TJ Maxx 2004 Annual Report Download - page 22

Part I
ITEM 1. BUSINESS
We are the leading off-price retailer of apparel and home fashions in the United States and worldwide. Our seven off-price
chains are synergistic in their philosophies and operating platforms. We sell off-price family apparel and home fashions through our
T.J. Maxx, Marshalls and A.J. Wright chains in the United States, our Winners chain in Canada, and our T.K. Maxx chain in the
United Kingdom and Ireland. We sell off-price home fashions through our HomeGoods chain in the United States and our
Canadian HomeSense chain, operated by Winners. The target customer for all of our off-price chains, except A.J. Wright, is the
middle to upper-middle income shopper, with the same profile as a department or specialty store customer. A.J. Wright targets the
moderate income customer. Bob’s Stores, acquired in December 2003, is a value-oriented, branded apparel chain based in the
Northeast United States that offers casual, family apparel. Bob’s Stores’ target customer demographic spans the moderate to upper-
middle income bracket.
Our off-price mission is to deliver an exciting, fresh and rapidly changing assortment of brand-name merchandise at excellent
values to our customers. We define value as the combination of quality, brand, fashion and price. With over 400 buyers and over
10,000 vendors worldwide and over 2,200 stores, we believe we are well positioned to continue accomplishing this goal. Our key
strengths include:
— expertise in off-price buying
— substantial buying power
— synergistic businesses with flexible business model
— solid relationships with many manufacturers and other merchandise suppliers
— deep organization with decades of experience in off-price retailing
— inventory management systems and distribution networks specific to our off-price business model
— financial strength and an excellent credit rating
As an off-price retailer, we offer quality, name brand and designer family apparel and home fashions every day at substantial
savings from comparable department and specialty store regular prices. We can offer these everyday savings as a result of our
opportunistic buying strategies, disciplined inventory management, including rapid inventory turns, and low expense structure.
In our off-price concepts, we purchase the majority of our inventory opportunistically. Different from traditional retailers that
order goods far in advance of the time they appear on the selling floor, TJX buyers are in the marketplace virtually every week. By
maintaining a liquid inventory position, our buyers can buy close to need, enabling them to buy into current market trends and take
advantage of the opportunities in the marketplace. Due to the unpredictable nature of consumer demand in the marketplace and the
mismatch of supply and demand, we are regularly able to buy the vast majority of our inventory directly from manufacturers, with
some merchandise coming from retailers and others. Virtually all of our buys for our off-price concepts are made at discounts from
initial wholesale prices. We generally purchase merchandise to sell in the current selling season, with a limited quantity of packaway
merchandise that we buy specifically to warehouse and sell in a future selling season. We are willing to purchase less than a full
assortment of styles and sizes. We pay promptly and do not ask for typical retail concessions in our off-price chains such as
advertising, promotional and markdown allowances or delivery concessions such as drop shipments to stores or delayed deliveries.
Our financial strength, strong reputation and ability to sell large quantities of merchandise through a geographically diverse network
of stores provide us excellent access to leading branded merchandise. Our opportunistic buying permits us to consistently offer our
customers a rapidly changing merchandise assortment at everyday values that are below department and specialty store regular prices.
We are extremely disciplined in our inventory management, and we rapidly turn the inventory in our off-price chains. We rely
heavily on sophisticated, internally developed inventory systems and controls that permit a virtually continuous flow of merchandise
into our stores and an expansive distribution infrastructure that supports our close-to-need buying by delivering goods to our stores
quickly and efficiently. For example, highly automated storage and distribution systems track, allocate and deliver an average of
11,000 items per week to each T.J. Maxx and Marshalls store. In addition, specialized computer inventory planning, purchasing and
monitoring systems, coupled with warehouse storage, processing, handling and shipping systems, permit a continuous evaluation and
rapid 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 and are designed to move inventory
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