ITEM 1. BUSINESS
The TJX Companies, Inc. (TJX) is the largest off-price retailer of apparel and home fashions in the United States and worldwide. We operate 632 T.J. Maxx stores, 505 Marshalls stores and 100 Winners Apparel Ltd. stores, a Canadian off-price family apparel and home fashions chain. We also operate HomeGoods, a U.S. off-price home fashions chain with 51 stores, and T.K. Maxx, an off-price family apparel and home fashions chain in the United Kingdom, the Republic of Ireland and the Netherlands, which has 54 stores. In addition, A.J. Wright, a new United States chain of off-price family apparel and home fashions stores begun in 1998 and targeted to moderate income customers, operates 15 stores. During the fiscal year ended January 29, 2000, we derived 32.0% of our sales from the Northeast, 17.3% from the Midwest, 28.0% from the South, 1.1% from the Central States, 12.9% from the West, 5.3% from Canada and 3.4% from Europe (primarily the United Kingdom).
TJX has positioned itself as a synergistic group of off-price businesses and has expanded its off-price concept to new geographic areas, new product lines and new demographic markets. Key synergistic strengths include our expertise in off-price buying and inventory management techniques, substantial buying power and off-price technological systems. Our mission is to deliver an exciting and fresh assortment of merchandise at excellent values to our customers every day. We define value as the combination of quality, fashion and price. With close to 250 buyers worldwide and over 7,800 vendors, we believe we are well positioned to accomplish this goal.
All of TJX's chains employ opportunistic buying strategies to purchase large quantities of merchandise at significant discounts from initial wholesale prices. These strategies include special situation purchases and close-outs of current season fashions. We also rely heavily on sophisticated inventory controls that permit a virtually continuous flow of merchandise into our stores. Highly automated storage and distribution systems track, allocate and deliver an average of 12,000 items per week to each T.J. Maxx and Marshalls store. In addition, computerized warehouse storage, handling and shipping systems permit a continuous evaluation and replenishment of store inventory. Pricing, markdown decisions and store inventory replenishment requirements are determined centrally, using satellite-transmitted information provided by point-of-sale computer terminals. This process is designed to sell substantially all merchandise within targeted selling periods.
Unless otherwise indicated, all store information is as of January 29, 2000. All references to store square footage are to gross square feet. Fiscal 2000 means the fiscal year ending January 29, 2000. Fiscal 2001 means the fiscal year ending January 27, 2001. In common with the business of apparel retailers generally, TJX's business is subject to seasonal influences, with higher levels of sales and income generally realized in the second half of the year.
Set forth below are the locations of stores operated by the Company as of January 29, 2000:
Winners Apparel Ltd. operates 100 stores in Canada: 14 in Alberta, 4 in Manitoba, 51 in Ontario, 14 in Quebec, 2 in Nova Scotia, 2 in Saskatchewan, 9 in British Columbia, 2 in New Brunswick, 1 in Newfoundland and 1 in Prince Edward Island.
T.K. Maxx operates 49 stores in the United Kingdom, 2 stores in the Republic of Ireland, and 3 in the Netherlands. The HomeGoods store locations include the HomeGoods portion of a T.J. Maxx 'N More and a Marshalls Mega-Store.
T.J. MAXX AND MARSHALLS
T.J. Maxx was founded in 1976 and is today the largest off-price retailer in the United States. We acquired Marshalls in 1995, which is the second largest off-price retailer in the United States. TJX has successfully retained the separate identities of the T.J. Maxx and Marshalls stores through merchandising, product assortment, marketing and store appearance. This has allowed us to give our customers reasons to shop at both chains.
T.J. Maxx sells brand name family apparel, accessories, giftware, domestics, women's shoes and fine jewelry at prices generally 20%-60% below department and specialty store regular prices. T.J. Maxx's target customers are typically women who have families with middle to upper-middle incomes and who generally fit the profile of a department store shopper. Marshalls' merchandise and target customers are similar to those of T.J. Maxx. However, Marshalls also offers its customers a full-line shoe department and a larger men's department than T.J. Maxx.
TJX has successfully integrated many administrative and operational functions of T.J. Maxx and Marshalls. These chains operate with a common buying and merchandising organization and have consolidated administrative functions, including finance, real estate, human resources and systems. The combined organization, known as The Marmaxx Group, offers us increased leverage to purchase merchandise at favorable prices and allows us to operate with a low cost structure. This is key to T.J. Maxx's and Marshalls' ability to sell quality, brand-name merchandise at substantial discounts.
T.J. Maxx and Marshalls stores are generally located in suburban community shopping centers. T.J. Maxx stores average approximately 29,000 square feet. Marshalls stores average approximately 31,000 square feet. Marmaxx currently expects to add approximately 60 stores in fiscal 2001.
WINNERS APPAREL LTD.
TJX acquired Winners as a five store chain in 1990 and has grown this business into the leading off-price retailer in Canada. Winners stores average approximately 27,000 square feet and emphasize off-price designer and brand name women's apparel and shoes, lingerie, accessories, domestics, giftware, menswear and children's clothing. Winners expects to add approximately 12 stores in fiscal 2001. Ultimately, we see Canada supporting approximately 160 Winners stores. Winners also intends to enter the home fashions market and currently plans to open its first "home" stores in fiscal 2002.
HOMEGOODS
TJX opened HomeGoods in 1992, which expanded its presence in the home fashions market. HomeGoods offers a broad array of giftware, accent furniture, lamps, rugs, accessories and seasonal merchandise for the home. In the last two years, HomeGoods has increased the proportion of its home decor items. HomeGoods operates in two formats: stand-alone stores and a superstore format in which we combine HomeGoods and a T.J. Maxx or Marshalls store. The combination stores are called T.J. Maxx 'N More or Marshalls Mega-Stores. Stand-alone HomeGoods stores average approximately 32,000 square feet. In superstores, which average approximately 53,000 square feet, we dedicate approximately 22,000 square feet to HomeGoods. The 51 stores open at year-end include 24 stand-alone stores and 27 superstores. In fiscal 2001, we anticipate adding a total of approximately 30 HomeGoods stores and superstores. We believe that the U.S. market could support about 500 free standing HomeGoods stores and 150 superstores. Thus, we believe this home-oriented, off-price concept offers us a great growth vehicle.
T.K. MAXX
TJX introduced the off-price concept to the United Kingdom in 1994 with T.K. Maxx stores. T.K. Maxx utilizes the same off-price strategies employed by T.J. Maxx, Marshalls and Winners. The average size of a T.K. Maxx store is approximately 25,000 square feet. T.K. Maxx opened 15 stores this year to end fiscal 2000 with 54 stores including 49 stores in the U.K., 2 in Ireland and 3 in the Netherlands. We currently expect to grow T.K. Maxx by approximately 22 stores in fiscal 2001. We see an ultimate store base of 250 in the U.K. and Ireland. Long term, we believe that the European continent offers us further growth potential and thus T.K. Maxx could be a 500 plus store chain.
A.J. WRIGHT
A.J. Wright offers TJX the ability to bring the off-price concept to a new demographic customer, the moderate income shopper. This business was launched in 1998 in New England and has expanded into the Tidewater, Virginia market as well as Detroit and Baltimore. A.J. Wright stores average approximately 27,000 square feet in size and, like our other businesses, are located in community shopping centers. We currently expect to open approximately 10 A.J. Wright stores in fiscal 2001. We believe this developing business offers TJX long-term growth opportunities throughout the U.S.
EMPLOYEES
At January 29, 2000, TJX had approximately 67,000 employees, many of whom work less than 40 hours per week. In addition, temporary employees are hired during the peak back-to-school and holiday seasons. The Company has collective bargaining agreements with the Union of Needletrades Industrial and Textile Employees ("UNITE"), covering approximately 5,300 employees in its distribution facilities in Worcester, Mansfield, and Woburn, Massachusetts; Evansville, Indiana; Las Vegas, Nevada; Charlotte, North Carolina; Decatur, Georgia; and Bridgewater, Virginia. Negotiations are currently being conducted with UNITE for a new agreement covering Decatur bargaining unit workers. TJX considers its labor/management relations and overall employee relations to be good.
COMPETITION
The retail apparel business is highly competitive. TJX generally competes for customers with a variety of conventional and discount retail stores, including national, regional and local independent department and specialty stores, as well as with catalog operations, factory outlet stores and other off-price stores. Competitive factors important to TJX's customers include fashion, value, merchandise selection, brand name recognition and, to a lesser degree, store location. In addition, because TJX purchases much of its inventory opportunistically, TJX competes for merchandise with other national and regional off-price apparel and other discount outlets. Also, many of TJX's competitors handle identical or similar lines of merchandise and have comparable locations. TJX believes that the Marshalls acquisition has enhanced its competitiveness.
CREDIT
TJX's stores operate primarily on a cash-and-carry basis. Each chain accepts credit sales through programs offered by banks and others.
BUYING AND DISTRIBUTION
The T.J. Maxx and Marshalls chains are serviced by a single centralized buying organization, while each of the other chains has its own centralized buying organization. All of TJX's chains are serviced through their own distribution network. Each T.J. Maxx store is serviced by one of the chain's four distribution centers in Worcester, Massachusetts; Evansville, Indiana; Las Vegas, Nevada (shared with Marshalls); and Charlotte, North Carolina. Each Marshalls store is serviced by one of the chain's four distribution centers in Woburn, Massachusetts; Decatur, Georgia; the shared Las Vegas, Nevada facility, and Bridgewater, Virginia. Shipments are generally made at least twice a week by contract carrier to each T.J. Maxx and Marshalls store. Winners Apparel Ltd. stores are serviced from a distribution center in Brampton, Ontario, and HomeGoods stores are serviced from a distribution center in Mansfield, Massachusetts, and by the T.J. Maxx Evansville facility. A.J. Wright stores are serviced from a distribution facility in Framingham, Massachusetts, and T.K. Maxx stores are serviced from distribution centers in Milton Keynes and Wakefield, England. A.J. Wright is currently constructing a 300,000 square foot facility in Fall River, Massachusetts that is scheduled to be operational in mid-year 2000.
SAFE HARBOR STATEMENTS UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
Certain statements contained in this report are forward-looking and involve a number of risks and uncertainties. Among the factors that could cause actual results to differ materially are the following: general economic conditions and consumer demand and consumer preferences and weather patterns in the U.S., Canada and Europe; competitive factors, including continuing pressure from pricing and promotional activities of competitors; impact of excess retail capacity and the availability of desirable store locations on suitable terms; the availability, selection and purchasing of attractive merchandise on favorable terms; import risks, including potential disruptions and duties, tariffs and quotas on imported merchandise including economic and political problems in countries from which merchandise is imported; currency and exchange rate factors in TJX's foreign operations; risks in the development of new businesses and application of TJX's off-price strategies in foreign countries; acquisition and divestment activities; risks; and other factors that may be described in TJX's filings with the Securities and Exchange Commission. TJX does not undertake to publicly update or revise its forward-looking statements even if experience or future changes make it clear that any projected results expressed or implied therein will not be realized.
ITEM 2.
ITEM 2. PROPERTIES
TJX's chains lease virtually all of their store locations. Leases are generally for 10 years with options to extend for one or more 5 year periods. TJX has the right to terminate certain leases before the expiration date under certain circumstances and for a specified payment.
The approximate average size of a T.J. Maxx store is 29,000 square feet, Marshalls stores average approximately 31,000 square feet, Winners stores are approximately 27,000 square feet on average, T.K. Maxx stores average approximately 25,000 square feet and A.J. Wright stores average approximately 27,000 square feet. HomeGoods' stand-alone stores currently average approximately 32,000 square feet, and a HomeGoods portion of a superstore combination format with a T.J. Maxx or Marshalls averages approximately 22,000 square feet. TJX owns four T.J. Maxx distribution facilities - a 526,000 square foot facility in Worcester, Massachusetts; a 983,000 square foot facility in Evansville, Indiana; a 713,000 square foot facility in Las Vegas, Nevada (shared with Marshalls); and a 600,000 square foot facility in Charlotte, North Carolina. The Company owns a 791,000 square foot Marshalls distribution facility in Decatur, Georgia. In addition, Marshalls leases two distribution facilities - an 824,000 square foot facility in Woburn, Massachusetts and a 713,000 square foot facility in Bridgewater, Virginia. Winners leases a 506,000 square foot distribution center in Brampton, Ontario and 60,000 square feet of office space in Mississauga, Ontario. HomeGoods leases a 204,000 square foot distribution center in Mansfield, Massachusetts. T.K. Maxx in the United Kingdom leases a 150,000 square foot office and distribution facility in Milton Keynes, England, a 140,000 square foot office and distribution facility in Wakefield, England, and a 41,000 square foot office space in Watford, England. A.J. Wright leases 107,000 square feet of distribution space in Framingham, Massachusetts, and is currently constructing a 300,000 square foot facility in Fall River, Massachusetts that is scheduled to be operational in mid-year 2000. The Company's, T.J. Maxx's, Marshalls', HomeGoods' and A.J. Wright's executive and administrative offices are located in a 517,000 square foot office facility, which the Company leases in Framingham, Massachusetts along with an additional 288,000 square feet of office space in the Framingham area. The Company is currently expanding its 517,000 square foot facility with a 283,000 square foot addition that will ultimately replace portions of the additional 288,000 square feet leased in the Framingham area.
The table below indicates the approximate gross square footage of stores and distribution centers, by division, in operation as of January 29, 2000.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
There is no litigation pending against TJX or any of its subsidiaries which TJX believes is material.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There was no matter submitted to a vote of the Company's security holders during the fourth quarter of fiscal 2000.
ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT
The following persons are the executive officers of the Company as of the date hereof:
All officers hold office until the next annual meeting of the Board in June 2000 and until their successors are elected, or appointed, and qualified.
PART II
ITEM 5.
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY HOLDER MATTERS
The information required by this Item is incorporated herein by reference from page 44 of the Annual Report, under the caption "Price Range of Common Stock," and from inside the back cover of the Annual Report, under the caption "Shareholder Information."
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
The information required by this Item is incorporated herein by reference from page 17 of the Annual Report, under the caption "Selected Financial Data."
ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The information required by this Item is incorporated herein by reference from pages 39 through 44 of the Annual Report, under the caption "Management's Discussion and Analysis of Results of Operations and Financial Condition."
ITEM 7A.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
TJX is exposed to foreign currency exchange rate risk on its investment in its Canadian (Winners) and European (T.K. Maxx) operations. As more fully described in Note D to the consolidated financial statements, we hedge a significant portion of our net investment and certain merchandise commitments in these operations with derivative financial instruments. TJX utilizes currency forward and swap contracts, designed to offset the gains or losses in the underlying exposures, most of which are recorded directly in shareholders' equity. The contracts are executed with creditworthy banks and are denominated in currencies of major industrial countries. TJX does not enter into derivatives for speculative trading purposes. We have performed a sensitivity analysis assuming a hypothetical 10% adverse movement in foreign exchange rates applied to the hedging contracts and the underlying exposures described above. As of January 29, 2000 the analysis indicated that such market movements would not have a material effect on our consolidated financial position, results of operations or cash flows.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this Item and not filed with this report as Financial Statement Schedules is incorporated herein by reference from pages 18 through 37 of the Annual Report, under the captions; "Consolidated Statements of Income," "Consolidated Balance Sheets," "Consolidated Statements of Cash Flows," "Consolidated Statements of Shareholders' Equity," "Selected Information by Major Business Segment" and "Notes to Consolidated Financial Statements."
ITEM 9.
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The Company 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, 2000 (the "Proxy Statement"). The information required by this Item and not given in Item 4A, Executive Officers of the Registrant, is incorporated by reference to the Proxy Statement. However, information under the captions "Executive Compensation Committee Report" and "Performance Graph" in the Proxy Statement is not so incorporated.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item is incorporated by reference to the Proxy Statement.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this Item is incorporated by reference to the Proxy Statement.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this Item is incorporated by reference to the Proxy Statement.
PART IV
ITEM 14.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) FINANCIAL STATEMENT SCHEDULES
The Financial Statements filed as part of this report are listed and indexed at Page.
(b) REPORTS ON FORM 8-K
The Company filed a Current Report on Form 8-K dated as of December 9, 1999, relating to a form of Underwriting Agreement in connection with the Company's public sale of $200 million of 7.45% notes.
ITEM 14. (c) EXHIBITS (Cont.)
Listed below are all Exhibits filed as part of this report. Certain Exhibits are incorporated by reference to documents previously filed by the Registrant with the Securities and Exchange Commission pursuant to Rule 12b-32 under the Securities Exchange Act of 1934, as amended.
* Management contract or compensatory plan or arrangement.
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.
Dated: April 28, 2000 /s/ DONALD G. CAMPBELL ------------------------------------- Donald G. Campbell Executive Vice President - Finance
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.
SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549
THE TJX COMPANIES, INC.
FORM 10-K
ANNUAL REPORT
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
For the Fiscal Years Ended January 29, 2000, January 30, 1999 and January 31, 1998
THE TJX COMPANIES, INC. AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
For Fiscal Years Ended January 29, 2000, January 30, 1999 and January 31, 1998
* Refers to page numbers in the Company's Annual Report to Stockholders for the fiscal year ended January 29, 2000, certain portions of which pages are incorporated by reference in Part II, Item 8 of this report as indicated.
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration Statement on Forms S-3 (Nos. 333-5501 and 33-60059) and on Forms S-8 (Nos. 333-63293, 333-23613, 33-49747, 33-12220 and 333-35073) of the TJX Companies, Inc. of our report dated February 29, 2000 relating to the financial statements, which appears in the Annual Report to Shareholders, which is incorporated in this Annual Report on Form 10-K.
Boston, Massachusetts April 27, 2000 PricewaterhouseCoopers LLP
EXHIBIT INDEX
* Management contract or compensatory plan or arrangement.