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.

SOLID RESULTS 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 world’s 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. Wright’s 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 chain’s 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.

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 year’s 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 division’s 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. Maxx’s 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. Wright’s 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 chain’s growth prospects within its under-served market segment.

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.

Bernard Cammarata     Chairman of the Board

Edmond J. English     President and       Chief Executive Officer