TJX shares soar thanks to sales hike
Announces employee cash bonuses
Shares of TJ Maxx, Marshalls and HomeGoods’ parent company shot up almost 10 percent yesterday after the Framingham off-price retailer said it missed fourthquarter profit expectations, but topped revenue forecasts, and reported strong comparable-store sales and said it will buy back up to $3 billion in stock.
TJX Cos. Inc. also announced it would use federal tax reform savings to give one-time cash bonuses to non-bonusplan associates globally, increase its contribution to all associates’ retirement plans, and institute paid parental leave and enhanced vacation benefits for eligible U.S. workers. It will also accelerate planned investments in technology, store growth and upgrading its store experiences, and raise its quarterly dividend.
TJX will spend about $100 million on the bonuses, increased retirement fund contributions and donations to its charitable foundations, and the majority will go to bonuses.
The paid parental leave policy includes four weeks for eligible U.S. associates. And eligible U.S. store and district hourly associates will now get paid vacation after six months of employment, instead of 12 months.
“Other eligible associates in various offices, as well as store management, will receive an enhanced level of paid vacation time during the first two years of employment,” spokeswoman Doreen Thompson said. “New hires will now get three weeks of vacation time instead of two, and we will adjust the vacation time for current associates accordingly.”
TJX shares climbed as much as 9.68 percent before settling at $82.68, a 6.95 percent gain. The company reported a 16 percent hike in net sales to $10.96 billion for the quarter that ended Feb. 3, beating Wall Street’s $10.76 billion forecast for the period, which included the holiday shopping season. Net income rose 29 percent to $877 million. Comparablestore sales — sales at stores open at least a year and an important retail metric — increased 4 percent, driven by increased foot traffic.
While there’s been concern about the health of the off-price market, TJX noted the concentration of its top vendors remains similar to last year, Wells Fargo Securities analyst Ike Boruchow said. “And though department store volume has come down, excess inventory generated by the rise of e-commerce has created even more availability to (TJ Maxx and Marshalls’) buying team,” he said.
TJX said it will primarily benefit from the lower U.S. corporate income tax resulting from the 2017 Tax Act and expects to significantly increase shareholder distributions and repatriate $1 billion-plus in cash from its TJX Canada division.
“Our business continues to generate tremendous amounts of cash and excellent financial returns,” CEO Ernie Herrman said. “In addition, with the recent changes in U.S. federal tax law, we expect a significant increase in cash flow.”