TJ Maxx 2014 Annual Report Download - page 26

Information appearing on tjx.com is not a part of, and is not incorporated by reference in, this Form 10-K.
Fiscal 2013 means the fiscal year ended February 2, 2013, fiscal 2014 means the fiscal year ended
February 1, 2014, fiscal 2015 means the fiscal year ended January 31, 2015 and fiscal 2016 means the fiscal
year ending January 30, 2016. Unless otherwise indicated, all store information in this Item 1 is as of January 31,
2015, and references to store square footage are to gross square feet. Unless otherwise stated or the context
otherwise requires, references in this Form 10-K to “TJX” and “we,” refer to The TJX Companies, Inc. and its
subsidiaries.
ITEM 1A. Risk Factors
The statements in this section describe the major risks to our business and should be considered carefully,
in connection with all of the other information set forth in this annual report on Form 10-K. The risks that follow,
individually or in the aggregate, are those that we think could cause our actual results to differ materially from
those stated or implied in forward-looking statements.
Failure to execute our opportunistic buying strategy and inventory management could adversely affect our
business.
While opportunistic buying, operating with lean inventory levels and frequent inventory turns are key elements of
our off-price business strategy, they subject us to risks related to the pricing, quantity, mix, nature and timing of
inventory flowing to our stores. Our merchants are in the marketplace frequently, as much of our merchandise is
purchased for the current or immediately upcoming season, and our opportunistic buying places considerable
discretion with them. Our business model expects them to react to frequently changing opportunities and trends in
the market, assess the desirability and value of merchandise and generally make determinations of how and what we
source as well as when we source it. If we do not obtain the right fresh, desirable merchandise at the right times,
quantities and prices, it could adversely affect customer traffic as well as our sales and margins.
We base our purchases of inventory, in part, on our sales forecasts. If our sales forecasts do not match
customer demand, we may experience higher inventory levels and need to take markdowns on excess or slow-
moving inventory, leading to decreased profit margins, or we may have insufficient inventory to meet customer
demand, leading to lost sales, either of which could adversely affect our financial performance.
If we are unable to generally purchase inventory at prices sufficiently below prices paid by conventional
retailers, we may not be able to maintain an overall pricing differential to regular department and specialty
stores, and our ability to attract customers and sustain our margins may be adversely affected. We may not
achieve this at various times or in some divisions or geographies, which could adversely affect our results.
We must also properly execute our inventory management strategy of delivering the right product to the right
stores at the right time. We need to appropriately allocate merchandise among our stores, timely and efficiently
distribute inventory to stores, maintain an appropriate mix and level of inventory in each store, appropriately
change the allocation of floor space of stores among product categories to respond to customer demand and
effectively manage pricing and markdowns. If we are not able to do so, our ability to attract and retain customers
and our results could be adversely affected.
In addition to our own execution, we may need to react to factors affecting inventory flow that are outside
our control, discussed further below, such as adverse weather and natural disasters or other changes in
conditions affecting our vendors and others in our supply chain, such as political instability, labor issues,
including strikes or threats of strikes, or increasing cost of regulations. If we are not able to adjust appropriately
to such factors, our inventory management may be affected, which could impact our performance and our
relationship with our customers.
Failure to continue to expand our business and operations successfully or to manage our substantial size and
scale effectively could adversely affect our financial results.
Our growth strategy includes successfully expanding our off-price model within our current markets and into new
geographic regions, product lines, businesses and channels and, as appropriate, adding new businesses, whether by
10