TJ Maxx 2006 Annual Report Download - page 16

Pa r t I
ITEM 1. BUSINESS
Business Overview
We are the leading off-price retailer of apparel and home fashions in the United States and worldwide. 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 Europe sell off-price family apparel and home fashions. Our HomeGoods chain in the United States and our
HomeSense chain, operated by Winners in Canada, sell off-price home fashions. 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. Our seven off-price chains are
synergistic in their philosophies and operating platforms. Our eighth chain, Bob’s Stores, was acquired in December
2003 and is a value-oriented, branded apparel chain based in the Northeastern 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
450 buyers and over 10,000 vendors worldwide and over 2,400 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 models
— solid relationships with many manufacturers and other merchandise suppliers
— deep organization with decades of experience in off-price retailing as well as other forms of retailing
— inventory management systems and distribution networks specific to our off-price business model
— financial strength and 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 to 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 chains, we purchase the majority of our inventory opportunistically. In contrast to 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, buying primarily for the current selling season. 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 highly fragmented apparel and home
fashions 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 other retailers and other sources. We
purchase virtually all of our inventory for our off-price stores at discounts from initial wholesale prices. Although we
generally purchase merchandise for our off-price chains to sell in the current season, we purchase a limited quantity of
pack away 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 or return privileges. Our financial strength, strong reputation and ability to
purchase large quantities of merchandise and sell it through our geographically diverse network of stores provide us
excellent access to leading branded merchandise. Our opportunistic buying permits us to consistently offer our
customers in our off-price chains 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 approximately 11,000 items per week to each T.J. Maxx
and Marshalls store. In addition, specialized computer inventory planning, purchasing and monitoring systems,
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