The TJX Companies, Inc., the leading off-price retailer of apparel and home fashions in the U.S. and worldwide, today announced sales and earnings results for the fiscal year and fourth quarter ended January 26, 2008. Net sales from continuing operations for the 52-week fiscal year were $18.6 billion, a 7% increase over last year, and consolidated comparable store sales increased 4%. Income from continuing operations for the 52-week fiscal year was $772 million, and diluted earnings per share from continuing operations were $1.66 compared to $1.63 for the prior year. Results include after-tax charges of $119 million, or $.25 per share, in Fiscal 2008 and $3 million (which did not change full-year earnings per share) in Fiscal 2007 related to the previously reported unauthorized computer intrusion(s) (see below). Excluding these charges, adjusted diluted earnings per share from continuing operations for Fiscal 2008 were $1.91, a 17% increase over $1.63 for the prior year.
For the 13-week Fiscal 2008 fourth quarter, net sales from continuing operations increased 8% to $5.5 billion, and consolidated comparable store sales increased 4% over last year. Income from continuing operations for the fourth quarter was $301 million, and diluted earnings per share from continuing operations were $.66 compared to $.51 in the prior year. Fourth quarter results include an after-tax benefit of $11 million, or $.02 per share, due to a reduction of the reserve related to the computer intrusion(s) (see below) as compared to a Fiscal 2007 fourth quarter charge of $.01 per share related to the intrusion(s). Excluding these items, adjusted diluted earnings per share from continuing operations were $.64, up 23% over the adjusted $.52 per share in the prior year.
Carol Meyrowitz, President and Chief Executive Officer of The TJX Companies, Inc., stated, "We are very pleased with our performance in 2007. Our strategies yielded strong operating results and margin growth, even in the challenging retail environment. Driving profitable sales remains our top priority, and we have delivered another great year on top of a great year by solidly executing the fundamentals of our flexible, global, off-price model. We were extremely disciplined in managing inventories, which gave us the ability to buy into current trends and offer great brands and fashions at compelling values. New merchandising initiatives and improved marketing highlighted our values and helped drive customer traffic. Further, expense management continued to be a key focus across the Company. In 2008, we will remain focused on many of these same strategies to drive profitable sales growth, and will continue pursuing growth vehicles to expand our brand presence both domestically and internationally."
Reduction of Reserve Related to Previously Announced Computer Intrusion(s)
In the fourth quarter of Fiscal 2008, the Company recorded a reduction in its reserve related to the computer intrusion(s), resulting in an after-tax benefit of approximately $11 million, or $.02 per share. This reduction related primarily to insurance proceeds with respect to the intrusion(s), as well as a reduction in estimated legal and other fees as the Company has continued to resolve disputes, litigation and investigations. The reserve reflects the Company's current estimation of probable losses arising from the computer intrusion(s), in accordance with generally accepted accounting principles. The Company continues to assess its potential exposure and the amount of its reserve based on ongoing developments.
In the fourth quarter of Fiscal 2008, the Company recorded an impairment charge of $5 million, after tax, or $.01 per share, related to Bob's Stores, which is reflected in Bob's Stores' segment results. The impairment charge relates to certain long-lived assets and intangible assets at Bob's Stores and represents the excess of recorded carrying values over the estimated fair value of these assets at year end. This charge was recorded in accordance with SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," under which the Company reviews its long lived assets across all business units and major asset classifications annually to determine potential impairment.
For the full year Fiscal 2008, consolidated pretax profit margin from continuing operations was 6.7% compared to 7.2% in the prior year, reflecting the negative impact (1.0 percentage points) of charges related to the previously announced computer intrusion(s). Excluding these charges, pretax margins increased 0.5 percentage points to 7.7%. Gross margin from continuing operations increased 0.4 percentage points to 24.5%, driven by improved merchandise margins. Selling, general and administrative costs as a percent of sales were 16.8%, which were flat with prior year, due to the Company's continued focus on cost containment, partially offset by a planned increase in marketing expense.
During the fourth quarter of Fiscal 2008, the Company's consolidated pretax profit margin from continuing operations was 8.9%, a 1.4 percentage point improvement over prior year. The reduction to the intrusion(s) reserve, referenced above, positively impacted consolidated pretax profit margin by 0.4 percentage points in the fourth quarter. The gross profit margin from continuing operations was 24.5%, up 1.5 percentage points over prior year, primarily due to a 1.3 percentage point increase in merchandise margins, as well as buying and occupancy cost leverage. The gross profit margin benefited by 0.3 percentage points due to the foreign currency impact of inventory-related hedges, primarily in Canada. Selling, general and administrative costs as a percent of sales was 16.0%, up 0.5 percentage points versus the prior year. This increase primarily reflects a planned increase in marketing expense, the Bob's Stores impairment charge, as well as the timing of certain corporate expense items.
Total inventories as of January 26, 2008, were $2.7 billion compared with $2.6 billion at the same time in the prior year. Consolidated inventories on a per-store basis, including the warehouses, at January 26, 2008, were up 2%. Excluding the impact of foreign currency, inventories were essentially flat on a per-store basis. At the Marmaxx division, the total inventory commitment, including the warehouses, stores and merchandise on order, was down versus last year on a per-store basis. The Company remains very comfortable with its inventory levels, with fewer dollars committed than at this time last year.
During the fourth quarter, the Company spent a total of $300 million to repurchase TJX stock, retiring 10.5 million shares. In Fiscal 2008, the Company spent a total of $950 million to repurchase TJX stock, which was more than planned, retiring a total of 33.3 million shares. As previously announced, the Company's Board of Directors earlier this year approved a new stock repurchase program that authorizes the repurchase of up to $1 billion of TJX common stock from time to time, which represents approximately 8% of the Company's outstanding shares at current prices. The new authorization is in addition to the current repurchase program.
The Company reports results from continuing operations, which exclude the results of operations from 34 discontinued A.J. Wright stores. These stores were closed during the fourth quarter of Fiscal 2007 in order to reposition this business.
Fiscal 2009 Outlook
For the fiscal year ending January 31, 2009, the Company expects earnings per share from continuing operations in the range of $2.20 to $2.25, which represents a 15% to 18% increase over the $1.91 adjusted earnings per share from continuing operations in Fiscal 2008 (detailed above). This guidance includes an expected $.09 per share benefit from the 53rd week in the Company's Fiscal 2009 calendar. Excluding this benefit, this guidance represents a 10% to 13% increase over last year. This range is based upon estimated consolidated comparable store sales growth of 2% to 3%, of which approximately 0.5 percentage points is due to the impact of foreign currency exchange rates.
For the first quarter of Fiscal 2009, the Company expects earnings per share from continuing operations in the range of $.40 to $.41, which represents an 18% to 21% increase over $.34 on a reported basis last year. Prior year's first quarter results include a $.03 per share charge related to the computer intrusion(s). Excluding this charge, this guidance represents an 8% to 11% increase over the prior year's adjusted earnings per share from continuing operations of $.37. This outlook is based upon estimated consolidated comparable store sales growth of 4% to 5% of which approximately 2 percentage points is due to the impact of foreign currency exchange rates.
Stores by Concept
During the fiscal year ended January 26, 2008, the Company added a total of 97 stores, net of closings, to end the year with 2,563 stores, and increased square footage by 4% over the same period last year.