TJX Reports Strong U.S. Comp Store Sales Growth In 2022 Final Quarter

TJX Companies reported 4^th quarter net sales of $13.9 billion. This is an increase of 14% over 2021 fourth quarter. Fully diluted earnings were $0.78 in the quarter. For the full year net sales were $48.5 billion, an increase of 16%, compared to last year. Fully diluted earnings were $2.70, which includes the negative impact of a debt. Excluding this debt, fully diluted earnings would have been $2.85, which represents the extinguishment charge of $0.15.Earings in fiscal 2021 was $0.07 and fiscal 2020 was $2.67.

That tells half the story. Management indicated that the company was impacted by cost increases both in wages and transportation. Some of the increases will be permanent as management feels that wages will remain at a higher level. On the other hand, freight increases, which stem from higher shipping costs and overland transportation are likely to abate toward the end of the new fiscal year. Management indicated, at an analyst meeting, that they are carefully monitoring the freight costs and are prepared to sign lower cost contracts. It would certainly be helpful if the company could count on less cost pressures from freight.

TJX Companies found that a number of their global store fleet had to close due to the global pandemic caused by COVID-19. Management identified open-only comp store sales. International companies in Europe and Australia had many temporary closures. These stores reported comparable store sales only for the days they were open. No stores were closed in the U.S.in the fourth quarter, 12% were closed in Canada. 19% were closed in Europe, 19% in Australia. Total company closures were about 4%. For the full year total company closures was 24%.

Ernie Hermann, Chief Executive Officer and President of TJC Companies commented on the year’s performance by saying: “During the holiday season and throughout the year, our shoppers responded to our amazing brands, excellent values, and inspiring treasure hunt shopping experience. Our home business across all of our divisions delivered phenomenal open-only comp sales performance, and overall apparel open-only comp store sales increase high-single digits in fiscal 2022.”

It is interesting to note that inventory at the end of the fiscal year increased $6.0 billion compared to $4.9 billion at the end of the previous year. Management blamed it to the higher in-transit merchandise. Nonetheless, the company indicated that availability of quality branded merchandise remains excellent and the company is well positioned to flow fresh spring merchandise to the stores and on-line.

The company operated 4,689 stores at the end of the fiscal year. This included 1284 T.J.Maxx, 1148 Marshalls, 850 Winners, 59 Sierra and 39 Homesense stores as well as tjmaxx.com, marshalls.com, homegoods.com and sierra.com in the U.S.293 Winners, 147 HomeSense and 106 Marshalls stores in Canada. 616 T.K.Maxx and 77 Homesense stores as well as tkmaxx.com in Europe and 68 T.K.Maxx stores in Australia. Mr. Hermann looks to 6270 stores in the next few years, he is adding 400 units in the current year.

Management is projecting sales increase of about 3% for the first quarter of 2023. It hopes that most of the stores can open for the full year and allow customers to shop for values in the stores.

POSTSCRIPT: The treasure hunt in T.J.Maxx stores continues to attract value shoppers. Many of the stores have been remodeled and enlarged. We believe there is an abundance of banded merchandise available to T.J.Maxx buyers and that the company will beat expectations.