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TJX Thanks Holiday Cheer and New Tax Act for Sales and Profit Boost

TJX Thanks Holiday Cheer and New
Photo credit: Photo Credit: AP/REX/Shutterstock

Boosted by strong store traffic and a tax benefit, TJX Cos. finished the year on a high note in its top and bottom lines.

In a Nutshell: Off-price apparel and home goods giant The TJX Cos., saw solid increases in net sales and net income in the fourth quarter and full-year, with consolidated comp store sales up 2 percent, marking the 22nd consecutive year of comp sales growth for the retailer.

TJX, which operates the T.J. Maxx, Marshalls, HomeGoods, Sierra Trading Post and Homesense chains, and related e-commerce sites, said it benefited from the 2017 Tax Act in the fourth quarter and full fiscal 2018 primarily due to the lower U.S. corporate income tax rate. As a result of the estimated cash benefit related to the 2017 Tax Act, the company is giving a one-time, discretionary bonus to eligible, non-bonus-plan associates, making an incremental contribution to its defined contribution retirement plans for eligible associates, instituting paid parental leave for eligible associates in the U.S. and enhancing vacation benefits for certain U.S. staff.

The company is also planning a significant increase in shareholder distributions in fiscal 2019 and plans to repatriate more than $1 billion in cash from its TJX Canada division in fiscal 2019. TJX said it also plans to continue to re-invest in the business, including store growth, supply chain and infrastructure, technology, employee training and upgrades to the shopping experience for customers.

Sales: Net sales for quarter ended Feb. 3 increased 16 percent to $10.96 billion from $9.47 billion a year earlier, driven by strong store traffic in the holiday selling period. The Marmaxx division, consisting of Marshall’s and T.J. Maxx stores, posted a 12 percent sales gain to $6.7 billion. Net sales for the full year increased 8 percent to $35.86 billion from $33.18 billion. Full-year net sales at Marmaxx rose 5 percent to $22.25 billion.

Earnings: Net income for the 14-week fourth quarter increased 32 percent to $877.28 million from $677.93 million a year earlier. Net income for the year rose 13 percent to $2.6 billion from $2.3 billion in the prior 12 months. Gross profit margin for the fourth quarter was 28.4%, up 0.1% versus the prior year. Gross profit margin for full year was 28.9%, down 0.1% from a year earlier.

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CEO’s Take: Ernie Herrman, TJX CEO and president, said, “We are very pleased with our strong finish to 2017. In the fourth quarter, our consolidated comp store sales increase of 4 percent and adjusted earnings per share both meaningfully exceeded our expectations. Once again, customer traffic was up overall and the primary driver of our comp sales increases at each of our four major divisions, as customers responded to our great brands and compelling, eclectic mix of merchandise at excellent values. We are also pleased with our full-year performance as we surpassed $35 billion in annual sales, an important milestone for our company.”

“Looking ahead, 2018 is off to a solid start. We see abundant opportunities in the marketplace for major brands and high-quality merchandise and are pursuing numerous initiatives to keep driving sales and customer traffic.”