The TJX Companies (TJX)

Q4 2011 Earnings Call

February 23, 2011 11:00 am ET

Executives

Carol Meyrowitz - Chief Executive Officer and Director

Sherry Lang - Senior Vice President of Global Communications

Ernie Herrman - President

Jeffrey Naylor - Chief Administrative Officer, Chief Financial Officer, Chief Accounting Officer and Senior Executive Vice President

Analysts

Daniel Hofkin - William Blair & Company L.L.C.

Richard Jaffe - Stifel, Nicolaus & Co., Inc.

Stacy Pak - Prudential

Paul Lejuez - Credit Suisse

Mark Montagna - Avondale Partners, LLC

Adrianne Shapira - Goldman Sachs Group Inc.

Marni Shapiro - The Retail Tracker

Jeffery Stein - Soleil Securities Group, Inc.

David Weiner - Deutsche Bank AG

Todd Slater - Lazard Capital Markets LLC

Evren Kopelman - Wells Fargo Securities, LLC

Kimberly Greenberger - Morgan Stanley

Presentation

Operator

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Ladies and gentlemen, thank you for standing by. Welcome to the TJX Companies Fourth Quarter and Full Fiscal 2011 Financial Results Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded February 23, 2011.

I would like to turn the conference call over to Ms. Carol Meyrowitz, Chief Executive Officer for the TJX Companies, Inc. Please go ahead, ma'am.

Carol Meyrowitz

Thanks, Holly. Good morning, everyone. Before we begin, Sherry has some comments.

Sherry Lang

Good morning. The forward-looking statements we make today about the company's results and plans are subject to risks and uncertainties that could cause the actual results and the implementation of the company's plans to vary materially. These risks are discussed in the company's SEC filings, including, without limitation, the Form 10-K filed March 30, 2010. Further, these comments and the Q&A that follows are copyrighted today by the TJX Companies. Any recording, retransmission, reproduction or other use of the same for profit or otherwise, without prior consent of TJX, is prohibited and a violation of the United States copyright and other laws. Additionally, while we have approved the publishing of a transcript of this call by a third party, we take no responsibility for inaccuracies that may appear in that transcript.

Please note that the financial results and expectations we discuss today on a continuing operations basis. Also, we have detailed the impact of foreign exchange on our consolidated results and our international divisions in today's press release and the investor information section of our website, www.tjx.com. As a reminder, the comparable store sales numbers that we talk about today are on a constant currency basis. With respect to the non-GAAP measures we discuss today, reconciliations to GAAP measures are included in today's press release and posted on our website, www.tjx.com, in the Investor Information section.

In addition, we have posted in that section reconciliations of guidance with respect to non-GAAP measures to guidance on a GAAP basis. Thank you, and I'll turn it back to Carol.

Carol Meyrowitz

Thanks, Sherry. Joining me on the call is Ernie Herrman, who as you know was promoted as President of TJX last month. It's terrific to have Ernie take on a bigger role with the company. I couldn't be more pleased with this new management structure, which further strengthens our leadership team to continue to grow TJX successfully. Also joining me with Ernie and Sherry is Jeff Naylor.

I'm proud to report that we delivered a 23% increase in adjusted EPS in 2010, particularly, because it was on top of an adjusted 48% increase in the previous year. This marks the 15th consecutive year of EPS increases. We drove this profit growth on a 4% annual comp increase over a very strong 6% increase last year. What continues to give this company the ability to post this increases year after year in good, bad and in between times and even over very tough comparisons is the extraordinarily flexibility of our business model.

One of the most impactful ways we used our flexibility in 2010 was to run with leaner inventories than we ever had in the past. This gave us fast returns and growth in merchandise margins over large increases the year before. We believe that there is still room for further improvement in running with even leaner inventory, as well as fine-tuning our shipping of the right goods to the right store at the right time. We will continue to invest significantly in our infrastructure for both the short and the long term.

In addition, our customer traffic was up mid-single digit over huge increases last year as our great brands and values continue to attract new and existing customers. This tells us that whether we are in recessionary times or recovery, value remains a constant top-of-mind priority with consumers.

I will keep my comments brief today. I'll focus on the sustainability of our strong top and bottom line growth, as well as our long-term vision to grow as a global off-price retailer. Before I continue, let me turn the call over to Jeff to recap our full year and fourth quarter results.

Jeffrey Naylor

Thanks, Carol. Good morning, everyone. Again, I want to emphasize that we will be referring to adjusted results throughout today's presentation. Reconciliations between GAAP reported and adjusted results are provided in today's release, and are also on our website.

So now to recap full year fiscal 2011 results. Net sales reached $21.9 billion, which is an 8% increase over last year. Consolidated comp store sales were up 4% on top of last year's very strong 6% increase. The growth, as Carol mentioned, was driven entirely by continued growth in transactions with the average ticket down slightly for the year.

Adjusted earnings per share were $3.49, which is a 23% increase over last year's adjusted 48% increase and this underscores the sustainability of our profit growth even over challenging comparisons. Foreign currency rates positively impacted full year EPS by $0.02 this past year compared with a neutral impact the year before that.

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