The TJX Cos. Inc. knows how to resonate with its customers as foot traffic was the primary driver of comp sales gains–6 percent on a consolidated basis on top of the 4 percent increase last year–in every division during the fourth quarter.
In a nutshell: The off pricer‘s chief executive officer and president Ernie Herrman said the business continues to generate “tremendous amount of cash.” In Fiscal 2019, TJX returned $3.4 billion to shareholders through share repurchases and dividends. Herrman said this year, Fiscal 2020, “[w]e plan to continue investment to support our growth while distributing cash to our shareholders.” The company plans to increase its quarterly dividend by 18 percent to 23 cents a share, payable in June 2019, and will continue its stock buyback program. The new program indicates a plan to repurchase between $1.75 billion to $2.25 billion of TJX stock for the fiscal year ending Feb. 1, 2020. “These actions underscore our confidence in our ability to continue delivering strong, profitable sales and cash flow that enables us to both fund our continued growth and return value to our shareholders,” Herrman said.
Sales: Net sales for the quarter ended Feb. 2 rose 1.5 percent to $11.1 billion from $11 billion a year ago, on consolidated comparable store sales of 6 percent. All divisions saw comps gains in the quarter. The Marmaxx division, which operates the TJX and Marshalls nameplates in the U.S., led the way with a comps gain of 7 percent that was also on top of the 3 percent gain in the year-ago quarter. TJX International, covering European and Australian operations, and HomeGoods in the U.S., each posted 5 percent comps gains. TJX Canada reported a 4 percent gain in comps for the quarter. Gross profit margin for the quarter was 27.8 percent, versus 28.4 percent in the year-ago quarter.
Earnings: Net income slipped 4.1 percent to $841.5 million, or 68 cents a diluted share, from $877.3 million, or 69 cents, a year ago. On an adjusted basis, fourth quarter diluted EPS was 59 cents. Wall Street was expecting 68 cents on sales of $11.02 billion.
For the fiscal year ending Feb. 1, 2020, the company guided diluted EPS in the range of $2.55 to $2.60. For the first quarter, TJX forecasted diluted EPS at between 53 cents to 54 cents, based on an estimated comp store sales growth of 2 percent to 4 percent on a consolidated basis, and 3 percent to 4 percent at its Marmaxx division.
CEO’s Take: “Fourth quarter consolidated comparable store sales increased a very strong 6 percent, significantly above our plan and over a 4 percent increase last year,” Herrman said. “Our excellent values on great brands and great gift giving assortments resonated with consumers around the globe this holiday season, and once again this quarter, our apparel and home businesses were both strong.”
He said 2019 is off to a “solid start,” noting that the company is pursuing many initiatives to keep driving sales and customer traffic.
“Our capital spending plans include investing in new stores, store remodels and our supply chain and infrastructure,” Hermann added.