The TJX Companies, Inc. Sees Strong Momentum Continue; Reports Above-Plan Third Quarter EPS Growth; Raises Full-Year Guidance

On a reported basis, diluted earnings per share for the first nine months of Fiscal 2013 were $1.73 compared to $1.31 last year. On an adjusted basis, excluding the items detailed above, diluted earnings per share for the first nine months of Fiscal 2013 represented a 26% increase over last year’s adjusted $1.37.

For the first nine months of Fiscal 2013, foreign currency exchange rates had a neutral impact on earnings per share, compared with a $.01 per share positive impact last year.

Third Quarter Items

As previously reported, during the third quarter, the Company recorded a $.02 per share non-cash charge for the cumulative impact of a correction to its pension accrual for prior fiscal years, which was not anticipated in its original guidance. Additionally, the Company recorded a $.01 per share non-operating charge due to an adjustment in the Company’s reserve for former operations relating to closed stores, which was not anticipated in the Company’s most recent guidance.

Margins

For the third quarter of Fiscal 2013, the Company’s consolidated pretax profit margin was 11.7%, up 0.2 percentage points over the prior year. The increase was primarily driven by merchandise margin improvement, partially offset by the 0.6 percentage point negative impact of the third quarter items mentioned above. Additionally, foreign currency had a 0.2 percentage point negative impact on year-over-year comparisons.

The gross profit margin for the third quarter of Fiscal 2013 was 28.8%, 0.7 percentage points above the prior year. The increase was driven entirely by merchandise margin improvement partially offset by a negative impact from mark-to-market adjustments on the Company's inventory-related hedges.

Selling, general and administrative costs as a percent of sales were 17.0% in the third quarter, a 0.5 percentage point increase over the prior year’s ratio, primarily due to the combined negative impact of 1.1 percentage points from the following factors: the third quarter items mentioned above, increased incentive compensation accruals arising from the Company’s above-plan results, and investments to support the Company’s growth, including talent and infrastructure.

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