TJ Maxx 2009 Annual Report Download - page 26

Failure to execute our opportunistic buying and inventory management could adversely affect our business.
We purchase the majority of our apparel inventory and much of our home inventory opportunistically with our
buyers purchasing close to need. To drive traffic to the stores and to increase same store sales, the treasure hunt nature of
the off-price buying experience requires continued replenishment of fresh, high quality, attractively priced merchandise
in our stores. While opportunistic buying provides our buyers the ability to buy at desirable times and prices, in the
quantities we need and into market trends, it places considerable discretion in our buyers, subjecting us to risks on the
timing, pricing, quantity and nature of inventory flowing to the stores. In addition, we base our purchases of inventory,
in part, on sales forecasts. If our sales forecasts do not match customer demand, we may experience higher inventory
levels and decreased profit margins if we have excess or slow-moving inventory, or we may have insufficient inventory to
meet customer demand, either of which could adversely affect our financial performance. In addition to acquiring
inventory, we must properly execute our inventory management strategies through effectively allocating merchandise
among our stores, timely and efficiently distributing inventory to stores, maintaining an appropriate mix and level of
inventory in stores, appropriately changing the allocation of floor space of stores among product categories to respond to
customer demand and effectively managing pricing and markdowns. Failure to execute our opportunistic inventory
buying and inventory management well could adversely affect our performance and our relationship with our customers.
Failure to continue to expand our operations successfully could adversely affect our financial results.
We have steadily expanded the number of concepts and stores we operate. Our revenue growth is dependent, among
other things, upon our ability to continue to expand successfully through new store openings as well as our ability to
increase same store sales. Successful store growth requires acquisition and development of appropriate real estate
including selection of store locations in appropriate geographies, availability of attractive stores or store sites in such
locations and negotiation of acceptable terms. Competition for desirable sites, increases in real estate, construction and
development costs and availability and costs of capital could limit our ability to open new stores in desirable locations in
thefutureoradverselyaffecttheeconomicsofnewstores.Wemay encounter difficulties in attracting customers in new
markets for various reasons including customers’ lack of familiarity with our brands or our lack of familiarity with local
customer preferences and cultural differences. New stores may not achieve the same sales or profit levels as our existing
stores, and new and existing stores in a market area may adversely affect each other’s sales and profitability. Further,
expansion places significant demands on the administrative, merchandising, store operations, distribution and other
organizations in our businesses to manage rapid growth, and we may not do so successfully.
Failure to successfully identify customer trends and preferences to meet customer demand could negatively impact our performance.
Because our success depends on our ability to meet customer demand, we take various steps to keep up with
customer trends and preferences including contacts with vendors, monitoring product category and fashion trends and
comparison shopping. Our flexible business model allows us to buy close to need and in response to consumer
preferences and trends and to expand and contract merchandise categories in response to consumers’ changing tastes.
However, identifying consumer trends and preferences and successfully meeting customer demand is challenging, and
we may not successfully do so, which could adversely affect our results.
Our quarterly operating results can be subject to significant fluctuations and may fall short of either a prior quarter or investors’
expectations.
Our operating results have fluctuated from quarter to quarter at points in the past, and they may continue to do so in
the future. Our earnings may not continue to grow at rates we plan and may fall short of either a prior quarter or
investors’ expectations. If we fail to meet the expectations of securities analysts or investors, our share price may decline.
Factors that could cause us not to meet our securities analysts’ or investors’ earnings expectations include some factors
that are within our control, such as the execution of our off-price buying; selection, pricing and mix of merchandise; and
inventory management including flow, markon and markdowns; and some factors that are not within our control,
including actions of competitors, weather conditions, economic conditions, consumer confidence and seasonality. In
addition, if we do not repurchase the number of shares we contemplate pursuant to our stock repurchase program, our
earnings per share may be adversely affected. Most of our operating expenses, such as rent expense and associate salaries,
do not vary directly with the amount of sales and are difficult to adjust in the short term. As a result, if sales in a particular
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