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Financial Roundup: TJX and Delta Galil Sales Rise, Kohl’s Margins Up, Exit of Product Categories Hurt L Brands


The TJX Companies attributed stellar fourth quarter and fiscal 2017 financial results to increased shopper traffic.

“We were proud to mark our 40-year milestone as a company and surpass $33 billion in sales! Our consolidated comp sales increased a strong five percent, above our plan and over five percent growth last year, and earnings per share growth exceeded our expectations,” The TJX Companies CEO and president Ernie Herrman said. “We were particularly pleased that customer traffic was the primary driver of our comp increases at every major division, which tells us that our eclectic merchandise mix and amazing values continue to resonate with consumers across our geographies.”

TJX reported a net sales increase of 6 percent to $9.5 billion for the fourth quarter ended Jan. 28, 2017. Consolidated comparable store sales increased by 3 percent. The company achieved a net income of $678 million and diluted earnings per share were $1.03, compared to last year’s $0.99.

For fiscal 2017 ended Jan. 28, 2017, TJX’s net sales were $33.2 billion, a 7 percent increase over fiscal 2016. Consolidated comparable store sales were also strengthened by a 5 percent increase. Net income for fiscal 2017 was $2.3 billion and diluted earnings per share were $3.53, a six percent increase over fiscal 2016’s net income of $3.33. Excluding a pension settlement charge and a third quarter debut extinguishment charge, which combined reduced earnings per share by $0.07 per share, adjusted earnings per share were $3.53, compared to fiscal 2016’s $3.33.

Gross profit margin for the fourth quarter was 28.3 percent, down 0.4% from fourth quarter 2016. Although merchandise margin increased, it was offset by losses related to incremental supply chain costs compared to last year. Selling costs as a percent of sales were flat versus fourth quarter 2016’s results. For fiscal 2017, gross profit margin was 29 percent, up 0.2% from fiscal 2016. Selling costs as a percent of sales were 17.4%, slightly higher than fiscal 2016 due to growth investments and wage increases.

TJX’s fiscal 2018 predictions anticipate diluted earnings per share to fall between $3.80 and $3.89, which would be a 10 percent to 12 percent increase compared to last year. The company’s fiscal 2018 guidance expects an adjusted diluted earnings per share to range from $3.69 to $3.78, due to an expected benefit of approximately $0.11 per share from fiscal 2018’s 53rd week.

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“Looking ahead, we see many opportunities to continue our successful growth and are pursuing many initiatives to keep driving shoppers to our stores,” Herrman said. “We are making strategic investments in our infrastructure, stores, and new seeds to strengthen our leadership positions and allow us to capture additional market share in the U.S. and internationally.”

Delta Galil

Delta Galil’s acquisitions of 7 For All Mankind, Ella Moss and Splendid brands, along with an upgraded digital platform, strengthened the company’s fourth quarter results.

“We are very pleased with our results for 2016, which concluded with a particularly strong fourth quarter and reflected all-time high sales, operating profit and cash flow,” Delta Galil CEO Isaac Dabah said. “Throughout the year, we remained focused on a number of operational and growth initiatives that improved our business segments and helped make us a more efficient company.”

In the fourth quarter of 2016, sales grew by 31 percent to $376.3 million from $287.1 million for the same quarter last year. Fiscal 2016 sales were $1.18 billion, a 9 percent increase over $1.1 billion for fiscal 2015. Top-line growth in key geographic regions and a diversified portfolio contributed to the year-over-year increase.

Delta Galil reported an operating profit of $32.3 million in the fourth quarter of 2016, which was an 80 percent increase from $17.9 million in the fourth quarter last year. For fiscal 2016, operating profit jumped by 23 percent to $85.3 million, compared to $69 million for fiscal 2015. Operating profit excluding one-time items grew by 36 percent to $32.3 million in the fourth quarter of 2016, meanwhile operating profit excluding one-time items increased by 10 percent to $83.2 million for fiscal 2016.

Fourth quarter 2016 net income increased by 51 percent to $18.5 million, compared to $12.3 million for fourth quarter 2015. Net income excluding one-time items totaled $18.5 million, compared to $16 million for the same period last year. Fourth quarter 2016’s diluted EPS increased by 52 percent to $0.73 from $0.48 for fourth quarter 2015. Net income for fiscal 2016 was $51.9 million, or $2.03 per diluted share, up from $43.8 million or $1.71 per diluted share for fiscal 2015.

For its 2017 financial guidance outlook, Delta Galil expects sales to range between $1.33 billion and $1.37 billion, which would be a 13 percent to 16 percent increase from fiscal 2016’s actual sales of $1.1 billion. Fiscal year 2017 net income is projected to range between $50 million and $52 million, representing an increase of 6 percent to 10 percent from fiscal 2016’s net income of $47.2 million. Diluted EPS for full-year 2017 is anticipated to range between $1.95 and $2.02, which is slightly higher than fiscal 2016’s actual EPS of $1.85.

L Brands

The removal of Victoria’s Secret product categories took a toll on L Brands’ fourth quarter and fiscal 2016 results.

Net income was $631.7 million, which was lower than $636 million for fourth quarter 2015. Fourth quarter operating income decreased by 8 percent to $987.6 million, compared to $1.078 billion last year. Earnings per share for the fourth quarter were $2.18 compared to $2.15 for the fourth quarter ended Jan. 30 2016.

For the fourth quarter ended Jan. 28, 2017, L Brands reported net sales of $4.5 billion, which grew by two percent from $4.4 billion. Comparable fourth quarter sales were flat. The exit of the apparel and swim categories had a negative impact of 2 percentage points and 4 percentage points to total company and Victoria’s Secret comparable fourth quarter sales.

Net income for the year ended Jan. 28, 2017 was $1.16 billion, which was lower than $1.25 billion last year. Full-year operating income was $2 billion compared to $2.1 billion last year. Full-year EPS were $3.98 compared to $4.22 for fiscal 2016. Excluding significant items, including a favorable tax settlement of $41.7 million, adjusted full-year EPS were down six percent compared to $3.99 last year. Adjusted operating income decreased by seven percent to $2 billion, meanwhile adjusted net income was $1 billion compared to $1.1 billion for fiscal 2016.

Fiscal 2016 net sales increased by 3 percent to $12.6 billion, compared to $12.16 billion for fiscal 2015. Comparable sales for fiscal 2016 increased by 2 percent. For fiscal 2016, the exit of the apparel and swim categories negatively impacted two percentage points and three percentage points of total company and Victoria’s Secret comparable sales.

For fiscal 2017, L Brands projects full-year EPS to range between $3.05 and $3.35. The fiscal 2017 EPS predictions include negative impacts related to the removal of Victoria’s Secret apparel and swim lines, in addition to continued investment in China and brick-and-mortar real estate.


Kohl’s reported a 2.8 percent drop in sales for the fourth quarter ended January 28, 2017, which the company owed to lower sales in its physical stores. Comp stores were off by 2.2 percent.

The chain’s gross margin was up 33 base points during the same period and down 6 for the year.

“We’ve really dramatically reduced inventories this year so our clearance levels and fall transitional inventories are way down compared to last year,” said Chief Executive Kevin Mansell, according to Reuters.

Net income totaled $252 million for the quarter, a 15 percent decrease from the same period in 2015. For the year, net income reached $556 million, which was a 17 percent decline compared to 2015.

“In 2017, we will accelerate our focus on becoming the destination for active and wellness with the launch of Under Armour in early March. We will also extend our efforts on improving our speed to market across all of our proprietary brands into all apparel areas and home,” said Kevin Mansell, Kohl’s chairman, chief executive officer and president.

The company issued 2017 sales guidance as modest gains of 1.3 percent to slightly down at 0.7. It expects comp stores to be flat or down 2 percent.

–By Genevieve Scarano with additional reporting by Caletha Crawford