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TJX Q4 profit up 29%; sales beat Street

TJX Cos. continued its winning ways in the fourth quarter with its 22nd quarterly comp increase and surging sales that beat estimates. The off-price giant announced a dividend increase and a new share buyback program.

Net income for the quarter totaled $877.3 million, or $1.37 per share, up from $677.9 million, or $1.03, in the year-ago period. Adjusted EPS was $1.19, which excludes a 17-cent benefit from the tax overhaul. Its results missed analysts’ forecasts.

Revenue rose to $10.96 billion, from $9.47 billion last year. Analysts had forecast sales of $10.76 billion. Same-store sales rose 4%, exceeding estimates for 2.1% growth.

“In our view, TJX's update provides sufficient proof that the off-price market has not yet run out of steam,” commented Neil Saunders, managing director, GlobalData Retail. “Admittedly, TJX is in a better position than many of its rivals, and this quarter has been aided by a robust external trading environment -- both of which have helped the results. However, our consumer data show there is still heightened interest in off-price and that the pool of consumers shopping in the channel continues to increase.”

As a result of the estimated cash benefit related to the 2017 tax cut, the company said it will give non-bonus-plan associates a one-time bonus, make an incremental contribution to retirement plans for eligible associates, and institute paid parental leave and enhanced vacation benefits for eligible U.S. associates.

"Apart from the tax-related tax benefit, we plan to continue to reinvest in the business, including store growth, supply chain and infrastructure, technology, training our associates, and upgrades to the shipping experience for customers," said CEO Ernie Herrman, CEO, TJX Companies.

In addition, TJX will increase its regular quarterly dividend to $.39 per share, representing a 25% increase in the current per share dividend. It is the 22nd consecutive year that the company has raised the dividend. The company also plans to repurchase approximately $2.5 to $3.0 billion of TJX stock during the fiscal year ending February 2, 2019.

“Our business continues to generate tremendous amounts of cash and excellent financial returns," Herrman said. “In addition, with the recent changes in U.S. federal tax law, we expect a significant increase in cash flow. A substantial use of this cash is reflected in our plan to increase our regular quarterly dividend and share buyback program while simultaneously reinvesting in the business. This underscores our confidence in our ability to continue delivering strong, profitable sales and cash flow that enables us to both fund our continued growth and return value to our shareholders."

For the 53-week fiscal year ended February 3, 2018, TJX’s net sales were $35.9 billion, an 8% increase over last year’s 7% increase. Consolidated comparable store sales on a 52-week basis increased 2% over last year’s 5% increase.

Net income for the 53-week fiscal year was $2.6 billion and diluted earnings per share were $4.04 versus $3.46 in the prior year. Adjusted diluted earnings per share for the fiscal year were $3.85, a 9% increase over the prior year’s adjusted $3.53, which excluded a combined $.07 negative impact from a debt extinguishment charge and a pension settlement charge.

At the end of the fourth quarter, TJX operated a total of 4,070 stores spanning the United States, Canada, the United Kingdom, Ireland, Germany, Poland, Austria, the Netherlands, and Australia, and three e-commerce sites. These include 1,223 TJ Maxx, 1,062 Marshalls, 667 HomeGoods, 27 Sierra Trading Post, and four Homesense stores in the United States; 264 Winners, 117 HomeSense, and 73 Marshalls stores in Canada; 540 TK Maxx and 55 Homesense stores in Europe; and 38 TK Maxx stores in Australia.
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