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Financial, Retail

The TJX Companies, Inc. Reports Very Strong Q3 FY22 Sales

The discount retailer announced Q3 FY22 overall open-only comp store sales increased 14 percent over Q3 FY20, the third consecutive quarter that overall open-only comp store sales increased mid-teens or better, and that Q3 FY22 net sales increased of 20 percent compared to Q3 FY20.

11/18/2021
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 third quarter ended October 30, 2021. Net sales for the third quarter of Fiscal 2022 were $12.5 billion, an increase of 24% versus the third quarter of Fiscal 2021. Net sales for the third quarter of Fiscal 2022 increased 20% versus the third quarter of Fiscal 2020. Overall open-only comp store sales (defined below) increased 14% over a 4% increase in the third quarter of Fiscal 2020. Net income for the third quarter was $1.0 billion and diluted earnings per share were $.84, a 24% increase over $.68 per share in the third quarter of Fiscal 2020.

For the first nine months of Fiscal 2022, net sales were $34.7 billion, an increase of 64% versus the first nine months of Fiscal 2021. Stores were closed for approximately 27% of the first nine months of Fiscal 2021 due to the COVID-19 global pandemic (see table below). Net sales for the first nine months of Fiscal 2022 increased 18% versus the first nine months of Fiscal 2020. Overall open-only comp store sales increased 17% 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% 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.

CEO and President Comments

Ernie Herrman, Chief Executive Officer and President of The TJX Companies, Inc., stated, “I am extremely pleased with the continued strength of our business, with our overall open-only comp store sales up a very strong 14% 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 product 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.”

Margins

For the third quarter of Fiscal 2022, the Company’s consolidated pretax profit margin was 11.0%, 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 pretax margin by an additional 0.5 percentage points.

Gross profit margin for the third quarter of Fiscal 2022 was 29.5%, 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%, 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 COVID-19 global pandemic, the Company is not providing financial guidance at this time.

Impact of Temporary Store Closures

The Company’s results for the third quarter of Fiscal 2022 were negatively impacted by the temporary closure of some of its Australian stores due to the COVID-19 global pandemic, which were closed for approximately 57% of the third quarter. In total, the Company had stores closed for approximately 1% of the third quarter due to the COVID-19 global pandemic (see table below). The Company estimates that these closures may have resulted in approximately $30 million to $40 million in lost sales during the third quarter of Fiscal 2022. This range of estimated lost sales assumes all Australian stores operated at similar open-only comp store sales trends as the second and third quarters of Fiscal 2022. Based on management’s estimate of profit dollars on this range of lost sales, the Company estimates that third quarter Fiscal 2022 earnings per share were negatively impacted by approximately $.01. Currently, the Company has no stores closed due to COVID restrictions.

The Company’s results for the first nine months of Fiscal 2022 were also 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 nine months of Fiscal 2022, stores in Europe were closed for approximately 26% of the first nine months, stores in Canada were closed for about 16% of the first nine months, and stores in Australia were closed for approximately 26% of the first nine months. In total, the Company had stores closed for approximately 6% of the first nine months of Fiscal 2022 due to the COVID-19 global pandemic (see table below). The Company estimates that these closures may have resulted in approximately $1.43 billion to $1.59 billion in lost sales during the first nine months of Fiscal 2022. Based on management’s estimate of profit dollars on this range of lost sales, the Company estimates that its first nine months of 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 third quarter and first nine months of Fiscal 2022. In order to provide a performance indicator for its stores, the Company has been temporarily reporting a new sales measure: 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 third quarter and first nine months of Fiscal 2022 against sales for the same days in Fiscal 2020, prior to the emergence of the global pandemic.

The full third quarter release and tables can be viewed here.
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