TJX profits rise, so will employee wages

It’s no wonder Macy’s is looking to allocate part of its $1 billion capital expenditure budget into opening off-price stores when you look at the financial results TJX Co. reported for the fourth quarter.

The company reported an 11% increase in profit for the quarter ended Jan. 31. Net sales for the fourth quarter were $8.3 billion, a 6% increase over last year. Same store sales increased 4% over last year’s 3% increase. Net income was $648 million and diluted earnings per share were $.93, a 15% increase over last year’s $.81 per share.

“We are particularly pleased our comps were almost entirely driven by customer traffic, as consumers responded to our exciting merchandise assortments, amazing values and effective marketing,” said Carol Meyrowitz, CEO of the TJX Companies Inc. “Merchandise margins were also very strong. We are also very pleased with our full year 2014 performance. Our adjusted earnings per share growth of 12% over last year’s 15% increase marks our sixth consecutive year of double-digit EPS increases.”

Macy’s unveiled plans this month to build off-price stores as ever-more price conscious shoppers flock to discounters.

TJX also announced plans to boost wages for U.S. store associates to at least $9 an hour, mirroring an announcement made by Walmart this month. Sometime during 2016, TJX said, all hourly U.S. store Associates who have been employed for six months or more will earn at least $10 per hour.

“At TJX, we attribute our success over the last 38 years primarily to the people we have hired who have remained focused on our mission of delivering consumers amazing values,” Meyrowitz said. “This pay initiative is an important part of our strategies to continue attracting and retaining the best talent in order to deliver a great shopping experience for our customers, remain competitive on wages in our U.S. markets, and stay focused on our value mission.”

“As always, we’re pursuing many initiatives to drive sales and customer traffic, and we have numerous growth vehicles that are working well. In 2015, we are taking a prudent approach to planning our earnings per share growth. We are continuing to plan comp sales increases conservatively while we simultaneously strive to surpass our goals. Further, we will continue to reinvest in our growth initiatives for today and the future, and we are making additional investments in our store Associates to maintain our focus on offering our customers an excellent shopping experience. Like other major international retailers, our 2015 plans also reflect an expected negative impact from foreign currency exchange rates. Our underlying business remains very strong and we are reiterating our 10% to 13% long-term annual EPS growth model. We see tremendous U.S. and international potential for our Company. We are excited to be entering our seventh country, Austria, this spring, and to announce our plans to expand into our eighth country, The Netherlands, later this year. We are growing TJX as a global, value retailer and are well on our way to becoming a $40 billion company and beyond!”

For the 52-week fiscal year ended January 31, 2015, net sales were $29.1 billion, a 6% increase over last year. Consolidated comparable store sales increased 2% over last year’s 3% increase. Net income for the fiscal year was $2.2 billion, and diluted earnings per share were $3.15. Excluding a second quarter debt extinguishment charge of $.01 per share, adjusted diluted earnings per share were $3.16, a 12% increase over last year’s adjusted $2.83, which excluded an $.11 tax benefit from reported diluted earnings per share of $2.94.

Meyrowitz added: “Our business continues to generate enormous amounts of cash and deliver strong financial returns. In Fiscal 2016, we plan to continue investing to support our growth while distributing cash to our shareholders. Our capital spending plans include investing in new stores, store remodels, and our supply chain and infrastructure. Simultaneously, we plan to significantly increase both our regular quarterly dividend and our large share buyback program, with $1.8 to $1.9 billion of repurchases planned for Fiscal 2016. All of these actions underscore our confidence in our ability to continue delivering substantial increases in sales, earnings, and cash flow, and generate superior financial returns.”

TJX Companies Inc. operates 3,395 stores in six countries, the United States, Canada, the United Kingdom, Ireland, Germany, and Poland, and three e-commerce sites.