For the first nine months of fiscal 2002, net sales reached $7.5 billion, a 10% increase over $6.8 billion last year. Income from continuing operations was $385 million and diluted earnings per share from continuing operations were $1.38, equal to last year. This year's $1.38 per share is before the after-tax charge for contingent lease liabilities associated with House2Home, Inc.
Edmond English, President and Chief Executive Officer of The TJX Companies, Inc. commented, "In light of the exceptionally tough retail environment, we believe our third quarter results demonstrate the strength of our concept and flexibility of our business to hold up well in difficult times. As we stated at the end of September, we reacted quickly to the fall-off in consumer confidence caused by the September 11 attacks by taking an even more aggressive stance on pricing in certain merchandise categories. Coupled with our continued rapid markdown strategy, this two-pronged approach helped to drive sales but adversely affected our margins. That said, we ended the third quarter in an extremely liquid inventory position which allows us to buy into market trends and take advantage of the abundance of excellent buys in the marketplace. This positions us well to continue to offer compelling values to our customers in the fourth quarter at better margins.
"At The Marmaxx Group, the combined entity of T.J. Maxx and Marshalls, comparable store sales for the third quarter met our expectations and increased 3% over the prior year's 3% gain. Third quarter operating profit was $244 million, slightly below the prior year. Bottom line performance was impacted by the more aggressive posture we took on pricing which successfully spurred customer traffic. With an abundance of good buys available to us and the ability to capitalize upon them, we are well positioned to continue to offer exciting merchandise and values for holiday gift giving at stronger margins.
"Winners Apparel Ltd., in Canada, posted a third quarter comparable store sales increase of 3% in local currency against a 9% gain last year. Third quarter results at Winners were affected by this division's entering the third quarter with excess inventory and the impact of the September 11 attacks. Winners continued to work down its inventory position throughout the quarter and ended the period in a liquid open-to-buy position. This liquidity now enables Winners to take advantage of the extraordinary opportunities in the marketplace. Further, Winners saw a significant spike in business during October which bodes well for the holiday selling season. We continue to be pleased with HomeSense which again exceeded our expectations."
English continued, "At T.K. Maxx, in Europe, comparable store sales in local currency were flat against a strong 10% increase last year. Operating income came in below last year. Results at this division were negatively impacted by consumer reaction to the September 11 attacks as Britain's involvement in the war on terrorism became more evident. In addition, unusually warm weather patterns prevailed throughout October in the U.K and Ireland. T.K. Maxx ended the quarter with a healthy open-to-buy position and continues to be a strong business with great growth potential.
"HomeGoods posted a solid 7% comparable store sales increase in the quarter and operating income increased slightly over last year. While sales at HomeGoods were slower to pick up than our apparel based concepts after the terrorist attacks, business came back strongly in October as seasonal shopping for the home moved into full swing. We anticipate a successful holiday season at HomeGoods.
"A.J. Wright, one of our youngest concepts, continues to achieve substantial comparable store sales gains, having posted an above-plan 18% increase in the third quarter on top of a 16% increase in the prior year. A.J. Wright's new stores also continue to outperform expectations and this division's bottom line is improving as anticipated. We continue to be optimistic about the growth prospects for A.J. Wright in new and existing markets.
"Our businesses continue to produce more than enough cash to fund the growth of our store base and the distribution infrastructure needed to support it. Our strong cash flow also enables us to pursue our aggressive share buy-back program. During the third quarter, we spent $75 million and retired 2.4 million shares. Over the last 9 months, we have spent $335 million, retiring 11 million shares."
English concluded, "We believe the most effective way of addressing the challenges of this very difficult economic environment is to continue to focus on offering our customers the most compelling values in our competitive arena. By sticking to our basic operating principles of maintaining large open-to-buy positions and closely managing our inventories, we will be able to continue to buy astutely and take the best advantage of opportunities in the marketplace. We are confident that our value-driven shoppers will be rewarded with fresh, high-quality merchandise at excellent values during the holiday shopping season. We are also confident in the strength of all of our divisional concepts and remain very enthusiastic about our prospects for growth."
The TJX Companies, Inc. is the leading off-price retailer of apparel and home fashions in the U.S. and worldwide. The Company operates 681 T.J. Maxx stores, 573 Marshalls, 109 HomeGoods and 40 A.J. Wright stores in the United States. In Canada, the Company operates 129 Winners and 7 HomeSense stores, and in Europe, 99 T.K. Maxx stores. TJX's press releases and financial information are also available on the Internet at www.tjx.com.
At 11:00 a.m. EST today, Edmond English, President and Chief Executive Officer of The TJX Companies, Inc. will hold a conference call with stock analysts to discuss the Company's fiscal 2002 third quarter results and its business. A real-time webcast of the call will be available at www.tjx.com through November 20, 2001. A replay of the call will also be available by dialing 800-294-0988 through November 20, 2001. Additionally, TJX will release its November 2001 sales results on December 6, 2001 at approximately 8:15 a.m. EST. Concurrent with the press release, a recorded message with more detailed information regarding TJX's November sales results and its business will be available by calling 703-736-7248 or via the Internet at www.tjx.com. That recording will remain available via the phone and Internet through Thursday, December 13, 2001.
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 including affects of terrorist incidents and military actions 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, actual liability for House2Home, Inc. lease obligations 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
October 27, October 28,
2001 2000
Net sales $2,741,769 $2,461,411
Cost of sales, including buying
and occupancy costs 2,059,996 1,807,748
Selling, general and administrative
expenses 431,721 385,666
Interest expense, net 8,537 9,379
Income from continuing operations
before provision for income taxes 241,515 258,618
Provision for income taxes 92,017 100,344
Income from continuing operations 149,498 158,274
Loss related to discontinued
operations, net of income taxes (40,000) -
Net Income $ 109,498 $ 158,274
Diluted earnings per share:
Income from continuing
operations $ .54 $ .56
Net income $ .40 $ .56
Cash dividends declared per share $ .045 $ .04
Weighted average shares for diluted
earnings per share computation 276,079,832 282,933,718
THE TJX COMPANIES, INC. AND CONSOLIDATED SUBSIDIARIES
FINANCIAL SUMMARY
(Unaudited)
(Dollars In Thousands Except Per Share Amounts)
39 Weeks Ended
October 27, October 28,
2001 2000
Net sales $7,500,286 $6,827,701
Cost of sales, including buying
and occupancy costs 5,641,316 5,064,086
Selling, general and administrative
expenses 1,218,434 1,088,097
Interest expense, net 18,441 17,206
Income from continuing operations before
provision for income taxes 622,095 658,312
Provision for income taxes 237,018 255,425
Income from continuing operations 385,077 402,887
Loss related to discontinued
operations, net of income taxes (40,000) -
Net Income $ 345,077 $ 402,887
Diluted earnings per share:
Income from continuing operations $ 1.38 $ 1.38
Net income $ 1.24 $ 1.38
Cash dividends declared per share $ .135 $ .12
Weighted average shares for diluted
earnings per share computation 279,139,009 291,911,329
THE TJX COMPANIES, INC. AND CONSOLIDATED SUBSIDIARIES
CONDENSED BALANCE SHEETS
(Unaudited)
(In Millions)
October 27, October 28,
2001 2000
ASSETS
Current assets:
Cash and cash equivalents $ 76.1 $ 55.5
Accounts receivable and other
current assets 158.6 118.6
Merchandise inventories 1,990.9 1,949.7
Total current assets 2,225.6 2,123.8
Property and capital leases, net
of depreciation 1,093.5 878.3
Other assets 73.5 93.8
Deferred income taxes, net 65.1 41.0
Goodwill and tradename, net of
amortization 180.6 186.4
TOTAL ASSETS $ 3,638.3 $ 3,323.3
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current installments of
long-term debt $ 351.3 $ .2
Short-term debt - 311.0
Accounts payable 882.6 881.2
Accrued expenses and other current
liabilities 494.0 437.8
Federal and state income taxes payable 71.3 88.6
Total current liabilities 1,799.2 1,718.8
Other long-term liabilities 265.0 188.0
Long-term debt 319.4 319.4
Shareholders' equity 1,254.7 1,097.1
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 3,638.3 $ 3,323.3
THE TJX COMPANIES, INC. AND CONSOLIDATED SUBSIDIARIES
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(In Millions)
39 Weeks Ended
October 27, October 28,
2001 2000
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $345.1 $402.9
Loss relating to discontinued operations 40.0 -
Depreciation and amortization 152.4 131.1
(Increase) in accounts receivable and
other current assets (22.5) (28.5)
(Increase) in merchandise inventories (544.2) (731.6)
Decrease (increase) in deferred income
taxes 8.8 (17.9)
Increase in accounts payable 240.0 270.8
(Decrease) increase in accrued expenses
and other liabilities (12.9) 26.3
Increase in federal and state income
taxes payable 29.1 45.9
Other, net 23.2 (4.0)
Net cash provided by operating activities 259.0 95.0
CASH FLOWS FROM INVESTING ACTIVITIES:
Property additions (297.1) (181.3)
Other (5.5) (9.4)
Net cash (used in) investing activities (302.6) (190.7)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from current year borrowings
of short-term debt, net - 311.0
Proceeds from borrowings of long-term
debt 347.6 -
Payments on short-term debt outstanding
from prior year (39.0) -
Principal payments on long-term debt (.1) (100.3)
Payments for repurchase of common stock (326.9) (400.3)
Cash dividends paid (36.0) (33.5)
Other 39.9 4.0
Net cash (used in) financing activities (14.5) (219.1)
Effect of exchange rate changes on cash 1.7 (1.5)
Net (decrease) in cash and cash
equivalents (56.4) (316.3)
Cash and cash equivalents at beginning
of year 132.5 371.8
Cash and cash equivalents at end of
period $ 76.1 $ 55.5
THE TJX COMPANIES, INC. AND CONSOLIDATED SUBSIDIARIES
SELECTED INFORMATION BY MAJOR BUSINESS SEGMENT
(Unaudited)
(In Thousands)
13 Weeks Ended
October 27, October 28,
2001 2000
Net sales:
Marmaxx $2,271,893 $2,107,248
Winners(a) 179,797 161,019
T.K. Maxx 126,307 96,239
HomeGoods 125,181 77,038
A.J. Wright 38,591 19,867
$2,741,769 $2,461,411
Operating income (loss):
Marmaxx $ 244,266 $ 248,992
Winners(a) 18,850 26,018
T.K. Maxx 2,149 5,646
HomeGoods 1,496 1,211
A.J. Wright (3,108) (4,002)
263,653 277,865
General corporate expense 12,950 9,216
Goodwill amortization 651 652
Interest expense, net 8,537 9,379
Income from continuing operations
before provision for income taxes $ 241,515 $ 258,618
Stores in operation end of period:
T.J. Maxx 681 654
Marshalls 573 533
Winners 129 116
T.K. Maxx 99 72
HomeGoods 109 69
A.J. Wright 40 22
HomeSense 7 -
Total 1,638 1,466
(a) Includes the operating results of the new HomeSense stores.
THE TJX COMPANIES, INC. AND CONSOLIDATED SUBSIDIARIES
SELECTED INFORMATION BY MAJOR BUSINESS SEGMENT
(Unaudited)
(In Thousands)
39 Weeks Ended
October 27, October 28,
2001 2000
Net sales:
Marmaxx $6,269,190 $5,909,129
Winners(a) 463,881 409,417
T.K. Maxx 333,818 254,225
HomeGoods 335,836 203,325
A.J. Wright 97,561 51,605
$7,500,286 $6,827,701
Operating income (loss):
Marmaxx $ 646,586 $ 658,250
Winners(a) 40,430 54,569
T.K. Maxx 6,408 4,683
HomeGoods (2,392) 1,854
A.J. Wright (10,183) (11,549)
680,849 707,807
General corporate expense 38,358 30,332
Goodwill amortization 1,955 1,957
Interest expense, net 18,441 17,206
Income from continuing operations
before provision for income taxes $ 622,095 $ 658,312
Stores in operation end of period:
T.J. Maxx 681 654
Marshalls 573 533
Winners 129 116
T.K. Maxx 99 72
HomeGoods 109 69
A.J. Wright 40 22
HomeSense 7 -
Total 1,638 1,466
(a) Includes the operating results of the new HomeSense stores.
The TJX Companies, Inc. Notes To Consolidated
and Consolidated Subsidiaries Condensed Financial Statements
1. During the third quarter ended October 27, 2001, TJX
repurchased 2.4 million shares of its common stock, under its $1
billion stock repurchase program, at a cost of $75.5 million. For the
nine months ended, TJX repurchased 10.9 million shares at a cost of
$335.3 million. Since the inception of the $1 billion stock repurchase
program, TJX has repurchased 30.4 million shares at a cost of $716.9
million.
2. On February 13, 2001 TJX issued $517.5 million zero coupon
convertible subordinated notes due February 2021 and raised gross
proceeds of $347.6 million. The issue price of the notes represents a
yield to maturity of 2% per year. The notes are convertible into 8.5
million shares of common stock if specified conditions are met. The
holders of the notes have the right to require TJX to purchase the
notes at the end of the first, third, sixth and twelfth year following
the issuance date. As of October 27, 2001, TJX has classified the
balance of this debt in current liabilities in case the holders
exercise this option in February 2002. If the holders exercise this
option, TJX will fund the payment with cash, long-term or short-term
borrowings, or a combination thereof. TJX used the proceeds to fund an
accelerated store roll-out program, investment in its distribution
network, its common stock repurchase program and for general corporate
purposes.
3. On November 7, 2001, a former division of TJX, House2Home, Inc.
filed for protection under Chapter 11 of the Federal Bankruptcy Code.
This division (formerly known as HomeClub and HomeBase) was spun off
by TJX, along with BJ's Wholesale Club in 1989. As a result of
House2Home's filing, TJX recorded an after-tax charge of $40 million,
or $.14 per share, for potential contingent lease obligations
associated with House2Home. The charge was recorded in the third
quarter ending October 27, 2001 as a loss relating to discontinued
operations.
House2Home is primarily liable on its leases and has agreed to
indemnify TJX for any amounts TJX may have to pay with respect to such
leases. In addition, BJ's Wholesale Club, Inc. has agreed to indemnify
TJX for all liabilities relating to these leases with respect to the
period through January 31, 2003, and 50% of such liabilities
thereafter.
4. Certain amounts in the prior period's financial statements have
been reclassified to be consistent with the current year's
presentation.
