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Retail

The TJX Companies Reports Q1 FY22 Results Well Above Plan

The off-price retailer announces overall open-only comp store sales up 16 percent versus Q1 FY20 with "phenomenal" sales in the home categories across divisions.

5/20/2021

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 first quarter ended May 1, 2021. Net sales for the first quarter of Fiscal 2022 were $10.1 billion, an increase of 129 percent versus the first quarter of Fiscal 2021 in which stores were closed for approximately 50 percent of the quarter due to the COVID-19 global pandemic (see table below). Net sales for the first quarter of Fiscal 2022 increased 9 percent versus the first quarter of Fiscal 2020. Overall open-only comp store sales (defined below) increased 16 percent compared to the first quarter of Fiscal 2020. Net income for the first quarter was $534 million and diluted earnings per share were $.44.
 
Ernie Herrman, chief executive officer and president of The TJX Companies, Inc., stated, “I am extremely pleased with our first quarter results, with overall open-only comp store sales up 16 percent and earnings per share of $.44, both well above our plan. I want to recognize the excellent work 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. Once again, we saw phenomenal performance in our home businesses across all of our divisions. We also saw strong open-only comp store sales increases in many other categories and positive open-only comp store sales in overall apparel, which we believe benefitted from consumers beginning to resume more normal activities. Our U.S. divisions delivered outstanding double-digit open-only comp store sales increases, and sales at our international divisions were very strong when their stores were permitted to be open. Clearly, our treasure-hunt shopping experience, eclectic mix of merchandise, and great brands and values continue to resonate with shoppers across our geographies. As we start the second quarter, overall open-only comp store sales trends remain similar to the first quarter. While the environment remains uncertain, particularly internationally, we are convinced we are strongly positioned as we emerge from this health crisis. Looking ahead, we see numerous opportunities to capture additional market share around the world and are excited about the runway for growth we see for TJX.”

The Company’s results for the first 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 first quarter, stores in Europe were closed for approximately 76 percent of the first quarter and stores in Canada were closed for about 25 percent of the quarter. In total, the Company had stores closed for approximately 14 percent of the first quarter due to the COVID-19 global pandemic (see table below). The Company estimates that these European and Canadian closures may have resulted in approximately $1.1 billion to $1.2 billion in lost sales during the first quarter of Fiscal 2022. This range of estimated lost sales assumes all European and Canadian stores operated at similar open-only comp store sales trends as the fourth quarter of Fiscal 2021 and first quarter of Fiscal 2022. Based on management’s estimate of profit dollars on this range of lost sales, the Company estimates that first quarter Fiscal 2022 earnings per share were negatively impacted by approximately $.21 to $.24.

Q1 FINANCIAL HIGHLIGHTS

-- Q1 FY22 overall open-only comp store sales increased 16 percent compared to Q1 FY20
-- Q1 FY22 diluted earnings per share were $.44
-- Q1 FY22 net sales were $10.1 billion, an increase of 129 percent compared to Q1 FY21 and an increase of 9 percent compared to Q1 FY20
-- The Company estimates that temporary store closures for approximately 14 percent of the first quarter, primarily stores in Europe and Canada, negatively impacted Q1 FY22 sales by approximately $1.1 billion to $1.2 billion and EPS by approximately $.21 to $.24
-- In April, redeemed $750 million of debt at par that was due to mature in June 2021
-- Announcing make-whole calls that will reduce outstanding debt by an additional $2.0 billion (see below)
-- For the start of Q2 FY22, overall open-only comp store sales trends remain similar to Q1 FY22

For the first quarter of Fiscal 2022, the Company’s consolidated pretax profit margin was 7.2 percent. The Company’s merchandise margin was up slightly compared to the first quarter of Fiscal 2020. Merchandise margin improvement versus Fiscal 2020 was due to strong markon and lower markdowns, mostly offset by higher freight costs.

CASH AND DIVIDEND UPDATE
 
The Company ended the first quarter of Fiscal 2022 with $8.8 billion of cash. The Company declared a quarterly dividend of $.26 in the first quarter of Fiscal 2022 and expects to declare a similar dividend in the second quarter of Fiscal 2022, subject to Board approval.

REDEMPTION OF SENIOR NOTES

In April 2021, the Company redeemed its $750 million principal outstanding, 2.75 percent Notes due June 15, 2021 at par. Today, the Company is also announcing 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. These make-whole calls are expected to settle on June 4, 2021, and once completed are expected to result in a pre-tax debt extinguishment charge of approximately $250 million in the second quarter of Fiscal 2022. The result of these three debt redemptions once completed are expected to be a $2.75 billion reduction of outstanding debt since the beginning of Fiscal 2022 and more than $90 million of annualized interest expense savings.

INVENTORY

Total inventories as of May 1, 2021, were $5.1 billion, compared with $4.9 billion at the end of the first quarter last year. Overall product availability in the marketplace remains excellent and the Company has continued to flex its buying to the categories with the strongest demand. The Company is well positioned to deliver a fresh assortment of merchandise to its stores and e-commerce sites throughout the summer season.

TEMPORARY STORE CLOSINGS

The Company currently has approximately 300 stores that are temporarily closed due to government mandates in response to the COVID-19 global pandemic. All of these stores are located in Canada and Europe. At this time, the Company expects its stores in Canada and Europe will be temporarily closed for an estimated 17 percent and 7 percent of the second quarter of Fiscal 2022, respectively. In total, based on the restrictions currently in place, the Company expects its stores to be closed for approximately 3 percent of the second quarter of Fiscal 2022. All of the Company’s e-commerce businesses remain open.

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 first quarter of Fiscal 2022. In order to provide a performance indicator for its stores as they reopen, 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 first quarter of Fiscal 2022 against sales for the same days in Fiscal 2020, prior to the emergence of the global pandemic.

OUTLOOK

For the start of the second quarter of Fiscal 2022, overall open-only comp store sales trends remain similar to the first quarter. In the second quarter of Fiscal 2022, the Company expects total sales, pretax margin, and earnings per share to be negatively impacted from the temporary store closings described above. Due to the continued uncertainty of the current environment, the Company is not providing financial guidance at this time.

During the first quarter ended May 1, 2021, the Company increased its store count by 67 stores to a total of 4,639 stores and increased square footage by 1 percent versus the previous quarter.

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. As of May 1, 2021, the end of the Company’s first quarter, the Company operated a total of 4,639 stores in nine countries, the United States, Canada, the United Kingdom, Ireland, Germany, Poland, Austria, the Netherlands, and Australia, and four e-commerce sites. These include 1,282 T.J. Maxx, 1,147 Marshalls, 843 HomeGoods, 52 Sierra, and 39 Homesense stores, as well as tjmaxx.com, marshalls.com, and sierra.com, in the United States; 284 Winners, 143 HomeSense, and 103 Marshalls stores in Canada; 604 T.K. Maxx and 78 Homesense stores, as well as tkmaxx.com, in Europe; and 64 T.K. Maxx stores in Australia. TJX’s financial information are available at TJX.com.
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