TJX reported Q4 results in-line with its recent preannouncement of $0.62 vs. $0.62E this morning. While there isn’t a whole lot in terms of surprises to report re the P&L, TJX’s SIGMA move is the clear highlight ahead of the call at 11am with sales outpacing inventories and margins expanding – a shift worth noting and bullish relative to the rest of the companies that have reported over the last two days (see our note "Retail:Tuesday's Foursome").
Here are some callouts from the release regarding Q1-to-date trends and F13 expectations:
1) Inventories:
- Sales growth +11% outpaced inventory growth up +7% (down -5pts seq) for the first time in 5qtrs
- On a per store basis inventories were up +3%, less than expected
- The company’s purchase commitments are down yy putting TJX in the driver seat as it relates to excess inventory that will be coming into the discount channel from the mid-tier providing a tailwind to the discounters (e.g. TJX and ROST).
- “Inventoriesare lean as we begin the year, which positions us very well to flow fresh spring merchandise to our stores.”
2) Outlook:
- Outlook in-line with expectations with upside likely in Q1 based on Feb-to-date trends.
- “We enter a new fiscal year with considerable momentum in our business and are off to a very strong start in 2012. With favorable weather patterns in February, comp store sales are trending toward a 7% increase for the month.”
- Q1 Outlook $0.45-$0.47 (vs $0.46E) predicated on comps +2%-4%. (up +7% so far in Feb.)
- F13 Outlook $2.21-$2.31 (vs $2.27E) predicated on comps +1%-2%; including $0.07 from 53rd week
3) Repo:
- Company spent $400mm to repurchase shares in Q4; expects to spend $1.2-$1.3mm in repo’s in F13 accounting for 5% of outstanding shares. New SRA up to $2Bn
4) Home Category:
- TJX’s HomeGoods posted a +10% comp matching TJX Europe as the strongest performers this quarter consistent with yesterday’s commentary re strong performance out of the Home category from WMT, M, and HD.
Casey Flavin
Director