TJX Q4 profit surges 11%; announces employee wage hike

Framingham, Mass. -- The TJX Cos. on Wednesday reported an 11% rise in fourth quarter profit and said it would raise employee pay above the minimum wage. It also announced plans to expand into two more global markets.



On a more downbeat note, the off-price giant said it expected a strong dollar to reduce its profit by 5% and the new wage hikes to lower earnings by 4% the year ending Jan. 30, 2016.



But the big story coming out of the company’s earnings release was the wage hike. TJX said all its U.S. hourly workers will begin earning at least $9 an hour starting this summer. Sometime during 2016, all hourly U.S. store associates who have been employed for at least six months will earn at least $10 an hour, the company said.



TJX’s move to increase wages comes a week after Walmart announced its own wage hike. It puts increased pressure on other U.S. retailers to do the same.



“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,” said CEO Carol Meyrowitz.



For the quarter ended Jan. 31, TJX posted net income of 648.2 million, up from $582.2 million a year earlier.



Net sales totaled $8.3 billion, a 6% increase over last year. Same store sales increased 4% over last year’s 3% increase. HomeGoods led growth with an 11% increase, while TJX Canada posted a 7% rise. T.J. Maxx and Marshalls both posted a 3% gain. “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 Meyrowitz. “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.



Looking ahead, TJX said it would continue to pursue initiatives to drive sales and customer traffic.



“In 2015, we are taking a prudent approach to planning our earnings per share growth, Meyrowitz said. “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. “



The company said it sees “tremendous” U.S. and international potential and will enter its seventh country, Austria, this spring. It will announce plans to expand into its 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,” Meyrowitz said.



The company also announced it would increase its dividend by 20% to 21 cents per share and repurchase $1.8 to $1.9 billion of its shares this year, a $100 million to $200 million increase over last year.



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.



TJX Companies Inc. operates 3,395 stores in six countries, and three e-commerce sites.