TJX Earnings 2020-05-02

Balance Sheet	Income Statement	Cash Flow
Assets, Equity	Rev, G Profit, Net Income	Ops, Inv, Fin

tjx-20200502

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(mark one)


☒			Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended May 2, 2020


☐			Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to

Commission file number 1-4908

The TJX Companies, Inc.

(Exact name of registrant as specified in its charter)


Delaware						04-2207613
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

770 Cochituate Road Framingham, Massachusetts						01701
(Address of principal executive offices)						(Zip Code)

(508) 390-1000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $1.00 per share	TJX	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ☐ NO ☒

The number of shares of registrant’s common stock outstanding as of May 2, 2020: 1,197,877,094

The TJX Companies, Inc.

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

THE TJX COMPANIES, INC.

CONSOLIDATED STATEMENTS OF (LOSS) INCOME

(UNAUDITED)

IN THOUSANDS EXCEPT PER SHARE AMOUNTS


	Thirteen Weeks Ended
	May 2, 2020		May 4, 2019
Net sales	$	4,408,888	$	9,277,585
Cost of sales, including buying and occupancy costs	4,414,465		6,637,885
Selling, general and administrative expenses	1,313,920		1,702,401


Interest expense, net	23,351		817
(Loss) income before income taxes	(1,342,848)		936,482
Benefit (provision) for income taxes	455,359		(236,304)
Net (loss) income	$	(887,489)	$	700,178
Basic (loss) earnings per share	$	(0.74)	$	0.58
Weighted average common shares – basic	1,197,809		1,214,531
Diluted (loss) earnings per share	$	(0.74)	$	0.57
Weighted average common shares – diluted	1,197,809		1,233,407

The accompanying notes are an integral part of the unaudited consolidated financial statements.

THE TJX COMPANIES, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(UNAUDITED)

IN THOUSANDS


	Thirteen Weeks Ended
	May 2, 2020		May 4, 2019
Net (loss) income	$	(887,489)	$	700,178
Additions to other comprehensive (loss) income:
Foreign currency translation adjustments, net of related tax benefit of $6,948 in fiscal 2021 and tax provision of $2,633 in fiscal 2020	(129,158)		(7,161)
Reclassifications from other comprehensive loss to net (loss) income:
Amortization of prior service cost and deferred gains/losses, net of related tax provisions of $1,746 in fiscal 2021 and $1,453 in fiscal 2020	4,797		3,992
Amortization of loss on cash flow hedge, net of related tax provisions of $76 in fiscal 2021 and $76 in fiscal 2020	208		208
Other comprehensive (loss) income, net of tax	(124,153)		(2,961)
Total comprehensive (loss) income	$	(1,011,642)	$	697,217

The accompanying notes are an integral part of the unaudited consolidated financial statements.

THE TJX COMPANIES, INC.

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

IN THOUSANDS, EXCEPT SHARE DATA


	May 2, 2020		February 1, 2020		May 4, 2019
ASSETS
Current assets:
Cash and cash equivalents	$	4,287,835	$	3,216,752	$	2,235,056

Accounts receivable, net	172,463		386,261		393,276
Merchandise inventories	4,945,720		4,872,592		5,057,202
Prepaid expenses and other current assets	408,587		368,048		343,170
Federal, state and foreign income taxes recoverable	481,643		46,969		38,508
Total current assets	10,296,248		8,890,622		8,067,212
Net property at cost	5,201,697		5,325,048		5,018,598
Non-current deferred income taxes, net	36,742		12,132		5,801
Operating lease right of use assets	9,073,898		9,060,332		8,810,367
Goodwill	94,469		95,546		96,685
Other assets	712,186		761,323		490,401
TOTAL ASSETS	$	25,415,240	$	24,145,003	$	22,489,064
LIABILITIES
Current liabilities:
Accounts payable	$	1,071,190	$	2,672,557	$	2,578,370
Accrued expenses and other current liabilities	2,187,885		3,041,774		2,468,588
Current portion of operating lease liabilities	1,399,290		1,411,216		1,343,243
Federal, state and foreign income taxes payable	11,182		24,700		190,818
Total current liabilities	4,669,547		7,150,247		6,581,019
Other long-term liabilities	786,008		851,116		752,968
Non-current deferred income taxes, net	113,229		142,170		167,283
Long-term operating lease liabilities	7,914,825		7,816,633		7,621,531
Long-term debt	7,192,413		2,236,625		2,234,368
Commitments and contingencies (See Note L)
SHAREHOLDERS’ EQUITY
Preferred stock, authorized 5,000,000 shares, par value $1, no shares issued	—		—		—
Common stock, authorized 1,800,000,000 shares, par value $1, issued and outstanding 1,197,877,094; 1,199,099,768 and 1,212,667,546 respectively	1,197,877		1,199,100		1,212,668
Additional paid-in capital	8,104		—		—
Accumulated other comprehensive (loss) income	(797,324)		(673,171)		(633,282)
Retained earnings	4,330,561		5,422,283		4,552,509
Total shareholders’ equity	4,739,218		5,948,212		5,131,895
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	25,415,240	$	24,145,003	$	22,489,064

The accompanying notes are an integral part of the unaudited consolidated financial statements.

THE TJX COMPANIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

IN THOUSANDS


	Thirteen Weeks Ended
	May 2, 2020		May 4, 2019
Cash flows from operating activities:
Net (loss) income	$	(887,489)	$	700,178
Adjustments to reconcile net (loss) income to cash (used in) provided by operating activities:
Depreciation and amortization	219,460		212,201
Loss on property disposals and impairment charges	26,424		2,304

Deferred income tax (benefit) provision	(48,464)		8,098
Share-based compensation	(11,531)		25,732
Changes in assets and liabilities:
Decrease (increase) in accounts receivable	210,419		(47,658)
(Increase) in merchandise inventories	(136,027)		(487,085)
(Increase) in income taxes recoverable	(434,674)		(25,716)
(Increase) decrease in prepaid expenses and other current assets	(39,580)		11,725
(Decrease) in accounts payable	(1,567,597)		(60,472)
(Decrease) in accrued expenses and other liabilities	(578,178)		(240,156)
(Decrease) increase in income taxes payable	(13,290)		38,217
Increase in net operating lease liabilities	65,578		17,640
Other, net	34,466		(5,769)
Net cash (used in) provided by operating activities	(3,160,483)		149,239
Cash flows from investing activities:
Property additions	(210,525)		(316,909)

Purchase of investments	(14,792)		(14,642)
Sales and maturities of investments	4,214		4,842

Net cash (used in) investing activities	(221,103)		(326,709)
Cash flows from financing activities:
Proceeds from long-term debt	4,988,452		—
Cash payments for debt issuance expenses	(33,872)		—
Cash payments for repurchase of common stock	(201,500)		(397,294)
Cash dividends paid	(278,250)		(238,758)
Proceeds from issuance of common stock	37,444		59,772
Cash payments of employee tax withholdings for performance based stock awards	(21,765)		(23,305)

Net cash provided by (used in) financing activities	4,490,509		(599,585)
Effect of exchange rate changes on cash	(37,840)		(18,118)
Net increase (decrease) in cash and cash equivalents	1,071,083		(795,173)
Cash and cash equivalents at beginning of year	3,216,752		3,030,229
Cash and cash equivalents at end of period	$	4,287,835	$	2,235,056

The accompanying notes are an integral part of the unaudited consolidated financial statements.

THE TJX COMPANIES, INC.

CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY

(UNAUDITED)

IN THOUSANDS



	Common Stock
	Shares	Par Value $1		Additional Paid-In Capital		Accumulated Other Comprehensive (Loss) Income		Retained Earnings		Total
Balance, February 1, 2020	1,199,100	$	1,199,100	$	—	$	(673,171)	$	5,422,283	$	5,948,212
Net (loss) income	—	—		—		—		(887,489)		(887,489)

Other comprehensive income, net of tax	—	—		—		(124,153)		—		(124,153)

Recognition (reversal) of share-based compensation	—	—		20,304		—		(31,835)		(11,531)

Issuance of common stock under Stock Incentive Plan, net of shares used to pay tax withholdings	2,164	2,164		13,515		—		—		15,679
Common stock repurchased and retired	(3,387)	(3,387)		(25,715)		—		(172,398)		(201,500)
Balance, May 2, 2020	1,197,877	$	1,197,877	$	8,104	$	(797,324)	$	4,330,561	$	4,739,218



	Common Stock
	Shares	Par Value $1		Additional Paid-In Capital		Accumulated Other Comprehensive (Loss) Income		Retained Earnings		Total
Balance, February 2, 2019	1,217,183	$	1,217,183	$	—	$	(630,321)	$	4,461,744	$	5,048,606
Net income	—	—		—		—		700,178		700,178
Cumulative effect of accounting change	—	—		—		—		403		403
Other comprehensive (loss), net of tax	—	—		—		(2,961)		—		(2,961)
Cash dividends declared on common stock	—	—		—		—		(279,236)		(279,236)
Recognition of share-based compensation	—	—		25,732		—		—		25,732
Issuance of common stock under Stock Incentive Plan, net of shares used to pay tax withholdings	3,142	3,142		33,325		—		—		36,467
Common stock repurchased and retired	(7,657)	(7,657)		(59,057)		—		(330,580)		(397,294)
Balance, May 4, 2019	1,212,668	$	1,212,668	$	—	$	(633,282)	$	4,552,509	$	5,131,895

The accompanying notes are an integral part of the unaudited consolidated financial statements.

THE TJX COMPANIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note A. Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation

The Consolidated Financial Statements and Notes thereto have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information. These Consolidated Financial Statements and Notes thereto are unaudited and, in the opinion of management, reflect all normal recurring adjustments, accruals and deferrals among periods required to match costs properly with the related revenue or activity, considered necessary by The TJX Companies, Inc. (together with its subsidiaries, “TJX”) for a fair statement of its Consolidated Financial Statements for the periods reported, all in conformity with GAAP consistently applied. Investments for which the Company exercises significant influence but does not have control are accounted for under the equity method. The Consolidated Financial Statements and Notes thereto should be read in conjunction with the audited Consolidated Financial Statements, including the related notes, contained in TJX’s Annual Report on Form 10-K for the fiscal year ended February 1, 2020 (“fiscal 2020”).

These interim results are not necessarily indicative of results for the full fiscal year. TJX’s business, in common with the businesses of retailers generally, is subject to seasonal influences, with higher levels of sales and income generally realized in the second half of the year, as well as the uncertainty surrounding the financial impact of the novel coronavirus (“COVID-19”) pandemic as discussed in Note B—Impact of the COVID-19 Pandemic.

The February 1, 2020 balance sheet data was derived from audited Consolidated Financial Statements and does not include all disclosures required by GAAP.

Fiscal Year

TJX’s fiscal year ends on the Saturday nearest to the last day of January of each year. The current fiscal year ends January 30, 2021 (“fiscal 2021”) and is a 52-week fiscal year. Fiscal 2020 was also a 52-week fiscal year.

Use of Estimates

The preparation of financial statements, in conformity with GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements as well as the reported amounts of revenues and expenses during the reporting period. TJX considers its accounting policies relating to leases, inventory valuation, impairment of long-lived assets, goodwill and tradenames, reserves for uncertain tax positions and loss contingencies to be the most significant accounting policies that involve management estimates and judgments. The Company considered COVID-19 related impacts to its estimates, as appropriate, within its unaudited condensed consolidated financial statements and there may be changes to those estimates in future periods. We believe that our accounting estimates are appropriate after giving consideration to the increased uncertainties surrounding the severity and duration of the COVID-19 pandemic and the associated containment and remediation efforts. Actual amounts could differ from these estimates, and such differences could be material.

Deferred Gift Card Revenue

The following table presents deferred gift card revenue activity:


In thousands	May 2, 2020		May 4, 2019
Balance, beginning of year	$	500,844	$	450,302
Deferred revenue	158,948		340,600
Effect of exchange rates changes on deferred revenue	(4,680)		(648)
Revenue recognized	(180,062)		(383,658)
Balance, end of period	$	475,050	$	406,596

Gift cards are combined in one homogeneous pool and are not separately identifiable. As such, the revenue recognized consists of gift cards that were part of the deferred revenue balance at the beginning of the period as well as gift cards that were issued during the period.

Equity Investment

On November 18, 2019, the Company, through a wholly owned subsidiary, completed an investment of $225 million, excluding acquisition costs, for a 25% ownership stake in privately held Familia, an established, off-price apparel and home fashions retailer with more than 275 stores throughout Russia. The Company's investment represents a non-controlling, minority position and is accounted for under the equity method of accounting.

Included in the initial carrying value of $225 million, which represents the fair value on the transaction date, was a basis difference of $212 million related to the difference between the cost of the investment and the Company's proportionate share of the net assets of Familia. Goodwill comprised $186 million of the difference, and the remainder was allocated to Familia tradename, customer relationships and basis adjustments to convert Familia from International Financial Reporting Standards to U.S. GAAP, primarily for lease accounting. The carrying value of the equity method investment is primarily adjusted for the Company's share in the earnings of Familia, as adjusted for basis differences, and the foreign currency exchange translation adjustment related to translating the investment from Russian Rubles to U.S. dollar. The Company amortizes the tradename and customer relationships over their useful lives of 10 and 7 years, respectively, using the straight-line method.

This investment is included in other assets on our Consolidated Balance Sheets. The Company reports its share of Familia’s results on a one-quarter lag, and earnings from the Company's investment in Familia for the three months ended May 2, 2020 were $0.4 million, which has been recorded in our Consolidated Statements of (Loss) Income as a reduction to Selling, general and administrative expenses. Revaluing the investment from Russian Rubles to the U.S. dollar as of May 2, 2020 resulted in a cumulative translation loss and reduced the carrying value of our investment by $32 million. The cumulative translation loss has been recorded in our Consolidated Balance Sheets as a component of Accumulated other comprehensive (loss) income. The carrying value of the equity investment on the Consolidated Balance Sheets at May 2, 2020, including acquisition costs of $6 million, was $199 million.

We assess this investment for impairment if a decline in fair value of our investment is deemed other than temporary. Familia operations have also been impacted by the COVID-19 pandemic and virtually all stores have been temporarily closed. We have not impaired our investment due to our belief that any decline in fair value of our investment is temporary as Familia anticipates reopening stores sometime in June if government guidelines so permit and that it has adequate liquidity to deal with the temporary store closures.

Leases

Supplemental cash flow information related to leases for the thirteen weeks ended May 2, 2020 and May 4, 2019 is as follows:


	Thirteen Weeks Ended
In thousands	May 2, 2020		May 4, 2019
Operating cash flows paid for operating leases	$	445,901	$	421,488
Lease liabilities arising from obtaining right of use assets	$	553,075	$	453,198

Recently Adopted Accounting Standards

Simplified Accounting for Income Taxes

In December 2019, the Financial Accounting Standards Board (“FASB”) issued guidance related to simplified accounting for income taxes. The new standard simplifies accounting for income taxes by removing certain exceptions to the general principals in Topic 740 related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period, and the recognition of deferred tax liabilities for outside basis differences. It also clarifies and simplifies other aspects of the accounting for income taxes. This standard is effective for fiscal years, and interim periods within those years, beginning after December 15, 2020, with early adoption permitted in any interim period within that year. The Company reviewed the provisions of this standard and determined that most of them do not apply to TJX. The most significant impact to the Company is the simplification of the tax benefit calculation recognized on pre-tax losses in interim periods. The Company elected to early adopt this standard as of February 2, 2020, which did not have an impact on the Company's financial statements or disclosures for first quarter 2021.

From time to time, the FASB or other standard setting bodies issue new accounting pronouncements. Updates to the FASB Accounting Standards Codification are communicated through issuance of an Accounting Standards Update (“ASU”). Unless otherwise discussed, we have reviewed the guidance and have determined that they will not apply or are not expected to be material to our Consolidated Financial Statements upon adoption and therefore, are not disclosed.

Note B. Impact of the COVID-19 Pandemic

In December 2019, COVID-19 emerged and spread worldwide. The World Health Organization declared COVID-19 a pandemic in March 2020, resulting in federal, state and local governments and private entities mandating various restrictions, including travel restrictions, restrictions on public gatherings, stay at home orders and advisories and quarantining of people who may have been exposed to the virus. After closely monitoring and taking into consideration the guidance from federal, state and local governments, in March 2020, the Company temporarily closed all of its stores, distribution centers and offices, and online businesses, with Associates working remotely where possible. These and other factors have had and may continue to have a material impact on our business, results of operations, financial position and cash flows. The Company amended its revolving credit facilities agreements and as a result, we expect to maintain compliance with our covenants for at least one year from the issuance of these financial statements based on our current expectations. As the ongoing public health impact and the associated containment and remediation efforts related to the COVID-19 pandemic is complex and rapidly evolving, the Company's plans as described below may change.

Financial Actions

Balance Sheet, Cash Flow and Liquidity

We have taken steps to further strengthen our financial position and balance sheet, and to maintain financial liquidity and flexibility, including suspending our share repurchase program, reviewing and reducing operating expenses, reducing the fiscal 2021 capital expenditure plan to a range of $0.4 billion to $0.6 billion, lowering fiscal 2021 store openings to approximately 50 stores, pausing a majority of our planned store remodels, and delaying a majority of distribution center, home office and IT capital spending. In addition, the Company drew down the entire $1.0 billion on our revolving credit facilities and issued $4.0 billion in aggregate principal long-term debt. For additional information on the new debt issuances, see Note J—Long-Term Debt and Credit Lines. The Company did not declare a dividend for the first quarter of 2021, and at this time does not expect to declare a dividend in the second quarter of fiscal 2021. The Company is committed to resuming dividend payments for the long term whenever the environment and its business stabilize.

During the first quarter of fiscal 2021, we negotiated rent deferrals (primarily for second quarter lease payments) for a significant number of our stores, with repayment at later dates, primarily in fiscal 2022. Consistent with updated guidance from the FASB in April 2020, we have elected to treat the COVID-19 pandemic-related rent deferrals as a resolution of a contingency by remeasuring the remaining consideration in the contract, with a corresponding adjustment to the right-of-use asset, using the remeasured consideration. The Company did not reassess the lease classification and did not update the discount rate used to measure the lease liability.

For the first quarter of fiscal 2021, as a result of the COVID-19 pandemic, and store closures, the Company evaluated the value of its inventory. Permanent markdowns, which have been or are expected to be taken upon reopening of the stores, on transitional or out of season merchandise and merchandise that was already in markdown status, combined with the write-off of perishable goods, resulted in a reduction of approximately $0.5 billion in inventory at May 2, 2020. While the Company recognized these markdowns in the first quarter of fiscal 2021, the non-perishable inventory is expected to be sold in the second quarter of fiscal 2021.

TJX evaluates its long-lived assets, operating lease right of use assets, goodwill and tradenames for indicators of impairment at least annually in the fourth quarter of each fiscal year or whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. Given the substantial reduction in our sales and the reduced cash flow projections as a result of the store closures due to the COVID-19 pandemic, we determined that a triggering event occurred and that an impairment assessment was warranted for certain stores. This analysis resulted in an immaterial amount of impairment charges related to long-lived assets and operating lease right of use assets in the first quarter of fiscal 2021.

As a result of the global COVID-19 pandemic, governments in the U.S., United Kingdom ("U.K."), Canada and various other jurisdictions have implemented programs to encourage companies to retain and pay employees that are unable to work or are limited in the work that they can perform in light of closures or a significant decline in sales. TJX continued to pay all employees through at least April 11, 2020 and continues to provide benefits for furloughed eligible impacted employees that are unable to work. As such, we qualify for certain of these provisions which will partially offset related expenses. During the quarter ended May 2, 2020, these programs reduced our expenses by approximately $0.2 billion on our Consolidated Statements of (Loss) Income and increased our Accounts receivable, net on our Consolidated Balance Sheets by approximately$0.1 billion. We expect that these programs will continue to provide additional liquidity through the second quarter of fiscal 2021.

Business Update

Beginning May 2, 2020, the Company started to reopen stores in select states and countries. When the Company reopened these stores it did so in accordance with local government guidelines. As of May 21, 2020, the Company has reopened more than 1,600 of its stores worldwide. In the United States, the Company has fully or partially reopened in 25 states. Internationally, TJX Canada has begun opening stores in some provinces, and the Company's stores in Germany, Poland, Austria, the Netherlands, and Australia are fully open. The Company has also reopened its U.K. and U.S. e-commerce businesses. The Company expects to continue reopening stores and other facilities around the world in a phased approach as more states and countries reopen for retail.

Note C. Property at Cost

The following table presents the components of property at cost:


In thousands	May 2, 2020		February 1, 2020		May 4, 2019
Land and buildings	$	1,443,342	$	1,426,222	$	1,219,604
Leasehold costs and improvements	3,510,394		3,541,413		3,379,543
Furniture, fixtures and equipment	6,379,717		6,404,643		6,016,591
Total property at cost	$	11,333,453	$	11,372,278	$	10,615,738
Less: accumulated depreciation and amortization	6,131,756		6,047,230		5,597,140
Net property at cost	$	5,201,697	$	5,325,048	$	5,018,598

Depreciation expense was $217.0 million for the three months ended May 2, 2020 and $209.7 million for the three months ended May 4, 2019.

Note D. Accumulated Other Comprehensive (Loss) Income

Amounts included in accumulated other comprehensive loss are recorded net of taxes. The following table details the changes in accumulated other comprehensive loss for the twelve months ended February 1, 2020 and the three months ended May 2, 2020:


In thousands	Foreign Currency Translation		Deferred Benefit Costs		Cash Flow Hedge on Debt		Accumulated Other Comprehensive (Loss) Income
Balance, February 2, 2019	$	(453,177)	$	(175,745)	$	(1,399)	$	(630,321)
Additions to other comprehensive loss:
Foreign currency translation adjustments (net of taxes of $1,189)	(3,943)		—		—		(3,943)

Recognition of net gains/losses on benefit obligations (net of taxes of $20,489)	—		(56,275)				(56,275)

Reclassifications from other comprehensive loss to net income:
Amortization of loss on cash flow hedge (net of taxes of $303)	—		—		831		831
Amortization of prior service cost and deferred gains/losses (net of taxes of $6,019)	—		16,537		—		16,537
Balance, February 1, 2020	$	(457,120)	$	(215,483)	$	(568)	$	(673,171)
Additions to other comprehensive loss:
Foreign currency translation adjustments (net of taxes of $6,948)	(129,158)		—		—		(129,158)
Reclassifications from other comprehensive loss to net (loss) income:
Amortization of loss on cash flow hedge (net of taxes of $76)	—		—		208		208
Amortization of prior service cost and deferred gains/losses (net of taxes of $1,746)	—		4,797		—		4,797
Balance, May 2, 2020	$	(586,278)	$	(210,686)	$	(360)	$	(797,324)

Note E. Capital Stock and (Loss) Earnings Per Share

Capital Stock

In March 2020, in connection with the actions taken related to the COVID-19 pandemic as described in Note B—Impact of the COVID-19 Pandemic, the Company suspended its share repurchase program.

Prior to the suspension of the program, TJX repurchased and retired 3.2 million shares of its common stock at a cost of $190.1 million during the quarter ended May 2, 2020, on a “trade date” basis. TJX reflects stock repurchases in its financial statements on a “settlement date” or cash basis. TJX had cash expenditures under repurchase programs of $201.5 million for the three months ended May 2, 2020, and $397.3 million for the three months ended May 4, 2019. These expenditures were funded by cash generated from operations.

In February 2020, the Company announced that its Board of Directors had approved, in January 2020, a new stock repurchase program that authorizes the repurchase of up to an additional $1.5 billion of TJX common stock from time to time. In February 2019, TJX announced that its Board of Directors had approved an additional stock repurchase program that authorized the repurchase of up to $1.5 billion of TJX common stock from time to time.

As of May 2, 2020, TJX had approximately $3.0 billion available under these previously announced stock repurchase programs.

All shares repurchased under the stock repurchase programs have been retired.

(Loss) Earnings Per Share

The following table presents the calculation of basic and diluted (loss) earnings per share for net (loss) income:


	Thirteen Weeks Ended
Amounts in thousands, expect per share amounts	May 2, 2020		May 4, 2019
Basic (loss) earnings per share:
Net (loss) income	$	(887,489)	$	700,178
Weighted average common shares outstanding for basic (loss) earnings per share calculation	1,197,809		1,214,531
Basic (loss) earnings per share	$	(0.74)	$	0.58
Diluted (loss) earnings per share:
Net (loss) income	$	(887,489)	$	700,178

Weighted average common shares outstanding for basic (loss) earnings per share calculations	1,197,809		1,214,531
Assumed exercise / vesting of:
Stock options and awards	—		18,876
Weighted average common shares outstanding for diluted (loss) earnings per share calculation	1,197,809		1,233,407
Diluted (loss) earnings per share	$	(0.74)	$	0.57
Cash dividends declared per share	$	—	$	0.230

For the period ended May 2, 2020, as a result of the net loss for the quarter, all options have been excluded from the calculation of diluted earnings per share and therefore there was no difference in the weighted average number of common shares for basic and diluted loss per share as the effect of all potentially dilutive shares outstanding was anti-dilutive. When there is net income the weighted average common shares for the diluted earnings per share calculation excludes the impact of outstanding stock options if the assumed proceeds per share of the option is in excess of the average price of TJX’s common stock for the related fiscal period. Such options are excluded because they would have an antidilutive effect. There were 6.0 million such options excluded for thirteen weeks ended May 4, 2019.

Note F. Financial Instruments

As a result of its operating and financing activities, TJX is exposed to market risks from changes in interest and foreign currency exchange rates and fuel costs. These market risks may adversely affect TJX’s operating results and financial position. TJX seeks to minimize risk from changes in interest and foreign currency exchange rates and fuel costs through the use of derivative financial instruments when and to the extent deemed appropriate. TJX does not use derivative financial instruments for trading or other speculative purposes and does not use any leveraged derivative financial instruments. TJX recognizes all derivative instruments as either assets or liabilities in the Consolidated Balance Sheets and measures those instruments at fair value. The fair values of the derivatives are classified as assets or liabilities, current or non-current, based upon valuation results and settlement dates of the individual contracts. Changes to the fair value of derivative contracts that do not qualify for hedge accounting are reported in earnings in the period of the change. For derivatives that qualify for hedge accounting, changes in the fair value of the derivatives are either recorded in shareholders’ equity as a component of other comprehensive (loss) income or are recognized currently in earnings, along with an offsetting adjustment against the basis of the item being hedged.

Diesel Fuel Contracts

TJX hedges portions of its estimated notional diesel requirements based on the diesel fuel expected to be consumed by independent freight carriers transporting TJX’s inventory. Independent freight carriers transporting TJX’s inventory charge TJX a mileage surcharge based on the price of diesel fuel. The hedge agreements are designed to mitigate the volatility of diesel fuel pricing (and the resulting per mile surcharges payable by TJX) by setting a fixed price per gallon for the period being hedged. During fiscal 2020, TJX entered into agreements to hedge a portion of its estimated notional diesel requirements for fiscal 2021, and during the first three months of fiscal 2021, TJX entered into agreements to hedge a portion of its estimated notional diesel requirements for the first three months of fiscal 2022. The hedge agreements outstanding at May 2, 2020 relate to approximately 87% of TJX’s estimated notional diesel requirements for the remainder of fiscal 2021 and approximately 50% of TJX’s estimated notional diesel requirements for the first three months of fiscal 2022. These diesel fuel hedge agreements will settle throughout the remainder of fiscal 2021 and throughout the first four months of fiscal 2022. TJX elected not to apply hedge accounting to these contracts.

Foreign Currency Contracts

TJX enters into forward foreign currency exchange contracts to obtain economic hedges on portions of merchandise purchases made and anticipated to be made by the Company’s operations in currencies other than their respective functional currencies. As a result of the pandemic, there was a significant change in the Company's anticipated merchandise purchases and we early settled derivative contracts designed to hedge merchandise purchases that would no longer take place. The settlement of these contracts resulted in a net gain of $24.8 million in the first quarter of fiscal 2021. The contracts outstanding at May 2, 2020 cover the merchandise purchases the Company is committed to over the next several months. Additionally, TJX’s operations in Europe are subject to foreign currency exposure as a result of their buying function being centralized in the U.K. All merchandise is purchased centrally in the U.K. and then shipped and billed to the retail entities in other countries. This intercompany billing to TJX’s European businesses’ Euro denominated operations creates exposure to the central buying entity for changes in the exchange rate between the Euro and British Pound. The inflow of Euros to the central buying entity provides a natural hedge for merchandise purchased from third-party vendors that is denominated in Euros. TJX calculates any excess Euro exposure each month and enters into forward contracts of approximately 30 days' duration to mitigate this exposure.

TJX also enters into derivative contracts, generally designated as fair value hedges, to hedge intercompany debt and intercompany interest payable. The changes in fair value of these contracts are recorded in selling, general and administrative expenses and are offset by marking the underlying item to fair value in the same period. Upon settlement, the realized gains and losses on these contracts are offset by the realized gains and losses of the underlying item in selling, general and administrative expenses.

The following is a summary of TJX’s derivative financial instruments, related fair value and balance sheet classification at May 2, 2020:


In thousands			Pay	Receive			Blended Contract Rate		Balance Sheet Location		Current Asset U.S.$		Current (Liability) U.S.$	Net Fair Value in U.S.$ at May 2,2020
Fair value hedges:
Intercompany balances, primarily debt and related interest:
	zł	65,000	£	12,780	0.1966	Prepaid Exp	$	351	$	—	$	351
	€	60,000	£	53,412	0.8902	Prepaid Exp	437		—		437
	A$	110,000	U.S.$	70,802	0.6437	Prepaid Exp / (Accrued Exp)	1,788

Price	54.83	EPS	3
Shares	1,229	P/E	22
MCap	67,381	P/FCF	36
Net Debt	240	EBIT	3,921
TEV	67,621	TEV/EBIT	17
TTM 2019-11-02, in MM, except price, ratios

10-Q	2020-05-02	Filed 2020-05-21
10-K	2020-02-01	Filed 2020-03-27
10-Q	2019-11-02	Filed 2019-12-03
10-Q	2019-08-03	Filed 2019-08-30
10-Q	2019-05-04	Filed 2019-05-31
10-K	2019-02-02	Filed 2019-04-03
10-Q	2018-11-03	Filed 2018-12-04
10-Q	2018-08-04	Filed 2018-08-31
10-Q	2018-05-05	Filed 2018-06-01
10-K	2018-02-03	Filed 2018-04-04
10-Q	2017-10-28	Filed 2017-11-28
10-Q	2017-07-29	Filed 2017-08-25
10-Q	2017-04-29	Filed 2017-05-26
10-K	2017-01-28	Filed 2017-03-28
10-Q	2016-10-29	Filed 2016-11-30
10-Q	2016-07-30	Filed 2016-08-26
10-Q	2016-04-30	Filed 2016-05-27
10-K	2016-01-30	Filed 2016-03-29
10-Q	2015-10-31	Filed 2015-12-01
10-Q	2015-08-01	Filed 2015-08-28
10-Q	2015-05-02	Filed 2015-05-29
10-K	2015-01-31	Filed 2015-03-31
10-Q	2014-11-01	Filed 2014-12-02
10-Q	2014-08-02	Filed 2014-08-29
10-Q	2014-05-03	Filed 2014-05-30
10-K	2014-02-01	Filed 2014-04-01
10-Q	2013-08-03	Filed 2013-08-30
10-Q	2013-05-04	Filed 2013-05-31
10-K	2013-02-02	Filed 2013-04-02
10-Q	2012-10-27	Filed 2012-11-29
10-Q	2012-07-28	Filed 2012-08-24
10-Q	2012-04-28	Filed 2012-05-25
10-K	2012-01-28	Filed 2012-03-27
10-Q	2011-10-29	Filed 2011-12-01
10-Q	2011-07-30	Filed 2011-08-26
10-Q	2011-04-30	Filed 2011-05-27
10-K	2011-01-29	Filed 2011-03-30
10-Q	2010-10-30	Filed 2010-11-24
10-Q	2010-07-31	Filed 2010-08-27
10-Q	2010-05-01	Filed 2010-05-28
10-K	2010-01-30	Filed 2010-03-30

8-K	2020-06-09
8-K	2020-05-15
8-K	2020-04-01
8-K	2020-04-01
8-K	2020-03-30
8-K	2020-03-19
8-K	2020-02-26
8-K	2019-11-20
8-K	2019-11-19
8-K	2019-08-20
8-K	2019-06-04
8-K	2019-05-21
8-K	2019-03-14
8-K	2019-02-27
8-K	2019-02-01
8-K	2018-11-21
8-K	2018-11-20
8-K	2018-10-22
8-K	2018-09-27
8-K	2018-09-17
8-K	2018-08-21
8-K	2018-06-05
8-K	2018-05-22
8-K	2018-03-02
8-K	2018-02-28
8-K	2018-02-02
8-K	2018-01-16

EX-31.1	tjx-20200502xex311.htm
EX-31.2	tjx-20200502xex312.htm
EX-32.1	tjx-20200502xex321.htm
EX-32.2	tjx-20200502xex322.htm


PART I
ITEM 1. Financial Statements			3
Consolidated Statements of (Loss) Income			3
Consolidated Statements of Comprehensive (Loss) Income			4
Consolidated Balance Sheets			5
Consolidated Statements of Cash Flows			6
Consolidated Statement of Shareholders' Equity			7
Notes To Consolidated Financial Statements			8
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			23
ITEM 3. Quantitative and Qualitative Disclosures about Market Risk			35
ITEM 4. Controls and Procedures			35

PART II
ITEM 1. Legal Proceedings			36
ITEM 1A. Risk Factors			36
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds			37
ITEM 6. Exhibits			38

SIGNATURES			39

TJX 10Q Quarterly Report

TJX Earnings 2020-05-02