US' TJX Companies reports net sales of $12.2 billion for Q3 FY23

TJX’s diluted earnings per share in Q3 FY23 was $0.91, compared to $0.84 in Q3 FY22. US comp store sales decreased 2 per cent versus a 16 per cent increase in US open-only comp store sales in the third quarter of fiscal 2022, the company said in a press release.

For the first nine months of fiscal 2023, net sales were $35.4 billion, an increase of 2 per cent versus the first nine months of fiscal 2022. Year to date (YTD) fiscal 2023 US comp store sales decreased 2 per cent versus an 18-per cent increase in US open-only comp store sales for the first three quarters of fiscal 2022. Net income for the first nine months of fiscal 2023 was $2.5 billion, compared to $2.3 billion for the corresponding period of the previous year. YTD diluted earnings per share were $2.08 versus $1.92 in the first three quarters of financial year 2022, while the adjusted diluted earnings per share were $2.22, which exclude from diluted earnings per share a $.14 net of tax charge related to a write-down and the divestiture of the company’s minority investment in Familia.

From a division perspective, the company’s Q3 FY23 net sales for Marmaxx (US) were $7,455 million, 3 per cent up from $7,214 million in Q3 FY22. For TJX Canada, Q3 FY23 net sales were $1,285 million, 1 per cent down compared to $1,301 million in Q3 FY22. For TJX International, Q3 FY23 net sales were $1,479 million, 16 per cent down compared to $1,764 million in Q3 FY22.

For the third quarter of fiscal 2023, the company’s pretax profit margin was 11.2 per cent versus last year’s third quarter pretax profit margin of 11 per cent. TJX’s above-plan third quarter fiscal 2023 pretax profit margin was largely due to a benefit from the timing of expenses, most of which the company expects will reverse out in the fourth quarter of fiscal 2023. Merchandise margin was flat despite 1.2 percentage points of incremental freight costs. Incremental wage costs negatively impacted pretax profit margin by 0.8 percentage points.

TJX’s gross profit margin for the third quarter of fiscal 2023 was 29.1 per cent, a 0.4 percentage point decrease versus the third quarter of fiscal 2022. Selling, general and administrative costs as a per cent of sales for the third quarter of FY23 were 18 per cent, a 0.3 percentage point decrease versus Q3 FY22.

The movement in foreign currency exchange rates had a three percentage point negative impact on the company’s net sales growth in Q3 FY23 versus the prior year. The overall net impact of foreign currency exchange rates had a $.01 negative impact on third quarter fiscal 2023 earnings per share.

Total inventories as of October 29, 2022, were $8.3 billion, compared with $6.6 billion at the end of the third quarter of financial year 2022. YTD consolidated inventories on a per-store basis, including distribution centres, but excluding inventory in transit, the company’s e-commerce sites, and Sierra stores, were up 27 per cent on a reported basis (up 31 per cent on a constant currency basis).

For Q3 FY23, the company generated $1.1 billion of operating cash flow and ended the quarter with $3.4 billion of cash. During the third quarter of FY23, TJX completed the divestiture of its minority investment in Familia. As a result, TJX realised a $54 million tax benefit, which increased third quarter fiscal 2023 diluted earnings per share by $.05. Furthermore, in Q3 FY23, the company increased its store count by 57 stores to a total of 4,793 stores and increased square footage by 1 per cent over the previous quarter.

For the full year fiscal 2023, TJX expects pretax profit margin to be 9.3 per cent to 9.4 per cent and adjusted pretax profit margin to be 9.8 per cent to 9.9 per cent. The company now expects diluted earnings per share to be $2.93 to $2.97 and adjusted diluted earnings per share to be $3.07 to $3.11. The change in the high end of the company’s full year fiscal 2023 adjusted earnings per share outlook is a result of an expected $.02 negative impact due to unfavourable foreign exchange rates. For the full year fiscal 2023, TJX is increasing its outlook for US comparable store sales and is now planning a decrease of 1 per cent to 2 per cent versus a 17 per cent US open-only comp store sales increase in fiscal 2022.

For the fourth quarter of fiscal 2023, the company now expects pretax profit margin to be 9.5 per cent to 9.8 per cent and diluted earnings per share to be $.85 to $.89. This guidance now assumes that most of the Q3 FY23 timing of expenses benefit will reverse out in the fourth quarter of FY23. For the fourth quarter of financial year 2023, the company is increasing its outlook for US comparable store sales and is now planning them to be flat to up 1 per cent versus a 13 per cent US open-only comp store sales increase in Q4 FY22.

Fibre2Fashion News Desk (DP)