e10vk
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-K
[ x ] Annual Report Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of
1934
For the fiscal year
ended January 29, 2011
or
[ ] Transition
Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period
from
to Commission
file
number 1-4908
THE
TJX COMPANIES, INC.
(Exact name of registrant as
specified in its charter)
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Delaware
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04-2207613
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(State or other jurisdiction of
incorporation or organization)
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(IRS Employer Identification No.)
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770 Cochituate Road
Framingham, Massachusetts
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01701
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(Address of principal executive
offices)
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(Zip Code)
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Registrants telephone number, including area code
(508) 390-1000
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Securities registered pursuant to Section 12(b) of the Act:
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Title of each class
Common Stock, par value $1.00 per share
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Name of each exchange
on which registered
New
York Stock Exchange
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Securities registered pursuant to
Section 12(g) of the Act: NONE
Indicate by check mark if the
registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.
YES [ x ] NO [ ]
Indicate by check mark if the
registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act.
YES [ ] NO [ x ]
Indicate by check mark whether the
registrant (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for
the past 90 days. YES [ x ] NO [ ]
Indicate by check mark whether the
registrant has submitted electronically and posted on its
corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of
Regulation S-T
(§ 232.405 of this chapter) during the preceding
12 months (or for such shorter period that the registrant
was required to submit and post such files). YES [ x
] NO [ ]
Indicate by check mark if
disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K
(§ 229.405 of this chapter) is not contained herein,
and will not be contained, to the best of registrants
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this
Form 10-K
or any amendment to this
Form 10-K. [ ]
Indicate by check mark whether the
registrant is a large accelerated filer, an accelerated filer, a
non-accelerated filer, or a smaller reporting company. See the
definitions of large accelerated filer,
accelerated filer and smaller reporting
company in
Rule 12b-2
of the Exchange Act. (Check one):
Large Accelerated Filer [ x ]
Accelerated Filer [ ] Non-Accelerated Filer [ ]
Smaller Reporting Company [ ]
(Do not check if a smaller reporting company)
Indicate by check mark whether the
registrant is a shell company (as defined in
Rule 12b-2
of the Act). YES [ ] NO [ x ]
The aggregate market value of the
voting common stock held by non-affiliates of the registrant on
July 31, 2010 was $16,542,276,373, based on the closing
sale price as reported on the New York Stock Exchange.
There were 389,657,340 shares
of the registrants common stock, $1.00 par value,
outstanding as of January 29, 2011.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Proxy Statement to
be filed with the Securities and Exchange Commission in
connection with the Annual Meeting of Stockholders to be held on
June 14, 2011 (Part III).
Cautionary
Note Regarding Forward-Looking Statements
This
Form 10-K
and our 2010 Annual Report to Shareholders contain
forward-looking statements intended to qualify for
the safe harbor from liability established by the Private
Securities Litigation Reform Act of 1995, including some of the
statements in this
Form 10-K
under Item 1, Business, Item 7,
Managements Discussion and Analysis of Financial
Condition and Results of Operations, and Item 8,
Financial Statements and Supplementary Data, and in
our 2010 Annual Report to Shareholders under Letter to
Shareholders and Financial Graphs.
Forward-looking statements are inherently subject to risks,
uncertainties and potentially inaccurate assumptions. Such
statements give our current expectations or forecasts of future
events; they do not relate strictly to historical or current
facts. We have generally identified such statements by using
words such as anticipate, believe,
could, estimate, expect,
forecast, intend, looking
forward, may, plan,
potential, project, should,
target, will and would or
any variations of these words or other words with similar
meanings. All statements that address activities, events or
developments that we intend, expect or believe may occur in the
future are forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended and
Section 21E of the Securities Exchange Act of 1934, as
amended, or Exchange Act. These forward looking
statements may relate to such matters as our future
actions, future performance or results of current and
anticipated sales, expenses, interest rates, foreign exchange
rates and results and the outcome of contingencies such as legal
proceedings.
We cannot guarantee that the results and other expectations
expressed, anticipated or implied in any forward-looking
statement will be realized. The risks set forth under
Item 1A of this
Form 10-K
describe major risks to our business. A variety of factors
including these risks could cause our actual results and other
expectations to differ materially from the anticipated results
or other expectations expressed, anticipated or implied in our
forward-looking statements. Should known or unknown risks
materialize, or should our underlying assumptions prove
inaccurate, actual results could differ materially from past
results and those anticipated, estimated or projected in the
forward-looking statements. You should bear this in mind as you
consider forward-looking statements.
Our forward-looking statements speak only as of the dates on
which they are made, and we do not undertake any obligation to
update any forward-looking statement, whether to reflect new
information, future events or otherwise. You are advised,
however, to consult any further disclosures we may make in our
future reports to the Securities and Exchange Commission
(SEC), on our website, or otherwise.
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PART I
BUSINESS
OVERVIEW
The TJX Companies, Inc. (TJX) is the leading off-price apparel
and home fashions retailer in the United States and worldwide.
Our over 2,700 stores offer a rapidly changing assortment of
quality, brand-name and designer merchandise at prices generally
20% to 60% below department and specialty store regular prices,
every day.
Retail Concepts. We operate multiple off-price
retail chains in the U.S., Canada and Europe which are known for
their treasure hunt shopping experience and excellent values on
fashionable, brand-name merchandise. Our stores turn their
inventories rapidly relative to traditional retailers to create
a sense of urgency and excitement for our customers which
encourages frequent customer visits. With our flexible no
walls business model, we can quickly expand and contract
merchandise categories in response to consumers changing
tastes. Although our stores primarily target the middle to upper
middle income customer, we reach a broad range of customers
across many demographic groups and income levels with the values
we offer. The operating platforms and strategies of all of our
retail concepts are synergistic. As a result, we capitalize on
our expertise and systems throughout our business, leveraging
information, best practices, initiatives and new ideas, and
developing talent across our concepts. We also leverage the
substantial buying power of our businesses in our global
relationships with vendors.
In the United States:
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T.J. MAXX and MARSHALLS: T.J. Maxx and Marshalls
(referred to together in the U.S. as Marmaxx) are the
largest off-price retailers in the United States with a total of
1,753 stores. We founded T.J. Maxx in 1976 and acquired
Marshalls in 1995. Both chains sell family apparel (including
footwear and accessories), home fashions (including home basics,
accent furniture, lamps, rugs, wall décor, decorative
accessories and giftware) and other merchandise. We
differentiate T.J. Maxx and Marshalls through different product
assortment (including an expanded assortment of fine jewelry and
accessories and a designer section called The Runway at T.J.
Maxx and a full line of footwear, a broader mens offering
and a juniors department called The Cube at Marshalls),
in-store initiatives, marketing and store appearance. This
differentiated shopping experience at T.J. Maxx and Marshalls
encourages our customers to shop both chains.
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HOMEGOODS: HomeGoods, introduced in 1992, is the
leading off-price retailer of home fashions in the
U.S. Through 336 stores, it sells a broad array of home
basics, giftware, accent furniture, lamps, rugs, wall
décor, decorative accessories, childrens furniture,
seasonal merchandise and other merchandise.
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In Canada:
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WINNERS: Acquired in 1990, Winners is the leading
off-price apparel and home fashions retailer in Canada. The
merchandise offering at its 215 stores across Canada is
comparable to T.J. Maxx and Marshalls. In 2008, Winners opened 3
StyleSense stores, a concept that offers family footwear and
accessories.
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MARSHALLS: In March 2011, we brought the Marshalls
chain to Canada, with six stores planned to open in Canada
during Fiscal 2012.
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HOMESENSE: HomeSense introduced the home fashions
off-price concept to Canada in 2001. The chain has 82 stores
with a merchandise mix of home fashions similar to HomeGoods.
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In Europe:
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T.K. MAXX: Launched in 1994, T.K. Maxx introduced
off-price to Europe and remains Europes only major
off-price retailer of apparel and home fashions. With 307
stores, T.K. Maxx operates in the U.K. and Ireland as well as
Germany, to which it expanded in 2007, and Poland, to which it
expanded in 2009. Through its stores and online website, T.K.
Maxx offers a merchandise mix similar to T.J. Maxx, Marshalls
and Winners.
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HOMESENSE: HomeSense introduced the home fashions
off-price concept to the U.K. in 2008 and its 24 stores offer a
merchandise mix of home fashions in the U.K. similar to that of
HomeGoods in the U.S. and HomeSense in Canada.
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A.J. Wright Consolidation. In the fourth quarter
of fiscal 2011, we announced our decision to consolidate A.J.
Wright, an off-price retailer of family apparel and home
fashions primarily targeting the lower middle income customer,
by converting 90 of its stores to T.J. Maxx, Marshalls or
HomeGoods banners and by closing the remaining 72 stores, two
distribution centers and home office. We have increasingly
improved our ability to reach the A.J. Wright customer
demographic through our T.J. Maxx and Marshalls stores and have
seen these stores perform well in markets with these
demographics. Consolidating the A.J. Wright chain is expected to
allow us to serve this customer demographic more efficiently,
focus our financial and managerial resources on fewer, larger
businesses with higher returns and enhance the growth prospects
for the Company overall. For more detail on the A.J. Wright
consolidation, see Note C to the consolidated financial
statements.
Flexible Business Model. Our off-price business
model is flexible, particularly for a company of our size,
allowing us to react to market trends. Our opportunistic buying
and inventory management strategies give us flexibility to
adjust our merchandise assortments more frequently than
traditional retailers, and the design and operation of our
stores and distribution centers support this flexibility. By
maintaining a liquid inventory position, our merchants can buy
close to need, enabling them to buy into current market trends
and take advantage of opportunities in the marketplace. Buying
close to need gives us insight into consumer and fashion trends
and current pricing at the time we make our purchases, helping
us buy smarter and reduce our markdown exposure. Our
selling floor space is flexible, without walls between
departments and largely free of permanent fixtures, so we can
easily expand and contract departments in response to customer
demand, as well as market and fashion trends. Our distribution
facilities are designed to accommodate our methods of receiving
and shipping broadly ranging quantities of product to our large
store base quickly and efficiently.
Opportunistic Buying. We are differentiated from
traditional retailers by our opportunistic buying of quality,
fashionable, brand name merchandise, which permits us to buy
into current trends and pricing. We purchase the majority of our
apparel inventory and a significant portion of our home fashion
inventory opportunistically. Virtually all of our opportunistic
purchases are made at discounts from initial wholesale prices.
Our merchant organization numbers over 700, and we operate 12
buying offices in nine countries. In contrast to traditional
retailers, which typically order goods far in advance of the
time the product appears on the selling floor, our merchants are
in the marketplace virtually every week. They buy primarily for
the current selling season, and to a limited extent, for a
future selling season. Buying later in the inventory cycle than
traditional retailers and using the flexibility of our stores to
shift in and out of categories, we are able to take advantage of
opportunities to acquire merchandise at substantial discounts
that regularly arise from the routine flow of inventory in the
highly fragmented apparel and home fashions marketplace, such as
order cancellations, manufacturer overruns and special
production. We operate with lean inventory levels compared to
conventional retailers to give ourselves the flexibility to take
advantage of these opportunities.
We buy most of our inventory directly from manufacturers, with
some coming from retailers and other sources. A small percentage
of the merchandise we sell is private label merchandise produced
for us by third parties. Our expansive vendor universe, which is
in excess of 14,000, provides us substantial and diversified
access to merchandise. We have not historically experienced
difficulty in obtaining adequate amounts of quality inventory
for our business in either favorable or difficult retail
environments and believe that we will continue to have adequate
inventory as we continue to grow.
We believe a number of factors make us an attractive outlet for
the vendor community and provide us excellent access on an
ongoing basis to leading branded merchandise. We are typically
willing to purchase
less-than-full
assortments of items, styles and sizes and quantities ranging
from small to very large; we are able to disperse inventory
across our geographically diverse network of stores; we pay
promptly; and we generally do not ask for typical retail
concessions (such as advertising, promotional and markdown
allowances), delivery concessions (such as drop shipments to
stores or delayed deliveries) or return privileges. Importantly,
we provide vendors an outlet with financial strength and an
excellent credit rating.
Inventory Management. We offer our customers a
rapidly changing selection of merchandise to create a
treasure hunt experience in our stores and spur
customer visits. To achieve this, we seek to turn the inventory
in our stores rapidly, regularly offering fresh selections of
apparel and home fashions at excellent values. Our specialized
inventory planning, purchasing, monitoring and markdown systems,
coupled with distribution center storage, processing, handling
and shipping systems, enable us to tailor the merchandise in our
stores to local preferences and demographics, achieve rapid
in-store inventory turnover on a vast array of products and sell
substantially all merchandise within targeted selling periods.
We make pricing and markdown decisions and store inventory
replenishment determinations centrally, using
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information provided by specialized computer systems, designed
to move inventory through our stores in a timely and disciplined
manner. We do not generally engage in promotional pricing
activity such as sales or coupons. Over the past several years,
we have improved our supply chain, allowing us to reduce
inventory levels and ship more efficiently and quickly. We plan
to continue to invest in our supply chain with the goal of more
precisely and effectively allocating the right merchandise to
each store and delivering it quicker and more efficiently.
Pricing. Our mission is to offer retail prices in
our stores generally 20% to 60% below department and specialty
store regular retail prices. Through our opportunistic
purchasing, we are generally able to react to price fluctuations
in the wholesale market to maintain this pricing. For example,
in a time of rising inventory prices, if conventional retailers
increase retail prices to preserve merchandise margin, we
typically are able to increase our retail prices
correspondingly, while maintaining our value relative to
conventional retailers and preserve our own merchandise margin.
If conventional retailers do not raise prices to pass rising
inventory costs on to consumers, we seek to buy inventory at
prices that permit us to maintain our values relative to
conventional retailers and sustain our merchandise margins.
Low Cost Operations. We operate with a low cost
structure compared to many traditional retailers. We focus
aggressively on expenses throughout our business. Although we
have enhanced our advertising over the past several years to
attract new customers to our stores, our advertising budget as a
percentage of sales remains low compared to traditional
retailers. We design our stores, generally located in community
shopping centers, to provide a pleasant, convenient shopping
environment but, relative to other retailers, do not spend
heavily on store fixtures. Additionally, our distribution
network is designed to run cost effectively. We continue to
pursue cost savings in our operations.
Customer Service. While we offer a self-service
format, we train our store associates to provide friendly and
helpful customer service and seek to staff our stores to deliver
a positive shopping experience. We typically offer
customer-friendly return policies. We accept a variety of
payment methods including cash, credit cards and debit cards. In
the U.S., we offer a co-branded TJX credit card and a private
label credit card, both through a bank, but do not own the
customer receivables related to either program. We are engaged
in a store upgrade program across our banners, designed to
enhance the customer shopping experience and drive sales.
Distribution. We operate distribution centers
encompassing approximately 10 million square feet in four
countries, which are large, highly automated and built to suit
our specific, off-price business model. We ship substantially
all of our merchandise to our stores through these distribution
centers as well as warehouses and shipping centers operated by
third parties. We shipped approximately 1.8 billion units
to our stores during fiscal 2011.
Store Growth. Expansion of our business through
the addition of new stores is an important part of our strategy
for TJX as a global, off-price, value Company. The following
table provides information on the growth and potential growth of
each of our current chains in their current geographies:
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Approximate
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Number of Stores at Year
End(1)
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Estimated
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Average Store
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Fiscal 2012
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Ultimate Number
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Size (square feet)
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Fiscal 2010
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Fiscal 2011
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(estimated)
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of Stores
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In the United States:
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T.J. Maxx
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30,000
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890
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923
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Marshalls
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32,000
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813
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830
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Marmaxx
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1,703
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1,753
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1,869
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2,300-2,400
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HomeGoods
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25,000
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323
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336
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374
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600
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In Canada:
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Winners
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29,000
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211
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215
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220
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240
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HomeSense
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24,000
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79
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82
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86
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90
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Marshalls
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33,000
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6
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90-100
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In Europe:
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T.K. Maxx
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32,000
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263
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307
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334
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650-725
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HomeSense
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21,000
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14
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24
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24
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100-150
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**
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2,593
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2,717
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2,913
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4,070-4,305
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(1)
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The number of stores at fiscal year
end in the above table does not include A.J. Wright stores,
which were 150 for fiscal 2010 and 142 for fiscal 2011. The
conversion of 90 A.J. Wright stores, of which 9 are relocations
of existing T.J. Maxx and Marshalls stores, is included in
the Fiscal 2012 (estimated) count for Marmaxx and HomeGoods.
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*
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U.K., Ireland, Germany and Poland
only
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**
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U.K. and Ireland only
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Included in the Marshalls store counts above are free-standing
Marshalls Shoe Shop stores, which sell family footwear and
accessories (six stores at fiscal 2011 year end). Included
in the Winners store counts above are StyleSense stores in
Canada, which sell family footwear and accessories (three stores
at fiscal 2011 year end). Some of our HomeGoods and
Canadian HomeSense stores are co-located with one of our apparel
stores in a superstore format. We count each of the stores in
the superstore format as a separate store.
Revenue Information. The percentages of our
consolidated revenues by geography for the last three fiscal
years are as follows:
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Fiscal 2009
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Fiscal 2010
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Fiscal 2011
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United States
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77
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%
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78
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%
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77%
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Northeast
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26
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%
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26
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%
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26%
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Midwest
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13
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%
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13
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%
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14%
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South (including Puerto Rico)
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25
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%
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26
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%
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24%
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West
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13
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%
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13
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%
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13%
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Canada
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11
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%
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11
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%
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12%
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Europe
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12
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%
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11
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%
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11%
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Total
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100
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%
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100
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%
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100%
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The percentages of our consolidated revenues by major product
category for the last three fiscal years are as follows:
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Fiscal 2009
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Fiscal 2010
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Fiscal 2011
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Clothing including footwear
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62
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%
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61
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%
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61
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%
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Home fashions
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25
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%
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26
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%
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26
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%
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Jewelry and accessories
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13
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%
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13
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%
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13
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%
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Total
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100
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%
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100
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%
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100
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%
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Segment Overview. As of January 29, 2011,
we operated five business segments: three in the
U.S. and one in each of Canada and Europe. Each of our
segments has its own administrative, buying and merchandising
organization and distribution network. Of the U.S. based
chains, T.J. Maxx and Marshalls, referred to as Marmaxx, are
managed together and reported as a single segment and HomeGoods
and A.J. Wright each is reported as a separate segment. As a
result of the consolidation of A.J. Wright, it will cease to be
a separate segment during fiscal 2012. Outside the U.S., chains
in Canada (Winners, HomeSense and StyleSense) are under common
management and reported as the TJX Canada segment, and chains in
Europe (T.K. Maxx and HomeSense) are under common management and
reported as the TJX Europe segment. More detailed information
about our segments, including financial information for each of
the last three fiscal years, can be found in Note H to the
consolidated financial statements.
6
STORE
LOCATIONS.
Our current chains operated stores in the following locations as
of January 29, 2011:
Stores
located in the United States:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
T.J. Maxx
|
|
|
Marshalls
|
|
|
HomeGoods
|
|
|
|
|
Alabama
|
|
|
20
|
|
|
|
4
|
|
|
|
2
|
|
Arizona
|
|
|
11
|
|
|
|
14
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|
|
|
6
|
|
Arkansas
|
|
|
10
|
|
|
|
|
|
|
|
1
|
|
California
|
|
|
84
|
|
|
|
116
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|
|
|
35
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|
Colorado
|
|
|
11
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|
|
|
7
|
|
|
|
4
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|
Connecticut
|
|
|
25
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|
|
|
23
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|
|
|
10
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|
Delaware
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|
|
3
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|
|
|
3
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|
|
|
1
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|
District of Columbia
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|
|
1
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|
|
|
1
|
|
|
|
|
|
Florida
|
|
|
69
|
|
|
|
72
|
|
|
|
35
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|
Georgia
|
|
|
38
|
|
|
|
28
|
|
|
|
10
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|
Idaho
|
|
|
5
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|
|
|
1
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|
|
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1
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|
Illinois
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|
|
39
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|
|
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41
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|
|
|
17
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|
Indiana
|
|
|
18
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|
|
|
10
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|
|
|
2
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|
Iowa
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|
|
6
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|
|
|
2
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|
|
|
|
|
Kansas
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|
|
6
|
|
|
|
3
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|
|
|
1
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|
Kentucky
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|
|
11
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|
|
|
4
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|
|
|
3
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|
Louisiana
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|
|
9
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|
|
|
10
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|
|
|
|
|
Maine
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|
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8
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|
|
|
4
|
|
|
|
3
|
|
Maryland
|
|
|
11
|
|
|
|
23
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|
|
|
7
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|
Massachusetts
|
|
|
48
|
|
|
|
49
|
|
|
|
21
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|
Michigan
|
|
|
34
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|
|
|
20
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|
|
|
11
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|
Minnesota
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|
|
12
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|
|
|
12
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|
|
|
8
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|
Mississippi
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|
|
6
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|
|
|
3
|
|
|
|
|
|
Missouri
|
|
|
14
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|
|
|
13
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|
|
|
6
|
|
Montana
|
|
|
3
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|
|
|
|
|
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|
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|
Nebraska
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|
|
4
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|
|
|
2
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|
|
|
|
|
Nevada
|
|
|
7
|
|
|
|
8
|
|
|
|
4
|
|
New Hampshire
|
|
|
14
|
|
|
|
8
|
|
|
|
6
|
|
New Jersey
|
|
|
31
|
|
|
|
41
|
|
|
|
24
|
|
New Mexico
|
|
|
3
|
|
|
|
3
|
|
|
|
|
|
New York
|
|
|
53
|
|
|
|
68
|
|
|
|
26
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|
North Carolina
|
|
|
32
|
|
|
|
20
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|
|
|
11
|
|
North Dakota
|
|
|
3
|
|
|
|
|
|
|
|
|
|
Ohio
|
|
|
38
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|
|
|
20
|
|
|
|
9
|
|
Oklahoma
|
|
|
5
|
|
|
|
4
|
|
|
|
|
|
Oregon
|
|
|
8
|
|
|
|
5
|
|
|
|
3
|
|
Pennsylvania
|
|
|
39
|
|
|
|
32
|
|
|
|
14
|
|
Puerto Rico
|
|
|
2
|
|
|
|
17
|
|
|
|
6
|
|
Rhode Island
|
|
|
5
|
|
|
|
6
|
|
|
|
4
|
|
South Carolina
|
|
|
19
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|
|
|
9
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|
|
|
4
|
|
South Dakota
|
|
|
2
|
|
|
|
|
|
|
|
|
|
Tennessee
|
|
|
25
|
|
|
|
13
|
|
|
|
6
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|
Texas
|
|
|
46
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|
|
|
66
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|
|
|
17
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|
Utah
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|
|
10
|
|
|
|
|
|
|
|
2
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|
Vermont
|
|
|
5
|
|
|
|
1
|
|
|
|
1
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|
Virginia
|
|
|
31
|
|
|
|
25
|
|
|
|
9
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|
Washington
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|
|
15
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|
|
|
10
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|
|
|
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|
West Virginia
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|
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6
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|
|
|
3
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|
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|
1
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|
Wisconsin
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|
|
17
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|
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6
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5
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Wyoming
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|
|
1
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|
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|
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Total Stores
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|
|
923
|
|
|
|
830
|
|
|
|
336
|
|
|
Store counts above include the T.J. Maxx, Marshalls or HomeGoods
portion of a superstore.
At January 29, 2011, we also operated 142 A.J. Wright
stores, which we subsequently closed. We are converting 90 of
these A.J. Wright locations to other banners (81 new stores and
9 relocations).
7
Stores
Located in Canada:
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Winners
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HomeSense
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|
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|
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Alberta
|
|
|
25
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|
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|
9
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|
British Columbia
|
|
|
27
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|
|
|
15
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|
Manitoba
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|
|
6
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|
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|
1
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|
New Brunswick
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|
|
3
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|
|
|
2
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Newfoundland
|
|
|
2
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|
|
|
1
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|
Nova Scotia
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|
|
8
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|
|
|
2
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|
Ontario
|
|
|
101
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|
|
|
38
|
|
Prince Edward Island
|
|
|
1
|
|
|
|
|
|
Quebec
|
|
|
39
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|
|
|
12
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|
Saskatchewan
|
|
|
3
|
|
|
|
2
|
|
|
Total Stores
|
|
|
215
|
|
|
|
82
|
|
|
Store counts above include the Winners or HomeSense portion of a
superstore.
Stores
Located in Europe:
|
|
|
|
|
|
|
|
|
|
|
|
|
T.K. Maxx
|
|
|
HomeSense
|
|
|
|
|
United Kingdom
|
|
|
237
|
|
|
|
24
|
|
Republic of Ireland
|
|
|
16
|
|
|
|
|
|
Germany
|
|
|
47
|
|
|
|
|
|
Poland
|
|
|
7
|
|
|
|
|
|
|
Total Stores
|
|
|
307
|
|
|
|
24
|
|
|
Competition. The retail apparel and home fashion
business is highly competitive. We compete on the basis of
fashion, quality, price, value, merchandise selection and
freshness, brand name recognition, service, reputation and store
location. We compete with local, regional, national and
international department, specialty, off-price, discount,
warehouse and outlet stores as well as other retailers that sell
apparel, home fashions and other merchandise that we sell,
whether in stores, through catalogues or other media or over the
internet.
Employees. At January 29, 2011, we had
approximately 166,000 employees, many of whom work less
than 40 hours per week. In addition, we hire temporary
employees, particularly during the peak
back-to-school
and holiday seasons.
Trademarks. We have the right to use our principal
trademarks and service marks, which are T.J. Maxx, Marshalls,
HomeGoods, Winners, HomeSense and T.K. Maxx, in relevant
countries. Our rights in these trademarks and service marks
endure for as long as they are used.
Seasonality. Our business is subject to seasonal
influences. In the second half of the year, which includes the
back-to-school
and holiday seasons, we generally realize higher levels of sales
and income.
SEC Filings and Certifications. Copies of our
annual reports on
Form 10-K,
proxy statements, quarterly reports on
Form 10-Q
and current reports on
Form 8-K
filed with, or furnished to, the SEC, and any amendments to
those documents, are available free of charge on our website,
www.tjx.com, under SEC Filings, as soon as
reasonably practicable after they are electronically filed with
or furnished to the SEC. They are also available free of charge
from TJX Investor Relations, 770 Cochituate Road, Framingham,
Massachusetts 01701. The public can read and copy materials at
the SECs Public Reference Room at 100 F Street,
NE, Washington, DC 20549,
1-800-SEC-0330.
The SEC maintains a website containing all reports, proxies,
information statements, and all other information regarding
issuers that file electronically
(http://www.sec.gov).
Information appearing on www.tjx.com is not a part of, and is
not incorporated by reference in, this
Form 10-K.
Unless otherwise indicated, all store information in this
Item 1 is as of January 29, 2011, and references to
store square footage are to gross square feet. Fiscal 2009 means
the fiscal year ended January 31, 2009, fiscal 2010 means
8
the fiscal year ended January 30, 2010, fiscal 2011 means
the fiscal year ended January 29, 2011 and fiscal 2012
means the fiscal year ending January 28, 2012.
Unless otherwise stated or the context otherwise requires,
references in this
Form 10-K
to TJX, we, us and
our refer to The TJX Companies, Inc. and its
subsidiaries.
The statements in this section describe the major risks to our
business and should be considered carefully, in connection with
all of the other information set forth in this annual report on
Form 10-K.
The risks that follow, individually or in the aggregate, are
those that we think could cause our actual results to differ
materially from those stated or implied in forward-looking
statements.
Global economic
conditions may adversely affect our financial
performance.
During the recent economic recession, global financial markets
experienced extreme volatility, disruption and credit
contraction. The volatility and disruption to the capital
markets significantly adversely affected global economic
conditions, resulting in additional significant recessionary
pressures and declines in employment levels, disposable income
and actual and perceived wealth. Although there have been some
recent improvements, continuing or worsened adverse economic
conditions, including higher unemployment, energy and health
care costs, interest rates and taxes and tighter credit, could
continue to affect consumer confidence and discretionary
consumer spending adversely and may adversely affect our sales,
cash flows and results of operations. Additionally, renewed
financial turmoil in the financial and credit markets could
adversely affect our costs of capital and the sources of
liquidity available to us and could increase our pension funding
requirements.
Fluctuations in
foreign currency exchange rates may lead to lower revenues and
earnings.
In addition to our U.S. businesses, we operate stores in
Canada and Europe and plan to continue to expand our
international operations. Sales made by our stores outside the
United States are denominated in the currency of the country in
which the store is located, and changes in foreign exchange
rates affect the translation of the sales and earnings of these
businesses into U.S. dollars for financial reporting
purposes. Because of this, movements in exchange rates have had
and are expected to continue to have a significant impact on our
net sales and earnings.
Additionally, we routinely enter into inventory-related hedging
instruments to mitigate the impact of foreign currency exchange
rates on merchandise margins of merchandise purchased by our
international segments that is denominated in currencies other
than their local currencies. In accordance with U.S. GAAP,
we evaluate the fair value of these hedging instruments and make
mark-to-market
adjustments at the end of an accounting period. These
adjustments are of a much greater magnitude when there is
significant volatility in currency exchange rates and may have a
significant impact on our earnings.
Changes in foreign currency exchange rates can also increase the
cost of inventory purchases by our businesses that are
denominated in a currency other than the local currency of the
business. When these changes occur suddenly, it can be difficult
for us to adjust retail prices accordingly, and gross margin can
be adversely affected. A significant amount of merchandise we
offer for sale is made in China and accordingly, a revaluation
of the Chinese currency, or increased market flexibility in the
exchange rate for that currency, increasing its value relative
to the U.S. dollar or currencies in which our stores are
located could be particularly significant.
Although we implement foreign currency hedging and risk
management strategies to reduce our exposure to fluctuations in
earnings and cash flows associated with changes in foreign
exchange rates, we expect that foreign currency fluctuations
could have a material adverse effect on our net sales and
results of operations. In addition, fluctuations in foreign
currency exchange rates may have a greater impact on our
earnings and operating results if a counterparty to one of our
hedging arrangements fails to perform.
Failure to
execute our opportunistic buying and inventory management could
adversely affect our business.
We purchase the majority of our apparel inventory and much of
our home inventory opportunistically with our buyers purchasing
close to need. To drive traffic to the stores and to increase
same store sales, the treasure hunt nature of the off-price
buying experience is enhanced by rapid inventory turns and
continued replenishment of fresh, high quality, attractively
priced merchandise in our stores. While opportunistic buying
provides our buyers the ability to buy at desirable times and
prices, in the quantities we need and into market trends, it
places considerable discretion in our buyers, subjecting us to
risks on the appropriate pricing, quantity, nature and timing of
inventory flowing to our stores. In addition, we base our
purchases of inventory, in part, on sales forecasts. If our
sales forecasts do not match customer demand, we may experience
higher inventory levels and need to take markdowns on excess or
slow-moving inventory, leading to decreased profit margins, or
we
9
may have insufficient inventory to meet customer demand leading
to lost sales, either of which could adversely affect our
financial performance. Our pricing model requires that we
purchase inventory sufficiently below conventional retail to
maintain our pricing differential and margin, which we may not
achieve at times. We must also properly execute our inventory
management strategies through appropriately allocating
merchandise among our stores, timely and efficiently
distributing inventory to stores, maintaining an appropriate mix
and level of inventory in stores, appropriately changing the
allocation of floor space of stores among product categories to
respond to customer demand and effectively managing pricing and
markdowns. Our vendors and others in our supply chain are also
subject to risks of labor issues, financial liquidity, weather
and other natural disasters, economic, political and regulatory
conditions and other matters that could affect our ability to
receive and provide to our stores acceptable merchandise in
adequate quantities on a timely basis. Failure to execute our
opportunistic inventory buying and inventory management well
could adversely affect our performance and our relationship with
our customers.
Failure to
continue to expand our operations successfully could adversely
affect our financial results.
Our revenue growth is dependent, among other things, upon our
ability to continue to expand successfully through successful
new store openings as well as our ability to increase same store
sales. Successful store growth requires acquisition and
development of appropriate real estate including selection of
store locations in appropriate geographies, availability of
attractive stores or store sites in such locations and
negotiation of acceptable terms. Competition for desirable
sites, increases in real estate, construction and development
costs and availability and costs of capital could limit our
ability to open new stores in desirable locations in the future
or adversely affect the economics of new stores. We may
encounter difficulties in attracting customers in new markets
for various reasons including decisions to open new banners,
expansion into new geographies, customers lack of
familiarity with our brands or our lack of familiarity with
local customer preferences and cultural differences. New stores
may not achieve the same sales or profit levels as our existing
stores, and new and existing stores in a market area may
adversely affect each others sales and profitability.
Further, expansion places significant demands on the
administrative, merchandising, store operations, distribution
and other organizations in our businesses to manage rapid
growth, and we may not do so successfully. As a result, we may
need to reduce our rate of expansion or we may operate with
decreased operational efficiency, and it may adversely affect
our results.
Failure to
successfully identify customer trends and preferences to meet
customer demand could negatively impact our
performance.
Because our success depends on our ability to meet customer
demand, we take various steps to keep up with customer trends
and preferences including contacts with vendors, monitoring
product category and fashion trends and comparison shopping. Our
flexible business model allows us to buy close to need and in
response to consumer preferences and trends and to expand and
contract merchandise categories in response to consumers
changing tastes. However, identifying consumer trends and
preferences in the various geographies in which we do business
and successfully meeting customer demand is challenging, and we
may not successfully do so, which could adversely affect our
results.
Our quarterly
operating results can be subject to significant fluctuations and
may fall short of either a prior quarter or investors
expectations.
Our operating results have fluctuated from quarter to quarter at
points in the past, and they may continue to do so in the
future. Our earnings may not continue to grow at rates we plan
and may fall short of either a prior quarter or investors
expectations. If we fail to meet the expectations of securities
analysts or investors, our share price may decline. Factors that
could cause us not to meet our securities analysts or
investors earnings expectations include some factors that
are within our control, such as the execution of our off-price
buying; selection, pricing and mix of merchandise; and inventory
management including flow, markon and markdowns; and some
factors that are not within our control, including actions of
competitors, weather conditions, economic conditions, consumer
confidence, seasonality, and cost increases due, among other
things, to government regulation and increased healthcare costs.
In addition, if we do not repurchase the number of shares we
contemplate pursuant to our stock repurchase program, our
earnings per share may be adversely affected. Most of our
operating expenses, such as rent expense and associate salaries,
do not vary directly with the amount of sales and are difficult
to adjust in the short term. As a result, if sales in a
particular quarter are below expectations for that quarter, we
may not proportionately reduce operating expenses for that
quarter, and therefore such a sales shortfall would have a
disproportionate effect on our net income for the quarter. We
maintain a forecasting process that seeks to project sales and
align expenses. If we do not correctly forecast sales and
control costs or appropriately adjust costs to actual results,
our financial performance could be adversely affected.
10
Our future
performance is dependent upon our ability to continue to expand
within our existing markets and to extend our off-price model in
new product lines, chains and geographic regions.
Our strategy is to continue to expand within existing markets,
to expand to new markets and geographies and to attract new
customers in existing and new markets across demographics. This
growth strategy includes developing new ways to sell more or
different categories of merchandise within our existing stores,
continued expansion of our existing chains in our existing
markets and countries, expansion of these chains to new markets
and countries, development and opening of new chains or
potential expansion of
e-commerce,
all of which entail significant risk. Our growth is dependent
upon our ability to successfully extend our business in these
ways. If any of our expansion vehicles does not achieve the
success we expect in whole or in part, we may be required to
increase our investment or close stores or operations.
Unsuccessful extension of our model could adversely affect
growth and financial performance.
If we fail to
successfully implement our marketing, advertising and
promotional programs, or if our competitors are more effective
with their programs than we are, our revenue may be adversely
affected.
We use marketing, advertising and promotional programs to
attract customers to our stores. We use various media for these
programs, including print, television, social media, database
marketing and direct marketing. Some of our competitors may have
substantially larger expenditures for their programs, which may
provide them with a competitive advantage. There can be no
assurance that we will be able to continue to execute our
marketing, advertising and promotional programs effectively, and
any failure to do so could have a material adverse effect on our
revenue and results of operations. Information posted about us
and our merchandise on social media platforms and similar
venues, including blogs, social media websites, and other forums
for Internet-based communications that allow individuals access
to a broad audience of consumers and other interested persons,
may be inaccurate or may harm our brand, which could have a
material effect on our revenue and results of operations.
Compromises of
our data security could materially harm our reputation and
business.
In the ordinary course of our business, we collect and store
certain personal information from individuals, such as our
customers and associates, and we process customer payment card
and check information. We suffered an unauthorized intrusion or
intrusions (such intrusion or intrusions, collectively, the
Computer Intrusion) into portions of our computer
system that process and store information related to customer
transactions, discovered late in fiscal 2007 in which we believe
customer data were stolen. We have taken steps designed to
further strengthen the security of our computer system and
protocols and have instituted an ongoing program with respect to
data security, consistent with a consent order with the Federal
Trade Commission. Nevertheless, there can be no assurance that
we will not suffer a future data compromise. We rely on
commercially available systems, software, tools and monitoring
to provide security for processing, transmission and storage of
confidential information. Further, the systems currently used
for transmission and approval of payment card transactions, and
the technology utilized in payment cards themselves, all of
which can put payment card data at risk, are determined and
controlled by the payment card industry, not by us. This is also
true for check information and approval. Computer hackers may
attempt to penetrate our computer system and, if successful,
misappropriate personal information, payment card or check
information or confidential Company business information. In
addition, a Company associate, contractor or other third party
with whom we do business may attempt to circumvent our security
measures in order to obtain such information, and may
purposefully or inadvertently cause a breach involving such
information. Advances in computer and software capabilities and
encryption technology, new tools and other developments may
increase the risk of such a breach. Any such compromise of our
data security and loss of personal or business information could
disrupt our operations, damage our reputation and
customers willingness to shop in our stores, violate
applicable laws, regulations, orders and agreements, and subject
us to additional costs and liabilities which could be material.
Our business is
subject to seasonal influences; a decrease in sales or margins
during the second half of the year could disproportionately
adversely affect our operating results.
Our business is subject to seasonal influences; we generally
realize higher levels of sales and income in the second half of
the year, which includes the
back-to-school
and year-end holiday seasons. Any decrease in sales or margins
during this period could have a disproportionately adverse
effect on our results of operations.
We may experience
risks associated with our substantial size and scale.
We operate multiple retail chains in the U.S., Canada and
Europe. Some aspects of the businesses and operations of the
chains are conducted with relative autonomy. The large size of
our operations, our multiple businesses and the autonomy
11
afforded to the chains increase the risk that systems and
practices will not be implemented uniformly throughout our
company and that information will not be appropriately shared
across different chains and countries.
Unseasonable
weather in the markets in which our stores operate or our
distribution centers are located could adversely affect our
operating results.
Adverse and unseasonable weather affects customers
willingness to shop and their demand for the merchandise in our
stores. Severe weather could also affect our ability to
transport merchandise to our stores from our distribution and
shipping centers. As a result, frequent, unusually heavy,
unseasonable or untimely weather in our markets, such as snow,
ice or rain storms, severe cold or heat or extended periods of
unseasonable temperatures, could adversely affect our sales and
increase markdowns. Increased governmental regulations focused
on climate change could increase compliance costs.
Our results may
be adversely affected by serious disruptions or catastrophic
events.
Unforeseen public health issues, such as pandemics and
epidemics, as well as natural disasters such as hurricanes,
tornadoes, floods, earthquakes and other adverse weather and
climate conditions, whether occurring in the United States or
abroad, could disrupt our operations or the operations of one or
more of our vendors or could severely damage or destroy one or
more of our stores or distribution facilities located in the
affected areas. Day to day operations, particularly our ability
to receive products from our vendors or transport products to
our stores could be adversely affected, or we could be required
to close stores or distribution centers in the affected areas or
in areas served by the affected distribution center. As a
result, our business could be adversely affected.
We operate in
highly competitive markets, and we may not be able to compete
effectively.
The retail apparel and home fashion business is highly
competitive. We compete with many other local, regional,
national and international retailers that sell apparel, home
fashions and other merchandise we sell, whether in stores,
through catalogues or media or over the internet. We compete on
the basis of fashion, quality, price, value, merchandise
selection and freshness, brand name recognition, service,
reputation and store location. Other competitive factors that
influence the demand for our merchandise include our
advertising, marketing and promotional activities and the name
recognition and reputation of our chains. If we fail to compete
effectively, our sales and results of operations could be
adversely affected.
Failure to
attract and retain quality sales, distribution center and other
associates in appropriate numbers as well as experienced buying
and management personnel could adversely affect our
performance.
Our performance depends on recruiting, developing, training and
retaining quality sales, distribution center and other
associates in large numbers as well as experienced buying and
management personnel. Many of our associates are in entry level
or part-time positions with historically high rates of turnover.
The nature of the workforce in the retail industry subjects us
to the risk of immigration law violations, which risk has
increased in recent years. In addition, any failure of
third-parties that perform services on our behalf to comply with
immigration, employment or other laws could damage our
reputation or disrupt our ability to obtain needed labor. Our
ability to meet our labor needs while controlling labor costs is
subject to external factors such as unemployment levels,
prevailing wage rates, minimum wage legislation, changing
demographics, health and other insurance costs and governmental
labor and employment requirements. Recently enacted health care
reform legislation could increase our costs. In the event of
increasing wage rates, if we fail to increase our wages
competitively, the quality of our workforce could decline,
causing our customer service to suffer, while increasing our
wages could cause our earnings to decrease. In addition, certain
associates in our distribution centers are members of unions and
therefore subject us to the risk of labor actions. Because of
the distinctive nature of our off-price model, we must do
significant internal training and development for a substantial
number of our associates. The market for retail management is
highly competitive and, in common with other retailers, we face
challenges in securing sufficient management talent. If we do
not continue to attract, train and retain quality associates and
management personnel, our performance could be adversely
affected.
If we engage in
mergers or acquisitions of new businesses, or divest, close or
consolidate any of our current businesses, our business will be
subject to additional risks.
We have grown our business in part through mergers and
acquisitions and may acquire new businesses or divest, close or
consolidate current businesses. Acquisition or divestiture
activities may divert attention of management from operating the
existing businesses. We may do a
less-than-optimal
job of evaluating target companies and their risks and benefits,
and integration of acquisitions can be difficult and
time-consuming. Acquisitions may not meet our performance and
other expectations or may expose us to unexpected or
greater-than-expected
liabilities and risks. Divestitures, closings and
12
consolidations also involve risks, such as the risks of exposure
on lease and other contractual, employment and severance
obligations, obligations undertaken in the process and potential
liabilities that may arise under law as a result of the
disposition or the subsequent failure of the acquirer. Failure
to execute on mergers or divestitures, closings and
consolidations in a satisfactory manner could adversely affect
our future results of operations and financial condition.
Failure to
operate information systems and implement new technologies
effectively could disrupt our business or reduce our sales or
profitability.
We rely extensively on various information systems, data centers
and software applications to manage many aspects of our
business, including to process and record transactions in our
stores, to enable effective communication systems, to plan and
track inventory flow, and to generate performance and financial
reports. We are dependent on the integrity, security and
consistent operations of these systems and related
back-up
systems. Our computer systems are subject to damage or
interruption from power outages, computer and telecommunications
failures, computer viruses, security breaches, catastrophic
events such as fires, floods, earthquakes, tornadoes,
hurricanes, acts of war or terrorism and usage errors by our
associates or contractors. The efficient operation and
successful growth of our business depends upon these information
systems, including our ability to operate them effectively and
to select and implement appropriate new technologies, systems,
controls, data centers and adequate disaster recovery systems
successfully. The failure of our information systems to perform
as designed or our failure to implement and operate them
effectively could disrupt our business or subject us to
liability and thereby harm our profitability.
We depend upon
strong cash flows from our operations to supply capital to fund
our expansion, operations, interest and debt repayments, stock
repurchases and dividends.
Our business depends upon our operations to generate strong cash
flow, and to some extent upon the availability of financing
sources, to supply capital to fund our expansions, general
operating activities, stock repurchases, dividends, interest and
debt repayments. Our inability to continue to generate
sufficient cash flows to support these activities or the lack of
availability of financing in adequate amounts and on appropriate
terms when needed could adversely affect our financial
performance including our earnings per share.
General economic
and other factors may adversely affect consumer spending, which
could adversely affect our sales and operating
results.
Interest rates; recession; inflation; deflation; consumer credit
availability; consumer debt levels; energy costs; tax rates and
policy; unemployment trends; threats or possibilities of war,
terrorism or other global or national unrest; actual or
threatened epidemics; political or financial instability; and
general economic, political and other factors beyond our control
have significant effects on consumer confidence and spending.
Consumer spending, in turn, affects sales at retailers, which
may include TJX. Although we benefit from being an off-price
retailer, these factors could adversely affect our sales and
performance if we are not able to implement strategies to
mitigate them promptly and successfully.
Issues with
merchandise quality or safety could damage our reputation, sales
and financial results.
Various governmental authorities in the jurisdictions where we
do business regulate the quality and safety of the merchandise
we sell in our stores. Regulations and standards in this area,
including those related to the Consumer Product Safety
Improvement Act of 2008 in the United States and similar
legislation in other countries in which we operate, change from
time to time. Our inability to comply on a timely basis with
regulatory requirements could result in significant fines or
penalties, which could have a material adverse effect on our
financial results. We rely on our vendors to provide quality
merchandise that complies with applicable product safety laws
and other applicable laws, but they may not comply with their
contractual obligations to do so. Issues with the quality and
safety of merchandise, particularly with food, bath and body and
childrens products, or issues with the genuineness of
merchandise, regardless of our fault, or customer concerns about
such issues, could cause damage to our reputation and could
result in lost sales, uninsured product liability claims or
losses, merchandise recalls and increased costs, and regulatory,
civil or criminal fines or penalties, any of which could have a
material adverse effect on our financial results.
We are subject to
import risks associated with importing merchandise from foreign
countries.
Many of the products sold in our stores are sourced by our
vendors and, to a lesser extent, by us, in many foreign
countries, particularly southeastern Asia. Where we are the
importer of record, we may be subject to regulatory or other
requirements similar to those imposed upon the manufacturer of
such products. We are subject to the various risks of
13
doing business in foreign markets, importing merchandise from
abroad and purchasing product made in foreign countries, such as:
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potential disruptions in manufacturing, logistics and supply;
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changes in duties, tariffs, quotas and voluntary export
restrictions on imported merchandise;
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strikes and other events affecting delivery;
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consumer perceptions of the safety of imported merchandise;
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product compliance with laws and regulations of the destination
country;
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product liability claims from customers or penalties from
government agencies relating to products that are recalled,
defective or otherwise noncompliant or alleged to be harmful;
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concerns about human rights, working conditions and other labor
rights and conditions in foreign countries where merchandise is
produced, and changing labor, environmental and other laws in
these countries;
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compliance with laws and regulations concerning ethical business
practices, such as the U.S. Foreign Corrupt Practices Act;
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potentially greater exposure for product warranty and safety
problems; and
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economic, political or other problems in countries from or
through which merchandise is imported.
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Political or financial instability, trade restrictions, tariffs,
currency exchange rates, labor conditions, transport capacity
and costs, systems issues, problems in third party distribution
and warehousing and other interruptions of the supply chain,
compliance with U.S. and foreign laws and regulations and
other factors relating to international trade and imported
merchandise beyond our control could affect the availability and
the price of our inventory. Furthermore, although we have
implemented policies and procedures designed to facilitate
compliance with laws and regulations relating to doing business
in foreign markets and importing merchandise from abroad, there
can be no assurance that our associates, contractors, agents,
vendors or other third parties with whom we do business will not
violate such laws and regulations or our policies, which could
subject us to liability and could adversely affect our
operations or operating results.
Our expanding
international operations increasingly expose us to risks
inherent in operating in foreign jurisdictions.
We have a significant retail presence in Canada and Europe, as
well as buying offices around the world, and our goal as a
global retailer is to continue to expand into other
international markets in the future. Our foreign operations
encounter risks similar to those faced by our
U.S. operations, as well as risks inherent in foreign
operations, such as understanding the retail climate and trends,
local customs and competitive conditions in foreign markets,
complying with foreign laws, rules and regulations, and foreign
currency fluctuations, which could have an adverse impact on our
profitability.
Our results may
be adversely affected by increases in the price of oil and other
commodities.
Prices of oil have fluctuated dramatically in the past and have
recently risen significantly. Increase in the price of oil
increases our transportation costs for distribution, utility
costs for our retail stores and costs to purchase our products
from suppliers. Although we have implemented a hedging strategy
to manage a portion of our transportation costs, increases in
oil and gasoline prices could adversely affect consumer spending
and demand for our products and increase our operating costs,
which could have an adverse effect on our performance.
Similarly, other commodity prices have also fluctuated
dramatically in the past. Cost of cotton and synthetic fabrics
have recently risen significantly. Such increases are expected
to increase the cost of merchandise, which could adversely
affect our performance through potentially reduced consumer
demand or reduced margins.
Failure to comply
with existing laws, regulations and orders or changes in
existing laws and regulations could negatively affect our
business operations and financial performance.
We are subject to federal, state, provincial and local laws,
rules and regulations in the United States and abroad, any of
which may change from time to time, as well as orders and
assurances. If we fail to comply with these laws, rules,
regulations and orders, we may be subject to fines or other
penalties, which could materially adversely affect our
operations and our financial results and condition. We must also
comply with new and changing laws. Further, Generally
14
Accepted Accounting Principles (GAAP) in the U.S. may
change from time to time, and the changes could have material
effects on our reported financial results and condition. In
addition, there have been a large number of new legislative and
regulatory initiatives and reforms introduced in the U.S., and
the initiatives and reforms that have been and may be enacted
may increase our costs.
Our results may
be materially adversely affected by the outcomes of litigation
and other legal proceedings.
We are periodically involved in various legal proceedings, which
may involve local, state and federal government inquiries and
investigations; tax, employment, real estate, tort, consumer
litigation and intellectual property litigation; or other
disputes. There have been a growing number of employment-related
lawsuits, including class actions, and we have been subject to
these types of suits. In addition, we may be subject to
investigations and other proceedings by regulatory agencies,
including, but not limited to, consumer protection laws,
advertising regulations, escheat and employment and wage and
hour regulations. Results of legal and regulatory proceedings
cannot be predicted with certainty and may differ from reserves
we establish estimating the probable outcome. Regardless of
merit, litigation may be both time-consuming and disruptive to
our operations and cause significant expense and diversion of
management attention. Legal and regulatory proceedings and
investigations could expose us to significant defense costs,
fines, penalties and liability to private parties and
governmental entities for monetary recoveries and other amounts
and attorneys fees
and/or
require us to change aspects of our operations, any of which
could have a material adverse effect on our business and results
of operations.
Our real estate
leases generally obligate us for long periods, which subjects us
to various financial risks.
We lease virtually all of our store locations, generally for
long terms and either own or lease for long periods our primary
distribution centers and administrative offices. Accordingly, we
are subject to the risks associated with owning and leasing real
estate, which can have a material adverse effect on our results
as reflected in our reserve for former operations. While we have
the right to terminate some of our leases under specified
conditions by making specified payments, we may not be able to
terminate a particular lease if or when we would like to do so.
If we decide to close stores, we are generally required to
continue to perform obligations under the applicable leases,
which generally includes, among other things, paying rent and
operating expenses for the balance of the lease term, or paying
to exercise rights to terminate, and the performance of any of
these obligations may be expensive. When we assign or sublease
leases, we can remain liable on the lease obligations if the
assignee or sublessee does not perform. In addition, when leases
for the stores in our ongoing operations expire, we may be
unable to negotiate renewals, either on commercially acceptable
terms or at all, which could cause us to close stores.
Our stock price
may fluctuate based on market expectations.
The public trading of our stock is based in large part on market
expectations that our business will continue to grow and that we
will achieve certain levels of net income. If the securities
analysts that regularly follow our stock lower their rating or
lower their projections for future growth and financial
performance, the market price of our stock is likely to drop. In
addition, if our quarterly financial performance does not meet
the expectations of securities analysts, our stock price would
likely decline. The decrease in the stock price may be
disproportionate to the shortfall in our financial performance.
Tax matters could
adversely affect our results of operations and financial
condition.
We are subject to income taxes in both the United States and
numerous foreign jurisdictions. Our provision for income taxes
and future tax liability could be adversely affected by numerous
factors including, but not limited to, income before taxes being
lower than anticipated in countries with lower statutory income
tax rates and higher than anticipated in countries with higher
statutory income tax rates, changes in income tax rates, changes
in transfer pricing, changes in the valuation of deferred tax
assets and liabilities, changes in U.S. tax legislation and
regulation, foreign tax laws, regulations and treaties, exposure
to additional tax liabilities, changes in accounting principles
and interpretations relating to tax matters, which could
adversely impact our results of operations and financial
condition in future periods. In addition, we are subject to the
continuous examination of our income tax returns by federal,
state and local tax authorities in the U.S. and foreign
countries, such authorities may challenge positions we take, and
we are engaged in various proceedings with such authorities with
respect to assessments, claims, deficiencies and refunds, and
the results of these examinations, judicial proceedings or as a
result of the expiration of statute of limitations in specific
jurisdictions. We regularly assess the likelihood of adverse
outcomes resulting from these examinations to determine the
adequacy of our provision for income taxes. However, it is
possible that the actual results of proceedings with tax
authorities and in courts,
15
changes in facts, expiration of statutes of limitations or other
resolutions of tax positions will differ from the amounts we
have accrued in either a positive or a negative manner, which
could materially affect our effective income tax rate in a given
financial period, the amount of taxes we are required to pay and
our results of operations.
ITEM 1B. UNRESOLVED
STAFF COMMENTS
None.
We lease virtually all of our over 2,700 store locations,
generally for 10 years with options to extend the lease
term for one or more
5-year
periods. We have the right to terminate some of these leases
before the expiration date under specified circumstances and
some with specified payments.
The following is a summary of our primary owned and leased
distribution centers and primary administrative office locations
of our current operations as of January 29, 2011. Square
footage information for the distribution centers represents
total ground cover of the facility. Square footage
information for office space represents total space occupied.
DISTRIBUTION
CENTERS
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Marmaxx
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T.J. Maxx
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Worcester, Massachusetts
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494,000 s.f.owned
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Evansville, Indiana
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989,000 s.f.owned
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Las Vegas, Nevada
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713,000 s.f. shared with
Marshallsowned
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Charlotte, North Carolina
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595,000 s.f.owned
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Pittston Township, Pennsylvania
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1,017,000 s.f.owned
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Marshalls
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Decatur, Georgia
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780,000 s.f.owned
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Woburn, Massachusetts
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472,000 s.f.leased
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Bridgewater, Virginia
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562,000 s.f.leased
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Philadelphia, Pennsylvania
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1,001,000 s.f.leased
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HomeGoods
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Brownsburg, Indiana
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805,000 s.f.owned
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Bloomfield, Connecticut
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803,000 s.f.owned
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TJX Canada
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Brampton, Ontario
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506,000 s.f.leased
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Mississauga, Ontario
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667,000 s.f.leased
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TJX Europe
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Wakefield, England
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176,000 s.f.leased
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Stoke, England
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261,000 s.f.leased
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Walsall, England
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277,000 s.f.leased
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Bergheim, Germany
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326,000 s.f.leased
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OFFICE
SPACE
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Corporate, Marmaxx, HomeGoods
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Framingham and Westboro, Massachusetts
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1,291,000 s.f.leased in several buildings
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TJX Canada
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Mississauga, Ontario
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174,000 s.f.leased
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TJX Europe
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Watford, England
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61,000 s.f.leased
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Dusseldorf, Germany
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21,000 s.f.leased
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In addition to the distribution centers listed above, TJX owns
two distribution centers that were used by the A.J. Wright
segment. These distribution centers, one in Fall River,
Massachusetts and the other in South Bend, Indiana, were closed
in fiscal 2011 as part of the A.J. Wright consolidation. The
company is actively marketing these properties.
In addition to the office space listed above, TJX leases a
limited amount of space for its numerous regional buying offices
located worldwide.
16
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ITEM 3.
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LEGAL
PROCEEDINGS
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TJX is subject to certain legal proceedings and claims that rise
from time to time in the ordinary course of our business. In
addition, TJX is a defendant in several lawsuits filed in
federal and state courts in California, New York and Texas
brought as putative class or collective actions on behalf of
various groups of current and former salaried and hourly
associates in the U.S. The lawsuits allege violations of
the Fair Labor Standards Act and of state wage and hour
statutes, including alleged misclassification of positions as
exempt from overtime and alleged entitlement to additional wages
for alleged
off-the-clock
work by hourly employees. The lawsuits seek unspecified monetary
damages, injunctive relief and attorneys fees. TJX is
vigorously defending these claims.
We provide the following additional information concerning these
lawsuits, setting forth the name of the matter, the court in
which the matter is pending, the related case number and the
date on which the lawsuit was filed.
Wage and Hour
Class Actions: Halton-Hurt et al. v.
The TJX Companies, Inc. d/b/a T.J. Maxx, U.S. District
Court, Northern District of Texas, 3:09-CV-02171-N,
November 13, 2009; Ebo v. The TJX Companies, et
al., Superior Court of CA, Los Angeles County Superior
Court, BC380575, November 13, 2007.
Exempt Status Cases: Ahmed v. T.J.
Maxx Corp. et al., U.S. District Court, Eastern
District of New York, 10-CV-03609, August 5, 2010;
Archibald, et al. v. Marshalls of MA, Inc., et al.,
U.S. District Court, Southern District of New York,
09-CV-2323, March 12, 2009; Guillen v. Marshalls of
MA, Inc., et al., U.S. District Court, Southern
District of New York, 09-CV-9575, November 18, 2009;
Jenkins v. The TJX Companies, Inc. et al.,
U.S. District Court, Eastern District of New York, Case
No. CV-10
3753, August 16, 2010.
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ITEM 4.
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(REMOVED
AND RESERVED)
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17
PART II
ITEM 5. MARKET
FOR THE REGISTRANTS COMMON EQUITY, RELATED SECURITY HOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Price
Range of Common Stock
Our common stock is listed on the New York Stock Exchange
(Symbol: TJX). The quarterly high and low sale prices for our
common stock for fiscal 2011 and fiscal 2010 are as follows:
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Fiscal 2011
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Fiscal 2010
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Quarter
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High
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Low
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High
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Low
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First
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$
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48.50
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$
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37.12
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$
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29.17
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$
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19.19
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Second
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$
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47.49
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$
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40.08
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$
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37.00
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$
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26.62
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Third
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$
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46.61
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$
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39.56
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$
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40.64
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$
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33.80
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Fourth
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$
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48.75
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$
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42.55
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$
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39.75
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$
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35.75
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The approximate number of common shareholders at
January 29, 2011 was 63,000.
We declared four quarterly dividends of $0.15 per share for
fiscal 2011 and $0.12 per share for fiscal 2010. While our
dividend policy is subject to periodic review by our Board of
Directors, we are currently planning to pay a $0.19 per share
quarterly dividend in fiscal 2012 and intend to continue to pay
comparable dividends in the future.
Information
on Share Repurchases
The number of shares of common stock repurchased by TJX during
the fourth quarter of fiscal 2011 and the average price paid per
share are as follows:
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Maximum Number
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(or Approximate
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Dollar Value) of
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Total Number of Shares
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Shares that May Yet
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Total
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Average Price Paid
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Purchased as Part of a
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be Purchased
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Number of Shares
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Per
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Publicly Announced
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Under the Plans or
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Repurchased(1)
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Share(2)
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Plan or
Program(3)
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Programs(4)
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Period
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(a)
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(b)
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(c)
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(d)
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October 31, 2010 through November 27, 2010
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1,981,470
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$
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45.60
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1,981,470
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$
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859,267,857
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November 28, 2010 through January 1, 2011
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4,372,783
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$
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44.59
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4,372,783
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$
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664,267,976
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January 2, 2011 through January 29, 2011
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1,512,456
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$
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46.28
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1,512,456
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$
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594,268,098
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Total:
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7,866,709
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7,866,709
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(1)
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All shares were purchased as part
of publicly announced plans or programs.
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(2)
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Average price paid per share
includes commissions and is rounded to the nearest two decimal
places.
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(3)
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During the third quarter of fiscal
2011, we completed a $1 billion stock repurchase program
that was approved in September 2009 and initiated another
multi-year $1 billion stock repurchase program, approved in
February 2010. As of January 29, 2011, $594 million
remained available for purchase under that program.
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(4)
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In February 2011, TJXs Board
of Directors approved a new stock repurchase program that
authorizes the repurchase of up to an additional $1 billion
of TJX common stock from time to time.
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18
Equity
Compensation Plan Information
The following table provides certain information as of
January 29, 2011 with respect to our equity compensation
plans:
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(a)
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(b)
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(c)
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Number of Securities to
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Weighted-Average Exercise
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Number of Securities Remaining
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be Issued Upon Exercise
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Price of Outstanding
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Available for Future Issuance Under
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of Outstanding Options,
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Options, Warrants and
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Equity Compensation Plans (Excluding
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Plan Category
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Warrants and Rights
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Rights
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Securities Reflected in Column (a))
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Equity compensation plans approved by security holders
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25,047,372
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$
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31.41
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16,945,286
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Equity compensation plans not approved by security
holders(1)
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N/A
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N/A
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N/A
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Total
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25,047,372
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$
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31.41
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16,945,286
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(1)
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All equity compensation plans have
been approved by shareholders.
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For additional information concerning our equity compensation
plans, see Note I to our consolidated financial statements.
19
ITEM 6. SELECTED
FINANCIAL DATA
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Amounts in thousands
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Fiscal Year Ended
January(1)
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except per share amounts
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2011
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2010
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2009
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2008
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2007
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(53 Weeks)
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Income statement and per share data:
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Net sales
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$
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21,942,193
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$
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20,288,444
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$
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18,999,505
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$
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18,336,726
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$
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17,104,013
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Income from continuing operations
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$
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1,339,530
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$
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1,213,572
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$
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914,886
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$
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782,432
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$
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787,172
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Weighted average common shares for diluted earnings per share
calculation
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406,413
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427,619
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442,255
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468,046
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480,045
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Diluted earnings per share from continuing operations
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$
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3.30
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$
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2.84
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$
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2.08
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$
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1.68
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$
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1.65
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Cash dividends declared per share
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$
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0.60
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$
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0.48
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$
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0.44
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$
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0.36
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$
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0.28
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Balance sheet data:
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Cash and cash equivalents
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$
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1,741,751
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$
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1,614,607
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$
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453,527
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$
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732,612
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$
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856,669
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Working capital
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$
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1,966,406
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$
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1,908,870
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$
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858,238
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$
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1,231,301
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$
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1,365,833
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Total assets
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$
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7,971,763
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$
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7,463,977
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$
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6,178,242
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$
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6,599,934
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$
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6,085,700
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Capital expenditures
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$
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707,134
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$
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429,282
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$
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582,932
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$
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526,987
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$
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378,011
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Long-term
obligations(2)
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$
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787,517
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$
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790,169
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$
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383,782
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$
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853,460
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$
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808,027
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Shareholders equity
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$
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3,099,899
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$
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2,889,276
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$
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2,134,557
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$
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2,131,245
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$
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2,290,121
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Other financial data:
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After-tax return (continuing operations) on average
shareholders equity
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44.7
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%
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48.3
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%
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42.9
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%
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35.4
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%
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37.6%
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Total debt as a percentage of total
capitalization(3)
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20.3
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%
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21.5
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%
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26.7
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%
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28.6
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%
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26.1%
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Stores in operation at fiscal year end:
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In the United States:
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T.J. Maxx
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923
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890
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874
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847
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821
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Marshalls
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830
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813
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806
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776
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748
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HomeGoods
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336
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323
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318
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289
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270
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A.J.
Wright(4)
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142
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150
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135
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129
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129
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In Canada:
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Winners
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215
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211
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202
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191
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184
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HomeSense
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82
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79
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75
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71
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68
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In Europe:
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T.K. Maxx
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307
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263
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235
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226
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210
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HomeSense
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24
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14
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7
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Total
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2,859
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2,743
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2,652
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2,529
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2,430
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Selling Square Footage at year-end:
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In the United States:
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T.J. Maxx
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21,611
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20,890
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20,543
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20,025
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19,390
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Marshalls
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20,912
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20,513
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20,388
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19,759
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19,078
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HomeGoods
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6,619
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6,354
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6,248
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5,569
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5,181
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A.J.
Wright(4)
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2,874
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3,012
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2,680
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2,576
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2,577
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In Canada:
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Winners
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4,966
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4,847
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4,647
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4,389
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4,214
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HomeSense
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1,594
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1,527
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1,437
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1,358
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1,280
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In Europe:
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T.K. Maxx
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|
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7,052
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6,106
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5,404
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5,096
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4,636
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HomeSense
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|
402
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222
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|
|
|
107
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|
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|
|
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Total
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66,030
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|
|
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63,471
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61,454
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|
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58,772
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|
|
|
56,356
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(1)
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Fiscal 2008 and fiscal 2007 have
been adjusted to reclassify the operating results of Bobs
Stores to discontinued operations.
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(2)
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Includes long-term debt, exclusive
of current installments and capital lease obligation, less
portion due within one year.
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(3)
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Total capitalization includes
shareholders equity, short-term debt, long-term debt and
capital lease obligation, including current maturities.
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(4)
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As a result of the consolidation of
the A.J. Wright chain, all A.J. Wright stores ceased operations
by the end of February, 2011.
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20
ITEM 7. MANAGEMENTS
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The discussion that follows relates to our 52-week fiscal years
ended January 29, 2011 (fiscal 2011) and
January 30, 2010 (fiscal 2010), and the 53-week fiscal year
ended January 31, 2009 (fiscal 2009). Like most retailers
we have a 53-week fiscal year every five to six years. This
extra week of sales volume, which also provides a lift to
pre-tax margins due to the flow of certain monthly and annual
expenses, impacts comparisons to 52-week fiscal years.
RESULTS OF
OPERATIONS
Highlights of our financial performance for fiscal 2011 include
the following:
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Same store sales for fiscal 2011 increased 4% over the prior
year. This was achieved on top of a 6% same store sales increase
in fiscal 2010. Our strategies of operating with lean
inventories and buying close to need, which we managed even more
aggressively in fiscal 2010 and continued in fiscal 2011,
increased inventory turns and drove continued growth in customer
traffic resulting in healthy gains in sales and profitability in
both years.
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Net sales increased 8% to $21.9 billion for fiscal 2011.
Stores in operation and selling square footage were both up 4%
at the end of fiscal 2011 compared to last fiscal year end.
Foreign currency exchange rates benefitted fiscal 2011 sales
growth by one percentage point.
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We made the major decision in the fourth quarter of fiscal 2011
to consolidate the A.J. Wright business by converting 90 stores
to other banners and closing the remaining 72 stores, its two
distribution centers and home office. Although this transaction
resulted in significant charges and operating losses to the A.J.
Wright segment for the fiscal 2011 fourth quarter, we believe
consolidating the A.J. Wright chain allows us to serve the A.J.
Wright customer demographic more efficiently, focus our
financial and managerial resources on fewer, larger businesses
with higher returns and enhance our growth prospects overall.
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Our fiscal 2011 pre-tax margin (the ratio of pre-tax income to
net sales) was 9.9% compared to 9.6% for fiscal 2010. The fourth
quarter results of the A.J. Wright segment decreased our fiscal
2011 pre-tax margin by 0.7 percentage points, which was
more than offset by strong merchandise margin growth as well as
expense leverage.
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Our cost of sales ratio for fiscal 2011 improved
0.7 percentage points to 73.1%. Improved merchandise
margins and leverage of buying and occupancy costs on strong
same store sales more than offset the negative impact of
0.2 percentage points due to the fourth quarter results of
the A.J. Wright segment. The selling, general and administrative
expense ratio for fiscal 2011 increased by 0.5 percentage
points to 16.9%. The fourth quarter A.J. Wright segment loss
negatively impacted the selling, general and administrative
ratio by 0.6 percentage points, which was almost entirely
offset by the benefit of cost reduction programs and expense
leverage on strong same store sales in fiscal 2011.
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Income from continuing operations was $1.3 billion, or
$3.30 per diluted share, for fiscal 2011 compared to
$1.2 billion, or $2.84 per diluted share, for fiscal 2010.
Fiscal 2011 diluted earnings per share includes the negative
impact of the fourth quarter A.J. Wright segment loss of $0.21
per share and the benefit of $0.02 per share due to a reduction
to the Provision for Computer Intrusion related costs.
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During fiscal 2011, we repurchased 27.6 million shares of
our common stock for $1.2 billion. Earnings per share
reflect the benefit of the stock repurchase program.
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Consolidated average per store inventories from our continuing
operations, including inventory on hand at our distribution
centers, were up 4% at the end of fiscal 2011 versus the prior
year end as compared to a decrease of 10% at the end of fiscal
2010 over the prior fiscal year end. In fiscal 2010 and 2011, we
managed inventory levels more aggressively than in prior years,
which had a much greater impact on the year over year inventory
comparison in fiscal 2010 to the prior year. The fiscal 2011
per-store inventories reflected larger available quantities of
end-of-season
branded product for future selling seasons based on greater
market opportunities in fiscal 2011.
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The following is a discussion of our consolidated operating
results, followed by a discussion of our segment operating
results.
21
Net sales: Consolidated net sales for fiscal
2011 totaled $21.9 billion, an 8% increase over net sales
of $20.3 billion in fiscal 2010. The increase reflected a
4% increase from same store sales, a 3% increase from new stores
and a 1% increase from foreign currency exchange rates.
Consolidated net sales for fiscal 2010 totaled
$20.3 billion, a 7% increase over net sales of
$19.0 billion in fiscal 2009. The increase reflected a 6%
increase from same store sales and a 4% increase from new
stores, offset by a 2% decline from the negative impact of
foreign currency exchange rates and a 1% decrease from the
53rd week
in fiscal 2009.
New stores have been a significant source of sales growth. Both
our consolidated store count and our selling square footage
increased by 4% in fiscal 2011 as compared to fiscal 2010 and by
3% in fiscal 2010 over the prior fiscal year. We expect to end
fiscal 2012 with 2,913 stores, which would represent a 2%
increase in both our consolidated store base and in our selling
square footage. The anticipated growth rate for fiscal 2012 will
be negatively impacted by the closing of the 72 A.J. Wright
stores that will not be converted to other banners.
The 4% same store sales increase in fiscal 2011 was driven
entirely by continued growth in transactions, with the value of
the average transaction down slightly for the year. Junior
apparel, jewelry and home fashions performed particularly well
in fiscal 2011. Geographically, same store sales increases in
Canada were in line with the consolidated average while same
store sales decreased in Europe. In the U.S., sales were strong
throughout the country with the West Coast and Southwest above
the consolidated average and the Northeast below the
consolidated average.
The 6% same store sales increase in fiscal 2010 was driven by
significant increases in customer transactions at all of our
businesses, partially offset by a decline in the value of the
average transaction. The increase in customer transactions
accelerated during the course of fiscal 2010. Junior apparel,
dresses, childrens apparel, footwear, accessories and home
fashions performed particularly well in fiscal 2010.
Geographically, same store sales increases in Europe and Canada
trailed the consolidated average. In the U.S., sales were strong
throughout the country with the Midwest, Southeast and West
Coast above the average, and New England and Florida below the
average.
We define same store sales to be sales of those stores that have
been in operation for all or a portion of two consecutive fiscal
years, or in other words, stores that are in at least their
third fiscal year of operation. We classify a store as a new
store until it meets the same store sales criteria. We determine
which stores are included in the same store sales calculation at
the beginning of a fiscal year and the classification remains
constant throughout that year, unless a store is closed. We
calculate same store sales results by comparing the current and
prior year weekly periods that are most closely aligned.
Relocated stores and stores that have increased in size are
generally classified in the same way as the original store, and
we believe that the impact of these stores on the consolidated
same store percentage is immaterial. Same store sales of our
foreign divisions are calculated on a constant currency basis,
meaning we translate the current years same store sales of
our foreign divisions at the same exchange rates used in the
prior year. This removes the effect of changes in currency
exchange rates, which we believe is a more accurate measure of
divisional operating performance.
The following table sets forth our consolidated operating
results from continuing operations as a percentage of net sales:
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|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended January
|
|
|
2011
|
|
|
2010
|
|
|
2009
|
|
|
Net sales
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
100.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales, including buying and occupancy costs
|
|
|
73.1
|
|
|
|
73.8
|
|
|
|
75.9
|
Selling, general and administrative expenses
|
|
|
16.9
|
|
|
|
16.4
|
|
|
|
16.5
|
Provision (credit) for Computer Intrusion related costs
|
|
|
(0.1
|
)
|
|
|
|
|
|
|
(0.2)
|
Interest expense, net
|
|
|
0.2
|
|
|
|
0.2
|
|
|
|
0.1
|
|
Income from continuing operations before provision for income
taxes*
|
|
|
9.9
|
%
|
|
|
9.6
|
%
|
|
|
7.6%
|
|
|
|
|
*
|
|
Due to rounding, the individual
items may not foot to Income from continuing operations before
provision for income taxes.
|
Impact of foreign currency exchange
rates: Our operating results are affected by
foreign currency exchange rates as a result of changes in the
value of the U.S. dollar in relation to other currencies.
Two ways in which foreign currency affects our reported results
are as follows:
Translation of foreign operating results into
U.S. dollars: In our financial statements we translate
the operations of our segments in Canada and Europe from local
currencies into U.S. dollars using currency rates in effect
at different points in
22
time. Significant changes in foreign exchange rates between
comparable prior periods can result in meaningful variations in
consolidated net sales, net income and earnings per share growth
as well as the net sales and operating results of our Canadian
and European segments. Currency translation generally does not
affect operating margins, as sales and expenses of the foreign
operations are translated at essentially the same rates within a
given period.
Inventory hedges: We routinely enter into
inventory-related hedging instruments to mitigate the impact of
foreign currency exchange rates on merchandise margins when our
divisions, principally in Europe and Canada, purchase goods in
currencies other than their local currencies. As we have not
elected hedge accounting as defined by
U.S. GAAP, we record a
mark-to-market
gain or loss on the hedging instruments in our results of
operations at the end of each reporting period. In subsequent
periods, the income statement impact of the
mark-to-market
adjustment is effectively offset when the inventory being hedged
is sold. While these effects occur every reporting period, they
are of much greater magnitude when there are sudden and
significant changes in currency exchange rates during a short
period of time. The
mark-to-market
adjustment on these hedges does not affect net sales, but it
does affect the cost of sales, operating margins and earnings we
report.
Cost of sales, including buying and occupancy
costs: Cost of sales, including buying and
occupancy costs, as a percentage of net sales was 73.1% in
fiscal 2011, 73.8% in fiscal 2010 and 75.9% in fiscal 2009. In
fiscal 2011, the 0.2 percentage point negative impact of
the fourth quarter A.J. Wright segment loss was more than offset
by improved consolidated merchandise margin, which increased
0.5 percentage points, along with expense leverage on the
4% same store sales increase. Merchandise margin improvement was
driven by our strategy of operating with leaner inventories and
buying closer to need, leading to lower markdowns compared to
the prior year.
The improvement in fiscal 2010 was primarily due to improved
consolidated merchandise margin, which increased
2.1 percentage points, along with expense leverage on the
6% same store sales increase, particularly in occupancy costs,
which improved by 0.3 percentage points. Merchandise margin
improvement was driven by our strategy of operating with leaner
inventories and buying closer to need, which resulted in an
increase in markon, along with a reduction in markdowns compared
to the prior year. These improvements were partially offset by a
benefit to this expense ratio in fiscal 2009 due to the
53rd week
(approximately 0.2 percentage points). Additionally, for
fiscal 2010, buying and occupancy expense leverage was offset by
higher accruals for performance-based incentive compensation as
a result of operating performance that was well ahead of our
objectives.
Selling, general and administrative
expenses: Selling, general and administrative
expenses as a percentage of net sales were 16.9% in fiscal 2011,
16.4% in fiscal 2010 and 16.5% in fiscal 2009. The increase in
selling, general and administrative expenses in fiscal 2011
compared to fiscal 2010 was due to the 0.6 percentage point
negative effect of the fourth quarter A.J. Wright segment loss.
Fiscal 2011 selling, general and administrative expenses include
impairment charges, severance and termination benefits, lease
related obligations and other store closing costs in connection
with the A.J. Wright consolidation, which was almost entirely
offset by the benefit of cost reduction programs, a reduction in
our fiscal 2011 incentive compensation versus the prior year and
expense leverage on strong same store sales in fiscal 2011.
The improvement in fiscal 2010 compared to fiscal 2009 was due
to levering of expenses and savings from our expense reduction
initiatives. These improvements were partially offset by the
increase in performance-based incentive compensation, which
increased selling, general and administrative expense ratio by
0.5 percentage points in fiscal 2010.
Provision for Computer Intrusion related
costs: In the second quarter of fiscal 2008, we
established a reserve to reflect our estimate of our probable
losses in accordance with U.S. GAAP with respect to the
Computer Intrusion.
We reduced the Provision for Computer Intrusion related costs by
$11.6 million during the second quarter of fiscal 2011,
primarily as a result of insurance proceeds and adjustments to
our remaining reserve. The reserve balance was
$17.3 million at January 29, 2011. As an estimate, the
reserve is subject to uncertainty, actual costs may vary from
the current estimate, however such variations are not expected
to be material to our results.
23
Interest expense, net: Interest expense, net
amounted to $39.1 million for fiscal 2011,
$39.5 million for fiscal 2010 and $14.3 million for
fiscal 2009. The components of interest expense, net for the
last three fiscal years are summarized below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended January
|
|
Dollars in thousands
|
|
2011
|
|
|
2010
|
|
|
2009
|
|
|
|
|
Interest expense
|
|
$
|
49,014
|
|
|
$
|
49,278
|
|
|
$
|
38,123
|
|
Capitalized interest
|
|
|
|
|
|
|
(758
|
)
|
|
|
(1,647
|
)
|
Interest (income)
|
|
|
(9,877
|
)
|
|
|
(9,011
|
)
|
|
|
(22,185
|
)
|
|
Interest expense, net
|
|
$
|
39,137
|
|
|
$
|
39,509
|
|
|
$
|
14,291
|
|
|
Gross interest expense and gross interest income for fiscal 2011
were flat to the prior period.
Gross interest expense for fiscal 2010 increased over fiscal
2009 as a result of the incremental interest cost of the
$375 million aggregate principal amount of 6.95% notes
issued in April 2009 and the $400 million aggregate
principal amount of 4.20% notes issued in July 2009. The
6.95% notes were issued in conjunction with the call for
redemption of our zero coupon convertible securities, and we
refinanced our C$235 million credit facility prior to its
scheduled maturity with a portion of the proceeds of the
4.20% notes. In addition, interest income for fiscal 2010
was less than fiscal 2009 due to considerably lower rates of
return on investments more than offsetting higher cash balances
available for investment during fiscal 2010.
Income taxes: Our effective annual income tax
rate was 38.1% in fiscal 2011, 37.8% in fiscal 2010 and 36.9% in
fiscal 2009. The increase in our effective income tax rate for
fiscal 2011 as compared to fiscal 2010 is primarily attributable
to the effects of repatriation of cash from Europe and
increasing state tax reserves, partially offset by the
finalization of an advance pricing agreement between Canada and
the United States (related to our intercompany transfer pricing)
and a favorable Canadian court ruling regarding withholding
taxes.
The increase in our effective income tax rate for fiscal 2010 as
compared to fiscal 2009 is primarily attributed to the favorable
impact in fiscal 2009 of a $19 million reduction in the
reserve for uncertain tax positions arising from the settlement
of several state tax audits. The absence of this fiscal 2009
benefit increased the effective income tax rate in fiscal 2010
by 1.3 percentage points, partially offset by a reduction
in the effective income tax rate related to foreign income.
We anticipate an effective annual income tax rate for fiscal
2012 comparable to that for fiscal 2011.
Income from continuing operations and income per share
from continuing operations: Income from continuing
operations was $1.3 billion in fiscal 2011, a 10% increase
over the $1.2 billion in fiscal 2010, which in turn was a
33% increase over the $914.9 million in fiscal 2009.
Comparisons between fiscal 2011 and fiscal 2010 are negatively
impacted by $86 million for the after tax impact of the
A.J. Wright fourth quarter segment loss. Income from continuing
operations per share was $3.30 in fiscal 2011, $2.84 in fiscal
2010 and $2.08 in fiscal 2009. Several items, discussed below,
affected earnings per share comparisons for fiscal 2011, fiscal
2010 and fiscal 2009.
Fiscal 2011 earnings per share were adversely affected by the
fiscal 2011 fourth quarter segment loss for A.J. Wright, which
reduced earnings per share by $0.21 per share, offset in part by
a $0.02 per share benefit for the fiscal 2011 reduction in the
Provision for the Computer Intrusion related costs.
Fiscal 2009 earnings per share reflected an estimated $0.09 per
share benefit from the
53rd week
in fiscal 2009, as well as a $0.04 per share benefit from the
fiscal 2009 reduction in the Provision for Computer Intrusion
related costs.
Foreign currency exchange rates also affected the comparability
of our results. Foreign currency exchange rates benefitted
fiscal 2011 earnings per share by $0.02 per share compared to an
immaterial impact in fiscal 2010. When comparing fiscal 2010 to
fiscal 2009, foreign currency rates reduced earnings per share
by $0.01 per share in fiscal 2010 compared to a $0.01 per share
benefit in fiscal 2009.
In addition, our weighted average diluted shares outstanding
affect the comparability of earnings per share, which are
benefited by our share repurchase programs. We repurchased
27.6 million shares of our stock at a cost of
$1.2 billion in fiscal 2011; 27.0 million shares at a
cost of $950 million in fiscal 2010; and 24.0 million
shares at a cost of $741 million in fiscal 2009.
24
Discontinued operations and net income: The
fiscal 2011 net gain from discontinued operations reflects
an after-tax benefit of $3.6 million, (which did not impact
earnings per share) as a result of a $6 million pre-tax
reduction for the estimated cost of settling lease-related
obligations of former businesses. Fiscal 2009 net loss from
discontinued operations reflects an after-tax loss of
$34 million, or $0.08 per share, on the sale of Bobs
Stores. Including the impact of discontinued operations, net
income was $1.3 billion, or $3.30 per share, for fiscal
2011, $1.2 billion, or $2.84 per share, for fiscal 2010 and
$880.6 million, or $2.00 per share, for fiscal 2009.
Segment information: The following is a
discussion of the operating results of our business segments. As
of January 29, 2011, we operated five business segments:
three in the United States and one in each of Canada and Europe.
In the United States, our T.J. Maxx and Marshalls stores are
aggregated as the Marmaxx segment, and HomeGoods and A.J. Wright
are each reported as a separate segment. A.J. Wright will cease
to be a business segment during fiscal 2012 as a result of its
consolidation. TJXs stores operated in Canada (Winners,
HomeSense and StyleSense) are reported as the TJX Canada
segment, and TJXs stores operated in Europe (T.K. Maxx and
HomeSense) are reported as the TJX Europe segment. We evaluate
the performance of our segments based on segment profit or
loss, which we define as pre-tax income before general
corporate expenses, Provision (credit) for Computer Intrusion
related costs, and interest expense. Segment profit or
loss, as we define the term, may not be comparable to
similarly titled measures used by other entities. In addition,
this measure of performance should not be considered an
alternative to net income or cash flows from operating
activities as an indicator of our performance or as a measure of
liquidity.
Presented below is selected financial information related to our
business segments:
U.S.
Segments:
Marmaxx
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended January
|
|
Dollars in millions
|
|
2011
|
|
|
2010
|
|
|
2009
|
|
|
|
|
Net sales
|
|
$
|
14,092.2
|
|
|
$
|
13,270.9
|
|
|
$
|
12,362.1
|
|
Segment profit
|
|
$
|
1,876.0
|
|
|
$
|
1,588.5
|
|
|
$
|
1,155.8
|
|
Segment profit as a percentage of net sales
|
|
|
13.3
|
%
|
|
|
12.0
|
%
|
|
|
9.3
|
%
|
Percent increase in same store sales
|
|
|
4
|
%
|
|
|
7
|
%
|
|
|
0
|
%
|
Stores in operation at end of period
|
|
|
|
|
|
|
|
|
|
|
|
|
T.J. Maxx
|
|
|
923
|
|
|
|
890
|
|
|
|
874
|
|
Marshalls
|
|
|
830
|
|
|
|
813
|
|
|
|
806
|
|
|
Total Marmaxx
|
|
|
1,753
|
|
|
|
1,703
|
|
|
|
1,680
|
|
|
Selling square footage at end of period (in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
T.J. Maxx
|
|
|
21,611
|
|
|
|
20,890
|
|
|
|
20,543
|
|
Marshalls
|
|
|
20,912
|
|
|
|
20,513
|
|
|
|
20,388
|
|
|
|
Total Marmaxx
|
|
|
42,523
|
|
|
|
41,403
|
|
|
|
40,931
|
|
|
Net sales at Marmaxx increased 6% in fiscal 2011 as compared to
fiscal 2010. Same store sales for Marmaxx were up 4%, which was
on top of a strong 7% increase in the prior year.
Same store sales growth at Marmaxx for fiscal 2011 was driven by
continued growth in customer transactions, partially offset by a
slight decrease in the value of the average transaction. The
growth in customer transactions in fiscal 2011 was on top of a
significant increase in fiscal 2010. Same store sales for
womens apparel were above the chain average, with junior
apparel particularly strong. Same store sales for mens
apparel were slightly below the chain average. Home categories
improved significantly at Marmaxx, with same store sales
increases above the chain average for fiscal 2011.
Geographically, there were strong trends throughout the country.
Same store sales were strongest in the West Coast and Southwest,
while the Northeast trailed the chain average for fiscal 2011.
We also saw a lift in the net sales of stores renovated during
the year.
Segment profit as a percentage of net sales (segment
margin or segment profit margin) increased to
13.3% in fiscal 2011 from 12.0% in fiscal 2010. This increase in
segment margin for fiscal 2011 was primarily due to an increase
in merchandise margin of 0.8 percentage points driven
primarily by lower markdowns. In addition, the 4% increase in
same
25
store sales provided expense leverage as a percentage of net
sales, particularly occupancy costs which improved by
0.2 percentage points.
Segment margin increased to 12.0% in fiscal 2010 from 9.3% in
fiscal 2009. This increase in segment margin for fiscal 2010 was
primarily due to an increase in merchandise margin of
2.4 percentage points driven by lower markdowns and higher
markon. In addition, the 7% increase in same store sales
provided expense leverage as a percentage of net sales,
particularly occupancy costs, which improved by
0.3 percentage points. These increases were partially
offset by an increase in administrative costs as a percentage of
sales, primarily due to higher accruals for performance-based
incentive compensation as a result of operating performance well
ahead of objectives.
We expect to open approximately 116 new stores (net of closings
and including the conversion of 65 A.J. Wright stores) in fiscal
2012, increasing the Marmaxx store base and selling square
footage each by 7%.
HomeGoods
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended January
|
|
Dollars in millions
|
|
2011
|
|
|
2010
|
|
|
2009
|
|
|
|
|
Net sales
|
|
$
|
1,958.0
|
|
|
$
|
1,794.4
|
|
|
$
|
1,578.3
|
|
Segment profit
|
|
$
|
186.5
|
|
|
$
|
137.5
|
|
|
$
|
42.4
|
|
Segment profit as a percentage of net sales
|
|
|
9.5
|
%
|
|
|
7.7
|
%
|
|
|
2.7
|
%
|
Percent increase (decrease) in same store sales
|
|
|
6
|
%
|
|
|
9
|
%
|
|
|
(3)
|
%
|
Stores in operation at end of period
|
|
|
336
|
|
|
|
323
|
|
|
|
318
|
|
Selling square footage at end of period (in thousands)
|
|
|
6,619
|
|
|
|
6,354
|
|
|
|
6,248
|
|
|
HomeGoods net sales increased 9% in fiscal 2011 compared
to fiscal 2010. Same store sales increased 6% in fiscal 2011,
driven by continued strong growth in customer traffic, compared
to a same store sales increase of 9% in fiscal 2010. Segment
margin of 9.5% was up from 7.7% for fiscal 2010, due to
increased merchandise margins, driven by decreased markdowns,
levering of expenses on the 6% same store sales and operational
efficiencies. The merchandise margin improvements were driven by
our continuing to manage this business with much lower inventory
levels and increasing inventory turns.
HomeGoods net sales increased 14% in fiscal 2010 compared
to fiscal 2009. Same store sales increased 9% in fiscal 2010,
driven by significantly increased customer traffic, compared to
a decrease of 3% in fiscal 2009. Segment margin of 7.7% was up
significantly from 2.7% for fiscal 2009, due to increased
merchandise margins driven by increased markon and decreased
markdowns, levering of expenses on the 9% same store sales and
operational efficiencies. The merchandise margin improvements
were driven by managing this business with much lower inventory
levels, which drove better off-price buying and increased
inventory turns. These improvements were partially offset by
higher accruals for performance-based incentive compensation as
a result of operating performance well ahead of objectives.
In fiscal 2012, we plan to add a net of 38 HomeGoods stores
(including the conversion of 16 A.J. Wright stores) and increase
selling square footage by 11%.
A.J.
Wright
In the fourth quarter of fiscal 2011, TJX announced that it
would consolidate its A.J. Wright division by converting 90 of
the A.J. Wright stores into T.J. Maxx, Marshalls or HomeGoods
stores and by closing the remaining 72 stores, its two
distribution centers and home office. TJX commenced the
liquidation process in the fiscal 2011 fourth quarter and 20
stores had been closed as of January 29, 2011. All of the
remaining stores ceased operation by February 13, 2011. See
Note C to the consolidated financial statements for more
information.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended January
|
|
Dollars in millions
|
|
2011
|
|
|
2010
|
|
|
2009
|
|
|
|
|
Net sales
|
|
$
|
888.4
|
|
|
$
|
779.8
|
|
|
$
|
677.6
|
|
Segment profit (loss)
|
|
$
|
(130.0)
|
|
|
$
|
12.6
|
|
|
$
|
2.9
|
|
Segment profit (loss) as a percentage of net sales
|
|
|
(14.6)
|
%
|
|
|
1.6
|
%
|
|
|
0.4
|
%
|
Percent increase in same store sales
|
|
|
6
|
%
|
|
|
9
|
%
|
|
|
4
|
%
|
Stores in operation at end of period
|
|
|
142
|
|
|
|
150
|
|
|
|
135
|
|
Selling square footage at end of period (in thousands)
|
|
|
2,874
|
|
|
|
3,012
|
|
|
|
2,680
|
|
|
26
A majority of the costs related to the closing of the A.J.
Wright business were recorded in the fourth quarter. The
operating results of the A.J. Wright segment for the full year
of fiscal 2011 include a fourth quarter loss of
$140.6 million, which includes the following:
|
|
|
|
|
|
|
|
|
Fiscal 2011
|
|
Dollars in thousands
|
|
Fourth Quarter
|
|
|
|
|
Fixed asset impairment chargesNon cash
|
|
$
|
82,589
|
|
Severance and termination benefits
|
|
|
25,400
|
|
Lease obligations and other closing costs
|
|
|
11,700
|
|
Operating losses
|
|
|
20,912
|
|
|
Total segment loss
|
|
$
|
140,601
|
|
|
In the first half of fiscal 2012, TJX will incur additional
store closing costs and operating losses due to the completion
of the A.J. Wright store closings as well as the costs to
convert the A.J. Wright stores to other TJX banners and grand
re-opening costs for those stores. TJX estimates that during
fiscal 2012, it will incur additional A.J. Wright segment losses
of approximately $66 million, primarily relating to the
completion of store operations and lease related obligations,
and conversion costs and grand re-opening costs of approximately
$28 million, which will be reflected in the segments of the
new banners into which the stores are converted. The majority of
these charges are expected to be incurred in the first quarter
of fiscal 2012.
A.J. Wrights net sales increased 15% in fiscal 2010 as
compared to fiscal 2009, and same store sales increased 9%.
Segment profit increased to $12.6 million in fiscal 2010,
compared to segment profit of $2.9 million in fiscal 2009.
The increase in segment margin in fiscal 2010 was primarily due
to improved merchandise margin. Like our other divisions, cost
reduction initiatives and the benefit of expense leverage on the
same store sales increase was partially offset by higher
accruals for performance-based incentive compensation.
International
Segments:
TJX
Canada
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended January
|
|
U.S. Dollars in millions
|
|
2011
|
|
|
2010
|
|
|
2009
|
|
|
|
|
Net sales
|
|
$
|
2,510.2
|
|
|
$
|
2,167.9
|
|
|
$
|
2,139.4
|
|
Segment profit
|
|
$
|
352.0
|
|
|
$
|
255.0
|
|
|
$
|
236.1
|
|
Segment profit as a percentage of net sales
|
|
|
14.0
|
%
|
|
|
11.8
|
%
|
|
|
11.0
|
%
|
Percent increase in same store sales
|
|
|
4
|
%
|
|
|
2
|
%
|
|
|
3
|
%
|
Stores in operation at end of period
|
|
|
|
|
|
|
|
|
|
|
|
|
Winners
|
|
|
215
|
|
|
|
211
|
|
|
|
202
|
|
HomeSense
|
|
|
82
|
|
|
|
79
|
|
|
|
75
|
|
|
Total
|
|
|
297
|
|
|
|
290
|
|
|
|
277
|
|
|
Selling square footage at end of period (in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
Winners
|
|
|
4,966
|
|
|
|
4,847
|
|
|
|
4,647
|
|
HomeSense
|
|
|
1,594
|
|
|
|
1,527
|
|
|
|
1,437
|
|
|
Total
|
|
|
6,560
|
|
|
|
6,374
|
|
|
|
6,084
|
|
|
Net sales for TJX Canada (which includes Winners and HomeSense)
increased 16% in fiscal 2011 as compared to fiscal 2010.
Currency translation benefitted fiscal 2011 sales growth by
approximately 9 percentage points, as compared to the same
period last year. Same store sales were up 4% in fiscal 2011
compared to an increase of 2% in fiscal 2010. Same store sales
of mens apparel, dresses and home fashions were above the
segment average for fiscal 2011.
Segment profit for fiscal 2011 increased to $352 million
compared to $255 million in fiscal 2010. The impact of
foreign currency translation increased segment profit by
$25 million in fiscal 2011 as compared to fiscal 2010. The
mark-to-market
adjustment on inventory-related hedges reduced segment profit in
fiscal 2011 by $7 million compared to an immaterial impact
in fiscal 2010. The unfavorable change in the
mark-to-market
adjustment of our inventory hedges reduced fiscal 2011 segment
margin by 0.3 percentage points. TJX Canada segment margin
increased 2.2 percentage
27
points to 14.0% in fiscal 2011, compared to 11.8% in fiscal
2010. The segment margin improvement in fiscal 2011 was driven
by a strong improvement in merchandise margins.
Net sales increased 1% in fiscal 2010 as compared to fiscal
2009. Currency exchange translation reduced fiscal 2010 sales by
approximately $62 million, or 3%, as compared to fiscal
2009. Same store sales were up 2% in fiscal 2010 compared to an
increase of 3% in fiscal 2009. Same store sales of junior
apparel, dresses, mens apparel and footwear, as well as
HomeSense on a standalone basis, were above the segment average
for fiscal 2010.
Segment profit for fiscal 2010 increased to $255 million
compared to $236 million in fiscal 2009. The impact of
foreign currency translation decreased segment profit by
$4 million, or 2%, in fiscal 2010 compared to fiscal 2009.
The
mark-to-market
adjustment on inventory related hedges did not have a material
impact on segment profit in fiscal 2010 compared to fiscal 2009.
Segment margin increased 0.8 percentage points to 11.8% in
fiscal 2010, compared to 11.0% in fiscal 2009, which was
primarily due to an improvement in merchandise margins.
Improvements in store payroll and distribution costs as a
percentage of net sales in fiscal 2010 due to operating
efficiencies were offset by higher accruals for
performance-based incentive compensation as a result of
operating performance well ahead of objectives.
As of the end of fiscal 2011, we operated three StyleSense
stores which are included in the Winners totals in the above
table. We are bringing the Marshalls chain to Canada, with six
stores scheduled to open in fiscal 2012. We believe that Canada
can ultimately support 90 to 100 Marshalls stores. We expect to
add a net of 15 stores in Canada in fiscal 2012 (including the
Marshalls stores) and plan to increase selling square footage by
5%.
TJX
Europe
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended January
|
|
U.S. Dollars in millions
|
|
2011
|
|
|
2010
|
|
|
2009
|
|
|
|
|
Net sales
|
|
$
|
2,493.5
|
|
|
$
|
2,275.4
|
|
|
$
|
2,242.1
|
|
Segment profit
|
|
$
|
75.8
|
|
|
$
|
164.0
|
|
|
$
|
137.6
|
|
Segment profit as a percentage of net sales
|
|
|
3.0
|
%
|
|
|
7.2
|
%
|
|
|
6.1
|
%
|
Percent (decrease) increase in same store sales
|
|
|
(3)
|
%
|
|
|
5
|
%
|
|
|
4
|
%
|
Stores in operation at end of period
|
|
|
|
|
|
|
|
|
|
|
|
|
T.K. Maxx
|
|
|
307
|
|
|
|
263
|
|
|
|
235
|
|
HomeSense
|
|
|
24
|
|
|
|
14
|
|
|
|
7
|
|
|
Total
|
|
|
331
|
|
|
|
277
|
|
|
|
242
|
|
|
Selling square footage at end of period (in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
T.K. Maxx
|
|
|
7,052
|
|
|
|
6,106
|
|
|
|
5,404
|
|
HomeSense
|
|
|
402
|
|
|
|
222
|
|
|
|
107
|
|
|
Total
|
|
|
7,454
|
|
|
|
6,328
|
|
|
|
5,511
|
|
|
Net sales for TJX Europe increased in fiscal 2011 to
$2.5 billion compared to $2.3 billion in fiscal 2010.
Currency translation negatively impacted the fiscal 2011
results, reducing net sales by $86 million. Same store
sales were down 3% in fiscal 2011 compared to a 5% increase in
fiscal 2010.
Segment profit decreased to $75.8 million for fiscal 2011,
and segment profit margin decreased to 3.0%. We believe that
execution issues at TJX Europe were the primary reasons for
below-plan sales and segment profit. We believe that our
expansion in Europe took managements focus off of the
proper execution of the fundamentals of our off-price strategy
and that as a result, consumers did not find the values they had
come to expect at our stores. This led to same store sales
declines, reduced merchandise margins, as a result of increased
markdowns, and the de-levering of expenses. We intend to slow
store growth for TJX Europe in fiscal 2012 and focus on
correcting the execution issues. Despite this setback, we remain
confident that Europe holds significant growth potential for TJX.
Net sales for TJX Europe increased in fiscal 2010 to
$2.3 billion compared to $2.2 billion in fiscal 2009.
Currency exchange rate translation reduced fiscal 2010 sales by
approximately $252 million, or 11%, as compared to fiscal
2009. Same store sales increased 5% for fiscal 2010 compared to
a 4% increase in fiscal 2009. Segment profit for fiscal 2010
increased 19% to $164 million, and segment profit margin
increased 1.1 percentage points to 7.2%. The increase in
segment margin for fiscal 2010 reflects improved merchandise
margins and leverage of expenses on the 5% same store sales
increase, partially offset by costs of operations in Germany and
Poland along with higher accruals for performance- based
incentive compensation in fiscal 2010. We also invested in
strengthening our shared services infrastructure.
28
Foreign currency had an immaterial impact on fiscal 2010 segment
profit, while segment profit for fiscal 2009 included a
favorable
mark-to-market
adjustment of $10 million, primarily relating to the
conversion of Euros to Pound Sterling.
As stated above, we intend to slow our growth in fiscal 2012. We
plan to open a net of 27 new T.K. Maxx stores in Europe and to
expand total TJX Europe selling square footage by 8%. This
compares to a net increase of 54 stores and an 18% increase in
selling square footage in fiscal 2011.
General
Corporate Expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended January
|
|
Dollars in millions
|
|
2011
|
|
|
2010
|
|
|
2009
|
|
|
|
|
General corporate expense
|
|
$
|
168.7
|
|
|
$
|
166.4
|
|
|
$
|
140.0
|
|
|
General corporate expense for segment reporting purposes
represents those costs not specifically related to the
operations of our business segments and is included in selling,
general and administrative expenses, except for the
mark-to-market
adjustment on diesel fuel hedges, which is included in cost of
sales. Fiscal 2011 general corporate expense was relatively flat
to the prior year. The slight increase in fiscal 2011 was due to
increased investment in corporate systems, management training
programs and normal expense growth offsetting the effect of
higher charitable donations and incentive compensation incurred
in fiscal 2010. The increase in general corporate expense in
fiscal 2010 compared to fiscal 2009 was primarily due to an
$18 million contribution to the TJX Foundation in fiscal
2010 and higher performance-based incentive and benefit plan
accruals, partially offset by benefits related to hedging
activity.
LIQUIDITY AND
CAPITAL RESOURCES
Operating
Activities:
Net cash provided by operating activities was
$1,976 million in fiscal 2011, $2,272 million in
fiscal 2010 and $1,155 million in fiscal 2009. The cash
generated from operating activities in each of these fiscal
years was largely due to operating earnings.
Operating cash flows for fiscal 2011 decreased $295 million
compared to fiscal 2010. Net income plus the non-cash impact of
depreciation and impairment charges provided cash of
$1,897 million in fiscal 2011 compared to $1,659 in fiscal
2010, an increase of $238 million. The change in
merchandise inventory, net of the related change in accounts
payable, resulted in a use of cash of $48 million in fiscal
2011, compared to a source of cash of $345 million in
fiscal 2010. Although we continued to operate with leaner
inventories throughout fiscal 2011, our strategy of being more
aggressive with managing inventories had a much greater impact
on cash flows in fiscal 2010. In addition, the increase in
inventory in fiscal 2011 reflected our business growth, as well
as a year-end increase in packaway merchandise to take advantage
of market opportunities. Changes in current income taxes
payable/recoverable unfavorably impacted fiscal 2011 cash flows,
as compared to fiscal 2010, by $203 million due to the
timing of tax payments. The change in accrued expenses and other
liabilities provided cash of $78 million in fiscal 2011
compared to cash provided of $31 million in fiscal 2010.
Operating cash flows for fiscal 2010 increased
$1,117 million compared to fiscal 2009. Net income provided
cash of $1,214 million in fiscal 2010, an increase of
$333 million over net income of $881 million in fiscal
2009. The change in merchandise inventory, net of the related
change in accounts payable, provided a source of cash of
$345 million in fiscal 2010, compared to a
$210 million use of cash in fiscal 2009. The reduction in
inventory in fiscal 2010 was the result of the ongoing
implementation of our strategy of operating with leaner
inventories and buying closer to need, which, in turn, increased
inventory turnover. Changes in current income taxes
payable/recoverable increased cash in fiscal 2010 by
$191 million compared to a decrease in cash of
$49 million in fiscal 2009. The change in prepaid expenses
and other current assets had a favorable impact on fiscal 2010
cash flows of $64 million, primarily due to the timing of
February rental payments. The change in accrued expenses and
other liabilities provided cash of $31 million in fiscal
2010, compared to a $35 million use of cash in fiscal 2009,
reflecting higher accruals in fiscal 2010 for performance-based
incentive compensation, partially offset by increased funding of
the pension plan. Partially offsetting these favorable changes
to fiscal 2010 operating cash flows was the change in the
deferred income tax provision, which reduced cash flows by
$79 million compared to fiscal 2009 and the unfavorable
impact of $61 million of all other items, which primarily
reflects unrealized gains on assets of the executive savings
plan in fiscal 2010 versus unrealized losses in fiscal 2009.
Reserve for obligations of former
operations: We have a reserve for the remaining
future obligations of businesses we have closed, sold or
otherwise disposed of including, among others, Bobs Stores
and A.J. Wright. The
29
majority of these obligations relate to real estate leases
associated with these businesses. The reserve balance was
$54.7 million at January 29, 2011 and
$35.9 million at January 30, 2010. See Note C to
the consolidated financial statements for more information.
We may also be contingently liable on up to 13 leases of
BJs Wholesale Club, a former TJX business, and up to seven
leases of Bobs Stores, in addition to those included in
the reserve. The reserve for former operations does not reflect
these leases because we do not believe that the likelihood of
future liability to us is probable.
Off-balance sheet liabilities: We have
contingent obligations on leases, for which we were a lessee or
guarantor, which were assigned to third parties without TJX
being released by the landlords. Over many years, we have
assigned numerous leases that we originally leased or guaranteed
to a significant number of third parties. With the exception of
leases of our former businesses for which we have reserved, we
have rarely had a claim with respect to assigned leases, and
accordingly, we do not expect that such leases will have a
material impact on our financial condition, results of
operations or cash flows. We do not generally have sufficient
information about these leases to estimate our potential
contingent obligations under them that could be triggered in the
event that one or more of the current tenants do not fulfill
their obligations related to one or more of these leases.
We also have contingent obligations in connection with some
assigned or sublet properties that we are able to estimate. We
estimate the undiscounted obligations of (i) leases of
former operations not included in our reserve for former
operations and (ii) properties of our discontinued
operations that we would expect to sublet, if the subtenants did
not fulfill their obligations, is approximately $75 million
as of January 29, 2011. We believe that most or all of
these contingent obligations will not revert to us and, to the
extent they do, will be resolved for substantially less due to
mitigating factors.
We are a party to various agreements under which we may be
obligated to indemnify other parties with respect to breach of
warranty or losses related to such matters as title to assets
sold, specified environmental matters or certain income taxes.
These obligations are typically limited in time and amount.
There are no amounts reflected in our balance sheets with
respect to these contingent obligations.
Investing
Activities:
Our cash flows for investing activities include capital
expenditures for the last three fiscal years as set forth in the
table below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended January
|
|
In millions
|
|
2011
|
|
|
2010
|
|
|
2009
|
|
|
|
|
New stores
|
|
$
|
196.3
|
|
|
$
|
127.8
|
|
|
$
|
147.6
|
|
Store renovations and improvements
|
|
|
301.0
|
|
|
|
206.8
|
|
|
|
264.3
|
|
Office and distribution centers
|
|
|
209.8
|
|
|
|
94.7
|
|
|
|
171.0
|
|
|
Capital expenditures
|
|
$
|
707.1
|
|
|
$
|
429.3
|
|
|
$
|
582.9
|
|
|
We expect that capital expenditures will approximate
$800 million to $825 million for fiscal 2012, which we
expect to fund through internally generated funds. Fiscal 2012
capital expenditures are expected to include $239 million
for new stores, $55 million of which is associated with
converting the 90 A.J. Wright stores to other banners.
Additionally, $269 million is for our offices and
distribution centers to support growth and $317 million is
for store renovations.
We also purchased short-term investments that had initial
maturities in excess of 90 days which, per our policy, are
not classified as cash on the balance sheets presented. In
fiscal 2011, we purchased $120 million of such short-term
investments, compared to $279 million in fiscal 2010.
Additionally, $180 million of such short-term investments
were sold or matured during fiscal 2011 compared to
$153 million last year. No such short-term investments were
held during fiscal 2009. Investing activities for fiscal 2009
also include cash flows associated with net investment hedges.
During fiscal 2009, we suspended our policy of hedging the net
investment in our foreign subsidiaries and settled such hedges
during the fourth quarter of that year. The net cash received on
net investment hedges during fiscal 2009 amounted to
$14.4 million.
30
Financing
Activities:
Cash flows from financing activities resulted in net cash
outflows of $1,224 million in fiscal 2011,
$584 million in fiscal 2010 and $769 million in fiscal
2009.
We spent $1,200 million to repurchase and retire
27.6 million shares of our stock in fiscal 2011,
$950 million to repurchase and retire 27.0 million
shares in fiscal 2010 and $741 million to repurchase and
retire 24.0 million shares in fiscal 2009 under our stock
repurchase programs. We record the purchase of our stock on a
cash basis, and the amounts reflected in the financial
statements may vary from the above due to the timing of the
settlement of our repurchases. During the third quarter of
fiscal 2011, we completed the $1 billion stock repurchase
program approved in September 2009 and initiated another
$1 billion stock repurchase program approved in February
2010. As of January 29, 2011, $594 million remained
available for purchase under that program, and in February 2011,
our Board of Directors authorized an additional $1 billion
stock repurchase program. We currently plan to repurchase
approximately $1.2 billion of stock under our stock
repurchase programs in fiscal 2012. We determine the timing and
amount of repurchases made directly and under
Rule 10b5-1
plans from time to time based on our assessment of various
factors including anticipated excess cash flow, liquidity,
market conditions, the economic environment and prospects for
the business and other factors. The timing and amount of these
purchases may change from our plans.
Cash flows from financing activities for fiscal 2010 include the
net proceeds of $774 million from two debt offerings. On
April 7, 2009, we issued $375 million aggregate
principal amount of 6.95% ten-year notes. Related to this
transaction, TJX called for the redemption of its zero coupon
convertible subordinated notes, virtually all of which were
converted into 15.1 million shares of common stock. We used
the proceeds of the 6.95% notes to repurchase additional
shares of common stock under our stock repurchase program. On
July 23, 2009, we issued $400 million aggregate
principal amount of 4.20% six-year notes. We used a portion of
the proceeds of this offering to refinance our
C$235 million term credit facility on August 10, 2009,
prior to its scheduled maturity, and used the remainder,
together with funds from operations, to pay our 7.45% notes
on their scheduled maturity of December 15, 2009.
We declared quarterly dividends on our common stock which
totaled $0.60 per share in fiscal 2011, $0.48 per share in
fiscal 2010 and $0.44 per share in fiscal 2009. Cash payments
for dividends on our common stock totaled $229 million in
fiscal 2011, $198 million in fiscal 2010 and
$177 million in fiscal 2009. We announced our intention to
increase the quarterly dividend on our common stock to $0.19 per
share, effective with the dividend payable in June 2011, subject
to the approval of our Board of Directors. Financing activities
also included proceeds from the exercise of employee stock
options of $176 million in fiscal 2011, $170 million
in fiscal 2010 and $142 million in fiscal 2009.
We traditionally have funded our seasonal merchandise
requirements through cash generated from operations, short-term
bank borrowings and the issuance of short-term commercial paper.
As of January 29, 2011, we had a $500 million
revolving credit facility maturing in May 2013 and a
$500 million revolving credit facility maturing in May
2011. The three-year agreement maturing in May 2013 was entered
into in May 2010 to replace a similar agreement that matured at
that time. The three-year agreement requires the payment of
17.5 basis points annually on the unused committed amount.
The agreement maturing in May 2011 requires the payment of six
basis points annually on the committed amount (whether used or
unused). Both of these agreements have no compensating balance
requirements; contain various covenants, including a requirement
of a specified ratio of debt to earnings and serve as back up to
TJXs commercial paper program. The availability under our
revolving credit facilities was $1 billion at
January 29, 2011 and January 30, 2010, and we had no
borrowings outstanding at those dates under these agreements. We
believe existing cash balances, internally-generated funds and
our revolving credit facilities will meet our future operating
needs. The maximum amount of our U.S. short-term borrowings
outstanding was $165 million during fiscal 2010. There were
no U.S. short-term borrowings outstanding during fiscal
2011.
As of January 29, 2011 and January 30, 2010,
TJXs foreign subsidiaries had uncommitted credit
facilities. TJX Canada had two credit lines, a C$10 million
facility for operating expenses and a C$10 million letter
of credit facility. As of January 29, 2011 and
January 30, 2010, there were no amounts outstanding on the
Canadian credit line for operating expenses. As of
January 29, 2011, TJX Europe had a credit line of
£20 million. There were no outstanding borrowings on
this European credit line as of January 29, 2011 or
January 30, 2010.
We believe that internally-generated funds and our current
credit facilities will adequately meet our operating, debt and
capital needs for at least the next twelve months. See
Note K to the consolidated financial statements for further
information regarding our long-term debt and other financing
sources.
31
Contractual obligations: As of
January 29, 2011, we had payment obligations (including
current installments) under long-term debt arrangements, leases
for property and equipment and purchase obligations that will
require cash outflows as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments Due by Period
|
|
|
|
|
|
|
Less Than
|
|
|
1-3
|
|
|
3-5
|
|
|
More Than
|
|
Tabular Disclosure of Contractual Obligations
|
|
Total
|
|
|
1 Year
|
|
|
Years
|
|
|
Years
|
|
|
5 Years
|
|
|
|
|
Long-term debt
obligations including
estimated interest and current installments
|
|
$
|
1,092,963
|
|
|
$
|
42,863
|
|
|
$
|
85,725
|
|
|
$
|
485,701
|
|
|
$
|
478,674
|
|
Operating lease commitments
|
|
|
6,800,093
|
|
|
|
1,092,709
|
|
|
|
1,938,020
|
|
|
|
1,464,690
|
|
|
|
2,304,674
|
|
Capital lease obligation
|
|
|
19,219
|
|
|
|
3,897
|
|
|
|
7,824
|
|
|
|
7,498
|
|
|
|
|
|
Purchase obligations
|
|
|
2,673,988
|
|
|
|
2,635,019
|
|
|
|
34,976
|
|
|
|
3,993
|
|
|
|
|
|
|
Total Obligations
|
|
$
|
10,586,263
|
|
|
$
|
3,774,488
|
|
|
$
|
2,066,545
|
|
|
$
|
1,961,882
|
|
|
$
|
2,783,348
|
|
|
The long-term debt obligations above include estimated interest
costs. The lease commitments in the above table are for minimum
rent and do not include costs for insurance, real estate taxes,
other operating expenses and, in some cases, rentals based on a
percentage of sales; these items totaled approximately one-third
of the total minimum rent for the fiscal year ended
January 29, 2011.
Our purchase obligations primarily consist of purchase orders
for merchandise; purchase orders for capital expenditures,
supplies and other operating needs; commitments under contracts
for maintenance needs and other services; and commitments under
executive employment and other agreements. We exclude from
purchase obligations long-term agreements for services and
operating needs that can be cancelled without penalty.
We also have long-term liabilities which include
$209.0 million for employee compensation and benefits, the
majority of which will come due beyond five years,
$165.3 million for accrued rent, the cash flow requirements
of which are included in the lease commitments in the above
table, and $179.8 million for uncertain tax positions for
which it is not reasonably possible for us to predict when they
may be paid.
CRITICAL
ACCOUNTING POLICIES
We prepare our consolidated financial statements in accordance
with accounting principles generally accepted in the United
States (U.S. GAAP) which require us to make certain
estimates and judgments that impact our reported results. These
judgments and estimates are based on historical experience and
other factors which we continually review and believe are
reasonable. We consider our most critical accounting policies,
involving management estimates and judgments, to be those
relating to the areas described below.
Inventory valuation: We use the retail method
for valuing inventory, which results in a weighted average cost.
Under the retail method, the cost value of inventory and gross
margins are determined by calculating a
cost-to-retail
ratio and applying it to the retail value of inventory. This
method is widely used in the retail industry, and we believe the
retail method results in a more conservative inventory valuation
than other inventory accounting methods. It involves management
estimates with regard to markdowns and inventory shrinkage.
Under the retail method, permanent markdowns are reflected in
inventory valuation when the price of an item is reduced.
Typically, a significant area of judgment in the retail method
is the amount and timing of permanent markdowns. However, as a
normal business practice, we have a specific policy as to when
and how markdowns are to be taken, greatly reducing
managements discretion and the need for management
estimates as to markdowns. Inventory shrinkage requires
estimating a shrinkage rate for interim periods, but we take a
full physical inventory near the fiscal year end to determine
shrinkage at year end. Thus, actual and estimated amounts of
shrinkage may differ in quarterly results, but the difference is
typically not a significant factor in full year results.
Overall, we believe that the retail method, coupled with our
disciplined permanent markdown policy and the full physical
inventory taken at each fiscal year end, results in an inventory
valuation that is fairly stated. Lastly, many retailers have
arrangements with vendors that provide for rebates and
allowances under certain conditions that ultimately affect the
value of inventory. We have generally not entered into such
arrangements with our vendors in our continuing operations.
Impairment of long-lived assets: We evaluate
the recoverability of the carrying value of our long-lived
assets at least annually and whenever events or circumstances
occur that would indicate that the carrying amounts of those
32
assets are not recoverable. Significant judgment is involved in
projecting the cash flows of individual stores, as well as our
business units, which involve a number of factors including
historical trends, recent performance and general economic
assumptions. If we determine that an impairment of long-lived
assets has occurred, we record an impairment charge equal to the
excess of the carrying value of those assets over the estimated
fair value of the assets. We believe as of January 29, 2011
that the carrying value of our long-lived assets was appropriate.
Retirement obligations: Retirement costs are
accrued over the service life of an employee and represent, in
the aggregate, obligations that will ultimately be settled far
in the future and are therefore subject to estimates. We are
required to make assumptions regarding variables, such as the
discount rate for valuing pension obligations and the long-term
rate of return assumed to be earned on pension assets, both of
which impact the net periodic pension cost for the period. The
discount rate, which we determine annually based on market
interest rates, and our estimated long-term rate of return,
which can differ considerably from actual returns, are two
factors that can have a considerable impact on the annual cost
of retirement benefits and the funded status of our qualified
pension plan. When the market performance of our plan assets,
discount rates or other factors have a negative impact on the
funded status of our plan, we may make contributions to the plan
in excess of mandatory funding requirements. In fiscal 2011 we
funded our qualified pension plan with a voluntary contribution
of $100 million.
Share-based compensation: In accordance with
U.S. GAAP, we estimate the fair value of stock awards
issued to employees and directors under our stock incentive
plan. The fair value of the awards is amortized as
share-based compensation over the vesting periods
during which the recipients are required to provide service. We
use the Black-Scholes option pricing model for determining the
fair value of stock options granted, which requires management
to make significant judgments and estimates. The use of
different assumptions and estimates could have a material impact
on the estimated fair value of stock option grants and the
related compensation cost.
Casualty insurance: In fiscal 2008, we
initiated a fixed premium program for our casualty insurance.
Previously, our casualty insurance program required us to
estimate the total claims we would incur as a component of our
annual insurance cost. The estimated claims are developed, with
the assistance of an actuary, based on historical experience and
other factors. These estimates involve significant judgments and
assumptions, and actual results could differ from these
estimates. A large portion of these claims is funded with a
non-refundable payment during the policy year, offsetting our
estimated claims accrual. We had a net accrual of
$14.2 million for the unfunded portion of our casualty
insurance program as of January 29, 2011.
Income taxes: Like many large corporations,
our income tax returns are regularly audited by federal, state
and local tax authorities in the United States and in foreign
countries where we operate. Such authorities may challenge
positions we take, and we are engaged in various proceedings
with such authorities with respect to assessments, claims,
deficiencies and refunds. In accordance with U.S. GAAP, we
evaluate uncertain tax positions based on our understanding of
the facts, circumstances and information available at the
reporting date, and we accrue for exposure when we believe that
it is more likely than not, based on the technical merits, that
the positions will not be sustained upon examination. However,
it is possible that amounts accrued or paid as the result of the
final resolutions of examinations, judicial or administrative
proceedings, changes in facts or law, expirations of statute of
limitations in specific jurisdictions or other resolutions of,
or changes in, tax positions, will differ either positively or
negatively from the amounts we have accrued, and may result in
accruals or payments for periods not currently under examination
or for which no claims have been made. It is possible that such
final resolutions or changes in accruals could have a material
adverse impact on the results of operations of the period in
which an examination or proceeding is resolved or in the period
in which a changed outcome becomes probable and reasonably
estimable.
Reserves for Computer Intrusion related costs and for
former operations: As discussed in Notes B and C to
the consolidated financial statements and elsewhere in the
Managements Discussion and Analysis, we have reserves for
probable losses arising out of the Computer Intrusion and for
future obligations of former operations, primarily real estate
leases. We must make estimates and assumptions about the costs
and expenses we will incur in connection with the Computer
Intrusion and in connection with the future obligations of our
former operations. The leases relating to A.J. Wright and other
former businesses are long-term obligations, and the estimated
cost to us involves numerous estimates and assumptions including
when and on what terms we will assign the lease, or sublease the
leased properties, whether and for how long we remain obligated
with respect to particular leases, the extent to which assignees
or subtenants will fulfill our financial and other obligations
under the leases, how particular obligations may ultimately be
settled and what mitigating factors, including indemnification,
may exist to any liability we may have. We develop these
assumptions based on past experience and evaluation of various
potential outcomes and the circumstances surrounding each
situation and location. We
33
believe that our reserves are reasonable estimates of the most
likely outcomes of the future obligations arising out of the
Computer Intrusion and the future obligations of our former
operations and should be adequate to cover the ultimate costs we
will incur. However, actual results may differ from our current
estimates, and we may decrease or increase the amount of our
reserves to adjust for future developments relating to the
underlying assumptions and other factors, although we do not
expect any such differences to be material to our results of
operations.
Loss contingencies: Certain conditions may
exist as of the date the financial statements are issued that
may result in a loss to us but will not be resolved until one or
more future events occur or fail to occur. Our management, with
the assistance of our legal counsel, assesses such contingent
liabilities. Such assessments inherently involve the exercise of
judgment. In assessing loss contingencies related to legal
proceedings that are pending against us or claims that may
result in such proceedings, our legal counsel assists us in
evaluating the perceived merits of any legal proceedings or
claims as well as the perceived merits of the relief sought or
expected to be sought therein.
If the assessment of a contingency indicates that it is probable
that a material loss has been incurred and the amount of the
liability can be reasonably estimated, we will accrue for the
estimated liability in the financial statements. If the
assessment indicates that a potentially material loss
contingency is not probable, but is reasonably possible, or is
probable but cannot be reasonably estimated, we will disclose
the nature of the contingent liability, together with an
estimate of the range of the possible loss or a statement that
such loss is not reasonably estimable.
RECENT ACCOUNTING
PRONOUNCEMENTS
See Note A to our consolidated financial statements
included in this annual report for recently issued accounting
standards, including the expected dates of adoption and
estimated effects on our consolidated financial statements.
ITEM 7A. QUANTITATIVE
AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
We do not enter into derivatives for speculative or trading
purposes.
FOREIGN CURRENCY
EXCHANGE RISK
We are exposed to foreign currency exchange rate risk on our
investment in our Canadian and European operations on the
translation of these foreign operations into the
U.S. dollar and on purchases of goods in currencies that
are not the local currencies of stores where the goods are sold.
As more fully described in Note F to our consolidated
financial statements, we hedge a portion of our intercompany
transactions with foreign operations and certain merchandise
purchase commitments incurred by these operations with
derivative financial instruments. We enter into derivative
contracts only for the purpose of hedging an underlying economic
exposure. We utilize currency forward and swap contracts,
designed to offset the gains or losses in the underlying
exposures. The contracts are executed with banks we believe are
creditworthy and are denominated in currencies of major
industrial countries. We have performed a sensitivity analysis
assuming a hypothetical 10% adverse movement in foreign currency
exchange rates applied to the hedging contracts and the
underlying exposures described above as well as the translation
of our foreign operations into our reporting currency. As of
January 29, 2011, the analysis indicated that such an
adverse movement would not have a material effect on our
consolidated financial position but could have reduced our
pre-tax income for fiscal 2011 by approximately $43 million.
INTEREST RATE
RISK
Our cash equivalents, short-term investments and certain lines
of credit bear variable interest rates. Changes in interest
rates affect interest earned and paid by us. In addition,
changes in the gross amount of our borrowings and future changes
in interest rates will affect our future interest expense. We
periodically enter into financial instruments to manage our cost
of borrowing; however, we believe that fixed interest rates on
most of our debt minimizes our exposure to changes in market
conditions. We have performed a sensitivity analysis assuming a
hypothetical 10% adverse movement in interest rates applied to
our maximum variable rate debt outstanding, and to our cash and
cash equivalents and short-term investments as of
January 29, 2011. The analysis indicated that such an
adverse movement as of that date would not have had a material
effect on our consolidated financial position, results of
operations or cash flows.
34
EQUITY PRICE
RISK
The assets of our qualified pension plan, a large portion of
which are equity securities, are subject to the risks and
uncertainties of the financial markets. We invest the pension
assets in a manner that attempts to minimize and control our
exposure to market uncertainties. Investments, in general, are
exposed to various risks, such as interest rate, credit, and
overall market volatility risks. A significant decline in the
financial markets can adversely affect the value of our pension
plan assets and the funded status of our pension plan, resulting
in increased contributions to the plan.
ITEM 8. FINANCIAL
STATEMENTS AND SUPPLEMENTARY DATA
The information required by this item may be found on pages F-1
through F-32 of this Annual Report on
Form 10-K.
ITEM 9. CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
ITEM 9A. CONTROLS
AND PROCEDURES
(a) Evaluation of Disclosure Controls and Procedures
We have carried out an evaluation, under the supervision and
with the participation of our management, including our Chief
Executive Officer and Chief Financial Officer, of the
effectiveness of the design and operation of our disclosure
controls and procedures, as defined in
Rules 13a-15(e)
and
15d-15(e)
under the Exchange Act, as of the end of the period covered by
this report pursuant to
Rules 13a-15
and 15d-15
of the Exchange Act. Based upon that evaluation, our Chief
Executive Officer and Chief Financial Officer concluded that our
disclosure controls and procedures are effective in ensuring
that information required to be disclosed by us in the reports
that we file or submit under the Exchange Act is
(i) recorded, processed, summarized and reported within the
time periods specified in the SECs rules and forms; and
(ii) accumulated and communicated to our management,
including our principal executive and principal financial
officers, or persons performing similar functions, as
appropriate to allow timely decisions regarding required
disclosures. Management recognizes that any controls and
procedures, no matter how well designed and operated, can
provide only reasonable assurance of achieving their objectives
and management necessarily applies its judgment in evaluating
the cost-benefit relationship of implementing controls and
procedures.
(b) Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial
reporting (as defined in
Rules 13a-15(f)
and
15d-15(f)
under the Exchange Act) during the fourth quarter of fiscal 2011
identified in connection with our Chief Executive Officers
and Chief Financial Officers evaluation that have
materially affected, or are reasonably likely to materially
affect, our internal control over financial reporting.
(c) Managements Annual Report on Internal Control
Over Financial Reporting
Our management is responsible for establishing and maintaining
adequate internal control over financial reporting. Internal
control over financial reporting is defined in
Rules 13a-15(f)
and
15d-15(f)
promulgated under the Exchange Act as a process designed by, or
under the supervision of, our principal executive and principal
financial officers, or persons performing similar functions, and
effected by our Board of Directors, management and other
personnel, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with
U.S. GAAP and includes those policies and procedures that:
|
|
|
|
|
Pertain to the maintenance of records that in reasonable detail
accurately and fairly reflect the transactions and dispositions
of the assets of TJX;
|
|
|
|
Provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in
accordance with U.S. GAAP, and that receipts and
expenditures of TJX are being made only in accordance with
authorizations of management and directors of TJX; and
|
|
|
|
Provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use or disposition of
TJXs assets that could have a material effect on the
financial statements.
|
35
Our internal control system is designed to provide reasonable
assurance to our management and Board of Directors regarding the
preparation and fair presentation of published financial
statements. Because of its inherent limitations, internal
control over financial reporting may not prevent or detect
misstatements. Therefore, even those systems designed to be
effective can provide only reasonable assurance with respect to
financial statement preparation and presentation. Also,
projections of any evaluation of effectiveness to future periods
are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.
Under the supervision and with the participation of our
management, including our Chief Executive Officer and Chief
Financial Officer, we conducted an evaluation of the
effectiveness of our internal control over financial reporting
as of January 29, 2011 based on the framework in
Internal ControlIntegrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission
(COSO). Based on that evaluation, management
concluded that its internal control over financial reporting was
effective as of January 29, 2011.
(d) Attestation Report of the Independent Registered Public
Accounting Firm
PricewaterhouseCoopers LLP, the independent registered public
accounting firm that audited and reported on our consolidated
financial statements contained herein, has audited the
effectiveness of our internal control over financial reporting
as of January 29, 2011, and has issued an attestation
report on the effectiveness of our internal control over
financial reporting included herein.
ITEM 9B. OTHER
INFORMATION
Not applicable.
36
Part III
ITEM 10. DIRECTORS,
EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The following are the executive officers of TJX as of
March 29, 2011:
|
|
|
|
|
Name
|
|
Age
|
|
Office and Employment During Last Five Years
|
|
|
Bernard Cammarata
|
|
71
|
|
Chairman of the Board since 1999. Acting Chief Executive
Officer from September 2005 to January 2007 and Chief Executive
Officer from 1989 to 2000. Led TJX and its former TJX
subsidiary and T.J. Maxx Division from the organization of the
business in 1976 until 2000, including serving as Chief
Executive Officer and President of TJX, Chairman and President
of TJXs T.J. Maxx Division, and Chairman of The Marmaxx
Group.
|
Ernie Herrman
|
|
50
|
|
President since January 2011, Senior Executive Vice President,
Group President from August 2008 to January 2011. Senior
Executive Vice President since January 2007 and President,
Marmaxx from January 2005 to August 2008. Senior Executive Vice
President, Chief Operating Officer, Marmaxx from 2004 to 2005.
Executive Vice President, Merchandising, Marmaxx from 2001 to
2004. Various merchandising positions with TJX since joining in
1989.
|
Michael MacMillan
|
|
54
|
|
Senior Executive Vice President, Group President since February
2011. President Marmaxx from August 2008 to January 2011.
President, Winners Merchants International (WMI) from June 2003
to August 2008, Executive Vice President, WMI from 2000 to 2003.
Various finance positions with TJX since joining in 1985.
|
Carol Meyrowitz
|
|
57
|
|
Chief Executive Officer since January 2007, Director since
September 2006 and President from October 2005 to January 2011.
Consultant to TJX from January 2005 to October 2005. Senior
Executive Vice President from March 2004 to January 2005.
President of Marmaxx from 2001 to January 2005. Executive Vice
President of TJX from 2001 to 2004.
|
Jeffrey G. Naylor
|
|
52
|
|
Senior Executive Vice President, Chief Financial and
Administrative Officer since February 2009. Senior Executive
Vice President, Chief Administrative and Business Development
Officer, June 2007 to February 2009. Chief Financial and
Administrative Officer, September 2006 to June 2007. Senior
Executive Vice President, Chief Financial Officer, from March
2004 to September 2006, Executive Vice President, Chief
Financial Officer effective February 2004.
|
Jerome Rossi
|
|
67
|
|
Senior Executive Vice President, Group President, since January
2007. Senior Executive Vice President, Chief Operating Officer,
Marmaxx from 2005 to January 2007. President, HomeGoods, from
2000 to 2005. Executive Vice President, Store Operations, Human
Resources and Distribution Services, Marmaxx from 1996 to 2000.
|
Nan Stutz
|
|
53
|
|
Senior Executive Vice President, Group President since February
2011. Group President from 2010 to 2011. President, HomeGoods
from 2007 to 2010, Executive Vice President, Merchandise and
Marketing from 2006 to 2007 and Senior Vice President,
Merchandise and Marketing from 2005 to 2006. Various
merchandising positions with Marmaxx and HomeGoods since 1996.
|
Paul Sweetenham
|
|
46
|
|
Senior Executive Vice President, Group President, Europe, since
January 2007. President, T.K. Maxx since 2001. Senior Vice
President, Merchandising and Marketing, T.K. Maxx from 1999 to
2001. Various merchandising positions with T.K. Maxx from 1993
to 1999.
|
The executive officers hold office until the next annual meeting
of the Board in June 2011 and until their successors are elected
and qualified.
TJX will file with the Securities and Exchange Commission a
definitive proxy statement no later than 120 days after the
close of its fiscal year ended January 29, 2011 (Proxy
Statement). The information required by this Item and not given
in this Item will appear under the headings Election of
Directors, Corporate Governance, Audit
Committee Report and Beneficial Ownership in
our Proxy Statement, which sections are incorporated in this
item by reference.
TJX has a Code of Ethics for TJX Executives governing its
Chairman, Chief Executive Officer, President, Chief Financial
and Administrative Officer, Principal Accounting Officer and
other senior operating, financial and legal executives. The Code
of
37
Ethics for TJX Executives is designed to ensure integrity in its
financial reports and public disclosures. TJX also has a Code of
Conduct and Business Ethics for Directors which promotes honest
and ethical conduct, compliance with applicable laws, rules and
regulations and the avoidance of conflicts of interest. Both of
these codes of conduct are published at www.tjx.com. We intend
to disclose any future amendments to, or waivers from, the Code
of Ethics for TJX Executives or the Code of Business Conduct and
Ethics for Directors within four business days of the waiver or
amendment through a website posting or by filing a Current
Report on
Form 8-K
with the Securities and Exchange Commission.
ITEM 11. EXECUTIVE
COMPENSATION
The information required by this Item will appear under the
heading Executive Compensation in our Proxy
Statement, which section is incorporated in this item by
reference.
ITEM 12. SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
The information required by this Item will appear under the
heading Beneficial Ownership in our Proxy Statement,
which section is incorporated in this item by reference.
ITEM 13. CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
The information required by this Item will appear under the
headings Transactions with Related Persons and
Corporate Governance in our Proxy Statement, which
sections are incorporated in this item by reference.
ITEM 14. PRINCIPAL
ACCOUNTANT FEES AND SERVICES
The information required by this Item will appear under the
heading Audit Committee Report in our Proxy
Statement, which section is incorporated in this item by
reference.
38
PART IV
ITEM 15. EXHIBITS,
FINANCIAL STATEMENT SCHEDULES
(a) Financial Statement Schedules
For a list of the consolidated financial information included
herein, see Index to the Consolidated Financial Statements on
page F-1.
Schedule
Schedule of Valuation and Qualifying Accounts Disclosure
Schedule IIValuation and Qualifying Accounts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
|
|
|
Amounts
|
|
|
Write-Offs
|
|
|
Balance
|
|
|
|
Beginning
|
|
|
Charged to
|
|
|
Against
|
|
|
End of
|
|
In thousands
|
|
of Period
|
|
|
Net Income
|
|
|
Reserve
|
|
|
Period
|
|
|
|
|
Sales Return Reserve:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended January 29, 2011
|
|
$
|
16,855
|
|
|
$
|
1,051,999
|
|
|
$
|
1,051,703
|
|
|
$
|
17,151
|
|
|
Fiscal Year Ended January 30, 2010
|
|
$
|
14,006
|
|
|
$
|
1,015,470
|
|
|
$
|
1,012,621
|
|
|
$
|
16,855
|
|
|
Fiscal Year Ended January 31, 2009
|
|
$
|
15,298
|
|
|
$
|
934,017
|
|
|
$
|
935,309
|
|
|
$
|
14,006
|
|
|
Reserves Related to Former Operations :
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended January 29, 2011
|
|
$
|
35,897
|
|
|
$
|
32,575
|
|
|
$
|
13,777
|
|
|
$
|
54,695
|
|
|
Fiscal Year Ended January 30, 2010
|
|
$
|
40,564
|
|
|
$
|
1,761
|
|
|
$
|
6,428
|
|
|
$
|
35,897
|
|
|
Fiscal Year Ended January 31, 2009
|
|
$
|
46,076
|
|
|
$
|
1,820
|
|
|
$
|
7,332
|
|
|
$
|
40,564
|
|
|
Casualty Insurance Reserve:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended January 29, 2011
|
|
$
|
17,116
|
|
|
$
|
(555
|
)
|
|
$
|
2,320
|
|
|
$
|
14,241
|
|
|
Fiscal Year Ended January 30, 2010
|
|
$
|
20,759
|
|
|
$
|
1,093
|
|
|
$
|
4,736
|
|
|
$
|
17,116
|
|
|
Fiscal Year Ended January 31, 2009
|
|
$
|
26,373
|
|
|
$
|
1,232
|
|
|
$
|
6,846
|
|
|
$
|
20,759
|
|
|
Computer Intrusion Reserve:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended January 29, 2011
|
|
$
|
23,481
|
|
|
$
|
(1,550
|
)
|
|
$
|
4,591
|
|
|
$
|
17,340
|
|
|
Fiscal Year Ended January 30, 2010
|
|
$
|
42,211
|
|
|
$
|
|
|
|
$
|
18,730
|
|
|
$
|
23,481
|
|
|
Fiscal Year Ended January 31, 2009
|
|
$
|
117,266
|
|
|
$
|
(13,000
|
)
|
|
$
|
62,055
|
|
|
$
|
42,211
|
|
|
39
(b) Exhibits
Listed below are all exhibits filed as part of this report. Some
exhibits are filed by the Registrant with the Securities and
Exchange Commission pursuant to
Rule 12b-32
under the Exchange Act.
|
|
|
Exhibit
|
|
|
No.
|
|
Description of Exhibit
|
|
|
3(i).1
|
|
Fourth Restated Certificate of Incorporation is incorporated
herein by reference to Exhibit 99.1 to the
Form 8-A/A
filed September 9, 1999. Certificate of Amendment of Fourth
Restated Certificate of Incorporation is incorporated herein by
reference to Exhibit 3(i) to the
Form 10-Q
filed for the quarter ended July 28, 2005.
|
3(ii).1
|
|
By-laws of TJX, as amended, are incorporated herein by reference
to Exhibit 3.1 to the
Form 8-K
filed on September 22, 2009.
|
4.1
|
|
Indenture between TJX and U.S. Bank National Association dated
as of April 2, 2009, incorporated by reference to
Exhibit 4.1 of the Registration Statement on
Form S-3
filed on April 2, 2009.
|
4.2
|
|
First Supplemental Indenture between TJX and U.S. Bank National
Association dated as of April 7, 2009, incorporated by
reference to Exhibit 4.1 to the
Form 8-K
filed on April 7, 2009.
|
4.3
|
|
Second Supplemental Indenture between TJX and U.S. Bank National
Association dated as of July 23, 2009, incorporated herein
by reference to Exhibit 4.1 to the
Form 8-K
filed on July 23, 2009.
|
10.1
|
|
The Employment Agreement dated as of June 2, 2009 between
Bernard Cammarata and TJX is incorporated herein by reference to
Exhibit 10.2 to the
Form 10-Q
filed for the quarter ended May 1, 2010.*
|
10.2
|
|
The Employment Agreement dated as of February 1, 2009
between Carol Meyrowitz and TJX is incorporated herein by
reference to Exhibit 10.3 to the
Form 10-Q
filed for the quarter ended May 1, 2010. The Employment
Agreement dated January 28, 2011 between Carol Meyrowitz
and TJX is filed herewith.*
|
10.3
|
|
The Employment Agreement dated as of April 5, 2008 between
Jeffrey Naylor and TJX is incorporated herein by reference to
Exhibit 10.4 to the
Form 10-Q
filed for the quarter ended May 1, 2010. The Amendment to
Employment Agreement dated April 21, 2009 between Jeffrey
Naylor and TJX is incorporated herein by reference to
Exhibit 10.2 to the
Form 8-K
filed on April 24, 2009. The Employment Agreement dated
January 28, 2011 between Jeffrey Naylor and TJX is filed
herewith.*
|
10.4
|
|
The Employment Agreement dated as of January 29, 2010
between Ernie Herrman and TJX is incorporated herein by
reference to Exhibit 10.5 to the
Form 10-Q
filed for the quarter ended May 1, 2010. The Amended and
Restated Employment Agreement dated January 28, 2011
between Ernie Herrman and TJX is filed herewith.*
|
10.5
|
|
The Form of 409A Amendment to Employment Agreements for the
named executive officers is incorporated herein by reference to
Exhibit 10.9 to the
Form 10-K
filed for the fiscal year ended January 31, 2009.*
|
10.6
|
|
The Employment Agreement dated as of January 29, 2010
between Jerome Rossi and TJX is incorporated herein by reference
to Exhibit 10.6 to the
Form 10-Q
filed for the quarter ended May 1, 2010.*
|
10.7
|
|
The Employment Agreement dated as of January 29, 2010
between and among Paul Sweetenham, TJX UK, and TJX is
incorporated herein by reference to Exhibit 10.7 to the
Form 10-Q
filed for the quarter ended May 1, 2010. The letter
agreement dated November 29, 2010 between and among Paul
Sweetenham, TJX UK, and TJX is filed herewith.*
|
10.8
|
|
The Employment Agreement dated January 28, 2011 between
Michael MacMillan and TJX is filed herewith.*
|
10.9
|
|
The Amended and Restated Employment Agreement dated
January 28, 2011 between Nan Stutz and TJX is filed
herewith.*
|
10.10
|
|
The Management Incentive Plan, as amended and restated effective
as of March 5, 2010, is incorporated herein by reference to
Exhibit 10.11 to the
Form 10-Q
filed for the quarter ended May 1, 2010.*
|
10.11
|
|
The Stock Incentive Plan (2009 Restatement), as amended through
June 2, 2009, is incorporated herein by reference to
Exhibit 10.1 to the
Form 10-Q
filed for the quarter ended August 1, 2009.*
|
10.12
|
|
The Stock Incentive Plan Rules for UK Employees, as amended
April 7, 2009, is incorporated herein by reference to
Exhibit 10.3 to the
Form 10-Q
filed for the quarter ending July 31, 2010.*
|
10.13
|
|
The Form of Non-Qualified Stock Option Certificate Granted Under
the Stock Incentive Plan as of September 17, 2009 is
incorporated herein by reference to Exhibit 12.1 to the
Form 10-Q
filed for the quarter ended October 31, 2009. The Form of
Non-Qualified Stock Option Terms and Conditions Granted Under
the Stock Incentive Plan as of September 17, 2009 is
incorporated herein by reference to Exhibit 12.2 to the
Form 10-Q
filed for the quarter ended October 31, 2009. The Form of
Non-Qualified Stock Option Certificate Granted Under the Stock
Incentive Plan as of September 9, 2010 is incorporated
herein by reference to Exhibit 10.2 to the
Form 10-Q
filed for the quarter ended October 30, 2010.*
|
40
|
|
|
Exhibit
|
|
|
No.
|
|
Description of Exhibit
|
|
|
10.14
|
|
The Form of Performance-Based Restricted Stock Award Granted
Under the Stock Incentive Plan is incorporated herein by
reference to Exhibit 10.13 to the
Form 10-K
filed for the fiscal year ended January 30, 2010.*
|
10.15
|
|
The Form of Performance-Based Deferred Stock Award Granted Under
the Stock Incentive Plan is incorporated herein by reference to
Exhibit 10.14 to the
Form 10-K
filed for the fiscal year ended January 30, 2010.*
|
10.16
|
|
Description of Director Compensation Arrangements is filed
herewith.*
|
10.17
|
|
The Long Range Performance Incentive Plan, as amended through
April 5, 2007, is incorporated herein by reference to
Exhibit 10.2 to the
Form 10-Q
filed for the quarter ended April 28, 2007. The 409A
Amendment to the Long Range Performance Incentive Plan,
effective as of January 1, 2008, is incorporated herein by
reference to Exhibit 10.16 to the
Form 10-K
filed for the fiscal year ended January 31, 2009. The Long
Range Performance Incentive Plan, as amended and restated
effective as of March 5, 2010, is filed herewith.*
|
10.18
|
|
The General Deferred Compensation Plan (1998 Restatement) and
related First Amendment, effective January 1, 1999, are
incorporated herein by reference to Exhibit 10.9 to the
Form 10-K
for the fiscal year ended January 30, 1999. The related
Second Amendment, effective January 1, 2000, is
incorporated herein by reference to Exhibit 10.10 to the
Form 10-K
filed for the fiscal year ended January 29, 2000. The
related Third and Fourth Amendments are incorporated herein by
reference to Exhibit 10.17 to the
Form 10-K
for the fiscal year ended January 28, 2006. The related
Fifth Amendment, effective January 1, 2008 is incorporated
herein by reference to Exhibit 10.17 to the
Form 10-K
filed the fiscal year ended January 31, 2009.*
|
10.19
|
|
The Supplemental Executive Retirement Plan (2008 Restatement) is
incorporated herein by reference to Exhibit 10.18 to the
Form 10-K
filed for the fiscal year ended January 31, 2009.*
|
10.20
|
|
The Executive Savings Plan (2010 Restatement) is incorporated
herein by reference to Exhibit 10.14 to the
Form 10-Q
filed for the quarter ended May 1, 2010.*
|
10.21
|
|
The form of Indemnification Agreement between TJX and each of
its officers and directors is incorporated herein by reference
to Exhibit 10(r) to the
Form 10-K
filed for the fiscal year ended January 27, 1990.*
|
10.22
|
|
The Trust Agreement dated as of April 8, 1988 between
TJX and State Street Bank and Trust Company is incorporated
herein by reference to Exhibit 10(y) to the
Form 10-K
filed for the fiscal year ended January 30, 1988.*
|
10.23
|
|
The Trust Agreement dated as of April 8, 1988 between
TJX and Fleet Bank (formerly Shawmut Bank of Boston, N.A.) is
incorporated herein by reference to Exhibit 10(z) to the
Form 10-K
filed for the fiscal year ended January 30, 1988.*
|
10.24
|
|
The Trust Agreement for Executive Savings Plan dated as of
January 1, 2005 between TJX and Wells Fargo Bank, N.A. is
incorporated herein by reference to Exhibit 10.26 to the
Form 10-K
filed for the fiscal year ended January 29, 2005.*
|
21
|
|
Subsidiaries:
|
|
|
A list of the Registrants subsidiaries is filed herewith.
|
23
|
|
Consents of Independent Registered Public Accounting Firm:
|
|
|
The Consent of PricewaterhouseCoopers LLP is filed herewith.
|
24
|
|
Power of Attorney:
|
|
|
The Power of Attorney given by the Directors and certain
Executive Officers of TJX is filed herewith.
|
31.1
|
|
Certification Statement of Chief Executive Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002 is filed
herewith.
|
31.2
|
|
Certification Statement of Chief Financial Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002 is filed
herewith.
|
32.1
|
|
Certification Statement of Chief Executive Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 is filed
herewith.
|
32.2
|
|
Certification Statement of Chief Financial Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 is filed
herewith.
|
101
|
|
The following materials from The TJX Companies, Inc.s
Annual Report on
Form 10-K
for the year ended January 29, 2011, formatted in XBRL
(Extensible Business Reporting Language): (i) the
Consolidated Statements of Income, (ii) the Consolidated
Balance Sheets, (iii) the Consolidated Statements of Cash
Flows, (iv) the Consolidated Statement of
Shareholders Equity, and (v) Notes to Consolidated
Financial Statements.
|
|
|
|
|
|
*
|
|
Management contract or compensatory
plan or arrangement.
|
41
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
THE TJX COMPANIES, INC.
Jeffrey G. Naylor, Chief Financial and
Administrative Officer
(Principal Financial and Accounting Officer)
Dated: March 29, 2011
42
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons
on behalf of the Registrant and in the capacities and on the
date indicated.
|
|
|
/S/ CAROL MEYROWITZ
Carol
Meyrowitz, Chief Executive Officer and Director (Principal
Executive Officer)
|
|
JEFFREY G. NAYLOR*
Jeffrey
G. Naylor, Chief Financial and Administrative Officer (Principal
Financial and Accounting Officer)
|
|
|
|
|
|
|
JOSE B. ALVAREZ*
Jose
B. Alvarez, Director
|
|
MICHAEL F. HINES*
Michael
F. Hines, Director
|
|
|
|
|
|
|
ALAN M. BENNETT*
Alan
M. Bennett, Director
|
|
AMY B. LANE*
Amy
B. Lane, Director
|
|
|
|
|
|
|
DAVID A. BRANDON*
David
A. Brandon, Director
|
|
JOHN F. OBRIEN*
John
F. OBrien, Director
|
|
|
|
|
|
|
BERNARD CAMMARATA*
Bernard
Cammarata, Chairman of the Board of Directors
|
|
WILLOW B. SHIRE*
Willow
B. Shire, Director
|
|
|
|
|
|
|
DAVID T. CHING*
David
T. Ching, Director
|
|
FLETCHER H. WILEY*
Fletcher
H. Wiley, Director
|
|
|
|
|
*BY
|
/S/ JEFFREY G. NAYLOR
|
Jeffrey G. Naylor
for himself and as attorney-in-fact
Dated: March 29, 2011
43
The TJX
Companies, Inc.
INDEX TO
CONSOLIDATED FINANCIAL STATEMENTS
For
Fiscal Years Ended January 29, 2011, January 30, 2010
and January 31, 2009
|
|
|
|
|
|
|
|
F-2
|
|
Consolidated Financial Statements:
|
|
|
|
|
|
|
|
F-3
|
|
|
|
|
F-4
|
|
|
|
|
F-5
|
|
|
|
|
F-6
|
|
|
|
|
F-7
|
|
Financial Statement Schedules:
|
|
|
|
|
|
|
|
39
|
|
F-1
Report of
Independent Registered Public Accounting Firm
To The Board
of Directors and Shareholders
of The TJX
Companies, Inc:
In our opinion, the consolidated financial statements listed in
the accompanying index present fairly, in all material respects,
the financial position of The TJX Companies, Inc. and its
subsidiaries (the Company) as of January 29,
2011 and January 30, 2010, and the results of their
operations and their cash flows for each of the three years in
the period ended January 29, 2011 in conformity with
accounting principles generally accepted in the United States of
America. In addition, in our opinion, the financial statement
schedule listed in the accompanying index presents fairly, in
all material respects, the information set forth therein when
read in conjunction with the related consolidated financial
statements. Also in our opinion, the Company maintained, in all
material respects, effective internal control over financial
reporting as of January 29, 2011, based on criteria
established in Internal Control Integrated
Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO). The
Companys management is responsible for these financial
statements and the financial statement schedule, for maintaining
effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over
financial reporting, included in Managements Annual Report
on Internal Control over Financial Reporting appearing under
Item 9A. Our responsibility is to express opinions on these
financial statements, on the financial statement schedule, and
on the Companys internal control over financial reporting
based on our integrated audits. We conducted our audits in
accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we
plan and perform the audits to obtain reasonable assurance about
whether the financial statements are free of material
misstatement and whether effective internal control over
financial reporting was maintained in all material respects. Our
audits of the financial statements included examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used
and significant estimates made by management, and evaluating the
overall financial statement presentation. Our audit of internal
control over financial reporting included obtaining an
understanding of internal control over financial reporting,
assessing the risk that a material weakness exists, and testing
and evaluating the design and operating effectiveness of
internal control based on the assessed risk. Our audits also
included performing such other procedures as we considered
necessary in the circumstances. We believe that our audits
provide a reasonable basis for our opinions.
A companys internal control over financial reporting is a
process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with
generally accepted accounting principles. A companys
internal control over financial reporting includes those
policies and procedures that (i) pertain to the maintenance
of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the
company; (ii) provide reasonable assurance that
transactions are recorded as necessary to permit preparation of
financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the
company are being made only in accordance with authorizations of
management and directors of the company; and (iii) provide
reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use, or disposition of the
companys assets that could have a material effect on the
financial statements.
Because of its inherent limitations, internal control over
financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree
of compliance with the policies or procedures may deteriorate.
/s/ PricewaterhouseCoopers
LLP
Boston, Massachusetts
March 29, 2011
F-2
The TJX
Companies, Inc.
CONSOLIDATED
STATEMENTS OF INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
|
|
|
Amounts in thousands
|
|
January 29,
|
|
|
January 30,
|
|
|
January 31,
|
|
except per share amounts
|
|
2011
|
|
|
2010
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
(53 weeks)
|
|
|
Net sales
|
|
$
|
21,942,193
|
|
|
$
|
20,288,444
|
|
|
$
|
18,999,505
|
|
|
Cost of sales, including buying and occupancy costs
|
|
|
16,040,461
|
|
|
|
14,968,429
|
|
|
|
14,429,185
|
|
Selling, general and administrative expenses
|
|
|
3,710,053
|
|
|
|
3,328,944
|
|
|
|
3,135,589
|
|
Provision (credit) for Computer Intrusion related costs
|
|
|
(11,550
|
)
|
|
|
|
|
|
|
(30,500
|
)
|
Interest expense, net
|
|
|
39,137
|
|
|
|
39,509
|
|
|
|
14,291
|
|
|
Income from continuing operations before provision for income
taxes
|
|
|
2,164,092
|
|
|
|
1,951,562
|
|
|
|
1,450,940
|
|
Provision for income taxes
|
|
|
824,562
|
|
|
|
737,990
|
|
|
|
536,054
|
|
|
Income from continuing operations
|
|
|
1,339,530
|
|
|
|
1,213,572
|
|
|
|
914,886
|
|
Gain (loss) from discontinued operations, net of income taxes
|
|
|
3,611
|
|
|
|
|
|
|
|
(34,269
|
)
|
|
Net income
|
|
$
|
1,343,141
|
|
|
$
|
1,213,572
|
|
|
$
|
880,617
|
|
|
Basic earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
|
$
|
3.35
|
|
|
$
|
2.90
|
|
|
$
|
2.18
|
|
Gain (loss) from discontinued operations, net of income taxes
|
|
$
|
0.01
|
|
|
$
|
|
|
|
$
|
(0.08
|
)
|
Net income
|
|
$
|
3.36
|
|
|
$
|
2.90
|
|
|
$
|
2.10
|
|
Weighted average common sharesbasic
|
|
|
400,145
|
|
|
|
417,796
|
|
|
|
419,076
|
|
Diluted earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
|
$
|
3.30
|
|
|
$
|
2.84
|
|
|
$
|
2.08
|
|
Gain (loss) from discontinued operations, net of income taxes
|
|
$
|
|
|
|
$
|
|
|
|
$
|
(0.08
|
)
|
Net income
|
|
$
|
3.30
|
|
|
$
|
2.84
|
|
|
$
|
2.00
|
|
Weighted average common sharesdiluted
|
|
|
406,413
|
|
|
|
427,619
|
|
|
|
442,255
|
|
Cash dividends declared per share
|
|
$
|
0.60
|
|
|
$
|
0.48
|
|
|
$
|
0.44
|
|
The accompanying notes are an integral part of the financial
statements.
F-3
The TJX
Companies, Inc.
CONSOLIDATED BALANCE
SHEETS
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
|
|
|
|
|
January 29,
|
|
|
January 30,
|
|
In thousands
|
|
2011
|
|
|
2010
|
|
|
|
|
ASSETS
|
Current assets:
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
1,741,751
|
|
|
$
|
1,614,607
|
|
Short-term investments
|
|
|
76,261
|
|
|
|
130,636
|
|
Accounts receivable, net
|
|
|
200,147
|
|
|
|
148,126
|
|
Merchandise inventories
|
|
|
2,765,464
|
|
|
|
2,532,318
|
|
Prepaid expenses and other current assets
|
|
|
249,832
|
|
|
|
255,707
|
|
Current deferred income taxes, net
|
|
|
66,072
|
|
|
|
122,462
|
|
|
Total current assets
|
|
|
5,099,527
|
|
|
|
4,803,856
|
|
|
Property at cost:
|
|
|
|
|
|
|
|
|
Land and buildings
|
|
|
320,633
|
|
|
|
281,527
|
|
Leasehold costs and improvements
|
|
|
2,112,151
|
|
|
|
1,930,977
|
|
Furniture, fixtures and equipment
|
|
|
3,256,446
|
|
|
|
3,087,419
|
|
|
Total property at cost
|
|
|
5,689,230
|
|
|
|
5,299,923
|
|
Less accumulated depreciation and amortization
|
|
|
3,239,429
|
|
|
|
3,026,041
|
|
|
Net property at cost
|
|
|
2,449,801
|
|
|
|
2,273,882
|
|
|
Property under capital lease, net of accumulated amortization of
$21,591 and $19,357, respectively
|
|
|
10,981
|
|
|
|
13,215
|
|
Other assets
|
|
|
231,518
|
|
|
|
193,230
|
|
Goodwill and tradename, net of amortization
|
|
|
179,936
|
|
|
|
179,794
|
|
|
TOTAL ASSETS
|
|
$
|
7,971,763
|
|
|
$
|
7,463,977
|
|
|
|
LIABILITIES
|
Current liabilities:
|
|
|
|
|
|
|
|
|
Obligation under capital lease due within one year
|
|
$
|
2,727
|
|
|
$
|
2,355
|
|
Accounts payable
|
|
|
1,683,929
|
|
|
|
1,507,892
|
|
Accrued expenses and other current liabilities
|
|
|
1,347,951
|
|
|
|
1,248,002
|
|
Federal, foreign and state income taxes payable
|
|
|
98,514
|
|
|
|
136,737
|
|
|
Total current liabilities
|
|
|
3,133,121
|
|
|
|
2,894,986
|
|
|
Other long-term liabilities
|
|
|
709,321
|
|
|
|
697,099
|
|
Non-current deferred income taxes, net
|
|
|
241,905
|
|
|
|
192,447
|
|
Obligation under capital lease, less portion due within one year
|
|
|
13,117
|
|
|
|
15,844
|
|
Long-term debt, exclusive of current installments
|
|
|
774,400
|
|
|
|
774,325
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SHAREHOLDERS EQUITY
|
|
|
|
|
|
|
|
|
Common stock, authorized 1,200,000,000 shares, par value
$1, issued and outstanding 389,657,340 and 409,386,126,
respectively
|
|
|
389,657
|
|
|
|
409,386
|
|
Additional paid-in capital
|
|
|
|
|
|
|
|
|
Accumulated other comprehensive income (loss)
|
|
|
(91,755
|
)
|
|
|
(134,124
|
)
|
Retained earnings
|
|
|
2,801,997
|
|
|
|
2,614,014
|
|
|
Total shareholders equity
|
|
|
3,099,899
|
|
|
|
2,889,276
|
|
|
TOTAL LIABILITIES AND SHAREHOLDERS EQUITY
|
|
$
|
7,971,763
|
|
|
$
|
7,463,977
|
|
|
The accompanying notes are an integral part of the financial
statements.
F-4
The TJX
Companies, Inc.
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
|
|
|
|
|
January 29,
|
|
|
January 30,
|
|
|
January 31,
|
|
In thousands
|
|
2011
|
|
|
2010
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
(53 weeks)
|
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
1,343,141
|
|
|
$
|
1,213,572
|
|
|
$
|
880,617
|
|
Adjustments to reconcile net income to net cash provided by
operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
458,052
|
|
|
|
435,218
|
|
|
|
401,707
|
|
Assets of discontinued operations sold
|
|
|
|
|
|
|
|
|
|
|
31,328
|
|
Loss on property disposals and impairment charges
|
|
|
96,073
|
|
|
|
10,270
|
|
|
|
23,903
|
|
Deferred income tax provision
|
|
|
50,641
|
|
|
|
53,155
|
|
|
|
132,480
|
|
Share-based compensation
|
|
|
58,804
|
|
|
|
55,145
|
|
|
|
51,229
|
|
Excess tax benefits from share-based compensation
|
|
|
(28,095
|
)
|
|
|
(17,494
|
)
|
|
|
(18,879
|
)
|
Changes in assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
(Increase) in accounts receivable
|
|
|
(23,587
|
)
|
|
|
(1,862
|
)
|
|
|
(8,245
|
)
|
Decrease (increase) in merchandise inventories
|
|
|
(211,823
|
)
|
|
|
147,805
|
|
|
|
(68,489
|
)
|
Decrease (increase) in prepaid expenses and other current assets
|
|
|
495
|
|
|
|
21,219
|
|
|
|
(118,830
|
)
|
Increase (decrease) in accounts payable
|
|
|
163,823
|
|
|
|
197,496
|
|
|
|
(141,580
|
)
|
Increase (decrease) in accrued expenses and other liabilities
|
|
|
77,846
|
|
|
|
31,046
|
|
|
|
(34,525
|
)
|
(Decrease) increase in income taxes payable
|
|
|
(11,801
|
)
|
|
|
152,851
|
|
|
|
(10,488
|
)
|
Other
|
|
|
2,912
|
|
|
|
(26,495
|
)
|
|
|
34,344
|
|
|
Net cash provided by operating activities
|
|
|
1,976,481
|
|
|
|
2,271,926
|
|
|
|
1,154,572
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Property additions
|
|
|
(707,134
|
)
|
|
|
(429,282
|
)
|
|
|
(582,932
|
)
|
Proceeds to settle net investment hedges
|
|
|
|
|
|
|
|
|
|
|
14,379
|
|
Purchase of short-term investments
|
|
|
(119,530
|
)
|
|
|
(278,692
|
)
|
|
|
|
|
Sales and maturities of short-term investments
|
|
|
180,116
|
|
|
|
153,275
|
|
|
|
|
|
Other
|
|
|
(1,065
|
)
|
|
|
(5,578
|
)
|
|
|
(34
|
)
|
|
Net cash (used in) investing activities
|
|
|
(647,613
|
)
|
|
|
(560,277
|
)
|
|
|
(568,587
|
)
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from issuance of long-term debt
|
|
|
|
|
|
|
774,263
|
|
|
|
|
|
Principal payments on current portion of long-term debt
|
|
|
|
|
|
|
(393,573
|
)
|
|
|
|
|
Cash payments for debt issuance expenses
|
|
|
(3,118
|
)
|
|
|
(7,202
|
)
|
|
|
|
|
Payments on capital lease obligation
|
|
|
(2,355
|
)
|
|
|
(2,174
|
)
|
|
|
(2,008
|
)
|
Cash payments for repurchase of common stock
|
|
|
(1,193,380
|
)
|
|
|
(944,762
|
)
|
|
|
(751,097
|
)
|
Proceeds from issuance of common stock
|
|
|
176,159
|
|
|
|
169,862
|
|
|
|
142,154
|
|
Excess tax benefits from share-based compensation
|
|
|
28,095
|
|
|
|
17,494
|
|
|
|
18,879
|
|
Cash dividends paid
|
|
|
(229,329
|
)
|
|
|
(197,662
|
)
|
|
|
(176,749
|
)
|
|
Net cash (used in) financing activities
|
|
|
(1,223,928
|
)
|
|
|
(583,754
|
)
|
|
|
(768,821
|
)
|
|
Effect of exchange rate changes on cash
|
|
|
22,204
|
|
|
|
33,185
|
|
|
|
(96,249
|
)
|
|
Net increase (decrease) in cash and cash equivalents
|
|
|
127,144
|
|
|
|
1,161,080
|
|
|
|
(279,085
|
)
|
Cash and cash equivalents at beginning of year
|
|
|
1,614,607
|
|
|
|
453,527
|
|
|
|
732,612
|
|
|
Cash and cash equivalents at end of year
|
|
$
|
1,741,751
|
|
|
$
|
1,614,607
|
|
|
$
|
453,527
|
|
|
The accompanying notes are an integral part of the financial
statements.
F-5
The TJX
Companies, Inc.
CONSOLIDATED
STATEMENTS OF SHAREHOLDERS EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
Common Stock
|
|
|
Additional
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
Par Value
|
|
|
Paid-In
|
|
|
Comprehensive
|
|
|
Retained
|
|
|
|
|
In thousands
|
|
Shares
|
|
|
$1
|
|
|
Capital
|
|
|
Income (Loss)
|
|
|
Earnings
|
|
|
Total
|
|
|
|
|
Balance, January 26, 2008
|
|
|
427,950
|
|
|
$
|
427,950
|
|
|
$
|
|
|
|
$
|
(28,685
|
)
|
|
$
|
1,731,980
|
|
|
$
|
2,131,245
|
|
Comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
880,617
|
|
|
|
880,617
|
|
(Loss) due to foreign currency translation adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(171,225
|
)
|
|
|
|
|
|
|
(171,225
|
)
|
Gain on net investment hedge contracts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
68,816
|
|
|
|
|
|
|
|
68,816
|
|
Recognition of prior service cost and deferred gains
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,206
|
)
|
|
|
|
|
|
|
(1,206
|
)
|
Recognition of unfunded post retirement obligations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(86,158
|
)
|
|
|
|
|
|
|
(86,158
|
)
|
Amount of cash flow hedge reclassified from other comprehensive
income to net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
677
|
|
|
|
|
|
|
|
677
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
691,521
|
|
Cash dividends declared on common stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(183,694
|
)
|
|
|
(183,694
|
)
|
Recognition of share-based compensation
|
|
|
|
|
|
|
|
|
|
|
51,229
|
|
|
|
|
|
|
|
|
|
|
|
51,229
|
|
Issuance of common stock upon conversion of convertible debt
|
|
|
1,717
|
|
|
|
1,717
|
|
|
|
39,326
|
|
|
|
|
|
|
|
|
|
|
|
41,043
|
|
Stock options repurchased by TJX
|
|
|
|
|
|
|
|
|
|
|
(987
|
)
|
|
|
|
|
|
|
|
|
|
|
(987
|
)
|
Issuance of common stock under stock incentive plan and related
tax effect
|
|
|
7,439
|
|
|
|
7,439
|
|
|
|
147,858
|
|
|
|
|
|
|
|
|
|
|
|
155,297
|
|
Common stock repurchased
|
|
|
(24,284
|
)
|
|
|
(24,284
|
)
|
|
|
(237,426
|
)
|
|
|
|
|
|
|
(489,387
|
)
|
|
|
(751,097
|
)
|
|
Balance, January 31, 2009
|
|
|
412,822
|
|
|
|
412,822
|
|
|
|
|
|
|
|
(217,781
|
)
|
|
|
1,939,516
|
|
|
|
2,134,557
|
|
Comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,213,572
|
|
|
|
1,213,572
|
|
Gain due to foreign currency translation adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
76,678
|
|
|
|
|
|
|
|
76,678
|
|
Recognition of prior service cost and deferred gains
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,191
|
|
|
|
|
|
|
|
8,191
|
|
Recognition of unfunded post retirement obligations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,212
|
)
|
|
|
|
|
|
|
(1,212
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,297,229
|
|
Cash dividends declared on common stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(201,490
|
)
|
|
|
(201,490
|
)
|
Recognition of share-based compensation
|
|
|
|
|
|
|
|
|
|
|
55,145
|
|
|
|
|
|
|
|
|
|
|
|
55,145
|
|
Issuance of common stock upon conversion of convertible debt
|
|
|
15,094
|
|
|
|
15,094
|
|
|
|
349,994
|
|
|
|
|
|
|
|
|
|
|
|
365,088
|
|
Issuance of common stock under stock incentive plan and related
tax effect
|
|
|
8,329
|
|
|
|
8,329
|
|
|
|
175,180
|
|
|
|
|
|
|
|
|
|
|
|
183,509
|
|
Common stock repurchased
|
|
|
(26,859
|
)
|
|
|
(26,859
|
)
|
|
|
(580,319
|
)
|
|
|
|
|
|
|
(337,584
|
)
|
|
|
(944,762
|
)
|
|
Balance, January 30, 2010
|
|
|
409,386
|
|
|
|
409,386
|
|
|
|
|
|
|
|
(134,124
|
)
|
|
|
2,614,014
|
|
|
|
2,889,276
|
|
Comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,343,141
|
|
|
|
1,343,141
|
|
Gain due to foreign currency translation adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
38,325
|
|
|
|
|
|
|
|
38,325
|
|
Recognition of prior service cost and deferred gains
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,219
|
|
|
|
|
|
|
|
5,219
|
|
Recognition of unfunded post retirement obligations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,175
|
)
|
|
|
|
|
|
|
(1,175
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,385,510
|
|
Cash dividends declared on common stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(239,003
|
)
|
|
|
(239,003
|
)
|
Recognition of share-based compensation
|
|
|
|
|
|
|
|
|
|
|
58,804
|
|
|
|
|
|
|
|
|
|
|
|
58,804
|
|
Issuance of common stock under stock incentive plan and related
tax effect
|
|
|
7,713
|
|
|
|
7,713
|
|
|
|
190,979
|
|
|
|
|
|
|
|
|
|
|
|
198,692
|
|
Common stock repurchased
|
|
|
(27,442
|
)
|
|
|
(27,442
|
)
|
|
|
(249,783
|
)
|
|
|
|
|
|
|
(916,155
|
)
|
|
|
(1,193,380
|
)
|
|
Balance, January 29, 2011
|
|
|
389,657
|
|
|
$
|
389,657
|
|
|
$
|
|
|
|
$
|
(91,755
|
)
|
|
$
|
2,801,997
|
|
|
$
|
3,099,899
|
|
|
The accompanying notes are an integral part of the financial
statements.
F-6
The TJX
Companies, Inc.
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
|
|
Note A.
|
Summary of
Accounting Policies
|
Basis of Presentation: The consolidated financial
statements of The TJX Companies, Inc. (referred to as
TJX or we) include the financial
statements of all of TJXs subsidiaries, all of which are
wholly owned. All of its activities are conducted by TJX or its
subsidiaries and are consolidated in these financial statements.
All intercompany transactions have been eliminated in
consolidation.
Fiscal Year: During fiscal 2010, TJX amended its
bylaws to change its fiscal year end to the Saturday nearest to
the last day of January of each year. Previously TJXs
fiscal year ended on the last Saturday of January. The fiscal
years ended January 29, 2011 (fiscal 2011) and
January 30, 2010 (fiscal 2010) included 52 weeks,
while the fiscal year ended January 31, 2009 (fiscal
2009) included 53 weeks. This change shifted the
timing of TJXs next 53 week fiscal year to the fiscal
year ending February 2, 2013.
Earnings Per Share: All earnings per share amounts
refer to diluted earnings per share unless otherwise indicated.
Use of Estimates: The preparation of the TJX
financial statements, in conformity with accounting principles
generally accepted in the United States of America
(U.S. GAAP), requires management to make estimates and
assumptions that affect the reported amounts of assets and
liabilities, and disclosure of contingent liabilities, at the
date of the financial statements as well as the reported amounts
of revenues and expenses during the reporting period. TJX
considers its accounting policies relating to inventory
valuation, impairments of long-lived assets, retirement
obligations, share-based compensation, casualty insurance,
income taxes, reserves for Computer Intrusion related costs,
disposal activity and discontinued operations, and loss
contingencies to be the most significant accounting policies
that involve management estimates and judgments. Actual amounts
could differ from those estimates, and such differences could be
material.
Revenue Recognition: TJX records revenue at the
time of sale and receipt of merchandise by the customer, net of
a reserve for estimated returns. We estimate returns based upon
our historical experience. We defer recognition of a layaway
sale and its related profit to the accounting period when the
customer receives the layaway merchandise. Proceeds from the
sale of store cards as well as the value of store cards issued
to customers as a result of a return or exchange are deferred
until the customers use the cards to acquire merchandise. Based
on historical experience, we estimate the amount of store cards
that will not be redeemed (store card breakage) and,
to the extent allowed by local law, these amounts are amortized
into income over the redemption period. Revenue recognized from
store card breakage was $10.1 million in fiscal 2011,
$7.8 million in fiscal 2010 and $10.7 million in
fiscal 2009.
Consolidated Statements of Income Classifications:
Cost of sales, including buying and occupancy costs, includes
the cost of merchandise sold and gains and losses on inventory
and fuel-related derivative contracts; store occupancy costs
(including real estate taxes, utility and maintenance costs and
fixed asset depreciation); the costs of operating our
distribution centers; payroll, benefits and travel costs
directly associated with buying inventory; and systems costs
related to the buying and tracking of inventory.
Selling, general and administrative expenses include store
payroll and benefit costs; communication costs; credit and check
expenses; advertising; administrative and field management
payroll, benefits and travel costs; corporate administrative
costs and depreciation; gains and losses on non-inventory
related foreign currency exchange contracts; and other
miscellaneous income and expense items.
Cash and Cash Equivalents: TJX generally considers
highly liquid investments with a maturity of three months or
less at the date of purchase to be cash equivalents. Investments
with maturities greater than three months but less than one year
at the date of purchase are included in short-term investments.
Our investments are primarily high-grade commercial paper,
institutional money market funds and time deposits with major
banks. At January 29, 2011, the Company had
$14.6 million of restricted cash, all of which is reported
in other assets on the consolidated balance sheets. The
restricted cash serves as collateral that provides financial
assurance that the Company will fulfill its obligations with
respect to certain leases in Europe. The cash is held in an
escrow account and is restricted as to withdrawal or use for a
term as long as the underlying lease.
Merchandise Inventories: Inventories are stated at
the lower of cost or market. TJX uses the retail method for
valuing inventories which results in a weighted average cost. We
utilize a permanent markdown strategy and lower the cost value
of the inventory that is subject to markdown at the time the
retail prices are lowered in our stores. We accrue for
inventory
F-7
obligations at the time inventory is shipped. At
January 29, 2011 and January 30, 2010, in-transit
inventory included in merchandise inventories was
$445.7 million and $396.8 million, respectively.
Comparable amounts were reflected in accounts payable at those
dates.
Common Stock and Equity: Equity transactions
consist primarily of the repurchase by TJX of its common stock
under its stock repurchase programs and the recognition of
compensation expense and issuance of common stock under
TJXs stock incentive plan. In fiscal 2010, we also issued
shares upon conversion of convertible notes that were called for
redemption, discussed in Note K. Under our stock repurchase
programs we repurchase our common stock on the open market. The
par value of the shares repurchased is charged to common stock
with the excess of the purchase price over par first charged
against any available additional paid-in capital
(APIC) and the balance charged to retained earnings.
Due to the high volume of repurchases over the past several
years, we have no remaining balance in APIC in any of the years
presented. All shares repurchased have been retired.
Shares issued under TJXs stock incentive plan are issued
from authorized but unissued shares, and proceeds received are
recorded by increasing common stock for the par value of the
shares with the excess over par added to APIC. Income tax
benefits upon the expensing of options result in the creation of
a deferred tax asset, while income tax benefits due to the
exercise of stock options reduce deferred tax assets to the
extent that an asset for the related grant has been created. Any
tax benefits greater than the deferred tax assets created at the
time of expensing the options are credited to APIC; any
deficiencies in the tax benefits are debited to APIC to the
extent a pool for such deficiencies exists. In the absence of a
pool any deficiencies are realized in the related periods
statements of income through the provision for income taxes. Any
excess income tax benefits are included in cash flows from
financing activities in the statements of cash flows. The par
value of restricted stock awards is also added to common stock
when the stock is issued, generally at grant date. The fair
value of the restricted stock awards in excess of par value is
added to APIC as the awards are amortized into earnings over the
related vesting periods. Upon the call of our convertible notes
most holders of the notes converted them into TJX common stock.
When converted the face value of the convertible notes less
unamortized debt discount was relieved, common stock was
credited with the par value of the shares issued, and the excess
of the carrying value of the convertible notes over par was
added to APIC.
Share-Based Compensation: TJX accounts for
share-based compensation in accordance with U.S. GAAP
whereby it estimates the fair value of each option grant on the
date of grant using the Black-Scholes option pricing model. See
Note I for a detailed discussion of share-based
compensation.
Interest: TJXs interest expense is presented
as a net amount. The following is a summary of net interest
expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
|
January 29,
|
|
|
January 30,
|
|
|
January 31,
|
|
Dollars in thousands
|
|
2011
|
|
|
2010
|
|
|
2009
|
|
|
|
|
Interest expense
|
|
$
|
49,014
|
|
|
$
|
49,278
|
|
|
$
|
38,123
|
|
Capitalized interest
|
|
|
|
|
|
|
(758
|
)
|
|
|
(1,647
|
)
|
Interest (income)
|
|
|
(9,877
|
)
|
|
|
(9,011
|
)
|
|
|
(22,185
|
)
|
|
Interest expense, net
|
|
$
|
39,137
|
|
|
$
|
39,509
|
|
|
$
|
14,291
|
|
|
We capitalize interest during the active construction period of
major capital projects. Capitalized interest is added to the
cost of the related assets.
Depreciation and Amortization: For financial
reporting purposes, TJX provides for depreciation and
amortization of property using the straight-line method over the
estimated useful lives of the assets. Buildings are depreciated
over 33 years. Leasehold costs and improvements are
generally amortized over their useful life or the committed
lease term (typically 10 years), whichever is shorter.
Furniture, fixtures and equipment are depreciated over 3 to
10 years. Depreciation and amortization expense for
property was $461.5 million for fiscal 2011,
$435.8 million for fiscal 2010 and $398.0 million for
fiscal 2009. Amortization expense for property held under a
capital lease was $2.2 million in each of fiscal 2011, 2010
and 2009. Maintenance and repairs are charged to expense as
incurred. Significant costs incurred for internally developed
software are capitalized and amortized over 3 to 10 years.
Upon retirement or sale, the cost of disposed assets and the
related accumulated depreciation are eliminated and any gain or
loss is included in income. Pre-opening costs, including rent,
are expensed as incurred.
Lease Accounting: TJX begins to record rent
expense when it takes possession of a store, which is typically
30 to
F-8
60 days prior to the opening of the store and generally
occurs before the commencement of the lease term, as specified
in the lease.
Long-Lived Assets: Presented below is information
related to carrying values of our long-lived assets by
geographic location:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
January 29,
|
|
|
January 30,
|
|
|
January 31,
|
|
Dollars in thousands
|
|
2011
|
|
|
2010
|
|
|
2009
|
|
|
|
|
United States
|
|
$
|
1,657,090
|
|
|
$
|
1,607,733
|
|
|
$
|
1,631,370
|
|
TJX Canada
|
|
|
210,693
|
|
|
|
195,434
|
|
|
|
178,176
|
|
TJX Europe
|
|
|
592,999
|
|
|
|
483,930
|
|
|
|
391,658
|
|
|
Total long-lived assets
|
|
$
|
2,460,782
|
|
|
$
|
2,287,097
|
|
|
$
|
2,201,204
|
|
|
Goodwill and Tradename: Goodwill is primarily the
excess of the purchase price paid over the carrying value of the
minority interest acquired in fiscal 1990 in TJXs former
83%-owned subsidiary and represents goodwill associated with the
T.J. Maxx chain. In addition, goodwill includes the excess of
cost over the estimated fair market value of the net assets of
Winners acquired by TJX in fiscal 1991.
Goodwill totaled $72.2 million as of January 29, 2011,
$72.1 million as of January 30, 2010 and
$71.8 million as of January 31, 2009. Goodwill is
considered to have an indefinite life and accordingly is not
amortized. Changes in goodwill are attributable to the effect of
exchange rate changes on Winners reported goodwill.
Tradename is the value assigned to the name
Marshalls, acquired by TJX in fiscal 1996 as part of
the acquisition of the Marshalls chain. The value of the
tradename was determined by the discounted present value of
assumed after-tax royalty payments, offset by a reduction for
their pro-rata share of negative goodwill acquired. The
Marshalls tradename is carried at a value of $107.7 million
and is considered to have an indefinite life.
TJX occasionally acquires or licenses other trademarks to be
used in connection with private label merchandise. Such
trademarks are included in other assets and are amortized to
cost of sales, including buying and occupancy costs, over their
useful life, generally from 7 to 10 years.
Goodwill, tradename and trademarks, and the related accumulated
amortization if any, are included in the respective operating
segment to which they relate.
Impairment of Long-Lived Assets, Goodwill and
Tradename: TJX evaluates its long-lived assets and
assets with indefinite lives (other than goodwill and tradename)
for indicators of impairment whenever events or changes in
circumstances indicate their carrying amounts may not be
recoverable, and at least annually in the fourth quarter of each
fiscal year. An impairment exists when the undiscounted cash
flow of an asset or asset group is less than the carrying cost
of that asset or asset group. The evaluation for long-lived
assets is performed at the lowest level of identifiable cash
flows, which is generally at the individual store level. If
indicators of impairment are identified, an undiscounted cash
flow analysis is performed to determine if an impairment exists.
The
store-by-store
evaluations did not indicate any recoverability issues (for any
of our continuing operations) during the past three fiscal
years. Our decision to close the A.J. Wright chain (see
Note C) resulted in the impairment of A.J.
Wrights fixed assets and impairment charges of
$83 million are reflected in the A.J. Wright segment.
Goodwill is tested for impairment whenever events or changes in
circumstances indicate that an impairment may have occurred and
at least annually in the fourth quarter of each fiscal year, by
comparing the carrying value of the related reporting unit to
its fair value. An impairment exists when this analysis, using
typical valuation models such as the discounted cash flow
method, shows that the fair value of the reporting unit is less
than the carrying cost of the reporting unit.
Tradename is also tested for impairment whenever events or
changes in circumstances indicate that the carrying amount of
the tradename may exceed its fair value and at least annually in
the fourth quarter of each fiscal year. Testing is performed by
comparing the discounted present value of assumed after-tax
royalty payments to the carrying value of the tradename.
There was no impairment related to our goodwill, tradename or
trademarks in fiscal 2011, 2010 or 2009.
Advertising Costs: TJX expenses advertising costs
as incurred. Advertising expense was $249.8 million for
fiscal 2011, $227.5 million for fiscal 2010 and
$254.0 million for fiscal 2009.
Foreign Currency Translation: TJXs foreign
assets and liabilities are translated into U.S. dollars at
fiscal year end exchange rates with resulting translation gains
and losses included in shareholders equity as a component
of accumulated
F-9
other comprehensive income (loss). Activity of the foreign
operations that affect the statements of income and cash flows
is translated at average exchange rates prevailing during the
fiscal year.
Loss Contingencies: TJX records a reserve for loss
contingencies when it is both probable that a loss will be
incurred and the amount of the loss is reasonably estimable. TJX
evaluates pending litigation and other contingencies at least
quarterly and adjusts the reserve for such contingencies for
changes in probable and reasonably estimable losses. TJX
includes an estimate for related legal costs at the time such
costs are both probable and reasonably estimable.
New Accounting Standards: We do not expect the
adoption of recently issued accounting pronouncements to have a
significant impact on our results of operations, financial
position or cash flow.
|
|
Note B.
|
Provision
(credit) for Computer Intrusion related costs
|
TJX has a reserve for its estimate of the remaining probable
losses arising from an unauthorized intrusion or intrusions (the
intrusion or intrusions, collectively, the Computer
Intrusion) into portions of its computer system, which was
discovered late in fiscal 2007 and in which TJX believes
customer data were stolen. TJX reduced the Provision for
Computer Intrusion related costs by $11.6 million in fiscal
2011 and by $30.5 million in fiscal 2009 as a result of
negotiations, settlements, insurance proceeds and adjustments in
our estimated losses. The reserve balance was $17.3 million
at January 29, 2011 and $23.5 million at
January 30, 2010. As an estimate, the reserve is subject to
uncertainty, actual costs may vary from the current estimate
however such variations are not expected to be material.
|
|
Note C.
|
Dispositions and
Reserves Related to Former Operations
|
TJX has disposal activities relating to two businesses during
the last three fiscal years.
Consolidation of A.J. Wright: On December 8,
2010, the Board of Directors approved the consolidation of the
A.J. Wright division whereby TJX would convert 90 A.J. Wright
stores into T.J. Maxx, Marshalls or HomeGoods stores and close
the remaining 72 stores, its two distribution centers and home
office. TJX has increasingly improved its ability to reach the
A.J. Wright customer demographic through T.J. Maxx and Marshalls
stores and has seen these stores perform well in markets with
these demographics. Even though the A.J. Wright chain was
profitable, consolidating the A.J. Wright chain is expected to
allow TJX to serve this customer demographic more efficiently,
focus TJXs financial and managerial resources on fewer,
larger businesses with higher returns and enhance the growth
prospects for TJX overall. All A.J. Wright stores ceased
operating by February 13, 2011 with the conversion to other
banners expected to be completed by the end of the first half of
fiscal 2012. Our fourth quarter segment results for A.J. Wright
include impairment charges, severance and termination benefits,
estimated lease obligations and other store closing costs as
well as operating losses to liquidate store inventory.
The A.J. Wright consolidation is not classified as a
discontinued operation due to our expectation that a significant
portion of the sales of the A.J. Wright stores will migrate to
other TJX stores. Thus the costs incurred in fiscal 2011
relating to the A.J. Wright consolidation are reflected in
continuing operations as part of the A.J. Wright segment which
reported a segment loss of $130 million for fiscal 2011.
The fiscal 2011 segment loss includes the following:
|
|
|
|
|
|
Fixed asset impairment chargesNon cash
|
|
$
|
82,589
|
|
Severance and termination benefits
|
|
|
25,400
|
|
Lease obligations and other closing costs
|
|
|
11,700
|
|
Operating losses
|
|
|
10,297
|
|
|
Total segment loss
|
|
$
|
129,986
|
|
|
The impairment charges relate to furniture and fixtures and
leasehold improvements that will be disposed of and are deemed
to have no value, as well as A.J. Wrights two owned
distribution centers. The distribution centers were closed prior
to the end of the fiscal year, are being held for sale and were
adjusted to fair market value. The impairment charges, severance
and termination benefits, lease obligations and other closing
costs are included in selling, general and administrative
expenses on the consolidated income statement.
In the first half of fiscal 2012, TJX will incur additional
store closing costs and operating losses due to the completion
of the A.J. Wright store closings as well as the costs to
convert the A.J. Wright stores to other TJX banners and grand
re-opening costs for those stores. TJX estimates that during
fiscal 2012 it will incur additional A.J. Wright segment losses
of approximately $65 million, primarily relating to the
completion of store operations and lease related obligations and
conversion costs and
F-10
grand
re-opening
costs of approximately $28 million, which will be reflected
in the segments of the new banners into which the stores are
converted. The majority of these charges will occur in the first
quarter of fiscal 2012.
Sale of Bobs Stores: In fiscal 2009, TJX
sold Bobs Stores and recorded as a component of
discontinued operations a loss on disposal (including expenses
relating to the sale) of $19 million, net of tax benefits
of $13 million. The net carrying value of Bobs Stores
assets sold was $33 million, which consisted primarily of
merchandise inventory of $56 million, offset by merchandise
payable of $21 million. The loss on disposal reflects sales
proceeds of $7.2 million as well as expenses of
$5.8 million relating to the sale. TJX also remains
contingently liable on seven of the Bobs Stores leases.
TJX reclassified the operating results of Bobs Stores for
all periods prior to the sale as a component of discontinued
operations. The following table presents the net sales, segment
profit (loss) and after-tax loss from operations reclassified to
discontinued operations for all periods presented:
|
|
|
|
|
|
|
|
|
January 31,
|
|
In thousands
|
|
2009
|
|
|
|
|
Net sales
|
|
$
|
148,040
|
|
Segment (loss)
|
|
|
(25,524
|
)
|
After-tax (loss) from operations
|
|
|
(15,314
|
)
|
|
The table below summarizes the pre-tax and after-tax loss from
discontinued operations for fiscal 2009:
|
|
|
|
|
|
|
|
|
January 31,
|
|
In thousands
|
|
2009
|
|
|
|
|
(Loss) from discontinued operations before provision for income
taxes
|
|
$
|
(56,980
|
)
|
Tax benefits
|
|
|
22,711
|
|
|
(Loss) from discontinued operations, net of income taxes
|
|
$
|
(34,269
|
)
|
|
Reserves Related to Former Operations: TJX has a
reserve for its estimate of future obligations of business
operations it has closed, sold or otherwise disposed of. The
reserve activity for the last three fiscal years is presented
below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
|
January 29,
|
|
|
January 30,
|
|
|
January 31,
|
|
In thousands
|
|
2011
|
|
|
2010
|
|
|
2009
|
|
|
|
|
Balance at beginning of year
|
|
$
|
35,897
|
|
|
$
|
40,564
|
|
|
$
|
46,076
|
|
Additions (reductions) to the reserve charged to net income:
|
|
|
|
|
|
|
|
|
|
|
|
|
Reduction in reserve for lease related obligations of former
operations classified as discontinued operations
|
|
|
(6,000
|
)
|
|
|
|
|
|
|
|
|
A.J. Wright closing costs
|
|
|
37,100
|
|
|
|
|
|
|
|
|
|
Interest accretion
|
|
|
1,475
|
|
|
|
1,761
|
|
|
|
1,820
|
|
Charges against the reserve:
|
|
|
|
|
|
|
|
|
|
|
|
|
Lease related obligations
|
|
|
(7,155
|
)
|
|
|
(5,891
|
)
|
|
|
(7,323
|
)
|
Termination benefits and all other
|
|
|
(6,622
|
)
|
|
|
(537
|
)
|
|
|
(9
|
)
|
|
Balance at end of year
|
|
$
|
54,695
|
|
|
$
|
35,897
|
|
|
$
|
40,564
|
|
|
In the fourth quarter of fiscal 2011 we reduced our reserve by
$6 million to reflect a lower estimated cost for lease
obligations for former operations classified as discontinued
operations, which was recorded to discontinued operations on the
income statement. We also added to the reserve the consolidation
costs of the A.J. Wright chain detailed above. The reserve
balance as of January 29, 2011 includes approximately
$20 million for severance and termination benefits relating
to the A.J. Wright consolidation. The lease related obligations
reflects our estimation of lease costs, net of estimated
subtenant income, and the cost of probable claims against us for
liability as an original lessee or guarantor of the leases of
former businesses, after mitigation of the number and cost of
these lease obligations. The actual net cost of the various
lease obligations included in the reserve may differ from our
estimate. We estimate that the majority of the former operations
reserve will be paid in the next three to five years. The actual
timing of cash outflows will vary depending on how the remaining
lease obligations are actually settled.
F-11
TJX may also be contingently liable on up to 13 leases of
BJs Wholesale Club, a former TJX business, and up to seven
leases of Bobs Stores, also a former TJX business, in
addition to those included in the reserve. The reserve for
discontinued operations does not reflect these leases because
TJX does not believe that the likelihood of future liability to
TJX is probable.
|
|
Note D.
|
Other
Comprehensive Income
|
TJXs comprehensive income information, net of related tax
effects, is presented below:
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
|
January 29,
|
|
|
January 30,
|
|
In thousands
|
|
2011
|
|
|
2010
|
|
|
|
|
Net income
|
|
$
|
1,343,141
|
|
|
$
|
1,213,572
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustments
|
|
|
38,325
|
|
|
|
76,678
|
|
Recognition of prior service cost and deferred gains
|
|
|
5,219
|
|
|
|
8,191
|
|
Recognition of unfunded post retirement obligations
|
|
|
(1,175
|
)
|
|
|
(1,212
|
)
|
|
Total comprehensive income
|
|
$
|
1,385,510
|
|
|
$
|
1,297,229
|
|
|
|
|
|
Note E.
|
Capital Stock and
Earnings Per Share
|
Capital Stock: TJX repurchased and retired
27.6 million shares of its common stock at a cost of
$1,200.7 million during fiscal 2011. TJX reflects stock
repurchases in its financial statements on a
settlement basis. We had cash expenditures under our
repurchase programs of $1,193.4 million in fiscal 2011,
$944.8 million in fiscal 2010 and $751.1 million in
fiscal 2009. We repurchased 27.4 million shares in fiscal
2011, 26.9 million shares in fiscal 2010 and
24.3 million shares in fiscal 2009. These expenditures were
funded primarily by cash generated from operations together, in
fiscal 2009, with the proceeds of a debt issuance. In October
2010, TJX completed the $1 billion stock repurchase program
authorized in September 2009 under which TJX repurchased
24.1 million shares of common stock. In February 2010,
TJXs Board of Directors approved another stock repurchase
program that authorizes the repurchase of up to an additional
$1 billion of TJX common stock from time to time. Under
this plan, on a trade date basis, TJX repurchased
9.0 million shares of common stock at a cost of
$405.7 million during fiscal 2011 and $594.3 million
remained available at January 29, 2011. All shares
repurchased under the stock repurchase programs have been
retired.
In February 2011, TJXs Board of Directors approved a new
stock repurchase program that authorizes the repurchase of up to
an additional $1 billion of TJX common stock from time to
time.
TJX has five million shares of authorized but unissued preferred
stock, $1 par value.
F-12
Earnings Per Share: The following schedule
presents the calculation of basic and diluted earnings per share
for income from continuing operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
|
January 29,
|
|
|
January 30,
|
|
|
January 31,
|
|
Amounts in thousands except per share amounts
|
|
2011
|
|
|
2010
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
(53 weeks)
|
|
|
Basic earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
|
$
|
1,339,530
|
|
|
$
|
1,213,572
|
|
|
$
|
914,886
|
|
|
Weighted average common stock outstanding for basic earnings per
share calculation
|
|
|
400,145
|
|
|
|
417,796
|
|
|
|
419,076
|
|
Basic earnings per share
|
|
$
|
3.35
|
|
|
$
|
2.90
|
|
|
$
|
2.18
|
|
Diluted earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
|
$
|
1,339,530
|
|
|
$
|
1,213,572
|
|
|
$
|
914,886
|
|
Add back: Interest expense on zero coupon convertible
subordinated notes, net of income taxes
|
|
|
|
|
|
|
1,073
|
|
|
|
4,653
|
|
|
Income from continuing operations used for diluted earnings per
share calculation
|
|
$
|
1,339,530
|
|
|
$
|
1,214,645
|
|
|
$
|
919,539
|
|
|
Weighted average common stock outstanding for basic earnings per
share calculation
|
|
|
400,145
|
|
|
|
417,796
|
|
|
|
419,076
|
|
Assumed conversion/exercise of:
|
|
|
|
|
|
|
|
|
|
|
|
|
Convertible subordinated notes
|
|
|
|
|
|
|
3,901
|
|
|
|
16,434
|
|
Stock options and awards
|
|
|
6,268
|
|
|
|
5,922
|
|
|
|
6,745
|
|
|
Weighted average common stock outstanding for diluted earnings
per share calculation
|
|
|
406,413
|
|
|
|
427,619
|
|
|
|
442,255
|
|
|
Diluted earnings per share
|
|
$
|
3.30
|
|
|
$
|
2.84
|
|
|
$
|
2.08
|
|
|
In April 2009, TJX called for the redemption of its zero coupon
convertible subordinated notes. There were 462,057 notes with a
carrying value of $365.1 million that were converted into
15.1 million shares of TJX common stock at a conversion
rate of 32.667 shares per note. TJX paid $2.3 million
to redeem the remaining 2,886 notes outstanding that were not
converted.
The weighted average common shares for the diluted earnings per
share calculation excludes the impact of outstanding stock
options if the assumed proceeds per share of the option is in
excess of the related fiscal periods average price of
TJXs common stock. Such options are excluded because they
would have an antidilutive effect. No such options were excluded
at the end of fiscal 2011. There were 9.5 million options
excluded at the end of fiscal 2010 and 5.2 million options
were excluded at the end of fiscal 2009.
|
|
Note F.
|
Financial
Instruments
|
As a result of its operating and financing activities TJX is
exposed to market risks from changes in interest and foreign
currency exchange rates and fuel costs. These market risks may
adversely affect TJXs operating results and financial
position. When deemed appropriate, TJX seeks to minimize risk
from changes in interest and foreign currency exchange rates and
fuel costs through the use of derivative financial instruments.
Derivative financial instruments are not used for trading or
other speculative purposes. TJX does not use leveraged
derivative financial instruments. TJX recognizes all derivative
instruments as either assets or liabilities in the statements of
financial position and measures those instruments at fair value.
The fair values of the derivatives are classified as assets or
liabilities, current or non-current, based upon valuation
results and settlement dates of the individual contracts.
Changes to the fair value of derivative contracts that do not
qualify for hedge accounting are reported in earnings in the
period of the change. For derivatives that qualify for hedge
accounting, changes in the fair value of the derivatives are
either recorded in shareholders equity as a component of
other comprehensive income or are recognized currently in
earnings, along with an offsetting adjustment against the basis
of the item being hedged. Effective in the fourth quarter of
fiscal 2009, TJX no longer entered into contracts to hedge its
net investments in foreign subsidiaries and settled all existing
contracts. As a result, there were no net investment contracts
as of January 29, 2011 or January 30, 2010.
Interest Rate Contracts: During fiscal 2004,
TJX entered into interest rate swaps with respect to
$100 million of the $200 million ten-year notes
outstanding at that time. Under those interest rate swaps, which
settled in December 2009, TJX paid a specific variable interest
rate indexed to the six-month LIBOR rate and received a fixed
rate applicable to the underlying debt, effectively converting
the interest on a portion of the notes from fixed to a floating
rate of interest. The interest income/
F-13
expense on those swaps was accrued as earned and recorded as an
adjustment to the interest expense accrued on the fixed-rate
debt. The interest rate swaps were designated as fair value
hedges on the underlying debt. The valuation of the swaps
resulted in an offsetting fair value adjustment to the debt
hedged. Accordingly, current installments of long-term debt were
increased by $1.6 million in fiscal 2009. The average
effective interest rate on $100 million of the 7.45%
unsecured notes, inclusive of the effect of hedging activity,
was approximately 4.04% in fiscal 2010 and 6.54% in fiscal 2009.
Diesel Fuel Contracts: During fiscal 2011,
TJX entered into agreements to hedge a portion of its notional
diesel requirements for fiscal 2012, based on the diesel fuel
consumed by independent freight carriers transporting the
Companys inventory. These economic hedges at
January 29, 2011 relate to 10% of TJXs notional
diesel requirement in the first quarter of fiscal 2012. These
diesel fuel hedge agreements will settle during the first half
of fiscal 2012. The fuel hedge agreements outstanding at
January 30, 2010 hedged approximately 10% of our notional
diesel fuel requirements in the second quarter of fiscal 2011
and 20% of our notional diesel requirement in the third and
fourth quarter of fiscal 2011, which settled throughout the year
and terminated in February 2011.
Independent freight carriers transporting the Companys
inventory charge TJX a mileage surcharge for diesel fuel price
increases as incurred by the carrier. The hedge agreements are
designed to mitigate the volatility of diesel fuel pricing (and
the resulting per mile surcharges payable by TJX) by setting a
fixed price per gallon for the period being hedged. TJX elected
not to apply hedge accounting rules to these contracts. The
change in the fair value of the hedge agreements resulted in a
gain of $1.2 million in fiscal 2011, a gain of
$4.5 million in fiscal 2010 and a loss of $4.9 million
in fiscal 2009, all of which are reflected in earnings as a
component of cost of sales, including buying and occupancy costs.
Foreign Currency Contracts: TJX enters into
forward foreign currency exchange contracts to obtain economic
hedges on portions of merchandise purchases made and anticipated
to be made in currencies other than the functional currency of
TJX Europe (operating in the United Kingdom, Ireland, Germany
and Poland), TJX Canada (Canada) and Marmaxx (U.S.). These
contracts are typically twelve months or less in duration. The
contracts outstanding at January 29, 2011 cover certain
commitments and anticipated needs throughout fiscal 2012. TJX
elected not to apply hedge accounting rules to these contracts.
The change in the fair value of these contracts resulted in a
loss of $6.8 million in fiscal 2011, income of
$0.5 million in fiscal 2010 and a loss of $2.3 million
in fiscal 2009 and is included in earnings as a component of
cost of sales, including buying and occupancy costs.
Until the fourth quarter of fiscal 2009, TJX entered into
foreign currency forward and swap contracts in both Canadian
dollars and British pounds sterling and accounted for them as
hedges of the net investment in and between foreign subsidiaries
or cash flow hedges of Winners long-term intercompany
debt. TJX applied hedge accounting to these hedge contracts of
our investment in foreign subsidiaries, and changes in fair
value of these contracts, as well as gains and losses upon
settlement, were recorded in accumulated other comprehensive
income, offsetting changes in the cumulative foreign translation
adjustments of the foreign subsidiaries. The change in fair
value of the contracts designated as hedges of the investment in
foreign subsidiaries resulted in a gain of $68.8 million,
net of income taxes, in fiscal 2009. The ineffective portion of
the net investment hedges resulted in pre-tax charges to the
income statement of $2.2 million in fiscal 2009. The change
in the cumulative foreign currency translation adjustment
resulted in a loss of $38.3 million, net of income taxes,
in fiscal 2011, a loss of $76.7 million, net of income
taxes, in fiscal 2010, and a gain of $171.2 million, net of
income taxes, in fiscal 2009. Amounts included in other
comprehensive income relating to cash flow hedges were
reclassified to earnings as the underlying exposure on the debt
had an impact on earnings. The net amount reclassified from
other comprehensive income to the income statement in fiscal
2009 related to cash flow hedges was $0.7 million, net of
income taxes.
TJX also enters into derivative contracts, generally designated
as fair value hedges, to hedge intercompany debt and
intercompany interest payable. The changes in fair value of
these contracts are recorded in selling, general and
administrative expenses and are offset by marking the underlying
item to fair value in the same period. Upon settlement, the
realized gains and losses on these contracts are offset by the
realized gains and losses of the underlying item in selling,
general and administrative expenses. The net impact on the
income statement of hedging activity related to these
intercompany payables was income of $0.1 million in fiscal
2011, income of $3.7 million in fiscal 2010 and expense of
$1.7 million in fiscal 2009.
F-14
Following is a summary of TJXs derivative financial
instruments, related fair value and balance sheet classification
at January 29, 2011:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Fair
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value in
|
|
|
|
|
|
|
|
|
|
Blended
|
|
|
Balance
|
|
|
Current
|
|
|
Current
|
|
|
US$ at
|
|
|
|
|
|
|
|
|
|
Contract
|
|
|
Sheet
|
|
|
Asset
|
|
|
(Liability)
|
|
|
January 29,
|
|
In thousands
|
|
Pay
|
|
|
Receive
|
|
|
Rate
|
|
|
Location
|
|
|
US$
|
|
|
US$
|
|
|
2011
|
|
|
|
|
Fair value hedges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intercompany balances, primarily short-term debt and related
interest
|
|
|
25,000
|
|
|
£
|
21,265
|
|
|
|
0.8506
|
|
|
|
(Accrued Exp
|
)
|
|
$
|
|
|
|
$
|
(278
|
)
|
|
$
|
(278
|
)
|
|
|
|
50,442
|
|
|
US$
|
66,363
|
|
|
|
1.3156
|
|
|
|
(Accrued Exp
|
)
|
|
|
|
|
|
|
(1,944
|
)
|
|
|
(1,944
|
)
|
|
|
US$
|
85,894
|
|
|
£
|
55,000
|
|
|
|
0.6403
|
|
|
|
Prepaid Exp/
(Accrued Exp
|
)
|
|
|
1,008
|
|
|
|
(77
|
)
|
|
|
931
|
|
Economic hedges for which hedge accounting was not elected:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diesel contracts
|
|
|
Fixed on 2.1M gal
|
|
|
|
Float on 2.1M gal
|
|
|
|
N/A
|
|
|
|
Prepaid Exp
|
|
|
|
746
|
|
|
|
|
|
|
|
746
|
|
Merchandise purchase commitments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
C$
|
403,031
|
|
|
US$
|
399,036
|
|
|
|
0.9901
|
|
|
|
Prepaid Exp/
(Accrued Exp
|
)
|
|
|
678
|
|
|
|
(2,938
|
)
|
|
|
(2,260
|
)
|
|
|
C$
|
4,951
|
|
|
|
3,700
|
|
|
|
0.7473
|
|
|
|
Prepaid Exp/
(Accrued Exp
|
)
|
|
|
102
|
|
|
|
(10
|
)
|
|
|
92
|
|
|
|
£
|
42,813
|
|
|
US$
|
66,900
|
|
|
|
1.5626
|
|
|
|
(Accrued Exp
|
)
|
|
|
|
|
|
|
(986
|
)
|
|
|
(986
|
)
|
|
|
£
|
28,465
|
|
|
|
33,900
|
|
|
|
1.1909
|
|
|
|
Prepaid Exp
|
|
|
|
976
|
|
|
|
|
|
|
|
976
|
|
|
|
US $
|
420
|
|
|
|
312
|
|
|
|
0.7429
|
|
|
|
Prepaid Exp
|
|
|
|
4
|
|
|
|
|
|
|
|
4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total fair value of financial instruments
|
|
|
|
|
|
|
|
|
|
$
|
3,514
|
|
|
$
|
(6,233
|
)
|
|
$
|
(2,719
|
)
|
|
Following is a summary of TJXs derivative financial
instruments, related fair value and balance sheet classification
at January 30, 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Fair
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value in
|
|
|
|
|
|
|
|
|
|
Blended
|
|
|
Balance
|
|
|
Current
|
|
|
Current
|
|
|
US$ at
|
|
|
|
|
|
|
|
|
|
Contract
|
|
|
Sheet
|
|
|
Asset
|
|
|
(Liability)
|
|
|
January 30,
|
|
In thousands
|
|
Pay
|
|
|
Receive
|
|
|
Rate
|
|
|
Location
|
|
|
US$
|
|
|
US$
|
|
|
2010
|
|
|
|
|
Economic hedges for which hedge accounting was not elected:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diesel contracts
|
|
|
Fixed on 260K-
520K gal
per month
|
|
|
|
Floating on 260K-
520K gal
per month
|
|
|
|
N/A
|
|
|
|
(Accrued Exp
|
)
|
|
|
|
|
|
|
(442
|
)
|
|
|
(442
|
)
|
Merchandise purchase commitments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
C$
|
220,244
|
|
|
US$
|
210,476
|
|
|
|
0.9556
|
|
|
|
Prepaid Exp
|
|
|
|
4,719
|
|
|
|
|
|
|
|
4,719
|
|
|
|
C$
|
2,264
|
|
|
|
1,450
|
|
|
|
0.6406
|
|
|
|
(Accrued Exp
|
)
|
|
|
|
|
|
|
(105
|
)
|
|
|
(105
|
)
|
|
|
£
|
19,000
|
|
|
US$
|
31,307
|
|
|
|
1.6477
|
|
|
|
Prepaid Exp
|
|
|
|
923
|
|
|
|
|
|
|
|
923
|
|
|
|
£
|
16,074
|
|
|
|
17,910
|
|
|
|
1.1142
|
|
|
|
(Accrued Exp
|
)
|
|
|
|
|
|
|
(882
|
)
|
|
|
(882
|
)
|
|
|
US$
|
1,175
|
|
|
|
818
|
|
|
|
0.6962
|
|
|
|
(Accrued Exp
|
)
|
|
|
|
|
|
|
(42
|
)
|
|
|
(42
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total fair value of all financial instruments
|
|
|
|
|
|
|
|
|
|
$
|
5,642
|
|
|
$
|
(1,471
|
)
|
|
$
|
4,171
|
|
|
F-15
The impact of derivative financial instruments on the statements
of income during fiscal 2011 and fiscal 2010 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount of Gain (Loss)
|
|
|
|
|
|
Recognized in Income by
|
|
|
|
Location of Gain
|
|
Derivative
|
|
|
|
(Loss) Recognized in
|
|
January 29,
|
|
|
January 30,
|
|
In thousands
|
|
Income by Derivative
|
|
2011
|
|
|
2010
|
|
|
|
|
Fair value hedges:
|
|
|
|
|
|
|
|
|
|
|
Interest rate swap fixed to floating on notional of $50,000
|
|
Interest expense, net
|
|
$
|
|
|
|
$
|
1,092
|
|
Interest rate swap fixed to floating on notional of $50,000
|
|
Interest expense, net
|
|
|
|
|
|
|
1,422
|
|
Intercompany balances, primarily short-term debt and related
interest
|
|
Selling, general
and administrative
expenses
|
|
|
2,551
|
|
|
|
(9,249
|
)
|
Economic hedges for which hedge accounting was not elected:
|
|
|
|
|
|
|
|
|
|
|
Diesel contracts
|
|
Cost of sales, including buying and occupancy costs
|
|
|
1,188
|
|
|
|
4,490
|
|
Merchandise purchase commitments
|
|
Cost of sales, including buying and occupancy costs
|
|
|
(6,786
|
)
|
|
|
494
|
|
|
Gain (loss) recognized in income
|
|
|
|
$
|
(3,047
|
)
|
|
$
|
(1,751
|
)
|
|
|
|
Note G.
|
Disclosures about
Fair Value of Financial Instruments
|
The following table sets forth TJXs financial assets and
liabilities that are accounted for at fair value on a recurring
basis:
|
|
|
|
|
|
|
|
|
|
|
|
|
January 29,
|
|
|
January 30,
|
|
In thousands
|
|
2011
|
|
|
2010
|
|
|
|
|
Level 1
|
|
|
|
|
|
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
Executive savings plan investments
|
|
$
|
73,925
|
|
|
$
|
55,404
|
|
Level 2
|
|
|
|
|
|
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
Short-term investments
|
|
$
|
76,261
|
|
|
$
|
130,636
|
|
Foreign currency exchange contracts
|
|
|
2,768
|
|
|
|
5,642
|
|
Diesel fuel contracts
|
|
|
746
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
Foreign currency exchange contracts
|
|
$
|
6,233
|
|
|
$
|
1,029
|
|
Diesel fuel contracts
|
|
|
|
|
|
|
442
|
|
|
The fair value of TJXs general corporate debt, including
current installments, was estimated by obtaining market quotes
given the trading levels of other bonds of the same general
issuer type and market perceived credit quality. The fair value
of long-term debt at January 29, 2011 was
$881.7 million compared to a carrying value of
$774.4 million. The fair value of long-term debt as of
January 30, 2010 was $862.3 million compared to a
carrying value of $774.3 million. These estimates do not
necessarily reflect provisions or restrictions in the various
debt agreements that might affect TJXs ability to settle
these obligations.
TJXs cash equivalents are stated at cost, which
approximates fair value, due to the short maturities of these
instruments.
Investments designed to meet obligations under the executive
savings plan are invested in securities traded in active markets
and are recorded at unadjusted quoted prices.
F-16
The foreign currency exchange contracts are valued using broker
quotations which include observable market information. TJX does
not make adjustments to quotes or prices obtained from brokers
or pricing services but does assess the credit risk of
counterparties and will adjust final valuations when
appropriate. Where independent pricing services provide fair
values, TJX obtains an understanding of the methods used in
pricing. As such, these derivative instruments are classified
within level 2.
|
|
Note H.
|
Segment
Information
|
At January 29, 2011, TJX operated five business segments:
three in the United States and one each in Canada and Europe.
Each of TJXs segments had its own administrative, buying
and merchandising organization and distribution network. Of the
U.S. based chains, T.J. Maxx and Marshalls, referred to as
Marmaxx, are managed together and reported as a single segment
and A.J. Wright and HomeGoods each is reported as a separate
segment. As a result of the consolidation of A.J. Wright, it
will cease to be a business segment after fiscal 2012 (see
Note C). Outside the U.S., chains in Canada (Winners,
HomeSense and StyleSense) are under common management and
reported as the TJX Canada segment, and chains in Europe (T.K.
Maxx and HomeSense) are under common management and reported as
the TJX Europe segment.
For fiscal 2011, TJX Canada and TJX Europe accounted for 23% of
TJXs net sales, 18% of segment profit and 23% of
consolidated assets. All of our stores, with the exception of
HomeGoods and HomeSense, sell family apparel and home fashions.
The HomeGoods and HomeSense stores offer exclusively home
fashions. By merchandise category, we derived approximately 61%
of our sales from clothing (including footwear), 26% from home
fashions and 13% from jewelry and accessories in fiscal 2011.
TJX evaluates the performance of its segments based on
segment profit or loss, which it defines as pre-tax
income before general corporate expense, Provision (credit) for
Computer Intrusion related costs, and interest expense.
Segment profit or loss, as defined by TJX, may not
be comparable to similarly titled measures used by other
entities. In addition, this measure of performance should not be
considered an alternative to net income or cash flows from
operating activities as an indicator of our performance or as a
measure of liquidity.
Presented below is selected financial information related to our
business segments:
F-17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
|
January 29,
|
|
|
January 30,
|
|
|
January 31,
|
|
In thousands
|
|
2011
|
|
|
2010
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
(53 weeks)
|
|
|
Net sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
In the United States
|
|
|
|
|
|
|
|
|
|
|
|
|
Marmaxx
|
|
$
|
14,092,159
|
|
|
$
|
13,270,863
|
|
|
$
|
12,362,122
|
|
HomeGoods
|
|
|
1,958,007
|
|
|
|
1,794,409
|
|
|
|
1,578,286
|
|
A.J.
Wright(1)
|
|
|
888,364
|
|
|
|
779,811
|
|
|
|
677,597
|
|
TJX Canada
|
|
|
2,510,201
|
|
|
|
2,167,912
|
|
|
|
2,139,443
|
|
TJX Europe
|
|
|
2,493,462
|
|
|
|
2,275,449
|
|
|
|
2,242,057
|
|
|
|
|
$
|
21,942,193
|
|
|
$
|
20,288,444
|
|
|
$
|
18,999,505
|
|
|
Segment profit (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
In the United States
|
|
|
|
|
|
|
|
|
|
|
|
|
Marmaxx
|
|
$
|
1,875,951
|
|
|
$
|
1,588,452
|
|
|
$
|
1,155,838
|
|
HomeGoods
|
|
|
186,535
|
|
|
|
137,525
|
|
|
|
42,370
|
|
A.J.
Wright(1)
|
|
|
(129,986
|
)
|
|
|
12,565
|
|
|
|
2,862
|
|
TJX Canada
|
|
|
351,989
|
|
|
|
254,974
|
|
|
|
236,086
|
|
TJX Europe
|
|
|
75,849
|
|
|
|
163,969
|
|
|
|
137,612
|
|
|
|
|
|
2,360,338
|
|
|
|
2,157,485
|
|
|
|
1,574,768
|
|
General corporate expense
|
|
|
168,659
|
|
|
|
166,414
|
|
|
|
140,037
|
|
Provision (credit) for Computer Intrusion related costs
|
|
|
(11,550
|
)
|
|
|
|
|
|
|
(30,500
|
)
|
Interest expense, net
|
|
|
39,137
|
|
|
|
39,509
|
|
|
|
14,291
|
|
|
Income from continuing operations before provision for income
taxes
|
|
$
|
2,164,092
|
|
|
$
|
1,951,562
|
|
|
$
|
1,450,940
|
|
|
Identifiable assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
In the United States
|
|
|
|
|
|
|
|
|
|
|
|
|
Marmaxx
|
|
$
|
3,625,780
|
|
|
$
|
3,340,745
|
|
|
$
|
3,538,663
|
|
HomeGoods
|
|
|
427,162
|
|
|
|
415,230
|
|
|
|
455,045
|
|
A.J.
Wright(1)
|
|
|
71,194
|
|
|
|
269,190
|
|
|
|
242,657
|
|
TJX Canada
|
|
|
726,781
|
|
|
|
762,338
|
|
|
|
609,363
|
|
TJX Europe
|
|
|
1,088,399
|
|
|
|
861,122
|
|
|
|
675,283
|
|
Corporate(2)
|
|
|
2,032,447
|
|
|
|
1,815,352
|
|
|
|
657,231
|
|
|
|
|
$
|
7,971,763
|
|
|
$
|
7,463,977
|
|
|
$
|
6,178,242
|
|
|
Capital expenditures:
|
|
|
|
|
|
|
|
|
|
|
|
|
In the United States
|
|
|
|
|
|
|
|
|
|
|
|
|
Marmaxx
|
|
$
|
360,296
|
|
|
$
|
214,308
|
|
|
$
|
328,965
|
|
HomeGoods
|
|
|
46,608
|
|
|
|
25,769
|
|
|
|
47,519
|
|
A.J.
Wright(1)
|
|
|
29,135
|
|
|
|
34,285
|
|
|
|
19,098
|
|
TJX Canada
|
|
|
66,391
|
|
|
|
38,960
|
|
|
|
61,486
|
|
TJX Europe
|
|
|
204,704
|
|
|
|
115,960
|
|
|
|
122,902
|
|
Discontinued
operations(3)
|
|
|
|
|
|
|
|
|
|
|
2,962
|
|
|
|
|
$
|
707,134
|
|
|
$
|
429,282
|
|
|
$
|
582,932
|
|
|
F-18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
|
January 29,
|
|
|
January 30,
|
|
|
January 31,
|
|
In thousands
|
|
2011
|
|
|
2010
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
(53 weeks)
|
|
|
Depreciation and amortization:
|
|
|
|
|
|
|
|
|
|
|
|
|
In the United States
|
|
|
|
|
|
|
|
|
|
|
|
|
Marmaxx
|
|
$
|
272,037
|
|
|
$
|
262,901
|
|
|
$
|
241,940
|
|
HomeGoods
|
|
|
35,129
|
|
|
|
32,876
|
|
|
|
28,892
|
|
A.J.
Wright(1)
|
|
|
18,981
|
|
|
|
19,542
|
|
|
|
16,298
|
|
TJX Canada
|
|
|
54,815
|
|
|
|
49,105
|
|
|
|
43,527
|
|
TJX Europe
|
|
|
74,868
|
|
|
|
67,783
|
|
|
|
59,949
|
|
Discontinued
operations(3)
|
|
|
|
|
|
|
|
|
|
|
2,610
|
|
Corporate(4)
|
|
|
2,222
|
|
|
|
3,011
|
|
|
|
8,491
|
|
|
|
|
$
|
458,052
|
|
|
$
|
435,218
|
|
|
$
|
401,707
|
|
|
|
|
|
(1)
|
|
On December 8, 2010, the Board
of Directors of TJX approved the consolidation of the A.J.
Wright segment. All stores ceased operating under the A.J.
Wright banner by February 13, 2011 with the conversion
process expected to be completed by the end of the second
quarter of fiscal 2012 (see Note C).
|
|
(2)
|
|
Corporate identifiable assets
consist primarily of cash, receivables, prepaid insurance, a
note receivable, ESP trust, deferred taxes and reflects a
significant increase in cash from fiscal 2009 to fiscal 2010.
|
|
(3)
|
|
Reflects activity of Bobs
Stores through the date of sale in fiscal 2009 (see Note C).
|
|
(4)
|
|
Includes debt discount accretion
and debt expense amortization.
|
|
|
Note I.
|
Stock Incentive
Plan
|
TJX has a stock incentive plan under which options and other
share-based awards may be granted to its directors, officers and
key employees. This plan has been approved by TJXs
shareholders, and all stock compensation awards are made under
this plan. The Stock Incentive Plan, as amended with shareholder
approval, provides for the issuance of up to 160.9 million
shares with 16.9 million shares available for future grants
as of January 29, 2011. TJX issues shares from authorized
but unissued common stock.
Total compensation cost related to share-based compensation was
$37.7 million, net of income taxes of $21.1 million,
in fiscal 2011, $33.5 million, net of income taxes of
$21.6 million, in fiscal 2010 and $31.2 million, net
of income taxes of $20.1 million, in fiscal 2009.
As of January 29, 2011, there was $108.9 million of
total unrecognized compensation cost related to nonvested
share-based compensation arrangements granted under the plan.
That cost is expected to be recognized over a weighted-average
period of two years.
Options for the purchase of common stock have been granted at
100% of market price on the grant date and generally vest in
thirds over a three-year period starting one year after the
grant, and have a ten-year term.
The fair value of options is estimated as of the date of grant
using the Black-Scholes option pricing model with the following
weighted average assumptions:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year
|
|
|
|
2011
|
|
|
2010
|
|
|
2009
|
|
|
|
|
Risk-free interest rate
|
|
|
1.57
|
%
|
|
|
2.49
|
%
|
|
|
2.96
|
%
|
Dividend yield
|
|
|
1.5
|
%
|
|
|
1.3
|
%
|
|
|
1.3
|
%
|
Expected volatility factor
|
|
|
32.3
|
%
|
|
|
37.3
|
%
|
|
|
33.9
|
%
|
Expected option life in years
|
|
|
5.0
|
|
|
|
5.0
|
|
|
|
4.8
|
|
Weighted average fair value of options issued
|
|
$
|
10.84
|
|
|
$
|
12.27
|
|
|
$
|
10.46
|
|
|
Expected volatility is based on a combination of implied
volatility from traded options on our stock, and historical
volatility during a term approximating the expected term of the
option granted. We use historical data to estimate option
exercise, employee termination behavior and dividend yield
within the valuation model. Employee groups and option
characteristics are considered separately for valuation purposes
when applicable. No such distinctions existed during the fiscal
years presented. The expected option life represents an estimate
of the period of time options are expected to remain outstanding
based upon historical exercise trends. The risk-free rate is for
periods within the contractual life of the option based on the
U.S. Treasury yield curve in effect at the time of grant.
F-19
Stock Options: A summary of the status of
TJXs stock options and related Weighted Average Exercise
Prices (WAEP) is presented below (shares in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
|
January 29, 2011
|
|
|
January 30, 2010
|
|
|
January 31, 2009
|
|
|
|
Options
|
|
|
WAEP
|
|
|
Options
|
|
|
WAEP
|
|
|
Options
|
|
|
WAEP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(53 weeks)
|
|
|
Outstanding at beginning of year
|
|
|
27,975
|
|
|
$
|
27.92
|
|
|
|
31,773
|
|
|
$
|
24.83
|
|
|
|
35,153
|
|
|
$
|
22.17
|
|
Granted
|
|
|
4,947
|
|
|
|
41.13
|
|
|
|
4,877
|
|
|
|
37.74
|
|
|
|
5,199
|
|
|
|
35.02
|
|
Exercised and repurchased
|
|
|
(7,368
|
)
|
|
|
24.45
|
|
|
|
(8,012
|
)
|
|
|
21.30
|
|
|
|
(7,533
|
)
|
|
|
19.08
|
|
Forfeitures
|
|
|
(507
|
)
|
|
|
35.19
|
|
|
|
(663
|
)
|
|
|
31.79
|
|
|
|
(1,046
|
)
|
|
|
27.59
|
|
|
Outstanding at end of year
|
|
|
25,047
|
|
|
$
|
31.41
|
|
|
|
27,975
|
|
|
$
|
27.92
|
|
|
|
31,773
|
|
|
$
|
24.83
|
|
|
Options exercisable at end of year
|
|
|
15,613
|
|
|
$
|
26.79
|
|
|
|
18,372
|
|
|
$
|
24.01
|
|
|
|
21,664
|
|
|
$
|
21.56
|
|
|
Included in the exercised and repurchased amount in the table
above are approximately 77,000 options that were repurchased
from optionees by TJX during fiscal 2009. There were no such
option repurchases during fiscal 2011 or fiscal 2010. Cash paid
for such repurchased options amounted to $0.7 million in
fiscal 2009.
The total intrinsic value of options exercised was
$143.3 million in fiscal 2011, $109.2 million in
fiscal 2010 and $108.1 million in fiscal 2009.
The following table summarizes information about stock options
outstanding that were expected to vest and stock options
outstanding that were exercisable at January 29, 2011:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
Weighted
|
|
|
|
|
|
|
Aggregate
|
|
|
Average
|
|
|
Average
|
|
|
|
|
|
|
Intrinsic
|
|
|
Remaining
|
|
|
Exercise
|
|
In thousands except years and per share amounts
|
|
Shares
|
|
|
Value
|
|
|
Contract Life
|
|
|
Price
|
|
|
|
|
Options outstanding expected to vest
|
|
|
8,766
|
|
|
$
|
76,623
|
|
|
|
9.0 years
|
|
|
$
|
38.97
|
|
Options exercisable
|
|
|
15,613
|
|
|
$
|
408,345
|
|
|
|
5.3 years
|
|
|
$
|
26.79
|
|
|
Total outstanding options vested and expected to vest
|
|
|
24,379
|
|
|
$
|
484,968
|
|
|
|
6.6 years
|
|
|
$
|
31.17
|
|
|
Options outstanding expected to vest represents total unvested
options of 9.4 million adjusted for anticipated forfeitures.
Performance-Based Restricted Stock and Other
Awards: TJX has issued performance-based restricted and
deferred stock awards under the Stock Incentive Plan which are
issued at no cost to the recipient of the award and are subject
to achievement of specified performance criteria for a period of
one to three fiscal years. The grant date fair value of the
award is charged to income ratably over the requisite service
period during which the recipient must remain employed. The fair
value of the awards is determined at date of grant and assumes
that performance goals will be achieved. If such goals are not
met, no compensation cost is recognized and any recognized
compensation cost is reversed.
A summary of the status of our nonvested performance-based
restricted stock and changes during fiscal 2011 is presented
below:
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance
|
|
|
Weighted
|
|
|
|
Based
|
|
|
Average
|
|
|
|
Restricted
|
|
|
Grant Date
|
|
Shares in thousands
|
|
Stock
|
|
|
Fair Value
|
|
|
|
|
Nonvested at beginning of year
|
|
|
641
|
|
|
$
|
27.30
|
|
Granted
|
|
|
621
|
|
|
|
46.17
|
|
Vested
|
|
|
(259
|
)
|
|
|
27.06
|
|
Forfeited
|
|
|
(32
|
)
|
|
|
35.11
|
|
|
Nonvested at end of year
|
|
|
971
|
|
|
$
|
39.18
|
|
|
There were 621,000 shares of performance-based restricted
stock, with a weighted average grant date fair value of $46.17,
granted in fiscal 2011; 470,000 shares of performance-based
restricted stock, with a weighted average grant date fair value
of $25.91, granted in fiscal 2010; and 173,000 shares with
a weighted average grant date fair value of $33.49 were granted
in fiscal 2009. The fair value of performance-based restricted
stock that vested was $7.0 million in fiscal 2011,
$6.7 million in fiscal 2010 and $5.9 million in fiscal
2009.
F-20
TJX also awards deferred shares to its outside directors under
the Stock Incentive Plan. The outside directors are awarded two
annual deferred share awards, each representing shares of TJX
common stock valued at $50,000. One award vests immediately and
is payable, with accumulated dividends, in stock at the earlier
of separation from service as a director or change of control.
The second award vests based on service as a director until the
annual meeting that follows the award and is payable, with
accumulated dividends, in stock at vesting date, unless an
irrevocable advance election is made whereby it is payable at
the same time as the first award. As of the end of fiscal 2011,
a total of 157,619 deferred shares were outstanding under the
plan.
|
|
Note J.
|
Pension Plans and
Other Retirement Benefits
|
Pension: TJX has a funded defined benefit
retirement plan which covered a majority of its full-time
U.S. employees hired prior to February 1, 2006. As a
result of an amendment to the plan, employees hired after
February 1, 2006 do not participate in this plan but are
eligible to receive enhanced employer contributions to their
401(k) plans. This plan amendment has not had a material impact
on pension expense in the periods presented, but is expected to
reduce net periodic pension costs gradually due to a reduction
in the number of participants. Employees who had attained
twenty-one years of age and completed one year of service prior
to amendment were, and remain, covered under the plan. No
employee contributions are required, and benefits are based
principally on compensation earned in each year of service. Our
funded defined benefit retirement plan assets are invested in
domestic and international equity and fixed income securities,
both directly and through investment funds. The plan does not
invest in the securities of TJX. TJX also has an unfunded
supplemental retirement plan which covers certain key employees
and provides additional retirement benefits based on average
compensation for certain of those employees or, alternatively
based on benefits that would be provided under the funded
retirement plan absent Internal Revenue Code limitations.
Presented below is financial information relating to TJXs
funded defined benefit retirement plan (funded plan) and its
unfunded supplemental pension plan (unfunded plan) for the
fiscal years indicated: