TJX(TJX) - 2025 Q1 - Quarterly Results

Q1 FY25 Financial Highlights TJX reported strong Q1 FY25 results with a 3% increase in consolidated comparable store sales, driven by customer transactions, and net sales growth of 6% to $12.5 billion Overall Performance TJX reported strong Q1 FY25 results, with a 3% increase in consolidated comparable store sales, driven entirely by customer transactions, net sales grew 6% to $12.5 billion, and pretax profit margin and diluted EPS of 11.1% and $0.93 respectively, both exceeded the company's plans, with EPS up 22% year-over-year Q1 FY25 Key Performance Indicators | Metric | Q1 FY25 Result | Year-over-Year Change | | :--- | :--- | :--- | | Net Sales | $12.5 billion | +6% | | Consolidated Comparable Store Sales | +3% | N/A | | Pretax Profit Margin | 11.1% | +0.8 p.p. | | Diluted Earnings Per Share (EPS) | $0.93 | +22% | - The 3% growth in comparable store sales was entirely driven by an increase in customer transactions, indicating strong customer traffic and engagement[1][2] - The company returned $886 million to shareholders during the first quarter through a combination of share repurchases and dividends[1] CEO Commentary The CEO, Ernie Herrman, expressed satisfaction with the Q1 performance, highlighting that profitability and earnings per share were well above expectations, attributing success to the company's focus on delivering value and a treasure-hunt shopping experience, which drove customer transaction growth across all divisions, and noted a positive start to Q2, expressing confidence in gaining market share and increasing profitability for the remainder of the year - The CEO emphasized that comparable sales growth at every division was entirely driven by customer transactions, underscoring the strength of the company's value proposition[2] - The company is confident in its ability to gain market share across all geographies and sees numerous opportunities for the business for the rest of the year[2] - The second quarter is reported to be off to a good start, and the company plans to pursue opportunities to drive customer transactions, sales, and profitability[2] Q1 FY25 Performance Analysis This section analyzes TJX's Q1 FY25 performance across sales, profitability, inventory, and foreign currency impacts Sales Performance by Division All divisions reported positive comparable store sales growth, led by HomeGoods (U.S.) and TJX Canada at +4% each, while Marmaxx (U.S.) and TJX International grew by 2%, with total net sales increasing by 6% to $12.5 billion, and TJX International showing the highest reported sales growth at 9% Q1 FY25 Comparable Store Sales Growth by Division | Division | Q1 FY25 Comp Sales Growth | Q1 FY24 Comp Sales Growth | | :--- | :--- | :--- | | Marmaxx (U.S.) | +2% | +5% | | HomeGoods (U.S.) | +4% | -7% | | TJX Canada | +4% | +1% | | TJX International | +2% | +4% | | TJX Total | +3% | +3% | Q1 FY25 Net Sales by Division ($ in millions) | Division | Q1 FY25 Net Sales | Q1 FY24 Net Sales | Reported Sales Growth | | :--- | :--- | :--- | :--- | | Marmaxx (U.S.) | $7,750 | $7,366 | +5% | | HomeGoods (U.S.) | $2,079 | $1,966 | +6% | | TJX Canada | $1,113 | $1,038 | +7% | | TJX International | $1,537 | $1,413 | +9% | | TJX Total | $12,479 | $11,783 | +6% | Profitability and Margins The Q1 pretax profit margin increased by 0.8 percentage points to 11.1%, exceeding plans due to lower freight costs, a reserve release, and higher net interest income, while gross profit margin improved by 1.1 percentage points to 30.0% driven by lower freight and favorable markon, and SG&A costs as a percent of sales saw a slight increase of 0.2 percentage points due to wage and payroll costs - Pretax profit margin was 11.1%, an increase of 0.8 percentage points from 10.3% in Q1 FY24, which was well above the company's plan[7] - Gross profit margin increased by 1.1 percentage points to 30.0%, driven by a benefit from lower freight costs and favorable markon[7] - SG&A as a percentage of sales increased by 0.2 percentage points to 19.2% compared to Q1 FY24, primarily due to incremental store wage and payroll costs[7] Inventory Management Total inventory decreased to $6.2 billion from $6.4 billion a year ago, with consolidated inventory per-store down 5% on both a reported and constant currency basis, positioning the company well to flow fresh merchandise - Total inventories as of May 4, 2024, were $6.2 billion, compared to $6.4 billion at the end of Q1 FY24[11] - Consolidated per-store inventory was down 5% on both a reported and constant currency basis, positioning the company to take advantage of merchandise availability in the marketplace[11] Impact of Foreign Currency Exchange Rates Foreign currency exchange rates had a neutral impact on net sales growth for Q1 FY25 but a positive $0.01 impact on diluted earnings per share - The movement in foreign currency exchange rates had a neutral impact on the Company's net sales growth in Q1 FY25 versus the prior year[10] - The overall net impact of foreign currency exchange rates had a positive $0.01 impact on Q1 FY25 diluted earnings per share[10] Shareholder Returns and Capital Allocation This section details TJX's cash flow generation and its strategy for returning capital to shareholders through repurchases and dividends Cash Flow and Shareholder Distributions In Q1 FY25, TJX generated $737 million in operating cash flow and ended the quarter with $5.1 billion in cash, returning a total of $886 million to shareholders through $509 million in share repurchases (retiring 5.3 million shares) and $377 million in dividends, with plans to repurchase $2.0 to $2.5 billion of its stock for the full fiscal year Q1 FY25 Cash Flow and Shareholder Returns | Metric | Amount | | :--- | :--- | | Operating Cash Flow | $737 million | | Ending Cash Balance | $5.1 billion | | Share Repurchases | $509 million | | Shareholder Dividends | $377 million | | Total Returned to Shareholders | $886 million | - The company continues to expect to repurchase approximately $2.0 billion to $2.5 billion of TJX stock during the full fiscal year 2025[12] FY25 Outlook This section provides TJX's financial guidance for the second quarter and the full fiscal year 2025 Second Quarter and Full Year Guidance For Q2 FY25, TJX anticipates 2-3% comparable store sales growth and diluted EPS of $0.88-$0.90, while for the full fiscal year, the company raised its guidance, now expecting a pretax profit margin of 11.0%-11.1% and diluted EPS between $4.03 and $4.09, maintaining its 2-3% comp sales growth forecast Q2 FY25 Outlook | Metric | Guidance Range | | :--- | :--- | | Consolidated Comp. Store Sales | +2% to +3% | | Pretax Profit Margin | 10.4% to 10.5% | | Diluted EPS | $0.88 to $0.90 | Full Year FY25 Outlook (Updated) | Metric | Guidance Range | | :--- | :--- | | Consolidated Comp. Store Sales | +2% to +3% (unchanged) | | Pretax Profit Margin | 11.0% to 11.1% (increased) | | Diluted EPS | $4.03 to $4.09 (increased) | Store Footprint This section outlines the changes in TJX's physical store presence and total retail square footage Store Count and Square Footage During the first quarter, TJX increased its total store count by a net of 18 stores, bringing the total to 4,972, which resulted in a 0.3% increase in total square footage to 130.5 million square feet - The company increased its store count by a net of 18 stores in Q1 FY25, reaching a total of 4,972 stores[14] - Total square footage increased by 0.3% versus the prior quarter to 130.5 million square feet[14] Financial Statements This section presents the consolidated financial statements, including the income statement, balance sheets, cash flows, and segment information Consolidated Financial Summary (Income Statement) For the thirteen weeks ended May 4, 2024, net sales were $12.48 billion, up from $11.78 billion in the prior year, with net income rising to $1.07 billion from $891 million, and diluted EPS increasing significantly to $0.93 from $0.76 Financial Summary (in Millions, except per share) | Account | Thirteen Weeks Ended May 4, 2024 | Thirteen Weeks Ended April 29, 2023 | | :--- | :--- | :--- | | Net sales | $12,479 | $11,783 | | Income before income taxes | $1,390 | $1,208 | | Net income | $1,070 | $891 | | Diluted earnings per share | $0.93 | $0.76 | Consolidated Balance Sheets As of May 4, 2024, total assets were $29.68 billion, compared to $28.68 billion a year prior, with key changes including a decrease in merchandise inventories to $6.22 billion and an increase in shareholders' equity to $7.50 billion from $6.42 billion Balance Sheet Highlights (in Millions) | Account | May 4, 2024 | April 29, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $5,059 | $5,025 | | Merchandise inventories | $6,218 | $6,441 | | Total assets | $29,679 | $28,681 | | Total current liabilities | $10,100 | $10,534 | | Long-term debt | $2,863 | $2,860 | | Shareholders' equity | $7,502 | $6,422 | | Total liabilities and shareholders' equity | $29,679 | $28,681 | Consolidated Statements of Cash Flows For the quarter, net cash provided by operating activities was $737 million, slightly down from $745 million in the prior year, with the company using $427 million in investing activities, primarily for property additions, and $840 million in financing activities, driven by share repurchases ($509 million) and dividend payments ($380 million), resulting in a net decrease in cash of $541 million Cash Flow Summary (in Millions) | Activity | Thirteen Weeks Ended May 4, 2024 | Thirteen Weeks Ended April 29, 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $737 | $745 | | Net cash (used in) investing activities | ($427) | ($362) | | Net cash (used in) financing activities | ($840) | ($837) | | Net (decrease) in cash and cash equivalents | ($541) | ($452) | Segment Information The Marmaxx segment remained the largest contributor to both net sales ($7.75 billion) and segment profit ($1.10 billion), with all segments showing year-over-year growth in both net sales and profit, and HomeGoods and TJX International demonstrating the strongest percentage profit growth Net Sales and Segment Profit (in Millions) | Segment | Net Sales (Q1 FY25) | Segment Profit (Q1 FY25) | Net Sales (Q1 FY24) | Segment Profit (Q1 FY24) | | :--- | :--- | :--- | :--- | :--- | | Marmaxx | $7,750 | $1,097 | $7,366 | $1,028 | | HomeGoods | $2,079 | $198 | $1,966 | $144 | | TJX Canada | $1,113 | $137 | $1,038 | $117 | | TJX International | $1,537 | $61 | $1,413 | $38 | | Total Segment Profit | $1,493 | | $1,327 | | Notes and Disclosures This section provides additional context and important disclosures regarding the financial report Notes to Consolidated Condensed Statements In Q1, the company returned $886 million to shareholders via $509 million in stock repurchases (5.3 million shares) and $377 million in dividends, and as of May 4, 2024, approximately $3.0 billion remained available for repurchase under all authorized programs, following the Board's approval of a new $2.5 billion stock repurchase program in February 2024 - Returned $886 million to shareholders in Q1, comprising $509 million in stock repurchases and $377 million in dividends[31] - As of May 4, 2024, the company had approximately $3.0 billion available for repurchase under its stock repurchase programs[31] Non-GAAP Financial Information The company utilizes non-GAAP financial measures, such as 'sales growth on a constant currency basis' and 'inventory on a constant currency basis,' to provide investors with a more useful comparison of its performance between periods by excluding items that can affect overall comparability - The company uses non-GAAP measures, including constant currency sales and inventory, for business planning and to provide investors with information to evaluate operating trends[17] Forward-looking Statement This report contains forward-looking statements concerning future performance, business plans, dividends, and financial outlook, which are subject to numerous risks and uncertainties such as buying strategy, customer trends, competition, and economic conditions, cautioning investors not to place undue reliance on these statements as actual results could differ materially - The press release includes forward-looking statements regarding financial performance, business plans, and shareholder returns, which are subject to risks and uncertainties[19] - The company cautions investors not to place considerable reliance on forward-looking statements and notes it has no obligation to update them unless required by law[20]