. and Consolidated Subsidiaries

Condensed Balance Sheets

(Unaudited)

(In Millions)

May 4,
2013

April 28,
2012

ASSETS

Current assets:

Cash and cash equivalents

$

1,989.8

$

1,563.7

Short-term investments

238.0

174.9

Accounts receivable and other current assets

549.1

474.9

Current deferred income taxes, net

107.7

108.5

Merchandise inventories

3,091.5

2,909.8

Total current assets

5,976.1

5,231.8

Property and capital leases, net of depreciation

3,273.3

2,827.7

Other assets

278.0

263.6

Goodwill and tradename, net of amortization

313.0

180.0

TOTAL ASSETS

$

9,840.4

$

8,503.1

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Accounts payable

$

1,846.6

$

1,757.9

Accrued expenses and other current liabilities

1,652.0

1,393.8

Total current liabilities

3,498.6

3,151.7

Other long-term liabilities

936.8

862.2

Non-current deferred income taxes, net

368.2

382.9

Long-term debt

1,274.1

774.5

Shareholders' equity

3,762.7

3,331.8

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

9,840.4

$

8,503.1

The TJX Companies, Inc. and Consolidated Subsidiaries

Condensed Statements of Cash Flows

(Unaudited)

(In Millions)

13 Weeks Ended

May 4,
2013

April 28,
2012

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income

$

452.9

$

419.2

Depreciation and amortization

130.5

120.6

Deferred income tax provision

8.7

10.9

Share-based compensation

16.5

14.3

(Increase) decrease in accounts receivable and other assets

(5.4

)

6.1

(Increase) decrease in merchandise inventories

(84.9

)

57.5

(Decrease) increase in accounts payable

(79.0

)

100.9

(Decrease) in accrued expenses and other liabilities

(148.5

)

(15.3

)

Other

(10.1

)

(9.6

)

Net cash provided by operating activities

280.7

704.6

CASH FLOWS FROM INVESTING ACTIVITIES:

Property additions

(238.5

)

(254.3

)

Purchases of short-term investments

(80.7

)

(92.9

)

Sales and maturities of short-term investments

75.0

15.4

Other

2.6

0.2

Net cash (used in) investing activities

(241.6

)

(331.6

)

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from issuance of long-term debt

499.6

-

Payments for repurchase of common stock

(302.6

)

(297.3

)

Proceeds from sale and issuance of common stock

34.7

28.3

Cash dividends paid

(83.2

)