The TJX Companies (TJX)
Q3 2013 Earnings Call
November 13, 2012 11:00 am ET
Executives
Carol M. Meyrowitz - Chief Executive Officer and Director
Sherry Lang - Senior Vice President of Global Communications
Scott Goldenberg - Chief Financial Officer, Executive Vice President and Principal Accounting Officer
Ernie L. Herrman - President
Analysts
Kimberly C. Greenberger - Morgan Stanley, Research Division
Jeffrey S. Stein - Northcoast Research
Jennifer M. Davis - Lazard Capital Markets LLC, Research Division
Brian J. Tunick - JP Morgan Chase & Co, Research Division
Nancy Hilliker
Michael Baker - Deutsche Bank AG, Research Division
Daniel Hofkin - William Blair & Company L.L.C., Research Division
Richard Ellis Jaffe - Stifel, Nicolaus & Co., Inc., Research Division
Omar Saad - ISI Group Inc., Research Division
Evren Dogan Kopelman - Wells Fargo Securities, LLC, Research Division
Paul Lejuez - Nomura Securities Co. Ltd., Research Division
Dana Lauren Telsey - Telsey Advisory Group LLC
Mark K. Montagna - Avondale Partners, LLC, Research Division
Howard Tubin - RBC Capital Markets, LLC, Research Division
Marni Shapiro - The Retail Tracker
Roxanne Meyer - UBS Investment Bank, Research Division
Laura A. Champine - Canaccord Genuity, Research Division
Presentation
Operator
Ladies and gentlemen, thank you for standing by. Welcome to the TJX Companies Third Quarter Fiscal 2013 Financial Results Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded, Tuesday, November 13, 2012.
I would like to turn the conference call over to Ms. Carol Meyrowitz, Chief Executive Officer of the TJX Companies, Inc. Please go ahead, ma'am.
Carol M. Meyrowitz
Good morning, everyone. And before we begin, Sherry has a few words.
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 27, 2012. 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 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 are 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.
Reconciliations of the non-GAAP measures we discuss today to GAAP measures are included in today's press release or otherwise posted on our website, again, www.tjx.com, in the Investor Information section.
Thank you. And I'll turn it over to Carol.
Carol M. Meyrowitz
Thanks, Sherry. And joining me and Sherry on the call are Ernie Herrman; and Scott Goldenberg. So before we talk about the third quarter, I want to say that on behalf of TJX, our hearts go out to everyone who is affected by Hurricane Sandy. The combination of our own donations and the fundraising effort we held in the U.S. stores this past weekend should come to about $1.5 million going to the Red Cross Discovery -- Disaster Recovery Funds for the natural disaster. So turning to our results.
I'm extremely pleased with our third quarter performance. Our strong momentum continued and once again, we demonstrated our ability to post strong comps and profit margin gains on top of challenging year-over-year comparisons. Comps increased 7%, significantly exceeding plan, over 3% increase last year. Earnings per share increased 17%, also above plan, and on top of 3 consecutive years of double-digit EPS growth in the third quarter.
Importantly, our momentum continued to be broad-based with all of our businesses delivering excellent results. Customer traffic continued to drive the comp increases at all of our divisions. We believe this speaks to the staying power of our value proposition, great fashions, great brands and, of course, extreme values.
What I want to emphasize on this call is that as excited as we are about our business for the holiday season and fourth quarter, we are more excited about the long term. In fact, as CEO of this company, I have never been more excited about the future of TJX. I believe our long-term opportunities are quite astounding.
And before I continue, I'll turn the call over to Scott to recap our third quarter consolidated results.
Scott Goldenberg
Thanks, Carol, and good morning, everyone. Now to recap our third quarter results. Net sales reached $6.4 billion, an 11% increase over last year. Consolidated comparable store sales were up a very strong 7%, well exceeding our expectations and achieved over a 3% increase last year. Diluted earnings per share were $0.62, a 17% increase over last year's $0.53 and above our plan. These results were achieved on top of EPS growth rates in the last 3 years of 15%, 12% and 41% in the third quarter. Foreign currency exchange rates had a neutral impact on EPS compared to a $.01 positive impact last year.
In our press release today, be called out the impact of certain third quarter items on third quarter EPS and pretax margins. As we've discussed on prior sales calls, we recorded a noncash charge for pension accruals for prior periods. In addition, we recorded an adjustment to our reserve for former operations related to closed stores. Neither of these items affected our core business nor were anticipated in our original guidance. Combined, these 2 items reduced third quarter EPS by $0.03 and consolidated pretax margins by 60 basis points.
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