THE TJX COMPANIES 
The Thirteen Weeks (second quarter) and Twenty-Six Weeks (six months) Ended
July 30, 2022 Compared to
The Thirteen Weeks (second quarter) and Twenty-Six Weeks (six months) Ended
July 31, 2021 OVERVIEW We are the leading off-price apparel and home fashions retailer in theU.S. and worldwide. Our mission is to deliver great value to our customers every day. We do this by selling a rapidly changing assortment of apparel, home fashions and other merchandise at prices generally 20% to 60% below full-price retailers' (including department, specialty, and major online retailers) regular prices on comparable merchandise, every day through our stores and five distinctive branded e-commerce sites. We operate over 4,700 stores through our four main segments: in theU.S. , Marmaxx (which operates T.J. Maxx, Marshalls, tjmaxx.com and marshalls.com) andHomeGoods (which operatesHomeGoods , Homesense and homegoods.com); TJX Canada (which operates Winners, HomeSense and Marshalls inCanada ); andTJX International (which operatesT.K. Maxx , Homesense and tkmaxx.com inEurope , andT.K. Maxx inAustralia ). In addition to our four main segments, Sierra operates sierra.com and retail stores in theU.S. The results of Sierra are included in the Marmaxx segment.
RESULTS OF OPERATIONS
As an overview of our financial performance, results for the quarter ended
-Net sales decreased 2% to$11.8 billion for the second quarter of fiscal 2023 versus last year's second quarter sales of$12.1 billion . As ofJuly 30, 2022 , the number of stores in operation increased 2% and selling square footage increased 1% compared to the end of the second quarter of fiscal 2022. -U.S. comp store sales decreased 5% for the second quarter of fiscal 2023. TheU.S. open-only comp store sales increase was 21% for the second quarter of fiscal 2022. SeeNet Sales below for definition of bothU.S. comp store sales andU.S. open-only comp store sales. -Net sales decreased 7% forTJX International and increased 22% for TJX Canada for the second quarter of fiscal 2023. On a constant currency basis, net sales increased 6% and 28% forTJX International and TJX Canada, respectively. -Diluted earnings per share for the second quarter of fiscal 2023 were$0.69 versus$0.64 in the second quarter of fiscal 2022. The second quarter of fiscal 2022 included a$0.15 negative impact due to a debt extinguishment charge. -Pre-tax profit margin (the ratio of pre-tax income to net sales) for the second quarter of fiscal 2023 was 9.2%, which was a 0.5 percentage point increase compared with 8.7% in the second quarter of fiscal 2022. The second quarter of fiscal 2022 included a 2 percentage point negative impact due to a debt extinguishment charge. -Our cost of sales ratio, including buying and occupancy costs, for the second quarter of fiscal 2023 was 72.4%, a 1.8 percentage point increase compared with 70.6% in the second quarter of fiscal 2022. -Our selling, general and administrative ("SG&A") expense ratio for the second quarter of fiscal 2023 was 18.4%, which was flat versus the second quarter of fiscal 2022. -Our consolidated average per store inventories, including inventory on hand at our distribution centers (which excludes inventory in transit) and excluding our e-commerce sites and Sierra stores, were up 33% on a reported basis and 35% on a constant currency basis at the end of the second quarter of fiscal 2023.
-During the second quarter of fiscal 2023, we returned over
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Operating Results as a Percentage of
The following table sets forth our consolidated operating results as a percentage of net sales:
Thirteen Weeks Ended Twenty-Six Weeks Ended
July 30, July 31, July 30, July 31,
2022 2021 2022 2021
Net sales 100.0 % 100.0 % 100.0 % 100.0 %
Cost of sales, including buying and
occupancy costs 72.4 70.6 72.2 71.2
Selling, general and administrative
expenses 18.4 18.4 18.4 19.4
Impairment on equity investment - - 0.9 -
Loss on early extinguishment of debt - 2.0 - 1.1
Interest expense, net 0.1 0.2 0.1 0.3
Income before provision for income taxes* 9.2 % 8.7 % 8.3 % 8.0 %
*Figures may not foot due to rounding.
Net sales for the quarter endedJuly 30, 2022 totaled$11.8 billion , a 2% decrease versus second quarter fiscal 2022 net sales of$12.1 billion . The decrease reflects a 5% decrease inU.S. comp store sales and a 2% negative impact from foreign currency exchange rates. This decrease was partially offset by a fully open store base for the second quarter compared to having temporary store closures in the second quarter of fiscal 2022, as well as an increase from non-comp store sales. Net sales from our e-commerce sites combined amounted to less than 2% of total sales for each of the second quarters of fiscal 2023 and fiscal 2022. Net sales for the six months endedJuly 30, 2022 totaled$23.2 billion , a 5% increase versus the first six months of fiscal 2022 net sales of$22.2 billion . The increase reflects a fully open store base for the six-month period compared to having temporary store closures for the first six months of fiscal 2022, as well as an increase from non-comp store sales. This was partially offset by a 2% decrease inU.S. comp store sales and a 2% negative impact from foreign currency exchange rates. Net sales from our e-commerce sites combined amounted to less than 3% of total sales for the first six months of both fiscal 2023 and fiscal 2022. For fiscal 2023, we returned to our historical definition of comparable store sales. While stores in theU.S. were open for all of fiscal 2022, a significant number of stores inTJX Canada and TJX International experienced COVID-19 related temporary store closures and government-mandated shopping restrictions during fiscal 2022. Therefore, we cannot measure year-over-year comparable store sales with fiscal 2022 in these geographies in a meaningful way. As a result, the comparable stores included in the fiscal 2023 measure consist ofU.S. stores only, which we refer to asU.S. comparable store sales ("U.S. comp store sales") and are calculated against sales for the comparable periods in fiscal 2022.U.S. comp store sales decreased 5% for the second quarter and 2% for the first six months of fiscal 2023 compared to a 21% open-only comp store sales increase in the second quarter and a 19% open-only comp store increase in the first six months of fiscal 2022.U.S. comp store sales for both periods reflect a decrease in customer traffic partially offset by an increase in average basket driven by higher average ticket. Positive apparel comp sales outperformed a decline in home fashions sales for the second quarter and first six months endedJuly 30, 2022 . There remains significant uncertainty in the current macro-economic environment, driven by inflationary pressures, as well as ongoing industry-wide supply chain issues. These factors have impacted, and are expected to continue to impact, consumer discretionary spending and many of the costs in our business.
As of
Definition of Comp Store Sales
We define comparable store sales, or comp store sales, to be sales of stores
that have been in operation for all or a portion of two consecutive fiscal
years, or in other words, stores that are starting their third fiscal year of
operation. We calculate comp store sales on a 52-week basis by comparing the
current and prior year weekly periods that are most closely aligned. Relocated
stores and stores that have changed in size are generally classified in the same
way as the original store, and we believe that the impact of these stores on the
consolidated comp percentage is immaterial.
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--------------------------------------------------------------------------------Sales excluded from comp store sales ("non-comp store sales") consist of sales from:
-New stores - stores that have not yet met the comp store sales criteria, which represents a substantial majority of non-comp store sales
-Stores that are closed permanently or for an extended period of time
-Sales from our e-commerce sites
We determine which stores are included in the comp store sales calculation at the beginning of a fiscal year and the classification remains constant throughout that year unless a store is closed permanently or for an extended period during that fiscal year.
Comp store sales of our foreign segments are calculated by translating the current year's comp store sales using the prior year's exchange rates. This removes the effect of changes in currency exchange rates, which we believe is a more accurate measure of segment operating performance.
Comp store sales may be referred to as "same store" sales by other retail companies. The method for calculating comp store sales varies across the retail industry, therefore our measure of comp store sales may not be comparable to that of other retail companies.
We define customer traffic to be the number of transactions in stores and average ticket to be the average retail price of the units sold. We define average transaction or average basket to be the average dollar value of transactions.
Open-Only Comp Store Sales
Due to the temporary closing of stores as a result of the COVID-19 pandemic, our historical definition of comp store sales was not applicable for fiscal 2022. In order to provide a performance indicator for its stores, during fiscal 2022, we temporarily reported open-only comp store sales. Open-only comp store sales included stores initially classified as comp stores at the beginning of fiscal 2021. This measure reported the sales increase or decrease of these stores for the days the stores were open in fiscal 2022 against sales for the same days in fiscal 2020, prior to the emergence of the global pandemic.
Impact of Foreign Currency Exchange Rates
Our operating results are affected by foreign currency exchange rates as a result of changes in the value of theU.S. dollar or a division's local currency in relation to other currencies. We specifically refer to "foreign currency" as the impact of translational foreign currency exchange and mark-to-market of inventory derivatives, as described in detail below. This does not include the impact foreign currency exchange rates can have on various transactions that are denominated in a currency other than an operating division's local currency, which are referred to as "transactional foreign exchange," and also described below.
Translation Foreign Exchange
In our consolidated financial statements, we translate the operations ofTJX Canada and TJX International from local currencies intoU.S. dollars using currency rates in effect at different points in time. Significant changes in foreign exchange rates between comparable prior periods can result in meaningful variations in assets, liabilities, net sales, net income and earnings per share growth as well as the net sales and operating results of these segments. Currency translation generally does not affect operating margins, or affects them only slightly, as sales and expenses of the foreign operations are translated at approximately the same rates within a given period.
Mark-to-Market Inventory Derivatives
We routinely enter into inventory-related hedging instruments to mitigate the impact on earnings of changes in foreign currency exchange rates on merchandise purchases denominated in currencies other than the local currencies of our divisions, principallyTJX Canada and TJX International . As we have not elected "hedge accounting" for these instruments, as defined byU.S. generally accepted accounting principles ("GAAP"), we record a mark-to-market gain or loss on the derivative instruments in our results of operations at the end of each reporting period. In subsequent periods, the income statement impact of the mark-to-market adjustment is effectively offset when the inventory being hedged is received and paid for. While these effects occur every reporting period, they are of much greater magnitude when there are sudden and significant changes in currency exchange rates during a short period of time. The mark-to-market adjustment on these derivatives does not affect net sales, but it does affect the cost of sales, operating margins and earnings we report. 23 --------------------------------------------------------------------------------
Transactional Foreign Exchange
When discussing the impact on our results of the effect of foreign currency exchange rates on certain transactions, we refer to it as "transactional foreign exchange". This primarily includes the impact that foreign currency exchange rates may have on the year-over-year comparison of merchandise margin as well as "foreign currency gains and losses" on transactions that are denominated in a currency other than the operating division's local currency. These two items can impact segment margin comparison of our foreign divisions and we have highlighted them when they are meaningful to understanding operating trends.
Cost of Sales, Including Buying and Occupancy Costs
Cost of sales, including buying and occupancy costs, as a percentage of net sales was 72.4% for the second quarter of fiscal 2023, an increase of 1.8 percentage points from 70.6% for the second quarter of fiscal of 2022.
Cost of sales, including buying and occupancy costs, as a percentage of net sales was 72.2% for the first six months of fiscal 2023, an increase of 1.0 percentage point from 71.2% for the first six months of fiscal of 2022.
The increase in the cost of sales ratio, including buying and occupancy costs, for the second quarter and six-month period was primarily attributable to lower merchandise margin and investments in supply chain. Within merchandise margin, strong markon and a benefit from our pricing initiative were more than offset by approximately 2.4 percentage points of incremental freight for the second quarter and approximately 2.3 percentage points of incremental freight for the first six months of fiscal 2023 as well as higher markdowns. Additionally, the second quarter was further impacted by deleverage on occupancy and administrative costs and unfavorable mark-to-market adjustments on inventory and fuel hedges.
Selling, General and Administrative Expenses
SG&A expenses, as a percentage of net sales, were 18.4% for the second quarter of fiscal 2023, which was flat relative to last year's second quarter ratio of 18.4%. SG&A expenses, as a percentage of net sales, were 18.4% for the first six months of fiscal 2023, a decrease of 1.0 percentage points over last year's first six months ratio of 19.4%. For the second quarter, the SG&A ratio was flat compared to the same period of fiscal 2022 primarily driven by lower store payroll costs due to a reduction in COVID-related costs, partially offset by higher store wages, as well as government programs received in the second quarter of fiscal 2022 that did not continue in fiscal 2023. The decrease in the SG&A ratio for the first six months of fiscal 2023 compared to the same period of fiscal 2022 was primarily driven by store payroll due to a reduction of COVID-related costs.
Impairment on
During the first quarter endedApril 30, 2022 , due to the Russian invasion ofUkraine , we announced that we had committed to divesting our minority investment in Familia, an off-price retailer of apparel and home fashions domiciled in Luxembourg that operates stores inRussia . As a result, we performed an impairment analysis and concluded that there was an other-than-temporary impairment of this investment. We recorded an impairment charge of$218 million representing the entire carrying value of the investment in the first quarter of fiscal 2023. This charge had a$0.18 negative impact on earnings per share for the six months endedJuly 30, 2022 .
Interest Expense, net
The components of interest expense, net are summarized below:
Thirteen Weeks Ended Twenty-Six Weeks Ended
July 30, July 31, July 30, July 31,
In millions 2022 2021 2022 2021
Interest expense $ 23 $ 30 $ 46 $ 77
Capitalized interest (2) (1) (3) (2)
Interest (income) (10) (1) (13) (2)
Interest expense, net $ 11 $ 28 $ 30 $ 73
Net interest expense decreased for both the second quarter of fiscal 2023 and
the six months ended July 30, 2022 compared to the same periods in fiscal 2022,
primarily due to the $2.75 billion pay down of outstanding debt during fiscal
2022 as well as an increase in interest income over the same periods.
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--------------------------------------------------------------------------------Provision for Income Taxes
The effective income tax rate was 25.4% for the second quarter of fiscal 2023 compared to 25.5% for the second quarter of fiscal 2022. The effective income tax rate was 27.9% and 25.7% for the first six months of fiscal 2023 and fiscal 2022, respectively. The increase in the effective income tax rate for the first six months of fiscal 2023 is primarily due to the impairment of our minority investment in Familia, which, as ofJuly 30, 2022 , did not have an associated tax benefit, and a reduction of excess tax benefits from share-based compensation, partially offset by the change of jurisdictional mix of profits and losses and the resolution of various tax matters.
Net Income and Diluted Earnings Per Share
Net income for the second quarter of fiscal 2023 was$0.8 billion , or$0.69 per diluted share compared with$0.8 billion , or$0.64 per diluted share for the second quarter of fiscal 2022. Foreign currency had a$0.03 negative impact on earnings per share for the second quarter of fiscal 2023 compared to a$0.01 positive impact on earnings per share for the second quarter of fiscal 2022. The$242 million debt extinguishment charge in fiscal 2022 had a$0.15 negative impact on earnings per share for the second quarter of fiscal 2022. Net income for the first six months of fiscal 2023 was$1.4 billion , or$1.18 per diluted share compared with$1.3 billion , or$1.08 per diluted share for the first six months of fiscal 2022. The$218 million impairment on our minority investment in Familia had a$0.18 negative impact on earnings per share for the first six months of fiscal 2023. Foreign currency had a$0.02 negative impact on earnings per share for the first six months of fiscal 2023 compared to a$0.01 positive impact on earnings per share for the first six months of fiscal 2022. The$242 million debt extinguishment charge in fiscal 2022 had a$0.15 negative impact on earnings per share for the first six months of fiscal 2022.
Segment Information
We operate four main business segments. Our Marmaxx segment (T.J. Maxx, Marshalls, tjmaxx.com and marshalls.com) and ourHomeGoods segment (HomeGoods , Homesense and homegoods.com) both operate inthe United States . Our TJX Canada segment operates Winners, HomeSense and Marshalls inCanada , and ourTJX International segment operatesT.K. Maxx , Homesense and tkmaxx.com inEurope andT.K. Maxx inAustralia . In addition to our four main segments, Sierra operates sierra.com and retail stores in theU.S. The results of Sierra are included in the Marmaxx segment. We evaluate the performance of our segments based on "segment profit or loss," which we define as pre-tax income or loss before general corporate expense and interest expense, net, and certain separately disclosed unusual or infrequent items. "Segment profit or loss," as we define the term, may not be comparable to similarly titled measures used by other companies. The terms "segment margin" or "segment profit margin" are used to describe segment profit or loss as a percentage of net sales. These measures of performance should not be considered an alternative to net income or cash flows from operating activities as an indicator of our performance or as a measure of liquidity.
Presented below is selected financial information related to our business segments.
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U.S. SEGMENTS
Marmaxx
Twenty-Six
Thirteen Weeks Ended Weeks Ended
July 30, July 31, July 30, July 31,
U.S. dollars in millions 2022 2021 2022 2021
Net sales $ 7,235 $ 7,349 $ 14,107 $ 13,989
Segment profit $ 933 $ 1,014 $ 1,837 $ 1,839
Segment profit margin 12.9 % 13.8 % 13.0 % 13.1 %
Comp store sales(a) (2) % 18 % 0 % 15 %
Stores in operation at end of period:
T.J. Maxx 1,290 1,283
Marshalls 1,157 1,145
Sierra 62 52
Total 2,509 2,480
Selling square footage at end of period (in thousands):
T.J. Maxx 27,986 27,887
Marshalls 26,318 26,144
Sierra 1,005 847
Total 55,309 54,878
(a)Comp store sales reported for fiscal 2023 and open-only comp store sales reported for fiscal 2022.
Net sales for Marmaxx were$7.2 billion for the second quarter of fiscal 2023, a decrease of 2% compared to$7.3 billion for the second quarter of fiscal 2022. The decrease in the second quarter was driven by a 2% decrease from comp store sales. The decrease in comp store sales was primarily attributable to a decrease in customer traffic, partially offset by an increase in average basket driven by higher average ticket. Net sales for Marmaxx were$14.1 billion for the first six months of fiscal 2023, an increase of 1% compared to$14.0 billion for the first six months of fiscal 2022 due to non-comp store sales. Comp store sales growth for the first six months was flat. For both the three and six months endedJuly 30, 2022 , positive apparel sales outperformed a decline in home fashions sales.
Segment Profit Margin
Segment profit margin decreased to 12.9% for the second quarter of fiscal 2023 compared to 13.8% for the same period last year. Segment profit margin decreased to 13.0% for the first six months of fiscal 2023 compared to 13.1% for the same period last year. The decrease in segment profit margin for both periods was primarily driven by deleverage on lower comp store sales, primarily in occupancy and administrative costs, higher store and distribution center wages and lower merchandise margin, partially offset by store payroll reflecting lower COVID-related expenses. Within merchandise margin, incremental freight costs and higher markdowns were partially offset by strong markon and the benefits from our pricing initiative.
Our Marmaxx e-commerce sites, tjmaxx.com and marshalls.com, together with sierra.com, represented less than 3% of Marmaxx's net sales for the second quarter and the first six months of fiscal 2023 and fiscal 2022, and did not have a significant impact on year-over-year segment margin comparisons.
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--------------------------------------------------------------------------------HomeGoods Twenty-Six Weeks Thirteen Weeks Ended Ended July 30, July 31, July 30, July 31, U.S. dollars in millions 2022 2021 2022 2021 Net sales$ 1,856 $ 2,083 $ 3,892 $ 4,225 Segment profit$ 50 $ 182 $ 172 $ 434 Segment profit margin 2.7 % 8.8 % 4.4 % 10.3 % Comp store sales(a) (13) % 36 % (10) % 38 % Stores in operation at end of period: HomeGoods 862 846 Homesense 40 39 Total 902 885 Selling square footage at end of period (in thousands): HomeGoods 15,760 15,475 Homesense 858 837 Total 16,618 16,312
(a)Comp store sales reported for fiscal 2023 and open-only comp store sales reported for fiscal 2022.
Net sales forHomeGoods were$1.9 billion for the second quarter of fiscal 2023, a decrease of 11%, compared to$2.1 billion for the second quarter of fiscal 2022. The decrease in the second quarter reflects a 13% decrease from comp store sales, partially offset by a 2% increase from non-comp store sales. Net sales forHomeGoods were$3.9 billion for the first six months of fiscal 2023, a decrease of 8%, compared to$4.2 billion for the first six months of fiscal 2022. The decrease in the first six months reflects a 10% decrease from comp store sales, partially offset by a 2% increase from non-comp store sales. The decreases in comp store sales for both the second quarter and first six months of fiscal 2023 were driven by a decrease in customer traffic, partially offset by an increase in average basket driven by higher average ticket.
Segment Profit Margin
Segment profit margin decreased to 2.7% for the second quarter of fiscal 2023 compared to 8.8% for the same period last year. Segment profit margin decreased to 4.4% for the first six months of fiscal 2023 compared to 10.3% for the same period last year. The decrease in segment profit margin for both periods was driven by lower merchandise margin, deleverage on lower comp store sales, primarily in occupancy and administrative costs, and higher store and distribution center wages. The decrease in segment profit margin for both periods was partially offset by store and distribution payroll reflecting lower COVID-related expenses and fewer units processed. Merchandise margin includes incremental freight costs of nearly 8 percentage points and approximately 7.4 percentage points in the second quarter and six months endedJuly 30, 2022 , respectively, as well as higher markdowns. These costs were partially offset by strong markon and the benefits from our pricing initiative. OurHomeGoods e-commerce website, homegoods.com, represented less than 1% ofHomeGoods net sales for the second quarter and the first six months of fiscal 2023, and did not have a significant impact on year-over-year segment margin comparisons. 27 --------------------------------------------------------------------------------
FOREIGN SEGMENTS
TJX Canada
Twenty-Six Weeks
Thirteen Weeks Ended Ended
July 30, July 31, July 30, July 31,
U.S. dollars in millions 2022 2021 2022 2021
Net sales $ 1,248 $ 1,022 $ 2,330 $ 1,787
Segment profit $ 197 $ 118 $ 324 $ 190
Segment profit margin 15.8 % 11.6 % 13.9 % 10.6 %
Stores in operation at end of period: Winners 295 290 HomeSense 150 147 Marshalls 106 105 Total 551 542 Selling square footage at end of period (in thousands): Winners 6,324 6,241 HomeSense 2,778 2,733 Marshalls 2,220 2,201 Total 11,322 11,175 Net Sales Net sales for TJX Canada were$1.2 billion for the second quarter of fiscal 2023, an increase of 22% compared to$1.0 billion for the second quarter of fiscal 2022. Net sales for TJX Canada were$2.3 billion for the first six months of fiscal 2023, an increase of 30% compared to$1.8 billion for the first six months of fiscal 2022. The increase in net sales reflects having a fully open store base for all of the second quarter and first six months of fiscal 2023, compared to temporary store closures for 22% of the second quarter and 24% of the first six months of fiscal 2022 as a result of the COVID-19 pandemic, partially offset by a negative impact due to foreign currency exchange rates for 6% and 4% in the second quarter and first six months of fiscal 2023, respectively. In addition to stores being open for more days in the second quarter and first six months of fiscal 2023, net sales further increased due to an increase in average basket driven by higher average ticket.
Segment Profit Margin
Segment profit margin increased to 15.8% for the second quarter of fiscal 2023
compared to 11.6% for the same period last year. Segment profit margin increased
to 13.9% for the first six months of fiscal 2023 compared to 10.6% for the same
period last year. The increase for the second quarter and first six months of
fiscal 2023 was primarily driven by increased sales due to having a fully open
store base compared to the temporary store closures in the same periods in
fiscal 2022. This was partially offset by government programs received in the
second quarter and first six months of fiscal 2022 that did not continue into
fiscal 2023. Within merchandise margin, strong markon, lower markdowns and the
benefits from our pricing initiative offset incremental freight costs in the
second quarter of fiscal 2023. For the first six months of fiscal 2023,
incremental freight costs more than offset strong markon and the benefits from
our pricing initiative.
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TJX International Twenty-Six Weeks Thirteen Weeks Ended Ended July 30, July 31, July 30, July 31, U.S. dollars in millions 2022 2021 2022 2021 Net sales$ 1,503 $ 1,623 $ 2,920 $ 2,162 Segment profit (loss)$ 105 $ 174 $ 118 $ (48) Segment profit margin 7.0 % 10.7 % 4.0 % (2.2) % Stores in operation at end of period: T.K. Maxx 626 616 Homesense 77 78 T.K. Maxx Australia 71 64 Total 774 758 Selling square footage at end of period (in thousands): T.K. Maxx 12,590 12,373 Homesense 1,126 1,142 T.K. Maxx Australia 1,246 1,143 Total 14,962 14,658 Net Sales Net sales forTJX International were$1.5 billion for the second quarter of fiscal 2023, a decrease of 7% compared to$1.6 billion for the second quarter of fiscal 2022. The decrease in net sales was primarily due to a negative foreign currency exchange rate impact of 13% in the second quarter of fiscal 2023, partially offset by an increase in average basket primarily due to higher average ticket. Net sales forTJX International were$2.9 billion for the first six months of fiscal 2023, an increase of 35% compared to$2.2 billion for the first six months of fiscal 2022. The increase in net sales reflects having a fully open store base for all of the first six months of fiscal 2023, compared to temporary store closings of 37% of the first six months of fiscal 2022 as a result of the COVID-19 pandemic. In addition, net sales further increased due to an increase in average basket, partially offset by a negative impact due to foreign currency exchange rates of 14% in the first six months of fiscal 2023. E-commerce sales were approximately 3% and 5% ofTJX International's net sales for the second quarters of fiscal 2023 and fiscal 2022, respectively and 3% and 7% for the first six months of the same periods. For the second quarter and first six months of fiscal 2022 temporary store closures due to the COVID-19 pandemic resulted in an increased e-commerce contribution.
Segment Profit Margin
Segment profit margin decreased to 7.0% for the second quarter of fiscal 2023
compared to 10.7% for the same period last year. This decrease primarily
reflects government programs received in the second quarter of fiscal 2022 that
did not continue into fiscal 2023, expense deleverage on occupancy and
administrative costs and lower merchandise margin in fiscal 2023. Within
merchandise margin, incremental freight costs and higher markdowns offset strong
markon. The segment profit margin decrease was partially offset by lower third
party storage costs.
Segment profit margin increased to 4.0% for the first six months of fiscal 2023
compared to loss of 2.2% for the same period last year. This increase was
primarily driven by additional sales due to having a fully open store base for
the first six months of fiscal 2023 compared to the temporary store closures in
the same period in fiscal 2022 as well as lower COVID-related expenses in stores
and distribution centers. This was partially offset by government programs
received in fiscal 2022 that did not continue into fiscal 2023 and lower
merchandise margin in fiscal 2023. Within merchandise margin, strong markon was
more than offset by higher markdowns and incremental freight costs.
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GENERAL CORPORATE EXPENSE
Twenty-Six Weeks
Thirteen Weeks Ended Ended
July 30, July 31, July 30, July 31,
In millions 2022 2021 2022 2021
General corporate expense $ 189 $ 164 General corporate expense for segment reporting purposes represents those costs not specifically related to the operations of our business segments. General corporate expenses are primarily included in SG&A expenses. The mark-to-market adjustment of our fuel and inventory hedges is included in cost of sales, including buying and occupancy costs. The increase in general corporate expense for the second quarter of fiscal 2023 was primarily driven by unfavorable mark-to-market adjustments on inventory and fuel hedges, partially offset by lower share-based and incentive compensation costs. The decrease in general corporate expense for the first six months of fiscal 2023 was primarily driven by lower share-based incentive costs and the timing of contributions to TJX's charitable foundations partially offset by unfavorable mark-to-market adjustments on inventory and fuel hedges.
ANALYSIS OF FINANCIAL CONDITION
Liquidity and Capital Resources
Our liquidity requirements have traditionally been funded through cash generated from operations, supplemented, as needed, by short-term bank borrowings and the issuance of commercial paper. As ofJuly 30, 2022 , there were no short-term bank borrowings or commercial paper outstanding. We have current maturities of long-term debt which will mature in the first half of fiscal 2024. We believe our existing cash and cash equivalents, internally generated funds and our credit facilities, under which facilities we have$1.5 billion available as of the period endedJuly 30, 2022 , as described in Note I-Long-Term Debt and Credit Lines of Notes to Consolidated Financial Statements, are adequate to meet our operating needs for the foreseeable future. As ofJuly 30, 2022 , we held$3.5 billion in cash. Approximately$1.2 billion of our cash was held by our foreign subsidiaries with$0.5 billion held in countries where we intend to indefinitely reinvest any undistributed earnings. We have provided for all applicable state and foreign withholding taxes on all undistributed earnings of our foreign subsidiaries inCanada ,Puerto Rico ,Italy ,India ,Hong Kong andVietnam throughJuly 30, 2022 . If we repatriate cash from such subsidiaries, we should not incur additional tax expense and our cash would be reduced by the amount of withholding taxes paid. We monitor debt financing markets on an ongoing basis and from time to time may incur additional long-term indebtedness depending on prevailing market conditions, liquidity requirements, existing economic conditions and other factors. In fiscal 2022 we used, and in the future we may again use, operating cash flow and cash on hand to repay portions of our indebtedness, depending on prevailing market conditions, liquidity requirements, existing economic conditions, contractual restrictions and other factors. As such, we may, from time to time, seek to retire, redeem, prepay or purchase our outstanding debt through redemptions, cash purchases, prepayments, refinancings and/or exchanges, in open market purchases, privately negotiated transactions, by tender offer or otherwise. If we use our operating cash flow and/or cash on hand to repay our debt, it will reduce the amount of cash available for additional capital expenditures.
Operating Activities
Operating activities resulted in net cash inflows of
Operating cash flows decreased compared to fiscal 2022, with the primary driver
being a
Investing Activities
Investing activities resulted in net cash outflows of$0.7 billion for the six months endedJuly 30, 2022 and$0.4 billion for the six months endedJuly 31, 2021 . The cash outflows for both periods were driven by capital expenditures. Investing activities in the first six months of fiscal 2023 primarily reflected property additions for investments in our new stores, store improvements and renovations as well as investments in our distribution centers and offices, including buying and merchandising systems and other information systems. We anticipate that capital spending for the full fiscal year 2023 will be approximately$1.7 billion to$1.9 billion . We plan to fund these expenditures through cash flows from operations. 30 --------------------------------------------------------------------------------
Financing Activities
Financing activities resulted in net cash outflows of$1.9 billion for the first six months of fiscal 2023 and net cash outflows of$3.9 billion for the six months endedJuly 31, 2021 . The cash outflows for fiscal 2023 were primarily driven by equity repurchases and dividend payments.
Debt
The cash outflows in the first six months of fiscal 2022 were due to the completion of make-whole calls and the redemption at par of certain of our notes.
Our 2.50% ten-year Notes dueMay 2023 will mature during our second quarter of fiscal 2024 and are included within our current maturities of long-term debt, see Note I-Long-Term Debt and Credit Lines of Notes to Consolidated Financial Statements. We plan to repay this debt by cash generated from operations.
Equity
Under our stock repurchase programs, we paid$1.3 billion to repurchase and retire 21.5 million shares of our stock on a settlement basis in the first six months of fiscal 2023. As ofJuly 30, 2022 , approximately$2.5 billion remained available under our existing stock repurchase program. We paid$0.3 billion to repurchase and retire 4.6 million shares of our stock on a settlement basis in the first six months of fiscal 2022. For further information regarding equity repurchases, see Note D - Capital Stock and Earnings Per Share of Notes to Consolidated Financial Statements.
Dividends
We declared quarterly dividends on our common stock of$0.295 per share in the first six months of fiscal 2023 and$0.26 per share in the first six months of fiscal 2022. Cash payments for dividends on our common stock totaled$0.7 billion for the first six months of fiscal 2023 and$0.6 billion for the first six months of fiscal 2022.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
There have been no material changes to the critical accounting estimates as discussed in TJX's Annual Report on Form 10-K for the fiscal year endedJanuary 29, 2022 . For a discussion of accounting standards, see Note A-Basis of Presentation and Summary of Significant Accounting Policies of Notes to Consolidated Financial Statements included in TJX's Annual Report on Form 10-K for the fiscal year endedJanuary 29, 2022 and Note A-Basis of Presentation and Summary of Significant Accounting Policies of Notes to Consolidated Financial Statements in this Quarterly Report on Form 10-Q.
FORWARD-LOOKING STATEMENTS
Various statements made in this Quarterly Report on Form 10-Q are forward-looking and involve a number of risks and uncertainties. All statements that address activities, events or developments that we intend, expect or believe may occur in the future are forward-looking statements. The following are some of the factors that could cause actual results to differ materially from the forward-looking statements: the ongoing COVID-19 pandemic and associated containment and remediation efforts; execution of buying strategy and inventory management; various marketing efforts; customer trends and preferences; competition; operational and business expansion; management of large size and scale; merchandise sourcing and transport; labor costs and workforce challenges; personnel recruitment, training and retention; data security and maintenance and development of information technology systems; corporate and retail banner reputation; cash flow; expanding international operations; fluctuations in quarterly operating results and market expectations; mergers, acquisitions, or business investments and divestitures, closings or business consolidations; real estate activities; inventory or asset loss; economic conditions and consumer spending; market instability; serious disruptions or catastrophic events; disproportionate impact of disruptions in the second half of the fiscal year; commodity availability and pricing; adverse or unseasonable weather; fluctuations in currency exchange rates; compliance with laws, regulations and orders and changes in laws, regulations and applicable accounting standards; outcomes of litigation, legal proceedings and other legal or regulatory matters; quality, safety and other issues with our merchandise; tax matters; and other factors that may be described in our filings with theSecurities and Exchange Commission , including our most recent Annual Report on Form 10-K filed with theSecurities and Exchange Commission . We do not undertake to publicly update or revise our forward-looking statements even if experience or future changes make it clear that any projected results expressed or implied in such statements will not be realized.
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