- Took prudent and proactive actions in response to COVID-19
to further strengthen the Company’s financial liquidity and
flexibility
- Began reopening stores on May 2, 2020; While still early,
the Company is seeing very strong initial sales overall at stores
across all states and countries that have been reopened at least a
week
- Q1 FY21 net sales of $4.4 billion
- Q1 FY21 loss per share of ($.74)
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 2, 2020. Net sales for the first quarter of Fiscal 2021 were
$4.4 billion. Net loss for the first quarter was ($887) million and
loss per share was ($.74).
The Company’s first quarter results were negatively impacted by
the temporary closure of its stores for approximately half of the
quarter due to the COVID-19 pandemic. As a result, the Company
reported a substantial pre-tax loss versus an original expectation
of significant pre-tax income. The vast majority of the variance
was a result of lost merchandise margin, corresponding to the lost
sales from temporary store closures. The Company also had an
inventory write-down charge (detailed below) and continued to incur
payroll expenses while stores were closed. These costs were mostly
offset by significant expense reductions which benefited the
Company later in the quarter, as well as government credits related
to COVID-19.
The Company’s first quarter cash flow was also negatively
impacted by the temporary closure of its stores due to the COVID-19
pandemic (detailed in the Condensed Statements of Cash Flows
below). This was primarily due to the Company paying the vast
majority of its merchandise costs, expenses payable, and payroll as
planned for the first quarter, despite a substantial loss of sales
from store closures. Further, the Company had shareholder
distributions of approximately $480 million, which included its
fourth quarter dividend payment and first quarter share buyback
prior to suspending the program. The Company is confident that it
currently has sufficient liquidity for the remainder of the
year.
CEO and President
Comments
Ernie Herrman, Chief Executive Officer and President of The TJX
Companies, Inc., stated, “In these unprecedented times, our hearts
are with everyone around the world who has been affected by the
COVID-19 pandemic, including our Associates and their families, our
customers, and the communities we serve. Throughout our 43-year
history, we have navigated through many challenging economic and
retail environments, and I am convinced that we will manage through
this as well. While the pandemic has resulted in our making
difficult decisions, TJX has always been and remains a
fundamentally strong company. We have a senior management team with
decades of TJX and off-price retail experience, who are fully
dedicated to managing through this crisis while ensuring the
long-term stability and strength of TJX and returning the Company
to its path of long-term, successful growth. I want to thank our
global Associates who are doing excellent work in the midst of
this, and we are all looking forward to the day when our business
is fully open again and we can welcome our Associates and customers
back worldwide.”
Herrman continued, “As to our sales results, we saw strong
trends prior to the impact of COVID-19. For the month of February,
we delivered a 5% consolidated comp increase driven by customer
traffic. All four major divisions had a February comp increase of
5% or better. As various states and countries reopen for business,
health and safety remain at the forefront of our decision making.
We have been pleased to reopen as many stores as we have in May, as
well as our e-commerce websites. Although it’s still early and the
retail environment remains uncertain, we have been encouraged with
the very strong sales we have seen with our initial reopenings. We
believe this very strong start speaks to our compelling value
proposition and the appeal of our treasure-hunt shopping
experience, as well as pent-up demand. It has been great to see,
especially for the teams working so hard on the reopening
preparations and our Associates welcoming back our customers. We
are currently seeing plentiful off-price buying opportunities,
which, as we look to the remainder of the year, gives us confidence
in having excellent brands and quality merchandise available to us.
With our flexible business model and ability to adapt quickly to
changing market conditions and customer preferences, we will be
pursuing these buying opportunities. Above all, we are convinced
that our mission to deliver great value to consumers every day will
continue to be our enduring retail formula today and in the
future.”
TJX Response to the COVID-19
Pandemic
During the first quarter of Fiscal 2021, the Company took many
actions in response to the COVID-19 pandemic in an effort to help
protect the health and well-being of its Associates, customers, and
communities, while also focusing on further strengthening its
financial liquidity and flexibility. The Company also withdrew its
first quarter and full year Fiscal 2021 guidance that it gave on
its February 26, 2020 earnings conference call due to the rapidly
evolving and uncertain environment.
- Store and Associate Actions
- As of March 19, 2020, temporarily closed all stores,
distribution centers, and offices, as well as its U.S. e-commerce
sites, with its U.K. e-commerce site closing shortly
thereafter.
- Paid all Associates through at least the week ending April 11,
2020.
- Effective April 12, 2020, made the difficult decision to
temporarily furlough the majority of hourly store and distribution
center Associates in the U.S. and Canada, with employee benefits
for eligible Associates continuing during the temporary furlough at
no cost to impacted Associates. The Company also took comparable
actions with respect to portions of its European and Australian
workforce.
- Established several task force teams focused on navigating the
Company through this global health crisis. These include those
focused on health protocols for its stores and buildings, store and
e-commerce reopenings, merchandising, supply chain, and Associate
and consumer communications.
- Financial Actions
- Drew down full amount of $1 billion from its revolving credit
facilities.
- Issued $4 billion in aggregate principal of 5, 7, 10 and
30-year senior notes at an average weighted rate of 3.85%.
- Suspended its share buyback program.
- Decided not to declare a dividend for the first quarter of
Fiscal 2021, and at this time, does not expect to declare a
dividend in the second quarter of Fiscal 2021. The Company is
committed to resuming dividend payments for the long term, as it
has done for decades, whenever the environment and its business
stabilize. The Company paid a dividend in the first quarter of
Fiscal 2021 that was declared for the fourth quarter of Fiscal
2020.
- Reduced Fiscal 2021 capital expenditure plan from $1.4 billion
to a range of $400 to $600 million.
- Lowered Fiscal 2021 store openings to approximately 50, paused
the majority of its planned store remodels, and delayed a
significant portion of its distribution center, home office, and IT
spending.
- Evaluated operating expenses and took actions to reduce some
ongoing variable and discretionary costs.
- Paid most of its rent due in the first quarter and negotiated
with many of its landlords to defer some of its April, and a
meaningful portion of its second quarter, rent payments to later
dates, primarily in Fiscal 2022.
Through the financial actions listed above, the Company ended
the quarter with $4.3 billion in cash.
Business Update
Beginning May 2, 2020 the Company started to reopen stores in
select states and countries in accordance with local government
guidelines. To date, the Company has reopened more than 1,600 of
its stores worldwide. Initial sales overall have been above last
year’s sales across all states and countries for the over 1,100
stores that have been reopened for at least a week. However, it is
still early in the quarter and sales could fluctuate. In the U.S.,
the Company has fully or partially reopened in 25 states.
Internationally, TJX Canada began reopening stores in some
provinces this week, and stores in Germany, Austria, Poland, the
Netherlands, and Australia are fully open. Stores in the U.K. and
Ireland remain closed. The Company also reopened its four
e-commerce websites in the U.S. and U.K. The Company expects to
continue reopening stores around the world in a phased approach as
more states and countries reopen for retail. The Company believes
that it could be mostly reopened by the end of June based on
current government guidance.
New Health and Safety
Practices
As various states and countries have started to reopen, the
Company has reopened stores and distribution centers in accordance
with government guidelines and at its own pace. The Company has put
in place geographically recommended practices to help protect the
health and well-being of its Associates and customers. Globally,
these include social distancing protocols, providing Associates
access to personal protective equipment, and enhanced cleaning
efforts. More specifically in the U.S. and Canada, these
include:
- Require usage of a face mask by store Associates while
working.
- Posted signage that the Company expects customers to wear a
face covering when shopping its stores.
- Providing Associates with face masks and gloves, and adding
hand sanitation stations throughout stores for Associates and
customers.
- Implemented new cleaning regimens throughout the day, including
enhanced cleaning of high-touch surfaces, such as PIN pads and
shopping carts.
- Installed protective shields at registers.
- Applied social distancing guidelines including:
- Added distancing markers in queue lines and outside stores as
necessary.
- Posted signage and providing in-store announcements on social
distancing etiquette.
- Require daily health screenings and temperature checks for all
store Associates prior to and upon reporting to work.
- Trained field organization on new health protocols prior to
store reopenings.
- Implemented new store occupancy limits, even where not required
by regulations.
- Temporarily closed fitting rooms in the U.S. and reduced
fitting room occupancy by 50% in Canada.
- Established new procedures for merchandise returns.
Net Sales by Business
Segment
The Company’s net sales by division, in the first quarter, were
as follows:
First Quarter
Net Sales ($ in
millions)1,2
FY2021
FY2020
Marmaxx (U.S.)3,4
$2,698
$5,802
HomeGoods (U.S.)5
$760
$1,397
TJX Canada
$380
$848
TJX International (Europe &
Australia)
$572
$1,231
TJX
$4,409
$9,278
1Net sales in TJX Canada and TJX International include the
impact of foreign currency exchange rates. 2Figures may not foot
due to rounding. 3Combination of T.J. Maxx and Marshalls. 4Net
sales include Sierra’s e-commerce and store sales. 5Includes
Homesense stores in the U.S.
Q1 FY21 Inventory Charge
For the first quarter of Fiscal 2021, the Company wrote down
inventory by approximately $500 million as a result of the
Company’s store closures due to the COVID-19 pandemic. This
inventory was primarily transitional or out of season merchandise
and merchandise that was already in markdown that was expected to
be reduced further. While the Company recognized these markdowns
with respect to the first quarter, the inventory is expected to be
sold in the second quarter upon reopening of its stores.
Q1 FY21 Inventory
Total inventories as of May 2, 2020, were $4.9 billion, compared
with $5.1 billion at the end of the first quarter last year.
Consolidated inventories on a per-store basis as of May 2, 2020,
including the distribution centers, but excluding inventory in
transit, the Company’s e-commerce sites, and Sierra stores, were
down 7% on a reported basis and down 6% on a constant currency
basis.
Fiscal 2021 Outlook
The Company continues to expect its results to be significantly
impacted by the ongoing COVID-19 pandemic. Due to the high level of
uncertainty around store reopenings, the current retail
environment, and future consumer demand, it remains difficult to
forecast a financial outlook for the remainder of the year.
Therefore, the Company is not providing a Fiscal 2021 financial
outlook at this time.
Stores by Concept
During the fiscal quarter ended May 2, 2020, the Company
increased its store count by 16 stores to a total of 4,545 stores.
The Company increased square footage by 3% over the same period
last year.
Store Locations1
Gross Square Feet2
First Quarter
First Quarter
(in millions)
Beginning
End
Beginning
End
In the U.S.:
T.J. Maxx
1,273
1,273
34.9
34.9
Marshalls
1,130
1,130
32.4
32.4
HomeGoods
809
814
18.8
18.9
Sierra
46
46
1.0
1.0
Homesense
32
34
0.9
0.9
In Canada:
Winners
279
279
7.6
7.6
HomeSense
137
139
3.1
3.2
Marshalls
97
100
2.6
2.7
In Europe:
T.K. Maxx
594
596
16.7
16.8
Homesense
78
78
1.5
1.5
In Australia:
T.K. Maxx
54
56
1.2
1.2
TJX
4,529
4,545
120.7
121.1
1Store counts above include both banners within a combo or a
superstore. Includes stores temporarily closed due to COVID-19.
2Square 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. As of May 2,
2020, the end of the Company’s first quarter, the Company operated
a total of 4,545 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 1,273 T.J. Maxx, 1,130 Marshalls, 814 HomeGoods, 46 Sierra,
and 34 Homesense stores, as well as tjmaxx.com, marshalls.com, and
sierra.com in the United States; 279 Winners, 139 HomeSense, and
100 Marshalls stores in Canada; 596 T.K. Maxx and 78 Homesense
stores, as well as tkmaxx.com, in Europe; and 56 T.K. Maxx stores
in Australia. TJX’s press releases and financial information are
available at TJX.com.
Fiscal 2021 First Quarter Earnings
Conference Call
At 11:00 a.m. ET today, Ernie Herrman, Chief Executive Officer
and President of TJX, will hold a conference call to discuss the
Company’s first quarter Fiscal 2021 results, operations, and
business trends. A real-time webcast of the call will be available
to the public at TJX.com. A replay of the call will also be
available by dialing (866) 367-5577 (U.S. only) or (203) 369-0233
through Thursday, May 28, 2020, or at TJX.com.
Important Information at
Website
Archived versions of the Company’s conference calls are
available in the Investors section of TJX.com after they are no
longer available by telephone, as are 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 Investors section at 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 and business expansion and
management of large size and scale; customer trends and
preferences; various marketing efforts; competition; economic
conditions and consumer spending; the ongoing COVID-19 pandemic and
associated containment and remediation efforts; labor costs and
workforce challenges; personnel recruitment, training and
retention; data security and maintenance and development of
information technology systems; corporate and retail banner
reputation; quality, safety and other issues with our merchandise;
compliance with laws, regulations and orders and changes in laws,
regulations and applicable accounting standards; serious
disruptions or catastrophic events and adverse or unseasonable
weather; expanding international operations; merchandise sourcing
and transport; commodity availability and pricing; fluctuations in
currency exchange rates; fluctuations in quarterly operating
results and market expectations; mergers, acquisitions, or business
investments and divestitures, closings or business consolidations;
outcomes of litigation, legal proceedings and other legal or
regulatory matters; disproportionate impact of disruptions in the
second half of the fiscal year; cash flow; inventory or asset loss;
tax matters; real estate activities; 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)
Thirteen Weeks Ended
May 2, 2020
May 4, 2019
Net sales
$
4,408,888
$
9,277,585
Cost of sales, including buying and
occupancy costs
4,414,465
6,637,885
Selling, general and administrative
expenses
1,313,920
1,702,401
Interest expense, net
23,351
817
(Loss) income before income taxes
(1,342,848
)
936,482
Benefit (provision) for income taxes
455,359
(236,304
)
Net (loss) income
$
(887,489
)
$
700,178
Diluted (loss) earnings per share
$
(0.74
)
$
0.57
Cash dividends declared per share
$
0.00
$
0.230
Weighted average common shares –
diluted
1,197,809
1,233,407
The TJX Companies, Inc. and Consolidated Subsidiaries
Condensed Balance Sheets
(Unaudited)
(In Millions)
May 2, 2020
May 4, 2019
ASSETS
Current assets:
Cash and cash equivalents
$
4,287.8
$
2,235.1
Accounts receivable and other current
assets
581.2
736.4
Merchandise inventories
4,945.7
5,057.2
Federal, state and foreign income taxes
recoverable
481.6
38.5
Total current assets
10,296.3
8,067.2
Net property at cost
5,201.7
5,018.6
Operating lease right of use assets
9,073.9
8,810.4
Goodwill
94.5
96.7
Other assets
748.8
496.2
TOTAL ASSETS
$
25,415.2
$
22,489.1
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable
$
1,071.2
$
2,578.4
Accrued expenses and other current
liabilities
2,199.1
2,659.4
Current portion of operating lease
liabilities
1,399.3
1,343.2
Total current liabilities
4,669.6
6,581.0
Other long-term liabilities
786.0
753.0
Non-current deferred income taxes, net
113.2
167.3
Long-term operating lease liabilities
7,914.8
7,621.5
Long-term debt
7,192.4
2,234.4
Shareholders’ equity
4,739.2
5,131.9
TOTAL LIABILITIES AND SHAREHOLDERS’
EQUITY
$
25,415.2
$
22,489.1
The TJX Companies, Inc. and Consolidated Subsidiaries
Condensed Statements of Cash
Flows
(Unaudited)
(In Millions)
Thirteen Weeks Ended
May 2, 2020
May 4, 2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income
$
(887.5
)
$
700.2
Depreciation and amortization
219.5
212.2
Deferred income tax (benefit)
provision
(48.5
)
8.1
Share-based compensation
(11.5
)
25.7
Decrease (increase) in accounts receivable
and other assets
170.8
(35.9
)
(Increase) in merchandise inventories
(136.0
)
(487.1
)
(Increase) in income taxes recoverable
(434.7
)
(25.7
)
(Decrease) in accounts payable
(1,567.6
)
(60.5
)
(Decrease) in accrued expenses and other
liabilities
(591.5
)
(201.9
)
Increase in net operating lease
liabilities
65.6
17.6
Other
60.9
(3.4
)
Net cash (used in) provided by operating
activities
(3,160.5
)
149.3
CASH FLOWS FROM INVESTING ACTIVITIES:
Property additions
(210.5
)
(316.9
)
Purchase of investments
(14.8
)
(14.6
)
Sales and maturities of investments
4.2
4.8
Net cash (used in) investing
activities
(221.1
)
(326.7
)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt
4,988.5
—
Cash payments for debt issuance
expenses
(33.9
)
—
Cash payments for repurchase of common
stock
(201.5
)
(397.3
)
Proceeds from issuance of common stock
37.4
59.8
Cash dividends paid
(278.3
)
(238.8
)
Other
(21.8
)
(23.3
)
Net cash provided by (used in) financing
activities
4,490.4
(599.6
)
Effect of exchange rate changes on
cash
(37.8
)
(18.1
)
Net increase (decrease) in cash and cash
equivalents
1,071.0
(795.1
)
Cash and cash equivalents at beginning of
year
3,216.8
3,030.2
Cash and cash equivalents at end of
period
$
4,287.8
$
2,235.1
The TJX Companies, Inc. and Consolidated Subsidiaries
Selected Information by Major
Business Segment
(Unaudited)
(In Thousands)
Thirteen Weeks Ended
May 2, 2020
May 4, 2019
Net sales:
In the United States:
Marmaxx
$
2,697,779
$
5,801,760
HomeGoods
759,865
1,396,865
TJX Canada
379,636
847,735
TJX International
571,608
1,231,225
Total net sales
$
4,408,888
$
9,277,585
Segment profit:
In the United States:
Marmaxx
$
(709,669
)
$
795,993
HomeGoods
(153,703
)
136,785
TJX Canada
(97,181
)
97,032
TJX International
(258,617
)
28,487
Total segment (loss) profit
(1,219,170
)
1,058,297
General corporate expense
100,327
120,998
Interest expense, net
23,351
817
(Loss) income before income taxes
$
(1,342,848
)
$
936,482
The TJX Companies, Inc. and Consolidated
Subsidiaries Notes to Consolidated Condensed Statements
- In December 2019, COVID-19 emerged and spread worldwide. The
World Health Organization declared COVID-19 a pandemic in March
2020, resulting in federal, state and local governments and private
entities mandating various restrictions, including travel
restrictions, restrictions on public gatherings, stay at home
orders and advisories and quarantining of people who may have been
exposed to the virus. After closely monitoring and taking into
consideration the guidance from federal, state and local
governments, in March 2020, the Company temporarily closed all of
its stores, its online businesses, its distribution centers and its
offices, with Associates working remotely where possible. These and
other factors have had and may continue to have a material impact
on our business, results of operations, financial position and cash
flows.
- In March 2020, in connection with the actions taken related to
the COVID-19 pandemic, the Company suspended its share repurchase
program. Prior to the suspension of the program, TJX repurchased
and retired 3.2 million shares of its common stock at a cost of
$190 million on a "trade date" basis. TJX records the repurchase of
its stock on a cash basis, and the amounts reflected in the
financial statements may vary from the above amounts due to the
timing of settlement of repurchases. In February 2020, the Company
announced that its Board of Directors had approved a new stock
repurchase program that authorizes the repurchase of up to an
additional $1.5 billion of TJX common stock from time to time. As
of May 2, 2020, the Company had approximately $3.0 billion
available under this and previously announced stock repurchase
programs.
- For the period ended May 2, 2020, as a result of the net loss
for the quarter, all options have been excluded from the
calculation of diluted earnings per share and therefore there was
no difference in the weighted average number of common shares for
basic and diluted loss per share as the effect of all potentially
dilutive shares outstanding was anti-dilutive.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200521005366/en/
Debra McConnell Global Communications (508) 390-2323
TJX Companies (NYSE:TJX)
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