TJX Cos. Inc. (TJX)
Analysis of Revenues
High level of difficulty
Accounting Policy on Revenue Recognition
TJX adopted Revenue from Contracts with Customers (referred to as “ASC 606”), on February 4, 2018 (“the adoption date”). The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. TJX adopted the new guidance under the modified retrospective approach which resulted in a $59 million cumulative adjustment to increase retained earnings. The cumulative adjustment primarily related to revenue recognized on the value of unredeemed rewards certificates issued to customers as part of TJX’s U.S. co-branded credit card loyalty program. TJX now recognizes the estimated unredeemed awards when they are earned, rather than when merchandise credits expire or when the likelihood of redemption becomes remote. In addition, online sales are now recognized at the shipping point rather than receipt by the customer. Other changes relate to the presentation of revenue as certain expenses previously presented as a reduction of revenue are now classified as selling, general and administrative expenses (“SG&A”). The new standard required a change in the presentation of the sales return reserve on the balance sheet, which TJX previously recorded net of the value of returned merchandise and now is presented at gross sales value with an asset established for the value of the merchandise returned. There was no change in the timing or amount of revenue recognized under the new standard as it related to revenue from point of sale at the registers in TJX’s stores, which constitutes more than 98% of the revenue. Financial results for fiscal periods after the adoption date are presented under ASC 606 while results from prior periods are not adjusted and continue to be reported under the accounting standards in effect for the prior period. TJX applied ASC 606 only to contracts that were not completed prior to fiscal 2019.
Source: 10-K (filing date: 2019-04-03).
Revenues as Reported
TJX Cos. Inc., Income Statement, Revenues
US$ in thousands
|12 months ended||Feb 2, 2019||Feb 3, 2018||Jan 28, 2017||Jan 30, 2016||Jan 31, 2015||Feb 1, 2014|
|In the United States|
Based on: 10-K (filing date: 2019-04-03), 10-K (filing date: 2018-04-04), 10-K (filing date: 2017-03-28), 10-K (filing date: 2016-03-29), 10-K (filing date: 2015-03-31), 10-K (filing date: 2014-04-01).
|Net sales||Amount of revenue recognized from goods sold, services rendered, insurance premiums, or other activities that constitute an earning process. Includes, but is not limited to, investment and interest income before deduction of interest expense when recognized as a component of revenue, and sales and trading gain (loss).||TJX Cos. Inc.’s net sales increased from 2017 to 2018 and from 2018 to 2019.|