For the fiscal 2003 fourth quarter, sales were $3.5 billion, up 9% over last year. Consolidated comparable store sales were flat to last year's 6% increase. Net income for the fourth quarter was $154 million and diluted earnings per share were $.29, up slightly over the prior year's fourth quarter of $.28.
Edmond English, President and Chief Executive Officer of The TJX Companies, Inc. commented, "With a weak economy and geopolitical concerns, which dampened consumer confidence, as well as a highly promotional retail landscape, 2002 was certainly a very difficult business environment. Despite these external challenges, we have once again proven our ability to grow substantially in difficult times. I am pleased that we achieved our sales goals for the year, growing sales 12% to $12 billion and increasing comparable store sales 3%. Additionally, our earnings growth was within the range that we established one year ago. We achieved a 42% after-tax return on average shareholders' equity and continued to generate significant excess cash. We added 178 stores company-wide, growing our store base by 11%, and I am very pleased with the performance of new stores across all of our divisions. It is also worth noting the power of our younger businesses, which continue to play an increasingly important role in our growth.
"At The Marmaxx Group, the combination of T. J. Maxx and Marshalls, total sales for the year were $9.5 billion, a 7% increase over last year, and comparable store sales for the year increased 2% over the prior year. Segment profit for 2002 was $888 million versus $894 million last year. While Marmaxx's sales were only slightly less than our expectations for the year, profits were impacted by large increases in insurance and employee benefits costs and the previously mentioned charge for the tentative settlement of the California lawsuits. For the fourth quarter, comparable stores sales decreased 1%, against a strong increase of 6% last year. Segment profit in the quarter was $208 million, which was below the prior year's exceptionally strong profits. Although we had higher expectations for Marmaxx in 2002, inventories were very well managed, which enabled us to respond quickly to opportunities in the marketplace and changes in the competitive landscape. Thus, merchandise margins at Marmaxx continued to hold strong, pointing to the fundamental strength of this business. We netted 73 additional stores in 2002 to end the year with 1,342 stores. Our plans are to increase store count for The Marmaxx Group by 79 stores in 2003.
"HomeGoods had an excellent year, far exceeding our sales and profit objectives, while at the same time growing its store count by 27%. Total sales reached $705 million, a 39% increase over last year, and comparable store sales increased 6% over an increase of 7% in the prior year. Segment profit increased nearly nine-fold to $32 million and profit margin grew substantially. For the fourth quarter, comparable store sales increased 2%, against a very strong 11% increase last year. Segment profit for the quarter increased 139%. HomeGoods was very successful in 2002 and made significant gains in merchandising, managing inventories, store operations and distribution. Our superstores, which combine HomeGoods with T.J. Maxx or Marshalls, continued to perform extremely well. We netted 30 additional HomeGoods stores during the year, bringing our year-end total to 142. We will continue rolling out new stores in the freestanding and superstore format in 2003, and expect to increase the HomeGoods chain by 37 stores, a 26% increase."
English continued, "Winners, our Canadian division, had a great year, exceeding our expectations. Sales for the year totaled $793 million, a 20% increase, and comparable store sales increased by 5% in local currency. Segment profit increased 44% to $85 million, with a strong 10.8% profit margin. In the fourth quarter, comparable store sales in local currency increased 2%. Improved inventory management resulted in segment profit growing 42% and Winners achieving an 11.3% profit margin in the quarter. Winners did an excellent job of inventory management throughout the year, and with its College Park, Toronto, store, set a new-store-opening performance record. We added 15 Winners stores in 2002, bringing its year-end total to 146. In addition, this division successfully added 8 HomeSense stores, the Canadian version of HomeGoods, to end the year with 15 stores. In 2003, we plan to add 13 Winners and 8 HomeSense stores.
"T.K. Maxx, in the U.K. and Ireland, had a very successful year, bringing in sales and profits above our expectations, while growing its store base substantially. Sales for the year totaled $720 million, increasing 38%, and comparable store sales increased 5%. Segment profit was up 232% to $43 million and profit margins increased dramatically. I am very pleased with T.K. Maxx's improvements in inventory management in 2002. While fourth quarter comparable store sales in local currency were flat to last year, these improvements in inventory management resulted in segment profit increasing by 323% and profit margins rising to 11.2% for the fourth quarter. T.K. Maxx added 22 stores in 2002 to end the year with 123 stores. We plan to open 30 T.K. Maxx stores in 2003, an increase of 24%."
English continued, "A.J. Wright grew its store base in 2002 by 67%, entering new markets as well as filling in existing ones. For the year, this young business increased total sales by 76% and comparable store sales increased by 11%, over a strong 18% increase last year. Comparable store sales increased 8% in the fourth quarter, over a 17% increase last year. However, bottom-line results did not meet our objectives. While A.J. Wright's bottom line exceeded expectations for the first half of the year, profitability in the back half was negatively impacted in part by strains put on this young organization by a very aggressive store opening program. That said, new A.J. Wright stores performed well and this division was successful in broadening its reach to the moderate-income customer. We continue to be confident in the strength of the A.J. Wright concept as a growth vehicle for TJX. This division netted 30 additional stores in 2002, ending the year with 75 stores. We plan to add 25 new A.J. Wright stores in 2003.
"Our financial strength continues to give us confidence in these challenging times. Our strong returns on investment continued to result in our generating significant excess cash, which in 2002, reached a level that exceeded our expectations. After funding all of our growth needs, this excess cash allowed us to continue our aggressive share buyback program at higher levels than we originally anticipated. In 2002, we completed our $1 billion share repurchase program begun in 2000 and initiated another $1 billion share buyback program. For the year, we spent $498 million on share repurchases and retired 26 million shares. In 2003, we are continuing our sizable buyback program with planned spending of an additional $500 million."
English concluded, "Looking ahead at a year that presents many macro uncertainties, I continue to be confident in the strength of our Company and our ability to grow. As we begin 2003, inventories are in great shape across all divisions, which allows us to continue to take advantage of the plentiful buying opportunities in the marketplace. While we face challenging comparisons to last year, especially in the first quarter, our value-oriented concept and our ability to react quickly to the changing dynamics of the competitive environment, as well as our very strong financial position, continue to serve us well and reaffirm my confidence in 2003 and beyond."
The TJX Companies, Inc. is the leading off-price retailer of apparel and home fashions in the U.S. and worldwide. The Company operates 713 T.J. Maxx, 629 Marshalls, 142 HomeGoods and 75 A.J. Wright stores in the United States. In Canada, the Company operates 146 Winners and 15 HomeSense stores, and in Europe, 123 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 2003 fourth quarter and year-end results and expectations for fiscal 2004. A real-time webcast of the call will be available at www.tjx.com through Wednesday, March 5, 2003. A replay of the call will also be available by dialing 800-839-5749 through Wednesday, March 5, 2003. Additionally, TJX will release its February 2003 sales results on Thursday, March 6, 2003 at approximately 8:15 a.m. EST. Concurrent with the press release, a recorded message with more detailed information regarding TJX's February 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, March 13, 2003.
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 effects of wars, terrorist incidents and other military actions and consumer confidence, demand and 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 and buying operations; risks in the development of new businesses and application of the Company's off-price strategies in foreign countries; factors affecting expenses including pressure on wages and benefits; acquisition and divestment activities; actual liability for Ames and House2Home, Inc. lease obligations; changes in laws and regulations; 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
January 25, January 26,
2003 2002
Net sales $ 3,505,481 $ 3,208,712
Cost of sales, including buying and
occupancy costs 2,721,877 2,481,606
Selling, general and administrative
expenses 527,646 467,955
Interest expense, net 5,903 7,202
Income from continuing operations
before provision for income taxes 250,055 251,949
Provision for income taxes 95,752 96,629
Income from continuing operations 154,303 155,320
Loss related to discontinued
operations, net of income taxes - -
Net income $ 154,303 $ 155,320
Diluted earnings per share:
Income from continuing operations $ .29 $ .28
Net income $ .29 $ .28
Cash dividends declared per share $ .03 $ .0225
Weighted average shares for diluted
earnings per share computation 529,292,524 550,612,550
THE TJX COMPANIES, INC. AND CONSOLIDATED SUBSIDIARIES
FINANCIAL SUMMARY
(Unaudited)
(Dollars In Thousands Except Per Share Amounts)
52 Weeks Ended
January 25, January 26,
2003 2002
Net sales $ 11,981,207 $ 10,708,998
Cost of sales, including buying and
occupancy costs 9,079,579 8,122,922
Selling, general and administrative
expenses 1,938,531 1,686,389
Interest expense, net 25,373 25,643
Income from continuing operations
before provision for income taxes 937,724 874,044
Provision for income taxes 359,336 333,647
Income from continuing operations 578,388 540,397
Loss related to discontinued
operations, net of income taxes - (40,000)
Net income $ 578,388 $ 500,397
Diluted earnings per share:
Income from continuing operations $ 1.08 $ .97
Net income $ 1.08 $ .90
Cash dividends declared per share $ .12 $ .09
Weighted average shares for diluted
earnings per share computation 537,739,759 556,267,724
THE TJX COMPANIES, INC. AND CONSOLIDATED SUBSIDIARIES
CONDENSED BALANCE SHEETS
(Unaudited)
(In Millions)
January 25, January 26,
2003 2002
ASSETS
Current assets:
Cash and cash equivalents $ 492.3 $ 492.8
Accounts receivable and other current
assets 175.8 154.1
Current deferred income taxes 9.0 12.0
Merchandise inventories 1,563.4 1,457.0
Total current assets 2,240.5 2,115.9
Property and capital leases, net of
depreciation 1,407.6 1,191.0
Other assets 113.2 83.1
Non-current deferred income taxes, net - 26.6
Goodwill and tradename, net of amortization 179.2 179.1
TOTAL ASSETS $ 3,940.5 $ 3,595.7
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt $ 15.0 $ -
Accounts payable 817.6 761.5
Accrued expenses and other current
liabilities 671.1 511.5
Income taxes payable 62.6 42.0
Total current liabilities 1,566.3 1,315.0
Other long-term liabilities 258.3 268.0
Non-current deferred income taxes 42.0 -
Long-term debt 664.8 672.0
Shareholders' equity 1,409.1 1,340.7
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $ 3,940.5 $ 3,595.7
THE TJX COMPANIES, INC. AND CONSOLIDATED SUBSIDIARIES
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(In Millions)
52 Weeks Ended
January 25, January 26,
2003 2002
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 578.4 $ 500.4
Loss relating to discontinued operations - 40.0
Depreciation and amortization 207.9 204.1
Deferred income tax provision 72.1 35.2
(Increase) in accounts receivable and
other current assets (28.2) (8.9)
(Increase) in merchandise inventories (85.6) (13.3)
Increase in accounts payable 45.6 120.8
Increase in income taxes payable 20.3 -
Increase in accrued expenses and other
liabilities 112.8 16.1
Other, net (14.7) 18.0
Net cash provided by operating activities 908.6 912.4
CASH FLOWS FROM INVESTING ACTIVITIES:
Property additions (396.7) (449.4)
Other .5 (5.4)
Net cash (used in) investing activities (396.2) (454.8)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings of long-term debt - 347.6
Payments on short-term debt outstanding
from prior year - (39.0)
Payments for repurchase of common stock (481.7) (424.2)
Cash dividends paid (60.0) (48.3)
Other 32.6 64.2
Net cash (used in) financing activities (509.1) (99.7)
Effect of exchange rate changes on cash (3.8) 2.4
Net (decrease) increase in cash and cash
equivalents (.5) 360.3
Cash and cash equivalents at beginning
of year 492.8 132.5
Cash and cash equivalents at end of year $ 492.3 $ 492.8
THE TJX COMPANIES, INC. AND CONSOLIDATED SUBSIDIARIES
SELECTED INFORMATION BY MAJOR BUSINESS SEGMENT
(Unaudited)
(In Thousands)
13 Weeks Ended
January 25, January 26,
2003 2002
Net sales:
Marmaxx $ 2,699,983 $ 2,593,863
Winners (a) 235,709 196,996
T.K. Maxx 247,273 186,711
HomeGoods 221,178 171,375
A.J. Wright 101,338 59,767
$ 3,505,481 $ 3,208,712
Segment profit or (loss):
Marmaxx $ 208,022 $ 247,064
Winners (a) 26,631 18,710
T.K. Maxx 27,779 6,564
HomeGoods 14,583 6,102
A.J. Wright (670) (1,660)
276,345 276,780
General corporate expense 20,387 16,977
Goodwill amortization - 652
Interest expense, net 5,903 7,202
Income from continuing operations before
provision for income taxes $ 250,055 $ 251,949
Stores in operation end of period:
T.J. Maxx 713 687
Marshalls 629 582
Winners 146 131
T.K. Maxx 123 101
HomeGoods 142 112
A.J. Wright 75 45
HomeSense 15 7
Total 1,843 1,665
(a) Includes the operating results of
HomeSense stores.
THE TJX COMPANIES, INC. AND CONSOLIDATED SUBSIDIARIES
SELECTED INFORMATION BY MAJOR BUSINESS SEGMENT
(Unaudited)
(In Thousands)
52 Weeks Ended
January 25, January 26,
2003 2002
Net sales:
Marmaxx $ 9,485,582 $ 8,863,053
Winners (a) 793,202 660,877
T.K. Maxx 720,141 520,529
HomeGoods 705,072 507,211
A.J. Wright 277,210 157,328
$ 11,981,207 $ 10,708,998
Segment profit or (loss):
Marmaxx $ 887,944 $ 893,650
Winners (a) 85,301 59,140
T.K. Maxx 43,044 12,972
HomeGoods 32,128 3,710
A.J. Wright (12,566) (11,843)
1,035,851 957,629
General corporate expense 72,754 55,335
Goodwill amortization - 2,607
Interest expense, net 25,373 25,643
Income from continuing operations before
provision for income taxes $ 937,724 $ 874,044
Stores in operation end of period:
T.J. Maxx 713 687
Marshalls 629 582
Winners 146 131
T.K. Maxx 123 101
HomeGoods 142 112
A.J. Wright 75 45
HomeSense 15 7
Total 1,843 1,665
(a) Includes the operating results of
HomeSense stores.
The TJX Companies, Inc. and Consolidated Subsidiaries
Notes To Consolidated Condensed Financial Statements
1. All earnings per share calculations and per share data have been adjusted to give effect for the two-for-one stock split distributed on May 8, 2002.
2. During the fourth quarter ended January 25, 2003, TJX repurchased 5.4 million shares of its common stock, for a cost of $105.2 million. During the twelve months ended January 25, 2003, TJX has repurchased 25.9 million shares of its common stock, at a cost of $497.6 million. Through January 25, 2003, under its current $1 billion multi-year stock repurchase program, TJX has repurchased 16.1 million shares at a cost of $303.4 million. The reference to shares repurchased above have all been effected for the two-for-one stock split.
3. The twelve months ended January 25, 2003, reflects an after-tax charge of approximately $10 million, or $.02 per diluted share, for the cost of a tentative settlement for claims relating to four California lawsuits. The lawsuits allege that the Company improperly classified store managers as exempt from California overtime laws. The suits are similar to numerous suits filed against retailers and others with operations in California. The settlement is subject to final negotiation and submission to the court for approval. The pre-tax cost of $16.0 million is reflected in selling, general and administrative expenses, with virtually the entire amount charged to the Marmaxx operating segment.
4. Certain amounts in the prior period's financial statements have been reclassified to be consistent with the current year's presentation.
