TJX 1st Quarter 2022 Results Beat Expectations

TJX Companies

TJX
reported that pre-tax margins were 7.5%. Domestic comparable store sales were flat in the 1^st quarter. Marmaxx comparable store sales increased +3%. A pretax adjusted margin of 9.4% excludes a 1.9% charge related to the write-down of the company’s minority investment in Familia, a Russian off-price company. Overall, the company stated that the results were above plan.

Management went on to say that fully diluted earnings per share was $0.49 comparted to last year’s $0.44. Adjusted fully diluted earnings, which excludes the $0.19 charge related to the write-down of the minority investment in Familia, was $0.68.

Marmaxx delivered a comparable store sales increase of +3% compared to last year’s 12% achieved in open-only comparable stores. This was driven by strong customer traffic. On the other hand Home Goods, which had a +40% increase last year, dropped to -7% in the quarter. As a result, the overall U.S. increase was +1% compared to last year’s +17%. Canada increased +41.3% since most stores were open, and Europe and Australia increased +6.2%

Inventory was higher. It increased from $5.1 billion last year to $7.0 billion, a +37% increase. Management indicated that some of the merchandise will be packed away until the proper time when it will be put on sale. Management also indicated that branded merchandise availability remained excellent, and it is comfortable with current inventory levels.

During the quarter, the company opened several stores (TJX had recently indicated that they will open 150 stores in 2022). In the first quarter, 26 stores were opened across the world for the various store nameplates. They include 18 stores in the U.S. (1 T.J.Maxx, 7 Marshalls, 9 HomeGoods, and 1 Sierra), 1 unit in Canada (1 HomeSense), 5 locations in Europe (5 T.K.Maxx), and 2 stores in Australia (2 T.K.Maxx).

Management indicated that shipping costs continue to rise and expects higher rates through most of this year that will affect operating costs. Despite that fact, the company raised its earnings expectation by $0.04 and now expects earnings to range between $2.94 and $3.01 per fully diluted share.

As all of this takes place, it is Important to point out the company’s concern for the global environment. It has set the following four objectives, with target dates, that will shape its overall strategies:

1. Achieve net zero greenhouse gas (GHG) emissions in its operations by 2040.

2. Source 100% renewable energy in its operations by 2030.

3. Divert 85% of its operational waste from landfill by 2027.

4. Shift 100% of the packaging for product developed in-house by its product design team to be reusable, recyclable, or contain sustainable material by 2030.

POSTSCIPT: Demand for off-price merchandise is still at a very high level. Further, since customers often enjoy a “treasure hunt” for branded merchandise, TJX management will use that type of merchandising strategy to satisfy shoppers. The company is driving to be a $60 billion company within three years and is likely to reach that goal.