TJ Maxx 2004 Annual Report Download - page 40

In fiscal 2004, segment profit increased 55% over the segment profit of fiscal 2003 despite only a modest 1% increase in same
store sales in fiscal 2004. HomeGoods’ segment profit margin reflected the solid execution of its merchandising and inventory
strategies in fiscal 2004, and a reduction in distribution and administrative expenses as the business expanded over fiscal 2003.
We opened a net of 34 HomeGoods stores in fiscal 2005, a 19% increase, and increased selling square footage of the division
by 17%. In fiscal 2006, we plan to add a net of 40 new HomeGoods stores (including freestanding and superstore formats) and
increase selling square footage by 19%.
A.J. WRIGHT:
Fiscal Year Ended January
Dollars In Millions 2005 2004 2003
(53 weeks)
Net sales $530.6 $421.6 $277.2
Segment (loss) profit $(15.0) $1.7 $ (12.6)
Segment (loss) profit as % of net sales (2.8)% .4% (4.5)%
Percent increase in same store sales 4% 8% 11%
Stores in operation at end of period 130 99 75
Selling square footage at end of period (in thousands) 2,606 1,967 1,498
A.J. Wright’s same store sales increased 4% for fiscal 2005 compared to an 8% increase in same store sales for fiscal 2004.
Segment profit and segment profit as a percentage of net sales include a $1.7 million charge for A.J. Wright’s share of the cumulative
impact of the lease accounting adjustment. We believe that the A.J. Wright customer is more sensitive to economic factors, such as
higher energy costs, and that this had an impact on the division’s sales performance in fiscal 2005. We also believe that a weaker
demand in urban fashion trends impacted sales during the year. These sales trends caused us to take higher markdowns to clear
inventories and to reposition our merchandise mix. Segment profit margin for fiscal 2005 reflects a reduction in merchandise margins
of 1.2%, primarily due to this higher markdown activity. We believe that the pace of store openings in fiscal 2005, especially later in
the year, may have been too aggressive for this young division, and placed a strain on operations. In addition, the lower-than-planned
sales volume for fiscal 2005 negatively impacted expense ratios for occupancy costs, distribution center costs and store payroll.
Distribution center costs were also impacted by expense increases relating to A.J. Wright’s new distribution facility in Indiana.
In fiscal 2004, the improvement in A.J. Wright’s segment profit, as compared to fiscal 2003, was primarily due to the impact
of improved merchandising and strong inventory management, which led to improved merchandise margins. Segment profit for
fiscal 2004 also included a $1.7 million gain in connection with an agreement to vacate a store property.
We added 31 new A.J. Wright stores in fiscal 2005, increasing selling square footage by 32%. In fiscal 2006, we plan to add 25
new stores and increase selling square footage by 20%.
BOB’S STORES:
Fiscal 2005 was the first full fiscal year for Bob’s Stores as a TJX division. Bob’s Stores now operates 32 stores and recorded
fiscal 2005 sales of $290.6 million and a segment loss of $17.3 million. In fiscal 2005, we built the Bob’s Stores organization and we
continued to refine the concept, including repositioning the division’s promotional activity, improving its inventory management,
fine tuning its product assortment and testing a smaller store size. For fiscal 2006, we plan to open 5 Bob’s Stores and increase selling
square footage by 15%.
GENERAL CORPORATE EXPENSE:
Fiscal Year Ended January
Dollars In Millions 2005 2004 2003
(53 weeks)
General corporate expense $88.5 $78.4 $72.8
General corporate expense for segment reporting purposes are those costs not specifically related to the operations of our
business segments. This item includes the costs of the corporate office, including the compensation and benefits for senior corporate
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