filings.toolsTJX Companies 10-Q 2021-10-30
Filed 2021-11-30. 7 sections, 152K characters. Original on sec.gov · Markdown · JSON
Cover and table of contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(mark one)
| ☒ | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the quarterly period ended October 30, 2021
OR
| ☐ | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the transition period from to
Commission file number 1-4908
The TJX Companies, Inc.
(Exact name of registrant as specified in its charter)
| Delaware | 04-2207613 | |||||||
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||||
| 770 Cochituate Road Framingham, Massachusetts | 01701 | |||||||
| (Address of principal executive offices) | (Zip Code) |
(508) 390-1000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
| Common Stock, par value $1.00 per share | TJX | New York Stock Exchange |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☒ | Accelerated filer | ☐ | |||||||||||||||||
| Non-accelerated filer | ☐ | Smaller reporting company | ☐ | |||||||||||||||||
| Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ☐ NO ☒
The number of shares of registrant’s common stock outstanding as of November 19, 2021: 1,192,878,394
The TJX Companies, Inc.
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
THE TJX COMPANIES, INC.
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(UNAUDITED)
IN THOUSANDS EXCEPT PER SHARE AMOUNTS
| Thirteen Weeks Ended | Thirty-Nine Weeks Ended | |||||||||||||
| October 30, 2021 | October 31, 2020 | October 30, 2021 | October 31, 2020 | |||||||||||
| Net sales | $ | 12,531,890 | $ | 10,117,289 | $ | 34,695,614 | $ | 21,193,752 | ||||||
| Cost of sales, including buying and occupancy costs | 8,835,532 | 7,062,285 | 24,619,297 | 16,651,240 | ||||||||||
| Selling, general and administrative expenses | 2,296,649 | 1,986,128 | 6,585,333 | 4,827,816 | ||||||||||
| Loss on early extinguishment of debt | — | — | 242,248 | — | ||||||||||
| Interest expense, net | 20,674 | 52,884 | 94,023 | 133,571 | ||||||||||
| Income (loss) before income taxes | 1,379,035 | 1,015,992 | 3,154,713 | (418,875) | ||||||||||
| (Provision) benefit for income taxes | (356,035) | (149,336) | (812,102) | 183,822 | ||||||||||
| Net income (loss) | $ | 1,023,000 | $ | 866,656 | $ | 2,342,611 | $ | (235,053) | ||||||
| Basic earnings (loss) per share | $ | 0.85 | $ | 0.72 | $ | 1.95 | $ | (0.20) | ||||||
| Weighted average common shares – basic | 1,200,661 | 1,199,951 | 1,203,718 | 1,198,798 | ||||||||||
| Diluted earnings (loss) per share | $ | 0.84 | $ | 0.71 | $ | 1.92 | $ | (0.20) | ||||||
| Weighted average common shares – diluted | 1,215,690 | 1,214,195 | 1,219,238 | 1,198,798 |
The accompanying notes are an integral part of the unaudited consolidated financial statements.
THE TJX COMPANIES, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)
IN THOUSANDS
| Thirteen Weeks Ended | ||||||||
| October 30, 2021 | October 31, 2020 | |||||||
| Net income | $ | 1,023,000 | $ | 866,656 | ||||
| Additions to other comprehensive income (loss): | ||||||||
| Foreign currency translation adjustments, net of related tax provision of $976 in fiscal 2022 and tax provisions of $993 in fiscal 2021 | (6,688) | (25,568) | ||||||
| Reclassifications from other comprehensive income (loss) to net income (loss): | ||||||||
| Amortization of prior service cost and deferred gains/losses, net of related tax provisions of $1,156 in fiscal 2022 and $1,981 in fiscal 2021 | 3,173 | 5,440 | ||||||
| Amortization of loss on cash flow hedge, net of related tax provision of $75 in fiscal 2021 | — | 208 | ||||||
| Other comprehensive (loss), net of tax | (3,515) | (19,920) | ||||||
| Total comprehensive income | $ | 1,019,485 | $ | 846,736 |
| Thirty-Nine Weeks Ended | ||||||||
| October 30, 2021 | October 31, 2020 | |||||||
| Net income (loss) | $ | 2,342,611 | $ | (235,053) | ||||
| Additions to other comprehensive income (loss): | ||||||||
| Foreign currency translation adjustments, net of related tax provision of $2,734 in fiscal 2022 and tax benefit of $493 in fiscal 2021 | 14,685 | (85,348) | ||||||
| Reclassifications from other comprehensive income (loss) to net income (loss): | ||||||||
| Amortization of prior service cost and deferred gains/losses, net of related tax provisions of $3,802 in fiscal 2022 and $5,473 in fiscal 2021 | 10,442 | 15,034 | ||||||
| Amortization of loss on cash flow hedge, net of related tax provision of $603 in fiscal 2022 and $227 in fiscal 2021 | (263) | 624 | ||||||
| Other comprehensive income (loss), net of tax | 24,864 | (69,690) | ||||||
| Total comprehensive income (loss) | $ | 2,367,475 | $ | (304,743) |
The accompanying notes are an integral part of the unaudited consolidated financial statements.
THE TJX COMPANIES, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
IN THOUSANDS, EXCEPT SHARE DATA
| October 30, 2021 | January 30, 2021 | October 31, 2020 | |||||||||
| ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 6,791,596 | $ | 10,469,570 | $ | 10,581,993 | |||||
| Accounts receivable, net | 615,119 | 461,139 | 463,732 | ||||||||
| Merchandise inventories | 6,633,328 | 4,337,389 | 4,997,506 | ||||||||
| Prepaid expenses and other current assets | 449,377 | 434,977 | 425,027 | ||||||||
| Federal, state and foreign income taxes recoverable | 86,690 | 36,262 | 185,648 | ||||||||
| Total current assets | 14,576,110 | 15,739,337 | 16,653,906 | ||||||||
| Net property at cost | 5,165,250 | 5,036,096 | 5,004,774 | ||||||||
| Non-current deferred income taxes, net | 193,583 | 127,191 | 56,132 | ||||||||
| Operating lease right of use assets | 9,143,834 | 8,989,998 | 9,028,696 | ||||||||
| Goodwill | 98,604 | 98,998 | 96,733 | ||||||||
| Other assets | 893,605 | 821,935 | 725,259 | ||||||||
| TOTAL ASSETS | $ | 30,070,986 | $ | 30,813,555 | $ | 31,565,500 | |||||
| LIABILITIES | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | 5,443,007 | $ | 4,823,397 | $ | 6,142,547 | |||||
| Accrued expenses and other current liabilities | 4,140,660 | 3,471,459 | 3,228,618 | ||||||||
| Current portion of operating lease liabilities | 1,606,480 | 1,677,605 | 1,650,154 | ||||||||
| Current portion of long-term debt | — | 749,684 | 749,446 | ||||||||
| Federal, state and foreign income taxes payable | 138,586 | 81,523 | 46,429 | ||||||||
| Total current liabilities | 11,328,733 | 10,803,668 | 11,817,194 | ||||||||
| Other long-term liabilities | 1,013,537 | 1,063,902 | 860,497 | ||||||||
| Non-current deferred income taxes, net | 69,053 | 37,164 | 78,007 | ||||||||
| Long-term operating lease liabilities | 7,861,023 | 7,743,216 | 7,795,838 | ||||||||
| Long-term debt | 3,353,866 | 5,332,921 | 5,447,208 | ||||||||
| Commitments and contingencies (See Note K) | |||||||||||
| SHAREHOLDERS’ EQUITY | |||||||||||
| Preferred stock, authorized 5,000,000 shares, par value $1, no shares issued | — | — | — | ||||||||
| Common stock, authorized 1,800,000,000 shares, par value $1, issued and outstanding 1,194,260,626; 1,204,698,124 and 1,200,631,186 respectively | 1,194,261 | 1,204,698 | 1,200,631 | ||||||||
| Additional paid-in capital | — | 260,515 | 126,413 | ||||||||
| Accumulated other comprehensive loss | (581,207) | (606,071) | (742,861) | ||||||||
| Retained earnings |
Showing the first 8K of 75K characters. Open the full section
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The Thirteen Weeks (third quarter) and Thirty-Nine Weeks (nine months) Ended October 30, 2021
Compared to
The Thirteen Weeks (third quarter) and Thirty-Nine Weeks (nine months) Ended October 31, 2020
OVERVIEW
We are the leading off-price apparel and home fashions retailer in the U.S. and worldwide. Our mission is to deliver great value to our customers every day. We do this by selling a rapidly changing assortment of apparel, home fashions and other merchandise at prices generally 20% to 60% below full-price retailers’ (including department, specialty, and major online retailers) regular prices on comparable merchandise, every day through our stores and five distinctive branded e-commerce sites. We operate nearly 4,700 stores through our four main segments: in the U.S., Marmaxx (which operates T.J. Maxx, Marshalls, tjmaxx.com and marshalls.com) and HomeGoods (which operates HomeGoods, Homesense, and homegoods.com); TJX Canada (which operates Winners, HomeSense and Marshalls in Canada); and TJX International (which operates T.K. Maxx, Homesense and tkmaxx.com in Europe, and T.K. Maxx in Australia). In addition to our four main segments, Sierra operates sierra.com and retail stores in the U.S. The results of Sierra are included in the Marmaxx segment.
RESULTS OF OPERATIONS
The novel coronavirus disease (“COVID-19”) continues to impact our financial results. During the first nine months of fiscal 2022, our stores in the United States remained open for the entire period. Stores were temporarily closed for approximately 1% of the third quarter due to temporary closures in Australia and 6% of the first nine months of fiscal 2022, due to temporary closures in Europe, Canada and Australia. Stores were temporarily closed for approximately 1% of the third quarter of fiscal 2021 due to temporary closures in Europe and Australia and for approximately 27% of the first nine months of fiscal 2021 due to temporary closures across all geographies. Overall, our third quarter and first nine months results for fiscal 2022 were significantly better than our results for the same periods of fiscal 2021.
In addition to comparing current year results to fiscal 2021, we may, where meaningful, also compare these results to a comparable period in the fiscal year ended February 1, 2020 (“fiscal 2020”), prior to the emergence of the pandemic. Although we are not fully past the negative impacts of the pandemic, we believe this additional comparison provides insight into how we are managing the business and performing as compared to our pre-pandemic results.
Overview of our financial performance for the quarter ended October 30, 2021 includes the following:
–Net sales were $12.5 billion, $10.1 billion and $10.5 billion for the third quarter of fiscal 2022, fiscal 2021 and fiscal 2020, respectively. As of October 30, 2021, the number of stores in operation (including stores that had been or continue to be temporarily closed due to COVID-19) increased 2% and selling square footage increased 2% compared to the end of the fiscal 2021 third quarter.
–Diluted earnings per share were $0.84, $0.71 and $0.68 for the third quarter of fiscal 2022, fiscal 2021 and fiscal 2020, respectively.
–Pre-tax margin (the ratio of pre-tax income to net sales) was 11.0%, 10.0% and 10.7% for the third quarter of fiscal 2022, fiscal 2021 and fiscal 2020, respectively.
–Our cost of sales, including buying and occupancy costs, ratio was 70.5%, 69.8% and 71.2% for the third quarter of fiscal 2022, fiscal 2021 and fiscal 2020, respectively.
–Our selling, general and administrative (“SG&A”) expense ratio was 18.3%, 19.6% and 18.0% for the third quarter of fiscal 2022, fiscal 2021 and fiscal 2020, respectively.
–Consolidated merchandise inventories as of the end of the third quarter of fiscal 2022 increased 33% compared to the third quarter of fiscal 2021 and increased 6% compared to the third quarter of fiscal 2020. On a constant currency basis, consolidated merchandise inventories as of the end of the third quarter of fiscal 2022 increased 31% compared to the third quarter of fiscal 2021 and increased 4% compared to the third quarter of fiscal 2020.
–During the third quarter of fiscal 2022, we returned $1.1 billion to our shareholders through share repurchases and dividends.
Operating Results as a Percentage of Net Sales
The following table sets forth certain information about our operating results as a percentage of net sales for the following periods:
| Thirteen Weeks Ended | Thirty-Nine Weeks Ended | |||||||||||||||||||
| October 30, 2021 | October 31, 2020 | November 2, 2019 | October 30, 2021 | October 31, 2020 | November 2, 2019 | |||||||||||||||
| Net sales | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||
| Cost of sales, including buying and occupancy costs | 70.5 | 69.8 | 71.2 | 71.0 | 78.6 | 71.5 | ||||||||||||||
| Selling, general and administrative expenses | 18.3 | 19.6 | 18.0 | 19.0 | 22.8 | 18.0 | ||||||||||||||
| Loss on early extinguishment of debt | — | — | — | 0.7 | — | — | ||||||||||||||
| Interest expense, net | 0.2 | 0.5 | — | 0.3 | 0.6 | — | ||||||||||||||
| Income (loss) before provision for income taxes* | 11.0 | % | 10.0 | % | 10.7 | % | 9.1 | % | (2.0) | % | 10.4 | % |
*Figures may not foot due to rounding.
Recent Events and Trends
COVID-19
COVID-19 was identified in December 2019 before spreading worldwide and being declared a pandemic by the World Health Organization in March 2020. In response to the COVID-19 pandemic, we temporarily closed all of our stores, online businesses, distribution centers and offices in March 2020, with Associates working remotely where possible. Upon reopening stores and distribution centers in May 2020, we implemented new health and safety practices, including practices related to personal protective equipment, enhanced cleaning and social distancing protocols (which included occupancy limits and reducing in-store inventory levels). In response to the pandemic, primarily during the first quarter of fiscal 2021, we took several steps to strengthen our financial position and balance sheet and to maintain financial liquidity and flexibility.
In response to increasing cases of COVID-19 and due to government mandates, hundreds of stores located in Canada, Australia and Europe had additional temporary closures during fiscal 2022, and many additional stores, while open, were operating with stringent COVID-19-related occupancy restrictions, negatively impacting our results during the third quarter and first nine months of fiscal 2022.
The below table represents total store days closed due to the COVID-19 pandemic as a percentage of potential total store days open in the third quarter and first nine months of fiscal 2022 and fiscal 2021 by segment.
| Thirteen Weeks Ended | Thirty-Nine Weeks Ended | |||||||||||||
| October 30, 2021 | October 31, 2020 | October 30, 2021 | October 31, 2020 | |||||||||||
| Marmaxx | — | % | — | % | — | % | 27 | % | ||||||
| HomeGoods | — | % | — | % | — | % | 27 | % | ||||||
| TJX Canada | — | % | — | % | 16 | % | 27 | % | ||||||
| TJX International | 5 | % | 3 | % | 26 | % | 29 | % |
Showing the first 8K of 63K characters. Open the full section
Item 3. Quantitative and Qualitative Disclosures about Market Risk
There have been no material changes in our primary risk exposures or management of market risks from those disclosed in our Annual Report on Form 10-K for the fiscal year ended January 30, 2021.
Item 4. Controls and Procedures
We have carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of October 30, 2021 pursuant to Rules 13a-15(b) and 15d-15(b) of the Securities Exchange Act of 1934, as amended (the “Act”). Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective at the reasonable assurance level in ensuring that information required to be disclosed by us in the reports that we file or submit under the Act is (i) recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms; and (ii) accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosures. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of implementing controls and procedures.
There were no changes in the Company’s internal controls over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Act) during the fiscal quarter ended October 30, 2021 identified in connection with the evaluation by our management, including our Chief Executive Officer and Chief Financial Officer, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II—OTHER INFORMATION
Item 1. Legal Proceedings
See Note K—Contingent Obligations and Contingencies of Notes to Consolidated Financial Statements for information on legal proceedings.
Item 1A. Risk Factors
There have been no material changes to the risk factors disclosed in the “Risk Factors” section of our Annual Report on Form 10-K for the year ended January 30, 2021, as filed with the Securities Exchange Commission on March 31, 2021.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Information on Share Repurchases
The number of shares of common stock repurchased by TJX during the third quarter of fiscal 2022 and the average price paid per share are as follows:
| Total Number of Shares Repurchased(a) | Average Price Paid Per Share(b) | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(c) | Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs(c) | |||||||||||
| August 1, 2021 through August 28, 2021 | 1,564,720 | $ | 72.86 | 1,564,720 | $ | 2,571,693,466 | ||||||||
| August 29, 2021 through October 2, 2021 | 4,794,822 | $ | 70.22 | 4,794,822 | $ | 2,234,981,781 | ||||||||
| October 3, 2021 through October 30, 2021 | 5,389,747 | $ | 64.81 | 5,389,747 | $ | 1,885,693,972 | ||||||||
| Total | 11,749,289 | 11,749,289 |
(a)Consists of shares repurchased under publicly announced stock repurchase programs.
(b)Includes commissions for the shares repurchased under stock repurchase programs.
(c)In February 2019 and 2020, TJX announced stock repurchase programs authorizing $1.5 billion and $1.5 billion, respectively, in repurchases of TJX common stock from time to time. As of October 30, 2021, approximately $1.9 billion in aggregate remained available under both plans. In March 2020, as a result of the COVID-19 pandemic, TJX suspended its share repurchase program. During the second quarter of fiscal 2022, the Company reinstated its share repurchase program.
Item 6. Exhibits
| Incorporate by Reference | |||||||||||||||||||||||
| Exhibit No. | Description | Form | Exhibit No. | Filing Date | |||||||||||||||||||
| 31.1 | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith | ||||||||||||||||||||||
| 31.2 | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith | ||||||||||||||||||||||
| 32.1 | Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith | ||||||||||||||||||||||
| 32.2 | Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith | ||||||||||||||||||||||
| 101 | The following materials from The TJX Companies, Inc.’s Quarterly Report on Form 10-Q for the quarter ended October 30, 2021, formatted in Inline XBRL (Extensible Business Reporting Language): (i) the Consolidated Statements of Income (Loss), (ii) the Consolidated Statements of Comprehensive (Loss) Income, (iii) the Consolidated Balance Sheets, (iv) the Consolidated Statements of Cash Flows, (v) the Consolidated Statements of Shareholders’ Equity, and (vi) Notes to Consolidated Financial Statements. | ||||||||||||||||||||||
| 104 | The cover page from The TJX Companies, Inc.’s Quarterly Report on Form 10-Q for the quarter ended October 30, 2021, formatted in Inline XBRL (included in Exhibit 101) |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934 the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| THE TJX COMPANIES, INC. | ||||||||||||||
| (Registrant) | ||||||||||||||
| Date: November 30, 2021 | ||||||||||||||
| /s/ Scott Goldenberg | ||||||||||||||
| Scott Goldenberg, Chief Financial Officer | ||||||||||||||
| (Principal Financial and Accounting Officer) |