HomeGoods made solid progress during 1997 as it improved the execution of its business in a true off-price manner. We improved the quality and value of our merchandise through better off-price buying. Also, we better managed our inventory, allowing us to be more opportunistic and provide a more exciting merchandise selection. In addition, we revamped the layouts of our stores, expanded some categories and reduced others.
  Improving trends at HomeGoods encouraged us to experiment further with the concept of coupling this business with the T.J. Maxx and Marshalls formats. In 1997, we added to our 3 T.J. Maxx ‘N More locations in Chicago by opening an additional location in Massachusetts. We also opened our first 2 Marshalls Mega-Stores, 1 in New York and another in Florida. In 1998, we expect to open 5 additional free-standing HomeGoods stores, as well as 7 superstores.
  We will continue to explore opportunities in order to maximize the full potential of HomeGoods and improve its profitability. If the HomeGoods concept proves successful, it could have significant positive implications for our Company, as we could roll it out further in this country as well as bring it to Canada and abroad.

At T.K. Maxx, the off-price concept has taken hold with customers in the United Kingdom and Ireland. This division achieved impressive comparable store sales growth, expanded its store base significantly and improved its bottom line.
  At this early stage in T.K. Maxx’s growth, profit contribution at the store level bodes very well for the future of this business. T.K. Maxx stores are highly productive, achieving sales per square foot well above U.S. levels. Thus, we are very excited by T.K. Maxx’s prospects.
  At year-end, we operated 30 T.K. Maxx stores in the U.K. and 1 in Ireland. In 1998, we expect to open 10-12 T.K. Maxx locations, including our first stores on the European mainland, specifically in the Netherlands. We expect to grow T.K. Maxx rather aggressively and believe we will operate about 75 stores by the end of the year 2000. Longer term, we could see approximately 170 stores in the U.K. alone, with the possibility of 300 additional T.K. Maxx stores in Europe. We believe that the United Kingdom and Europe offer TJX great opportunities for future expansion and growth of the off-price concept.