TJX Companies Prices 2.750% Notes - Analyst Blog

Off-price retailer The TJX Companies Inc. TJX disclosed the pricing of a public offering of 2.750% senior unsecured notes worth $750 million, due 2021. TJX intends to use the proceeds from the offering to redeem the 4.200% notes due Aug 15, 2015 and use the balance as working capital and other general corporate purposes.

Leading financial institutions like BofA Merrill Lynch a unit of Bank of America Corporation BAC, Deutsche Bank Securities of Deutsche Bank DB, HSBC of HSBC Holdings plc (HSBC) and Wells Fargo Securities of Wells Fargo & Company WFC are acting as the joint book-running managers for the tender offer.

The notes are scheduled to settle on Jun 5, 2014 subject to customary closing conditions. TJX's senior unsecured notes issuance has been rated ‘A3- (Stable)' by Moody's Corporation MCO. 

We are encouraged by the proposed offering which is expected to reduce the weighted average coupon rate and interest expense, thus improving the liquidity of the company, while providing working capital for general corporate purpose.

The company has a solid balance sheet position. As of May 3, 2014, TJX had $2.1 billion of cash and cash equivalents and a total debt of $1.3 billion. TJX is also active in returning value to shareholders.

During the recently concluded first quarter of 2015, the company spent a total of $360 million to repurchase 6.0 million common shares. TJX also announced its plan to repurchase approximately $1.6 to $1.7 billion of common stocks during fiscal 2015. In Apr 2014, TJX hiked its quarterly dividend by 21% — the 18^th consecutive year of quarterly dividend hike.

TJX Companies will now pay a quarterly dividend of 17.5 cents per share on Jun 5, 2014 to shareholders of record as of May 15. The increased dividend is equivalent to an annual dividend of 70 cents for fiscal 2014, up from 58 cents in fiscal 2013. The new dividend will yield 1.1% annually.

However, the Zacks Rank #4 (Sell) reported mixed first-quarter fiscal 2015 results. Earnings of 64 cents per share missed the Zacks Consensus Estimate by 4.5% due to higher-than-expected unfavorable foreign currency impact. However profits were ahead of the year-ago figure by 3.12% backed by higher consumer traffic, improved margins and solid comparable-store sales growth for consecutive months.