TJ Maxx 2000 Annual Report Download - page 22

Management’s Discussion and Analysis of
Results of Operations and Financial Condition
The following discussion contains forward-looking information and should be read in conjunction with the consolidated financial state-
ments and notes thereto included elsewhere in this report. Our actual results could differ materially from the results contemplated by
these forward-looking statements due to various factors, including those discussed under the “Forward–Looking Information” section
of this report.
RESULTS OF OPERATIONS
OVERVIEW
The following is a summary of the operating results of TJX at the consolidated level. This discussion is followed by an overview of oper-
ating results by segment. All references to earnings per share are diluted earnings per share unless otherwise indicated.
Net sales for fiscal 2001 were $9.58 billion, an increase of 8.9% over net sales of $8.80 billion in fiscal 2000. Net sales for fiscal 2000
increased 10.6% over net sales of $7.95 billion in fiscal 1999. Income from continuing operations before cumulative effect of accounting
change (“income from continuing operations”) was $538.1 million in fiscal 2001, $526.8 million in fiscal 2000, and $433.2 million in fiscal
1999. Income from continuing operations per share was $1.86 in fiscal 2001, versus $1.66 in fiscal 2000 and $1.29 in fiscal 1999. Net
income was $538.1 million in fiscal 2001, $521.7 million in fiscal 2000, after a $.02 per share charge for the cumulative effect of the change
in accounting for layaway sales, and $424.2 million in fiscal 1999, after a $.02 per share charge relating to discontinued operations.
The following table sets forth our consolidated operating results as a percentage of net sales:
Fiscal Year Ended January
2001 2000 1999
Net sales 100.0% 100.0% 100.0%
Cost of sales, including buying and occupancy costs 75.0 74.8 74.9
Selling, general and administrative expenses 15.7 15.4 16.2
Interest expense, net .3 .1 –
Income from continuing operations before income taxes and cumulative
effect of accounting change 9.0% 9.7% 8.9%
NET SALES: Our net sales increased 8.9% in fiscal 2001, to $9.58 billion, over sales of $8.80 billion in fiscal 2000. Net sales in fiscal 2000
increased 10.6% over sales of $7.95 billion in fiscal 1999. The increase in our net sales for both years is attributable to an increase in same
store sales and new stores. Consolidated same store sales increased 2% in fiscal 2001 and 5% in fiscal 2000. Our consolidated store count
increased 10% in fiscal 2001 over the prior year as compared to a 9% increase in fiscal 2000 over fiscal 1999. In fiscal 2001, sales results
were adversely affected by unseasonable or severe weather conditions in certain areas of the country, particularly at Marmaxx, the internal
combination of T.J. Maxx and Marshalls. In both years, non–apparel sales gains generally exceeded increases in apparel sales.
COST OF SALES, INCLUDING BUYING AND OCCUPANCY COSTS: Cost of sales, including buying and occupancy costs, as a
percentage of net sales were 75.0% in fiscal 2001, 74.8% in fiscal 2000 and 74.9% in fiscal 1999. The increase in this ratio in fiscal 2001
is primarily due to the moderation in our sales growth, distribution center capacity issues and an increase in our freight costs. The slight
improvement in this ratio in fiscal 2000 versus fiscal 1999 is primarily due to improved merchandise margins at Marmaxx. We have managed
our inventories tightly during both years, allowing us to take advantage of better buys in the marketplace. This ratio is expected to increase
slightly in the short term due to our increased investment in our distribution center network.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES: Selling, general and administrative expenses as a percentage of net sales
were 15.7% in fiscal 2001, 15.4% in fiscal 2000 and 16.2% in fiscal 1999. This ratio is largely influenced by corporate charges and other
gains and losses included in this line over the last three years. Selling, general and administrative expenses for fiscal 2001 include a
pre–tax charge of $6.3 million for the estimated cost of closing the three T. K. Maxx stores operated in the Netherlands, while fiscal 2000
includes a pre–tax gain of $8.5 million, due to the receipt of common stock due to the demutualization of Manulife Financial Corporation.
The inclusion of these items in their respective years, along with an increase in store payroll costs at Marmaxx in fiscal 2001, is the
THE TJX COMPANIES, INC.
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