For the first half of fiscal 2001, net income was $245 million and diluted earnings per share were $.83, 12% greater than $.74 per share last year. Last year's $.74 per share is before the one-time cumulative charge for the accounting change for layaway sales. Net sales for the six month period reached $4.4 billion, an 8% increase over $4.0 billion last year.
Edmond English, President and Chief Executive Officer of The TJX Companies, Inc. commented, "Our second quarter sales and profits fell short of our original objectives. However, we completed the first half of the year achieving our net income and earnings per share plan over very strong results last year.
"At The Marmaxx Group, the combined entity of T.J. Maxx and Marshalls, comparable store sales for the second quarter were flat compared to the prior year's 7% increase. Second quarter operating profit of $191 million was short of our original expectations. Although Marmaxx's merchandise margins were very strong, they could not offset this division's shortfall in sales, which occurred primarily in the Northeast and Midwest, where weather in the months of May and June was unseasonably cool. The less weather-sensitive merchandise categories of home fashions, jewelry, shoes and accessories outperformed during the quarter. Marmaxx ended the quarter in a very liquid inventory position, enabling it to take advantage of the exciting fall off-price opportunities in the market. New Marmaxx stores continue to open very profitably and we are on schedule to open 60 new Marmaxx stores this year.
"Winners Apparel Ltd., in Canada, had another excellent quarter, driven by sales which outperformed our objectives. Winners achieved a comparable store sales increase of 8% over 6% growth last year. Further, second quarter operating income increased 21% over last year. While comparable store sales were strong in apparel, we are particularly pleased with this division's performance in home fashions, which bodes well for our plans to bring a new off-price home fashions concept to Canada in 2001.
"T.K. Maxx, our European division, posted a 9% comparable store sales increase over 14% growth last year and outperformed our second quarter profit objectives. We continue to see great performance in both new and existing T.K. Maxx stores. As T.K. Maxx's popularity grows, we are continuing the rapid roll-out of this business throughout the U.K. and Ireland and expect to open 21 stores this year. This represents a 39% increase in T.K. Maxx's store base.
"HomeGoods posted a comparable store sales increase in the second quarter of 5% over a 14% increase last year. HomeGoods remains solidly on track, having achieved its operating earnings target for the first half of the year. We are very enthusiastic about our aggressive roll-out of this chain as new stores continue to open very successfully. HomeGoods is on schedule to open 30 stores this year, growing its store base by 59%.
"A.J. Wright, our newest division, achieved a 19% increase in comparable store sales. A.J. Wright's sales trends are promising as we gain more knowledge about the moderate income customer. We remain enthusiastic about developing the A.J. Wright concept and maximizing its long term growth potential."
English concluded, "Although we are disappointed with our sales shortfall in the second quarter, we continue to generate significant returns on investment and substantial amounts of cash. We are reinvesting these funds into our new stores, which continue to open very strongly. Our store base is increasing 10% annually on a consolidated basis. In addition, beyond funding our growth, our strong cash flow enables us to aggressively execute our share repurchase program. During the second quarter, we spent a total of $195 million and retired 11 million shares. Further, over the last 12 months, we have spent a total of $716 million, retiring 35 million shares. With our most important quarters ahead of us and inventories in excellent shape, we are in a solid position for the remainder of the year, where our biggest opportunities for growth exist."
The TJX Companies, Inc. is the leading off-price retailer of apparel and home fashions in the U.S. and worldwide. The Company operates 639 T.J. Maxx stores, 519 Marshalls, 60 HomeGoods and 19 A.J. Wright stores in the United States. In Canada, the Company operates 106 Winners, and in Europe, 64 T.K. Maxx stores.
Edmond English, President and Chief Executive Officer of The TJX Companies, Inc. will hold a conference call today at 11:00 a.m. Eastern Standard Time to discuss the Company's second quarter results with stock research analysts. A real-time webcast of the call will be available on The TJX Companies, Inc.'s website at www.tjx.com. In addition, a taped replay of the conference call will be available through August 17 and can be accessed at (888) 566-0409.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995: Certain statements contained in this release are forward-looking and involve a number of risks and uncertainties. Among the factors that could cause actual results to differ materially are the following: general economic conditions and consumer demand and consumer preferences and weather patterns in the U.S., Canada and Europe; competitive factors, including continuing pressure from pricing and promotional activities of competitors; impact of excess retail capacity and the availability of desirable store locations on suitable terms; the availability, selection and purchasing of attractive merchandise on favorable terms; import risks, including potential disruptions and duties, tariffs and quotas on imported merchandise, including economic and political problems in countries from which merchandise is imported; currency and exchange rate factors in the Company's foreign operations; risks in the development of new businesses and application of the Company's off-price strategies in foreign countries; acquisition and divestment activities and other factors that may be described in the Company's filings with the Securities and Exchange Commission. The Company does not undertake to publicly update or revise its forward-looking statements even if experience or future changes make it clear that any projected results expressed or implied therein will not be realized.
THE TJX COMPANIES, INC. AND CONSOLIDATED SUBSIDIARIES
FINANCIAL SUMMARY
(Unaudited)
(Dollars In Thousands Except Per Share Amounts)
13 Weeks Ended
July 29, July 31,
2000 1999
(As Restated)
Net sales $2,258,174 $2,102,851
Cost of sales, including buying and
occupancy costs 1,702,298 1,585,248
Selling, general and administrative
expenses 364,474 330,481
Interest expense, net 5,074 1,964
Income before income taxes and cumulative
effect of accounting change 186,328 185,158
Provision for income taxes 72,295 69,277
Income before cumulative effect of
accounting change 114,033 115,881
Cumulative effect of accounting change,
net of income taxes - -
Net Income $ 114,033 $ 115,881
Diluted earnings per share:
Income before cumulative effect of
accounting change $ .39 $ .36
Net income $ .39 $ .36
Cash dividends declared per share $ .04 $ .035
Weighted average shares for diluted
earnings per share computation 292,665,656 320,450,875
THE TJX COMPANIES, INC. AND CONSOLIDATED SUBSIDIARIES
FINANCIAL SUMMARY
(Unaudited)
(Dollars In Thousands Except Per Share Amounts)
26 Weeks Ended
July 29, July 31,
2000 1999
(As Restated)
Net sales $4,366,290 $4,033,357
Cost of sales, including buying and
occupancy costs 3,256,338 3,004,040
Selling, general and administrative
expenses 702,431 641,157
Interest expense, net 7,827 1,230
Income before income taxes and cumulative
effect of accounting change 399,694 386,930
Provision for income taxes 155,081 148,775
Income before cumulative effect of
accounting change 244,613 238,155
Cumulative effect of accounting change,
net of income taxes - ( 5,154)
Net Income $ 244,613 $ 233,001
Diluted earnings per share:
Income before cumulative effect of
accounting change $ .83 $ .74
Net income $ .83 $ .72
Cash dividends declared per share $ .08 $ .07
Weighted average shares for diluted
earnings per share computation 296,385,164 322,956,141
THE TJX COMPANIES, INC. AND CONSOLIDATED SUBSIDIARIES CONDENSED
BALANCE SHEETS
(Unaudited)
(In Millions)
July 29, July 31,
2000 1999
(As Restated)
ASSETS
Current assets:
Cash and cash equivalents $ 39.4 $ 47.2
Accounts receivable and other
current assets 137.7 125.2
Merchandise inventories 1,690.9 1,603.3
Total current assets 1,868.0 1,775.7
Property, net of depreciation 859.1 795.2
Other assets 70.4 47.3
Deferred income taxes, net 35.0 29.9
Goodwill and tradename, net of
amortization 187.9 195.4
TOTAL ASSETS $3,020.4 $2,843.5
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term debt $ 297.4 $ 59.6
Current installments of long-term debt .2 100.5
Accounts payable 767.0 740.9
Accrued expenses and other current
liabilities 617.1 582.8
Federal and state income taxes payable 21.4 22.1
Total current liabilities 1,703.1 1,505.9
Long-term debt 319.4 120.1
Shareholders' equity 997.9 1,217.5
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $3,020.4 $2,843.5
THE TJX COMPANIES, INC. AND CONSOLIDATED SUBSIDIARIES CONDENSED
STATEMENTS OF CASH FLOWS
(Unaudited)
(In Millions)
26 Weeks Ended
July 29, July 31,
2000 1999
(As Restated)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 244.6 $ 233.0
Cumulative effect of accounting change,
net of income taxes - 5.2
Depreciation and amortization 82.8 76.0
(Increase) in accounts receivable and
other current assets ( 46.7) ( 52.6)
(Increase) in merchandise inventories ( 461.3) ( 402.6)
Increase in accounts payable 151.3 123.8
(Decrease) in accrued expenses and
other current liabilities ( 39.4) ( 30.8)
(Decrease) in federal and state income
taxes payable ( 21.5) ( 41.3)
Other ( 5.1) ( 19.9)
Net cash (used in) operating activities ( 95.3) ( 109.2)
CASH FLOWS FROM INVESTING ACTIVITIES:
Property additions ( 114.6) ( 116.2)
Other ( 2.4) -
Net cash (used in) investing activities ( 117.0) ( 116.2)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings of short-term
debt, net 297.4 59.6
Principal payments on long-term debt ( 100.2) ( .4)
Payments for repurchase of common stock ( 298.7) ( 244.8)
Cash dividends paid ( 22.2) ( 20.8)
Other 3.6 17.8
Net cash (used in) financing activities ( 120.1) ( 188.6)
Net (decrease) in cash and cash
equivalents ( 332.4) ( 414.0)
Cash and cash equivalents at beginning
of year 371.8 461.2
Cash and cash equivalents at end of
period $ 39.4 $ 47.2
THE TJX COMPANIES, INC. AND CONSOLIDATED SUBSIDIARIES
SELECTED INFORMATION BY MAJOR BUSINESS SEGMENT
(Unaudited)
(In Thousands)
13 Weeks Ended
July 29, July 31,
2000 1999
(As Restated)
Net sales:
Off-price family apparel stores $2,191,020 $2,059,924
Off-price home fashion stores 67,154 42,927
$2,258,174 $2,102,851
Operating income (loss):
Off-price family apparel stores $ 203,515 $ 202,166
Off-price home fashion stores (445) (989)
203,070 201,177
General corporate expense 11,016 13,402
Goodwill amortization 652 653
Interest expense, net 5,074 1,964
Income before income taxes and cumulative
effect of accounting change $ 186,328 $ 185,158
Stores in operation end of period:
T.J. Maxx 639 617
Marshalls 519 487
Winners 106 91
HomeGoods 60 39
T.K. Maxx 64 43
A.J. Wright 19 11
Total 1,407 1,288
THE TJX COMPANIES, INC. AND CONSOLIDATED SUBSIDIARIES SELECTED
INFORMATION BY MAJOR BUSINESS SEGMENT
(Unaudited)
(In Thousands)
26 Weeks Ended
July 29, July 31,
2000 1999
(As Restated)
Net sales:
Off-price family apparel stores $4,240,003 $3,952,157
Off-price home fashion stores 126,287 81,200
$4,366,290 $4,033,357
Operating income (loss):
Off-price family apparel stores $ 429,299 $ 412,818
Off-price home fashion stores 643 (1,655)
429,942 411,163
General corporate expense 21,116 21,698
Goodwill amortization 1,305 1,305
Interest expense, net 7,827 1,230
Income before income taxes and cumulative effect
of accounting change $ 399,694 $ 386,930
Stores in operation end of period:
T.J. Maxx 639 617
Marshalls 519 487
Winners 106 91
HomeGoods 60 39
T.K. Maxx 64 43
A.J. Wright 19 11
Total 1,407 1,288
The TJX Companies, Inc. Notes To Consolidated and Consolidated Subsidiaries Condensed Financial Statements
1. On February 11, 2000, the Company announced that it had adopted the provisions of the SEC's Staff Accounting Bulletin No. 101 related to layaway sales. The accounting change was effective as of January 31, 1999, and accordingly, the Company restated its earnings for the first three-quarters of the fiscal year ended January 29, 2000. The Company recorded a one-time, non-cash, after-tax charge of $5.2 million in the first quarter of fiscal 2000 for the cumulative effect of the accounting change. The prior periods presented in these Condensed Financial Statements are restated and include the impact of the accounting change.
2. During March 2000, the Company completed its $750 million stock repurchase program and announced its intentions to repurchase an additional $1 billion of common stock over several years. During the six months ended July 29, 2000, the Company repurchased 18.4 million shares at a cost of $346.7 million. Since the inception of the $1 billion stock repurchase program, the Company has repurchased 15.7 million shares at a cost of $293.5 million.
