There is no question that the events of September
11 defined the year 2001 for our Company, for our nation and
for the world. With the loss of seven of our beloved associates,
to whom we have dedicated this report, the pain of the terrorist
attacks for our Company was very personal. Before we begin
a discussion of our business, we would like to take this opportunity
to express our deep appreciation for the outpouring of support
that we received from our associates, customers, shareholders,
business partners and the community at large. We were, and
continue to be buoyed by how many people came forth to give
support and let us know they care. This unprecedented generosity
of spirit has helped to reinforce our faith in the goodness
in our world.
IN DIFFICULT TIMESAgainst
the difficult backdrop of 2001, we can be especially proud
of our many achievements. We expanded the store base for each
of our six concepts, launched a new business, expanded our
distribution network and continued to apply the disciplined
buying and inventory liquidity practices that have helped
to make us the worlds leading off-price retailer.
The TJX Companies produced a solid
12% growth in revenue in 2001 with net sales reaching $10.7
billion, meeting our expectations. Our sizable revenue base
continues to afford our Company great leverage in virtually
every aspect of our business. Consolidated comparable store
sales met our goal with 3% growth in 2001. Income from continuing
operations for the year was $540 million and diluted earnings
per share were $1.94, a 4% increase over last year. While
our earnings fell short of our goals, we achieved an after-tax
return on average shareholders equity from continuing
operations of 42%. Given the poor economy and highly promotional
retail environment, we believe that our 2001 results present
another example of the ability of our off-price concept to
hold up well in both difficult and strong environments.
GROWTH OF OUR BUSINESS The growth
of our consolidated store base by 12% in 2001 was a key component
of our achievements. We successfully netted 172 new stores
across all divisions to end the year with 1,665 stores and
our new stores performed extremely well.
Shoppers throughout the U.S. welcomed
a new generation of T.J. Maxx, Marshalls, HomeGoods and A.J.
Wright stores with enthusiasm. Together, T.J. Maxx and Marshalls,
known internally as The Marmaxx Group, netted 73 new stores
to end the year with 1,269 stores. HomeGoods ended the year
with 112 stores, having added 31 stores during the year and
increasing its store base by 38%. A.J. Wrights store
base increased to 45, an 80% increase over last year, with
the opening of 20 new stores in 2001. In Canada, our customer
following grew with the opening of 14 new Winners stores which
brought that chain to 131 stores at year end. In addition,
we introduced to Canada our newest home fashions concept,
HomeSense, with seven stores. Within the United Kingdom and
Ireland, we brought 30 new T.K. Maxx stores to a growing base
of loyal customers, increasing the chains size by 36%
and bringing it to 101 stores. To support this expanded base
of stores, we successfully brought new major distribution
centers on board for The Marmaxx Group as well as for HomeGoods,
and increased our consolidated distribution center network
by over two million square feet.
DIVISIONAL PERFORMANCE Our T.J.
Maxx and Marshalls stores, comprising the core of our business,
continue to set the pace in off-price retailing. In 2001,
total sales for The Marmaxx Group increased by 8% to reach
$8.9 billion and comparable store sales increased by 3%. Operating
income was $894 million, 4% above last year, and operating
margin was 10.1%. Results at Marmaxx were driven by excellent
inventory liquidity management which entails maintaining large
open-to-buy positions. This once again enabled us to take
advantage of the best opportunities in the marketplace and
pass great values on to our customers.
At Winners in Canada, sales in 2001
grew by 17% over the prior year to $661 million and comparable
store sales increased by 6% in local currency over last year.
Operating income was $59 million and operating margin was
8.9%, both below last years record results. Winners
results were dampened by inventory liquidity challenges during
the year. Having worked through these challenges as the year
progressed, Winners ended the year with inventories in excellent
condition. New stores at Winners continued to perform very
well and we remain upbeat about this divisions prospects.
In addition, the Winners organization did an excellent job
in launching HomeSense, which is patterned after HomeGoods.
HomeSense significantly exceeded its first year sales goals
and has received rave reviews in Canada.
T.K. Maxx continued to broaden its
customer base in the United Kingdom and Ireland in 2001. Sales
grew by 34% over last year, reaching $521 million and comparable
store sales increased 5% in local currency. Operating income
was $13 million and operating margin was 2.5%. T.K. Maxx did
not meet its sales or profit objectives in 2001, largely due
to inventory liquidity issues. That said, this division ended
the year in a good inventory position. With planned improvement
in gross margin and the greater leverage on overhead costs
that we are achieving as T.K. Maxx expands, we are very confident
in T.K. Maxxs prospects for continued growth and success.
HomeGoods, which delivers a broad
assortment of home fashions at off-price values, continued
to garner great customer response in 2001. Sales at HomeGoods
reached $507 million, an increase of 61% over last year and
comparable store sales increased 7%. Operating income was
$4 million, slightly below last year. We were particularly
pleased with the performance of our superstore concepts, which
couple HomeGoods with T.J. Maxx or Marshalls apparel. Although
HomeGoods did not meet its divisional targets in 2001, this
division entered the new year in an excellent inventory position.
HomeGoods continues to be extremely popular with our customers
and we are bullish about this exciting concept.
A.J. Wright continued to expand
our reach by bringing the off-price concept to the more moderate-income
shopper. In 2001, A.J. Wrights sales grew by 89% with
comparable store sales increasing 18% over a 19% increase
last year. New stores continued to open very successfully
and we remain very optimistic about this young chains
growth prospects within its under-served market segment.
SOLID FINANCIAL FOOTING Our continued
success in generating sizable excess cash from operations
enabled us to support the substantial growth of all TJX divisions.
It also continued to provide us with the ability to increase
shareholder value through our aggressive share buyback program.
During 2001, we purchased $424 million of TJX stock, retiring
13.2 million shares. We plan to continue our aggressive share
buyback program in 2002 and beyond.
With our strong balance sheet, as
well as exceptional cash flows and returns on invested capital,
we look forward to continued growth. In 2002, we plan to increase
our consolidated store base by a net of 184 stores. Additionally,
we expect to generate comparable store sales growth of approximately
3%, increase our overall revenues by about 12% and realize
even higher annual growth in earnings per share in 2002. We
also expect to achieve significant annual growth in earnings
over the next several years.
CONFIDENCE IN OUR FUTURE In conclusion,
we wish to acknowledge and thank all of our 89,000 associates
for their dedication, energy and spirit, especially in such
an extraordinary year as 2001. Our organization was tested
as it had never been before. We learned to what extent TJX
really is a family and how, like any family, we can rise to
the occasion and together find strength to face our challenges
and resiliency to achieve our goals. With the difficulties
of 2001 behind us, we believe the future is bright for America
and for our Company.
of the Board
Chief Executive Officer