TJ Maxx 2006 Annual Report Download - page 46

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Canadian store base by 3%, and increasing selling square footage by 3%. The store counts include the Winners and
HomeSense portions of this division’s superstores, which either combine a Winners store with a HomeSense store or
operate them side-by-side. As of January 27, 2007 we operated 29 of these superstores.
T.K. Maxx:
U.S. Dollars In Millions 2007 2006 2005
Fiscal Year Ended January
Net sales $1,864.5 $1,517.1 $1,304.4
Segment profit 109.3 69.2 64.0
Segment profit as a % of net sales 5.9% 4.6% 4.9%
Percent increase (decrease) in same store sales
U.S. currency 13% (1)% 14%
Local currency 9% 1% 3%
Stores in operation at end of period 210 197 170
Selling square footage at end of period (in thousands) 4,636 4,216 3,491
Net sales in fiscal 2007 for T.K. Maxx, operating in the United Kingdom and Ireland, increased by 23% over fiscal
2006, with approximately one-fifth of this growth due to currency exchange rates. T.K. Maxx had a strong same store
sales increase of 9% (in local currency) in fiscal 2007 with growth in both home fashions and most apparel categories.
Apparel categories that performed well included dresses, accessories and footwear, while misses sportswear was below
the chain average.
Segment profit margin improved to 5.9% of sales for fiscal 2007 compared to 4.6% for fiscal 2006. The 1.3 per-
centage point improvement was due to merchandise margin, which was up 0.9 percentage points (primarily due to lower
markdowns), as well as expense leverage from the 9% same store sales increase. These improvements were partially
offset by an increase in occupancy expense due to higher costs for rent, utilities and property taxes and costs associated
with store relocations.
Segment profit margin for fiscal 2006 declined 0.3 percentage points to 4.6% of sales. T.K. Maxx had an improved
merchandise margin in fiscal 2006, primarily due to lower markdowns. In addition, the comparison of segment profit
and segment margin of fiscal 2006 to fiscal 2005 was favorably impacted by the inclusion in the fiscal 2005 segment profit
of this division’s share of the cumulative impact of the lease accounting adjustment of $6.5 million. These improve-
ments however, were more than offset by an increase in occupancy expense due to higher cost for rent, utilities and
property taxes as well as the de-levering impact of a 1% same store sales increase. Distribution and administrative costs
as a percentage of net sales were essentially flat compared to fiscal 2005, despite the low same store sales increase.
We added a net of 13 T.K. Maxx stores in fiscal 2007 and increased the division’s selling square footage by 10%. We
plan to open a net of 10 T.K. Maxx stores in fiscal 2008, and expand selling square footage by 7%. Also, we expect to
expand into Germany with 5 store openings planned for fiscal 2008.
HomeGoods:
Dollars In Millions 2007 2006 2005
Fiscal Year Ended January
Net sales $1,365.1 $1,186.9 $1,012.9
Segment profit 60.9 28.4 18.1
Segment profit as a % of net sales 4.5% 2.4% 1.8%
Percent increase in same store sales 4% 1% 1%
Stores in operation at end of period 270 251 216
Selling square footage at end of period (in thousands) 5,181 4,859 4,159
HomeGoods’ same store sales grew 4% in fiscal 2007, due to strong growth in giftware and home decorative
products. Segment profit increased to $60.9 million from $28.4 million, and segment profit margin almost doubled to
4.5% of sales. The increase in segment profit margin resulted primarily from the leverage of expenses across most
categories, most notably in distribution center and occupancy expenses. Additionally, merchandise margin increased
0.4 percentage points primarily due to higher markon.
HomeGoods’ same store sales grew 1% in fiscal 2006. Customer transactions and unit sales increased at
HomeGoods during fiscal 2006 compared to fiscal 2005, but these increases were partially offset by a decline in the
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