TJX just announced they are closing all stores and all e-commerce sites and distribution centers for 2 weeks, drawing down $1B on their credit facility, suspending share buybacks and “evaluating” their dividend. Excluding capitalized leases, they have no net debt. As of their Feb fiscal year end, they had $3.2B in cash and $2.2B in debt. The drawdown will bring their cash balance to $4B. A recent accounting change has required the capitalization of leases which adds another $7.8B in debt to their balance sheet. Basically the accounting change requires companies to take the PV of all future leases and add it to LT liabilities on their balance sheet. This has happened for all retailers, restaurants etc. For this fiscal year, TJX has ~$1.6B in lease commitments. As of February 1, 2020, they operated a total of 4,529 stores in nine countries, the US, Canada, the UK, Ireland, Germany, Poland, Austria, the Netherlands, and Australia, and 4 e-commerce sites.
FRAMINGHAM, Mass.–(BUSINESS WIRE)– The TJX Companies, Inc. (NYSE: TJX), today announced several actions related to its response to the rapidly changing market uncertainty from the COVID-19 pandemic.
Effective today the Company is closing all of its stores in the United States, Canada, Europe, and Australia for two weeks. In certain regions, including Germany, Poland, Austria, Ireland, and the Netherlands, and a number of U.S. and Canadian locations, the Company had previously closed stores based on several factors, including government or health department requirements. The Company is also closing its online businesses tjmaxx.com, marshalls.com, and sierra.com. Further, the Company is temporarily closing its distribution centers and offices, with Associates working remotely when they can. We know our Associates are very concerned for their health and financial well-being, and we plan to pay our store, distribution center and office Associates for two weeks during these closures.
To further strengthen its financial position and balance sheet, and maintain financial liquidity and flexibility, the Company is taking the following actions:
· Drawing down $1 billion from its revolving credit facilities.
· Suspending its share repurchase program.
· Evaluating its dividend program.
· Reviewing all operating expenses.
· Reducing capital expenditures.
The Company also announced today that it is withdrawing its first quarter and full year Fiscal 2021 financial guidance given on its February 26, 2020 earnings conference call. The Company is not providing an updated outlook at this time.
As the COVID-19 pandemic is complex and evolving rapidly, the Company’s plans as outlined above may change.
Sarah Kanwal
Equity Analyst, Director
Direct: 617.226.0022
Fax: 617.523.8118
Crestwood Advisors
One Liberty Square, Suite 500
Boston, MA 02109
$TJX.US
[tag TJX]
[category equity research]