TJ Maxx 2006 Annual Report Download - page 41

in fiscal 2006, in each case without adjustment for the A.J. Wright closed stores. Excluding the impact of the A.J. Wright
store closings in fiscal 2007, our consolidated store count and total selling square footage each increased by 5% in fiscal
2007. We expect to add 83 stores (net of store closings) in the fiscal year ending January 26, 2008 (fiscal 2008), a 3%
projected increase in our consolidated store base, and we expect to increase our selling square footage base by 4%.
The 4% increase in same store sales for fiscal 2007 was driven by growth in unit sales and increased transactions as
well as the strong performance at our international businesses (Winners’ same store sales increased 5% and T.K. Maxx
same store sales increased 9%, both in local currency). Net sales for fiscal 2007 reflect growth in both apparel and home
fashions. Within apparel, jewelry, accessories and footwear (combined), as well as misses sportswear and dresses
performed well. As for home fashions, giftware and home decorative products performed well while our “soft” home
categories (bedding, linens, etc.) were weak. Same store sales also benefited from the continued expansion of footwear
departments in Marshalls. During fiscal 2007, we added 134 expanded footwear departments, bringing the total number
of stores with the expanded footwear departments to 280. These stores had same store sales growth that exceeded the
chain average. During fiscal 2008, we intend to expand footwear departments in approximately 200 additional Marshalls
stores. The expansion of jewelry and accessory departments at T.J. Maxx was substantially completed during fiscal 2007,
with 686 out of the total 821 stores having expanded departments as of year end. Going forward, we plan to add jewelry
and accessory expansions to certain new stores and relocated stores, as well as a limited number of existing stores. In the
United States, where TJX generates approximately 80% of its sales, same store sales increased across almost all regions,
with the Northeast, Southwest and Mid-Atlantic areas experiencing the strongest growth. Same store sales growth was
favorably impacted by foreign currency exchange rates, which contributed approximately one percentage point of
growth.
Net sales for fiscal 2006 reflected strong demand for jewelry, accessories and footwear, as well as improved
demand for men’s apparel. The positive impact of growth in these categories was partially offset by same store sales
declines in home fashions and women’s sportswear. Marmaxx continued its program of expanding jewelry and
accessories and footwear departments and ended fiscal 2006 with 594 T.J. Maxx stores with expanded jewelry and
accessories departments and 146 Marshalls stores with expanded footwear departments. These stores had same store
sales growth which exceeded Marmaxx’s chain average. In the United States, same store sales were strong in warm
weather regions, particularly Florida, the Southwest and California, while flat to slightly negative in the Midwest and
Northeast. Same store sales growth was favorably impacted by foreign currency exchange rates, which contributed
approximately one-half of a percentage point of growth.
We define same store sales to be sales of those stores that have been in operation for all or a portion of two
consecutive fiscal years, or in other words, stores that are starting their third fiscal year of operation. We classify a store
as a new store until it meets the same store criteria. We determine which stores are included in the same store sales
calculation at the beginning of a fiscal year and the classification remains constant throughout that year, unless a store is
closed. We calculate same store sales results by comparing the current and prior year weekly periods that are most
closely aligned. Relocated stores and stores that are increased in size are generally classified in the same way as the
original store, and we believe that the impact of these stores on the same store percentage is immaterial. Consolidated
and divisional same store sales are calculated in U.S. dollars. We also show divisional same store sales in local currency
for our foreign divisions because this removes the effect of changes in currency exchange rates, and we believe it is a
more appropriate measure of the divisional operating performance.
The following table sets forth our consolidated operating results as a percentage of net sales:
2007 2006 2005
Fiscal Year Ended January
Net sales 100.0% 100.0% 100.0%
Cost of sales, including buying and occupancy costs 75.9 76.6 76.4
Selling, general and administrative expenses 16.8 16.9 16.7
Interest expense, net 0.1 0.2 0.2
Income from continuing operations before provision for income taxes 7.2% 6.3% 6.7%
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