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The Tjx Companies, Inc. Reports Above-Plan Q3 Fy16 Results With 5% Comp Sales Growth And Earnings Per Share Of $.86

The following excerpt is from the company's SEC filing.

FRAMINGHAM, Mass.--(BUSINESS WIRE)--November 17, 2015--The TJX Companies, Inc. (NYSE: 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 third quarter ended October 31, 2015. Net sales for the third quarter of Fiscal 2016 increased 5% to $7.8 billion and consolidated comparable store sales increased 5% over last year’s 2% increase. Net income for the third quarter was $587 million and diluted earnings per share were $.86 versus last year’s $.85.

For the fir st nine months of Fiscal 2016, net sales were $22.0 billion, a 6% increase over last year, and consolidated comparable store sales increased 5%. Net income for the first nine months of Fiscal 2016 was $1.6 billion. Diluted earnings per share were $2.35, a 5% increase over the prior year’s adjusted $2.23, which excluded a $.01 per share debt extinguishment charge from reported earnings per share of $2.22.

Carol Meyrowitz, Chairman and Chief Executive Officer of The TJX Companies, Inc., stated, “I am extremely pleased with our third quarter performance as our momentum continued. Our 5% consolidated comparable store sales growth, over a 2% increase last year, continued our excellent trend from the first two quarters and significantly exceeded our plans. Our $.86 in earnings per share was also well above our expectations. We are delighted that strong customer traffic drove our entire consolidated comp and was the primary driver of our comp increases at every division. Our excellent traffic gains and strong performance across our apparel, accessories and home categories, demonstrate that our brands globally are offering the right values and merchandise mix. Again this quarter, we saw strong sales at every division. I am particularly pleased with our ability to simultaneously deliver exceptional value to consumers while maintaining strong merchandise margins, which speaks to the flexibility of our off-price business model. Our goal is to keep serving consumers and growing our market share around the world. To that end, we continue to balance growth with investments in our future to establish a strong foundation in the U.S. and internationally. Further, we were happy to add Trade Secret, an Australian off-price retailer, to our family of companies in October. As to the fourth quarter, we are pleased to see that traffic continues to be up and we could not be more excited about the holiday selling season. I am convinced that our gift-giving selections are better than ever this year and that our holiday marketing campaigns will resonate with consumers and attract more shoppers to our stores. With our clear vision for global growth, a differentiated apparel and home fashions business, and world-class organization, I am very confident we will grow TJX to a $40 billion-plus company!”

Sales by Business Segment

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

Third Quarter

Comparable Store Sales

Net Sales

($ in millions)

FY2016

FY2015

In the U.S.:

Marmaxx

+3%

+1%

$4,927

$4,674

HomeGoods

+6%

+7%

$960

$851

International:

TJX Canada

+10%

$754

$792

TJX Europe

-1%

$1,114

$1,050

+5%

+2%

$7,753

$7,366

Comparable store sales outside the U.S. calculated on a constant currency basis, which removes the effect of changes in currency exchange rates.

Comparable store sales exclude Sierra Trading Post, tjmaxx.com and tkmaxx.com sales.

Sales in Canada and Europe include the impact of foreign currency exchange rates. See below.

Figures may not foot due to rounding.

Combination of T.J. Maxx and Marshalls.

Net sales 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 can have a material effect on the magnitude of these translations and adjustments when there is significant volatility in currency exchange rates.

The movement in foreign currency exchange rates had a three percentage point negative impact on consolidated net sales growth in the third quarter of Fiscal 2016 versus the prior year. The overall net impact of foreign currency exchange rates had a $.04 negative impact on third quarter Fiscal 2016 earnings per share, compared with a $.01 positive impact last year.

For the first nine months of Fiscal 2016, the movement in foreign currency exchange rates had a three percentage point negative impact on consolidated net sales growth. The overall net impact of foreign currency exchange rates had an $.08 negative impact on earnings per share in the first nine months of Fiscal 2016, compared with a neutral 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, tjx.com.

The foreign currency exchange rate impact to earnings per share does not include the impact currency exchange rates have on various transactions, which we refer to as “transactional foreign exchange.”

Margins

For the third quarter of Fiscal 2016, the Company’s consolidated pretax profit margin was 12.1%, a 0.9 percentage point decrease compared with the prior year.

Gross profit margin for the third quarter of Fiscal 2016 was 29.0%, down 0.4 percentage points versus the prior year. The decrease was primarily due to transactional foreign exchange at the Company’s international divisions and increased supply chain costs related to a substantial increase in units sold during the quarter. Merchandise margins remained strong.

Selling, general and administrative costs as a percent of sales were 16.7%, up 0.5 percentage points versus the prior year’s...


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