TJ Maxx 2004 Annual Report Download - page 38

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WINNERS AND HOMESENSE:
Fiscal Year Ended January
U.S. Dollars In Millions 2005 2004 2003
(53 weeks)
Net sales $1,285.4 $1,076.3 $793.2
Segment profit $ 108.9 $ 106.7 $ 85.3
Segment profit as % of net sales 8.5% 9.9% 10.8%
Percent increase in same store sales
U.S. currency 10% 19% 5%
Local currency 4% 4% 5%
Stores in operation at end of period
Winners 168 160 146
HomeSense 40 25 15
Selling square footage at end of period (in thousands)
Winners 3,811 3,576 3,261
HomeSense 747 468 282
Same store sales (in local currency) for Winners and HomeSense, our Canadian businesses, increased by 4% in both fiscal 2005
and fiscal 2004. Segment profit and segment profit as a percentage of net sales for fiscal 2005 include a $3.5 million charge for this
division’s share of the cumulative impact of the lease accounting adjustment. The growth in the Winners segment profit in fiscal
2005 over the prior year was due to favorable currency exchange rates. The segment profit margin for fiscal 2005 of 8.5% was 1.4%
below fiscal 2004 segment profit margin, primarily due to lower merchandise margins, which decreased .9% from the prior year,
primarily driven by markdowns. Sales in the second half of fiscal 2005 slowed considerably from the first half, primarily due to
unseasonable weather and a promotional retail environment. This, along with Winners buying based on the strength of its first half
sales, resulted in excess inventories, requiring the division to take aggressive markdowns to clear merchandise in the second half of
the year. The lease accounting charge reduced segment profit margin by .2% with the balance of the segment profit margin
reduction coming largely from the increasing impact of HomeSense on the division’s combined results. HomeSense is at an earlier
stage of development and therefore operates with higher expense ratios than does Winners.
Winners and HomeSense segment profit in fiscal 2004 increased 25% over the segment profit in fiscal 2003. Approximately
two-thirds of the increase in segment profit in fiscal 2004 over fiscal 2003 was due to changes in currency exchange rates. Winners
and HomeSense segment profit margin for fiscal 2004 was below that of fiscal 2003. This reduction reflects increased markdowns at
Winners and the increasing impact of HomeSense on their combined results.
We opened 8 Winners stores and 15 HomeSense stores in fiscal 2005, and expanded selling square footage in Canada by 13%.
We expect to add a net of 4 Winners and 17 HomeSense stores in fiscal 2006, increasing our total Canadian store base by 10%, and
increasing selling square footage by 10%. The store counts include the Winners portion and HomeSense portion of this division’s
superstores which either combine a Winners store with a HomeSense store or operates them side-by-side. As of January 29, 2005 we
operated 11 superstores and expect to have a total of 23 superstores at the end of fiscal 2006.
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