The TJX Companies Reports Q1 FY21 Results; Begins Reopening Stores Worldwide.
Highlights:
Took prudent and proactive actions in response to COVID-19 to further strengthen the Company's financial liquidity and flexibility
Began reopening stores on
Q1 FY21 net sales of
Q1 FY21 loss per share of (
The Company's first quarter results were negatively impacted by the temporary closure of its stores for approximately half of the quarter due to the COVID-19 pandemic. As a result, the Company reported a substantial pre-tax loss versus an original expectation of significant pre-tax income. The vast majority of the variance was a result of lost merchandise margin, corresponding to the lost sales from temporary store closures. The Company also had an inventory write-down charge (detailed below) and continued to incur payroll expenses while stores were closed. These costs were mostly offset by significant expense reductions which benefited the Company later in the quarter, as well as government credits related to COVID-19.
The Company's first quarter cash flow was also negatively impacted by the temporary closure of its stores due to the COVID-19 pandemic (detailed in the Condensed Statements of Cash Flows below). This was primarily due to the Company paying the vast majority of its merchandise costs, expenses payable, and payroll as planned for the first quarter, despite a substantial loss of sales from store closures. Further, the Company had shareholder distributions of approximately
CEO and President Comments
Herrman continued, 'As to our sales results, we saw strong trends prior to the impact of COVID-19. For the month of February, we delivered a 5% consolidated comp increase driven by customer traffic. All four major divisions had a February comp increase of 5% or better. As various states and countries reopen for business, health and safety remain at the forefront of our decision making. We have been pleased to reopen as many stores as we have in May, as well as our e-commerce websites. Although it's still early and the retail environment remains uncertain, we have been encouraged with the very strong sales we have seen with our initial reopenings. We believe this very strong start speaks to our compelling value proposition and the appeal of our treasure-hunt shopping experience, as well as pent-up demand. It has been great to see, especially for the teams working so hard on the reopening preparations and our Associates welcoming back our customers. We are currently seeing plentiful off-price buying opportunities, which, as we look to the remainder of the year, gives us confidence in having excellent brands and quality merchandise available to us. With our flexible business model and ability to adapt quickly to changing market conditions and customer preferences, we will be pursuing these buying opportunities. Above all, we are convinced that our mission to deliver great value to consumers every day will continue to be our enduring retail formula today and in the future.'
TJX Response to the COVID-19 Pandemic
During the first quarter of Fiscal 2021, the Company took many actions in response to the COVID-19 pandemic in an effort to help protect the health and well-being of its Associates, customers, and communities, while also focusing on further strengthening its financial liquidity and flexibility. The Company also withdrew its first quarter and full year Fiscal 2021 guidance that it gave on its
Store and Associate Actions
As of
Paid all Associates through at least the week ending
Effective
Established several task force teams focused on navigating the Company through this global health crisis. These include those focused on health protocols for its stores and buildings, store and e-commerce reopenings, merchandising, supply chain, and Associate and consumer communications.
Financial Actions
Drew down full amount of
Issued
Suspended its share buyback program.
Decided not to declare a dividend for the first quarter of Fiscal 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, as it has done for decades, whenever the environment and its business stabilize. The Company paid a dividend in the first quarter of Fiscal 2021 that was declared for the fourth quarter of Fiscal 2020.
Reduced Fiscal 2021 capital expenditure plan from
Lowered Fiscal 2021 store openings to approximately 50, paused the majority of its planned store remodels, and delayed a significant portion of its distribution center, home office, and IT spending.
Evaluated operating expenses and took actions to reduce some ongoing variable and discretionary costs.
Paid most of its rent due in the first quarter and negotiated with many of its landlords to defer some of its April, and a meaningful portion of its second quarter, rent payments to later dates, primarily in Fiscal 2022.
Through the financial actions listed above, the Company ended the quarter with
Business Update
Beginning
As various states and countries have started to reopen, the Company has reopened stores and distribution centers in accordance with government guidelines and at its own pace. The Company has put in place geographically recommended practices to help protect the health and well-being of its Associates and customers. Globally, these include social distancing protocols, providing Associates access to personal protective equipment, and enhanced cleaning efforts. More specifically in the
Require usage of a face mask by store Associates while working.
Posted signage that the Company expects customers to wear a face covering when shopping its stores.
Providing Associates with face masks and gloves, and adding hand sanitation stations throughout stores for Associates and customers.
Implemented new cleaning regimens throughout the day, including enhanced cleaning of high-touch surfaces, such as PIN pads and shopping carts.
Installed protective shields at registers.
Applied social distancing guidelines including:
Added distancing markers in queue lines and outside stores as necessary.
Posted signage and providing in-store announcements on social distancing etiquette.
Require daily health screenings and temperature checks for all store Associates prior to and upon reporting to work.
Trained field organization on new health protocols prior to store reopenings.
Implemented new store occupancy limits, even where not required by regulations.
Temporarily closed fitting rooms in the
Established new procedures for merchandise returns.
The Company's net sales by division, in the first quarter, were as follows: See results at:
https://investor.tjx.com/news-releases/news-release-details/tjx-companies-inc-reports-q1-fy21-results-begins-reopening
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