TJX Companies, Inc. — FY2022 Form 10-K
Reporting period: Fiscal year ended January 29, 2022 (52 weeks); comparatives are fiscal years ended January 30, 2021 and February 1, 2020. This filing reports the full fiscal year, not a standalone fourth quarter. TJX operates off-price apparel and home retailers across the U.S., Canada, Europe and Australia, with nearly 4,700 stores and five e-commerce sites.
Financial performance
| Metric | FY2022 | FY2021 | FY2020 |
|---|---|---|---|
| Net sales | $48.55 billion | $32.14 billion | $41.72 billion |
| Net income | $3.28 billion | $90 million | $3.27 billion |
| Diluted EPS | $2.70 | $0.07 | $2.67 |
| Pre-tax margin | 9.1% | 0.3% | 10.6% |
| Cost of sales, buying and occupancy | 71.5% of sales | 76.3% | 71.5% |
| SG&A | 18.7% of sales | 21.8% | 17.9% |
| Cash provided by operating activities | $3.06 billion | $4.56 billion | $4.07 billion |
FY2022 sales rose 51% from FY2021, reflecting more store days open, higher customer traffic and larger average baskets. Compared with FY2020, sales increased 16%; open-only comparable sales increased 15%, including 17% in the U.S. Home fashions comps substantially outpaced the overall increase. E-commerce accounted for less than 3% of consolidated sales in each of the three years.
FY2022 merchandise margin improved year over year, primarily on lower markdowns, but freight costs increased. Higher distribution costs and wages also weighed on margins. SG&A rose to $9.1 billion, though its ratio improved from FY2021 as sales recovered. FY2022 included a $242 million pre-tax debt-extinguishment charge ($0.15 per diluted share); FY2021 included a $312 million charge ($0.19 per share).
Segments
| Segment | FY2022 sales | FY2022 segment profit | Margin |
|---|---|---|---|
| Marmaxx | $29.48 billion | $3.81 billion | 12.9% |
| HomeGoods | $9.00 billion | $907 million | 10.1% |
| TJX Canada | $4.34 billion | $485 million | 11.2% |
| TJX International | $5.73 billion | $161 million | 2.8% |
All segments reported higher sales and profit than FY2021, when pandemic-related closures were more extensive. Relative to FY2020, International and Canada segment margins were lower; Marmaxx and HomeGoods profit increased, but both margins remained below FY2020 levels. Segment profit is a company-defined measure before corporate expense, net interest and certain unusual items.
Liquidity, debt and capital allocation
At year-end, cash and cash equivalents were $6.23 billion, versus $10.47 billion a year earlier. Current assets were $13.26 billion and current liabilities were $10.47 billion. Long-term debt was $3.35 billion, with no current portion; TJX had reduced outstanding debt by $2.75 billion during FY2022. It also had $1.5 billion of available revolving credit capacity and no short-term borrowings or commercial paper outstanding. Operating lease liabilities totaled $9.15 billion and are separate from reported debt.
Operating cash flow declined by $1.50 billion year over year, mainly because inventory was rebuilt and FY2021 had unusually favorable working-capital timing; repayment of deferred rent also reduced cash flow. Capital expenditures were $1.05 billion. TJX returned $3.4 billion to shareholders through repurchases and dividends. It repurchased about $2.2 billion of stock and paid $1.3 billion in dividends.
Outlook, commentary and risks
For FY2023, management expected capital spending of approximately $1.7–$1.9 billion, including distribution, systems and store investments. Planned openings included approximately 55 Marmaxx stores, 20 Sierra stores, 60 HomeGoods stores (including 10 Homesense), 10 Canadian stores and 25 International stores. TJX planned approximately $2.25–$2.5 billion of share repurchases and expected quarterly dividends of $0.295 per share, subject to Board approval.
Management cited continuing uncertainty from COVID-19, including possible closures and restrictions, as well as supply-chain disruption, higher freight and labor costs, and inflation. Other material risks include the ability to source and allocate suitable merchandise, intense retail and e-commerce competition, foreign-exchange movements, geopolitical events, cybersecurity and data protection, legal and regulatory matters, and consumer discretionary spending. Results are seasonal, with sales and income generally higher in the second half.
Following Russia’s invasion of Ukraine, TJX committed to divest its 25% investment in Russian off-price retailer Familia. The investment’s carrying value was $186 million at year-end; the company stated the divestiture could result in a loss of up to $225 million and that an impairment might be required before sale. TJX also recorded immaterial accruals for certain legal proceedings. Management concluded disclosure controls and internal control over financial reporting were effective; the independent auditor issued unqualified opinions on the financial statements and internal controls.
Key investor verification points
- Assess the durability of the FY2022 sales recovery, particularly against pre-pandemic results, while accounting for the changed comparable-sales measure and closures in Canada and International.
- Track inventory: consolidated average per-store inventories were up 31% year over year, and determine whether freight, wage and distribution costs continue to pressure margins.
- Verify FY2023 capital-spending, store-opening, dividend and repurchase plans against actual cash generation and liquidity needs.
- Monitor the Familia divestiture, impairment or loss recognition, and developments related to Russia and Ukraine.
- Review the full financial statements and notes for lease commitments, debt maturities, tax uncertainties, pension exposures and other contingencies.