Tuesday, TJX Companies, Inc. (TJX), an off-price retailer of apparel and home fashions, said it sold casual clothing and footwear superstore Bob's Stores to private equity firms Versa Capital Management and Crystal Capital. Terms of the sale were not disclosed. The company also lifted its Fiscal 2009 guidance for earnings per share from continuing operations.
The sale is expected to generate cash proceeds of about $23 million, which primarily represents anticipated tax benefits, as well as proceeds from the sale, partially offset by fees and expenses related to the transaction.
The Framingham, Massachusetts-based company acquired Bob's Stores in late 2003. Bob's Stores' net sales were $310 million for the fiscal year ended January 26, 2008, and it currently operates 34 store locations in the Northeastern U.S.
The company will record an after-tax loss of $15 million or $0.03 per share from the sale of Bob's Stores, which will be reported as a loss from discontinued operations.
Historical results will also be adjusted to reflect the Bob's Stores business segment as discontinued operations. The loss on the sale and the operating losses related to Bob's Stores will not impact results from continuing operations.
Peter J. Solomon Company, LLC acted as financial advisor and Ropes & Gray LLP provided legal counsel to TJX Companies in connection with this transaction.
Commenting on the sale, Carol Meyrowitz, President and Chief Executive Officer of TJX Companies, said, "…our decision to sell the business reflects our vision to grow TJX as a global, off-price company. We believe that focusing on the significant opportunities to expand the domestic and international presence of our core, off-price concepts is the right strategy for us at this time."
Looking ahead, the company noted that its guidance for earnings per share from continuing operations for the third quarter and fourth quarter is unchanged from the previous outlook.
However, the company now expects full year Fiscal 2009 earnings from continuing operations to be in the range of $2.30-$2.35 per share, up from the prior guidance for earnings of $2.26-$2.31 per share from continuing operations due to the reclassification of Bob's Stores results to discontinued operations.
Full year guidance for earnings per share from continuing operations for the current fiscal year includes an expected $0.09 per share benefit from the 53rd week in the company's Fiscal 2009 fourth quarter as well as a $0.02 per share of unanticipated tax-related adjustments recorded in the first quarter of Fiscal 2009. Last year's results included a charge of $0.25 per share related to computer intrusions.
Excluding items, full year Fiscal 2009 adjusted earnings from continuing operations are estimated to be in the range of $2.19-$2.24 per share, an increase of 13%-16% over prior year's adjusted $1.93 per share. The company's previous outlook was for adjusted earnings from continuing operations of $2.17-$2.22.
On average, 16 analysts polled by First Call/Thomson Financial expect earnings of $2.30 per share for fiscal 2009 with the low and high ends being $2.27 per share and $2.33 per share, respectively.
Last month, an analyst of Credit Suisse downgraded TJX shares to "Neutral" from "Outperform" with a price target of $35, attributing the revision primarily to valuation. The analyst believes the market has come to appreciate the defensive nature of the off-price business model and expects strong results to continue.
TJX closed Tuesday's regular trade at $34.77, down $0.82 or 2.30% from the previous close, on 4.48 million shares. For the past year, the stock trended in the range of $25.49 - $36.44.
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