TJ Maxx 2014 Annual Report Download - page 40

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ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The discussion that follows relates to our 52-week fiscal years ended January 31, 2015 (fiscal 2015) and
February 1, 2014 (fiscal 2014) and our 53-week fiscal year ended February 2, 2013 (fiscal 2013).
OVERVIEW
We are the leading off-price apparel and home fashions retailer in the U.S. and worldwide. We sell a rapidly
changing assortment of apparel, home fashions and other merchandise at prices generally 20% to 60% below
department and specialty store regular prices on comparable merchandise, every day. We operate over 3,300
stores through our four main segments: in the U.S., Marmaxx (which operates T.J. Maxx, Marshalls and
tjmaxx.com) and HomeGoods; TJX Canada (which operates Winners, HomeSense and Marshalls in Canada);
and TJX Europe (which operates T.K. Maxx, HomeSense and tkmaxx.com in Europe). We also operate Sierra
Trading Post (STP), a leading off-price Internet retailer that we acquired in late fiscal 2013, which operates
sierratradingpost.com and six stores in the U.S. The results of STP have been reported with the Marmaxx
segment.
Fiscal 2015 was another successful year for TJX as we posted solid gains in net sales and earnings per
share on top of strong increases in both fiscal 2014 and fiscal 2013. We continued to generate strong cash
flows, allowing us to return value to our shareholders through cash dividends and share repurchases, while
continuing to reinvest in our business by adding new stores, remodeling existing ones and strengthening our
infrastructure to support our next level of growth. In fiscal 2016, we announced an initiative to raise wages for
our U.S. full- and part-time hourly store associates to at least $9.00 per hour beginning in June 2015.
Highlights of our financial performance for fiscal 2015 include the following:
— Same store sales increased 2% in fiscal 2015 over an increase of 3% in fiscal 2014 and an increase of 7%
in fiscal 2013. The fiscal 2015 increase was driven by increases in the value of the average transaction
and in customer traffic.
— Net sales increased to $29.1 billion for fiscal 2015, up 6% over the same period last year. Net sales
increased to $27.4 billion for fiscal 2014, up 6% over the 53-week fiscal period in fiscal 2013. At
January 31, 2015, the number of stores in operation and selling square footage increased 5% over the
end of fiscal 2014.
— Earnings per share for fiscal 2015 were $3.15 per diluted share compared to $2.94 per diluted share in
fiscal 2014. Fiscal 2015 earnings per share reflect a charge of $0.01 from a loss on early extinguishment
of debt. Diluted earnings per share for fiscal 2014 included an $0.11 per share benefit resulting from tax
benefits recognized in the third quarter.
— Our fiscal 2015 pre-tax margin (the ratio of pre-tax income to net sales) was 12.2%, a 0.1 percentage
point increase compared to our fiscal 2014 pre-tax margin. The loss on early extinguishment of debt
reduced pre-tax margin by 0.1 percentage point in fiscal 2015.
— Our cost of sales ratio for fiscal 2015 was 71.5%, flat compared to the fiscal 2014 ratio. Merchandise
margins were slightly up in fiscal 2015.
— Our selling, general and administrative expense ratio for fiscal 2015 decreased 0.2 percentage points from
16.3% in fiscal 2014 to 16.1%.
— Our consolidated average per store inventories, including inventory on hand at our distribution centers
(which excludes inventory in transit) and excluding our e-commerce businesses, were up 3% at the end of
fiscal 2015.
— During fiscal 2015, we repurchased 27.7 million shares of our common stock for $1.7 billion. Earnings per
share reflect the benefit of the stock repurchase program. In January 2015, our Board of Directors
authorized our 16th stock repurchase program for an additional $2 billion.
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