The TJX Companies, Inc. Reports October 2008 Sales;
Comp Sales Down 1% Excluding Impact of Foreign Currency Exchange;
Updates Details of Third Quarter Outlook
FRAMINGHAM, Mass.--(BUSINESS WIRE)--The TJX Companies, Inc. (NYSE: TJX) today reported October 2008 sales results. Sales for the four-week period ended November 1, 2008, were $1.48 billion, a 2% decrease from the $1.52 billion achieved during the four-week period ended November 3, 2007. For the 39 weeks ended November 1, 2008, sales reached $13.7 billion, up 5% over the $13.0 billion achieved during the 39 weeks ended November 3, 2007. Consolidated comparable store sales for the four-week period ended November 1, 2008, decreased 6% compared to last year, driven by the precipitous drop in foreign currency exchange rates versus the U.S. dollar which was not anticipated by the Company. Excluding the negative five percentage point impact from this rate swing, consolidated comparable store sales decreased 1% for the month.
Carol Meyrowitz, President and Chief Executive Officer of The TJX Companies, Inc., stated, “We often talk about the resiliency of our off-price business model, and we are seeing that resiliency benefiting us in this difficult consumer environment. Our buyers are buying very close to need to make even better buys, offering customers excellent values on great brand name merchandise. In this challenging environment, consolidated comparable store sales were down 1% excluding the impact of foreign exchange. The fundamentals of our business remain strong. It is important to note that customer traffic is up across virtually all divisions as we continue to gain market share. We are managing our inventories extremely tightly, with inventory levels even leaner than last year, to maximize gross margins, while continuing to aggressively manage expenses. We believe this is a prudent approach in the current economic environment and going forward, we continue to believe that the flexibility of our business model will help us weather these tough times.”
Third Quarter Fiscal 2009 Guidance
While the Company believes that its reported third quarter earnings per share from continuing operations will be near the high end of its previously estimated range of $.55 to $.58, this forecast now includes factors not contemplated in the prior guidance which help offset the negative impact of lower-than-expected sales in October. These factors include an estimated net $.03 per share favorable impact of foreign currency exchange rates (see below) as well as an expected benefit due to a reduction in the reserve related to the previously announced computer intrusion(s). Excluding these factors, the Company expects adjusted earnings per share from continuing operations to be slightly below the previously estimated range of $.55 to $.58.
Detail on the Impact of Foreign Currency Exchange Rates
In addition to its U.S. businesses, the Company operates stores in Canada, the U.K., Ireland, and Germany. The translation of foreign currency into U.S. dollars generally affects the Company’s sales more than profit, as sales and expenses are translated at approximately the same rates. As noted above, foreign exchange rates during October dropped precipitously and negatively impacted consolidated comparable store sales by five percentage points during the month.
Additionally, the Company routinely enters into inventory-related hedging instruments to mitigate the impact of foreign exchange on merchandise margins when the Company’s international divisions purchase goods from U.S. sources. For accounting purposes there is a mark-to-market adjustment on the hedging instruments at the end of each quarter. While this adjustment occurs every quarter and is usually not material, it is of much greater magnitude when there is significant volatility in currency exchange rates, as there was in the third quarter.
For the third quarter, the Company expects that the net impact of currency translation (a negative of $.02 per share) and the mark-to-market adjustment for inventory hedge instruments (a positive of $.05 per share which will reverse in the fourth quarter) will be a positive $.03 per share.
About The TJX Companies, Inc.
The TJX Companies, Inc. is the leading off-price retailer of apparel and home fashions in the U.S. and worldwide. The Company operates 874 T.J. Maxx, 808 Marshalls, 315 HomeGoods, and 135 A.J. Wright stores in the United States. In Canada, the Company operates 200 Winners, 75 HomeSense, and 2 STYLESENSE stores, and in Europe, 235 T.K. Maxx and 7 HomeSense stores. TJX’s press releases and financial information are also available on the Internet at www.tjx.com.
October and November Fiscal 2009 Recorded Calls
A recorded message with more detailed information regarding TJX’s October 2008 sales results, operations and business trends is available via the Internet at www.tjx.com, or by calling (703) 736-7248 through Thursday, November 13, 2008. The Company expects to release its November 2008 sales results on Thursday, December 4, 2008, at approximately 8:15 a.m. ET. Concurrent with that press release, a recorded message with more detailed information regarding TJX’s November sales results, operations and business trends will be available via the Internet at www.tjx.com, or by calling (703) 736-7248 through Thursday, December 11, 2008.
Third Quarter Fiscal 2009 Conference Call
Additionally, the Company expects to release its third quarter earnings on Tuesday, November 11, 2008, before 9:30 a.m. ET. At 11:00 a.m. ET that day, Carol Meyrowitz, President and Chief Executive Officer of TJX, will hold a conference call with stock analysts to discuss the Company’s third quarter Fiscal 2009 results, operations and business trends. A real-time webcast of the call will be available at www.tjx.com. A replay of the call will also be available at www.tjx.com or by dialing (866) 367-5577 through Tuesday, November 18, 2008.
Archived versions of the Company’s recorded messages and conference calls are available at www.tjx.com after they are no longer available by telephone. The Company routinely posts information that may be important to investors in the Investor Information section at www.tjx.com. The Company encourages investors to consult that section of its website regularly.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995: Various statements made in this release are forward-looking and involve a number of risks and uncertainties. All statements that address activities, events or developments that we intend, expect or believe may occur in the future are forward-looking statements. The following are some of the factors that could cause actual results to differ materially from the forward-looking statements: effects of current economic environment; matters relating to the computer intrusion(s) including potential losses that could differ from our reserve, potential effects on our reputation and sales, compliance with orders, and other consequences to the value of our Company and related value of our stock; our ability to successfully expand our store base and increase comparable store sales; risks of expansion and costs of contraction; risks inherent in foreign operations; our ability to successfully implement our opportunistic buying strategies and to manage our inventories effectively; successful advertising and promotion; consumer confidence, demand, spending habits and buying preferences; effects of unseasonable weather; competitive factors; availability of store and distribution center locations on suitable terms; our ability to recruit and retain associates; factors affecting expenses; success of our acquisition and divestiture activities; our ability to successfully implement technologies and systems and protect data; our ability to continue to generate adequate cash flows; our ability to execute our share repurchase program; availability and cost of financing; general economic conditions, including fluctuations in the price of oil; potential disruptions due to wars, natural disasters and other events beyond our control; changes in currency and exchange rates; issues with merchandise quality and safety; import risks; adverse outcomes for any significant litigation; compliance with and changes in laws and regulations and accounting rules and principles; adequacy of reserves; asset impairments and other charges; closing adjustments; failure to meet market expectations; and other factors that may be described in our filings with the Securities and Exchange Commission. We do not undertake to publicly update or revise our forward-looking statements even if experience or future changes make it clear that any projected results expressed or implied in such statements will not be realized.
