The TJX Companies announced sales and earnings results for the first quarter ended April 30, 2016.
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Net sales for the first quarter of Fiscal 2017 increased 10% to $7.5 billion and consolidated comparable store sales increased 7% over last year’s 5% increase.
Net income was $508 million and diluted earnings per share were $.76, a 10% increase over the prior year’s $.69.
Ernie Herrman, CEO and president of The TJX Companies, stated, "It is great to start 2016 with such a strong quarter! Our momentum continued with a consolidated comparable store sales increase of 7% over 5% growth last year, and earnings per share increased 10%.
"We are particularly pleased with our very strong customer traffic, which drove the comp increases at every division.
"This tells us that our strategies to bring consumers exciting values on an eclectic and ever-changing mix of the right fashions and brands, sourced from across the globe, are working."
Changes in foreign currency exchange rates affect the translation of sales and earnings of the company’s international businesses into U.S. dollars for financial reporting purposes.
In addition, ordinary course, inventory-related hedging instruments are marked to market at the end of each quarter. Changes in currency exchange rates can have a material effect on the magnitude of these translations and adjustments when there is significant volatility in currency exchange rates.
The movement in foreign currency exchange rates had a one percentage point negative impact on consolidated net sales growth in the first quarter of Fiscal 2017 versus the prior year. The overall net impact of foreign currency exchange rates had a $.05 negative impact on first quarter Fiscal 2017 earnings per share, compared with a $.03 negative impact last year.
A table detailing the impact of foreign currency on TJX pretax earnings and margins, as well as those of its international businesses, can be found in the Investor Information section of the company’s website, tjx.com.
The foreign currency exchange rate impact to earnings per share does not include the impact currency exchange rates have on various transactions, which we refer to as “transactional foreign exchange.â€
For the first quarter of Fiscal 2017, the company’s consolidated pretax profit margin was 10.9%, a 0.2 percentage point decrease compared with the prior year.
Gross profit margin for the first quarter of Fiscal 2017 was 28.8%, up 0.5 percentage points versus the prior year, primarily due to strong buying and occupancy leverage on the 7% comp growth.
This was partially offset by the mark-to-market adjustment on the company’s inventory-related hedges. Merchandise margins remained strong despite the negative impact of transactional foreign exchange at TJX Canada and TJX International.
Selling, general and administrative costs as a percent of sales were 17.7%, up 0.7 percentage points versus the prior year’s ratio, primarily due to wage increases and investments to support growth, as the company had anticipated. ■