filings.toolsItem 1. Consolidated Financial Statements
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Item 1. Consolidated Financial Statements
THE TJX COMPANIES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
IN THOUSANDS EXCEPT PER SHARE AMOUNTS
| Thirteen Weeks Ended | ||||||||||||||
| April 30, 2022 | May 1, 2021 | |||||||||||||
| Net sales | $ | 11,406,474 | $ | 10,086,661 | ||||||||||
| Cost of sales, including buying and occupancy costs | 8,223,213 | 7,255,635 | ||||||||||||
| Selling, general and administrative expenses | 2,094,582 | 2,064,992 | ||||||||||||
| Impairment on equity investment | 217,619 | — | ||||||||||||
| Interest expense, net | 18,785 | 44,688 | ||||||||||||
| Income before income taxes | 852,275 | 721,346 | ||||||||||||
| Provision for income taxes | 264,802 | 187,416 | ||||||||||||
| Net income | $ | 587,473 | $ | 533,930 | ||||||||||
| Basic earnings per share | $ | 0.50 | $ | 0.44 | ||||||||||
| Weighted average common shares – basic | 1,177,141 | 1,205,439 | ||||||||||||
| Diluted earnings per share | $ | 0.49 | $ | 0.44 | ||||||||||
| Weighted average common shares – diluted | 1,189,263 | 1,221,517 |
The accompanying notes are an integral part of the unaudited consolidated financial statements.
THE TJX COMPANIES, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
IN THOUSANDS
| Thirteen Weeks Ended | ||||||||||||||
| April 30, 2022 | May 1, 2021 | |||||||||||||
| Net income | $ | 587,473 | $ | 533,930 | ||||||||||
| Additions to other comprehensive (loss) income: | ||||||||||||||
| Foreign currency translation adjustments, net of related tax benefit of $574 in fiscal 2023 and tax provision of $2,898 in fiscal 2022 | (57,612) | 22,249 | ||||||||||||
| Reclassifications from other comprehensive (loss) income to net income: | ||||||||||||||
| Amortization of prior service cost and deferred gains/losses, net of related tax provisions of $1,375 in fiscal 2023 and $1,056 in fiscal 2022 | 3,778 | 2,901 | ||||||||||||
| Amortization of loss on cash flow hedge, net of related tax provision of $603 in fiscal 2022 | — | (263) | ||||||||||||
| Other comprehensive (loss) income, net of tax | (53,834) | 24,887 | ||||||||||||
| Total comprehensive income | $ | 533,639 | $ | 558,817 |
The accompanying notes are an integral part of the unaudited consolidated financial statements.
THE TJX COMPANIES, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
IN THOUSANDS, EXCEPT SHARE DATA
| April 30, 2022 | January 29, 2022 | May 1, 2021 | |||||||||
| Assets | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 4,295,068 | $ | 6,226,765 | $ | 8,775,485 | |||||
| Accounts receivable, net | 576,300 | 517,623 | 621,177 | ||||||||
| Merchandise inventories | 6,989,788 | 5,961,573 | 5,114,643 | ||||||||
| Prepaid expenses and other current assets | 565,351 | 438,099 | 440,533 | ||||||||
| Federal, state and foreign income taxes recoverable | 53,715 | 114,537 | 64,211 | ||||||||
| Total current assets | 12,480,222 | 13,258,597 | 15,016,049 | ||||||||
| Net property at cost | 5,289,164 | 5,270,827 | 5,067,824 | ||||||||
| Non-current deferred income taxes, net | 177,425 | 184,971 | 135,765 | ||||||||
| Operating lease right of use assets | 9,066,865 | 8,853,934 | 9,121,628 | ||||||||
| Goodwill | 96,910 | 96,662 | 99,324 | ||||||||
| Other assets | 599,318 | 796,467 | 860,844 | ||||||||
| Total Assets | $ | 27,709,904 | $ | 28,461,458 | $ | 30,301,434 | |||||
| Liabilities | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | 4,370,563 | $ | 4,465,427 | $ | 4,433,295 | |||||
| Accrued expenses and other current liabilities | 3,811,585 | 4,244,997 | 3,536,637 | ||||||||
| Current portion of operating lease liabilities | 1,575,582 | 1,576,561 | 1,650,574 | ||||||||
| Federal, state and foreign income taxes payable | 260,789 | 181,155 | 286,455 | ||||||||
| Total current liabilities | 10,018,519 | 10,468,140 | 9,906,961 | ||||||||
| Other long-term liabilities | 908,907 | 1,015,720 | 1,033,236 | ||||||||
| Non-current deferred income taxes, net | 54,063 | 44,175 | 33,930 | ||||||||
| Long-term operating lease liabilities | 7,777,160 | 7,575,590 | 7,853,229 | ||||||||
| Long-term debt | 3,355,815 | 3,354,841 | 5,334,864 | ||||||||
| Commitments and contingencies (See Note K) | |||||||||||
| Shareholders’ equity | |||||||||||
| Preferred stock, authorized 5,000,000 shares, par value $1, no shares issued | — | — | — | ||||||||
| Common stock, authorized 1,800,000,000 shares, par value $1, issued and outstanding 1,172,711,116; 1,181,188,731 and 1,206,386,746 respectively | 1,172,711 | 1,181,189 | 1,206,387 | ||||||||
| Additional paid-in capital | — | — | 321,475 | ||||||||
| Accumulated other comprehensive loss | (740,984) | (687,150) | (581,184) | ||||||||
| Retained earnings | 5,163,713 | 5,508,953 | 5,192,536 | ||||||||
| Total shareholders’ equity | 5,595,440 | 6,002,992 | 6,139,214 | ||||||||
| Total liabilities and shareholders’ equity | $ | 27,709,904 | $ | 28,461,458 | $ | 30,301,434 |
The accompanying notes are an integral part of the unaudited consolidated financial statements.
THE TJX COMPANIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
IN THOUSANDS
| Thirteen Weeks Ended | |||||||||||
| April 30, 2022 | May 1, 2021 | ||||||||||
| Cash flows from operating activities: | |||||||||||
| Net income | $ | 587,473 | $ | 533,930 | |||||||
| Adjustments to reconcile net income to cash (used in) operating activities: | |||||||||||
| Depreciation and amortization | 219,605 | 215,379 | |||||||||
| Impairment on equity investment | 217,619 | — | |||||||||
| Loss on property disposals and impairment charges | 3,883 | 931 | |||||||||
| Deferred income tax provision (benefit) | 11,501 | (16,181) | |||||||||
| Share-based compensation | 27,336 | 50,536 | |||||||||
| Changes in assets and liabilities: | |||||||||||
| (Increase) in accounts receivable | (65,740) | (156,999) | |||||||||
| (Increase) in merchandise inventories | (1,085,340) | (750,553) | |||||||||
| Decrease (increase) in income taxes recoverable | 60,822 | (27,949) | |||||||||
| (Increase) decrease in prepaid expenses and other current assets | (32,816) | 12,254 | |||||||||
| (Decrease) in accounts payable | (52,817) | (410,244) | |||||||||
| (Decrease) increase in accrued expenses and other liabilities | (565,135) | 12,214 | |||||||||
| Increase in income taxes payable | 77,329 | 203,740 | |||||||||
| (Decrease) in net operating lease liabilities | (3,851) | (50,319) | |||||||||
| Other, net | (34,345) | (49,466) | |||||||||
| Net cash (used in) operating activities | (634,476) | (432,727) | |||||||||
| Cash flows from investing activities: | |||||||||||
| Property additions | (314,351) | (225,293) | |||||||||
| Purchases of investments | (15,649) | (7,345) | |||||||||
| Sales and maturities of investments | 5,528 | 7,733 | |||||||||
| Net cash (used in) investing activities | (324,472) | (224,905) | |||||||||
| Cash flows from financing activities: | |||||||||||
| Payments on debt | — | (750,000) | |||||||||
| Payments for repurchase of common stock | (607,201) | — | |||||||||
| Cash dividends paid | (309,485) | (315,215) | |||||||||
| Proceeds from issuance of common stock | 18,055 | 36,539 | |||||||||
| Payments of employee tax withholdings for performance based stock awards | (32,459) | (24,426) | |||||||||
| Net cash (used in) financing activities | (931,090) | (1,053,102) | |||||||||
| Effect of exchange rate changes on cash | (41,659) | 16,649 | |||||||||
| Net (decrease) in cash and cash equivalents | (1,931,697) | (1,694,085) | |||||||||
| Cash and cash equivalents at beginning of year | 6,226,765 | 10,469,570 | |||||||||
| Cash and cash equivalents at end of period | $ | 4,295,068 | $ | 8,775,485 |
The accompanying notes are an integral part of the unaudited consolidated financial statements.
THE TJX COMPANIES, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(UNAUDITED)
IN THOUSANDS
| Thirteen Weeks Ended | ||||||||||||||||||||
| Common Stock | ||||||||||||||||||||
| Shares | Par Value $1 | Additional Paid-In Capital | Accumulated Other Comprehensive Loss | Retained Earnings | Total | |||||||||||||||
| Balance, January 29, 2022 | 1,181,189 | $ | 1,181,189 | $ | — | $ | (687,150) | $ | 5,508,953 | $ | 6,002,992 | |||||||||
| Net income | — | — | — | — | 587,473 | 587,473 | ||||||||||||||
| Other comprehensive (loss), net of tax | — | — | — | (53,834) | — | (53,834) | ||||||||||||||
| Cash dividends declared on common stock | — | — | — | — | (346,922) | (346,922) | ||||||||||||||
| Recognition of share-based compensation | — | — | 27,336 | — | — | 27,336 | ||||||||||||||
| Issuance of common stock under stock incentive plan, and related tax effect | 1,145 | 1,145 | (15,549) | — | — | (14,404) | ||||||||||||||
| Common stock repurchased | (9,623) | (9,623) | (11,787) | — | (585,791) | (607,201) | ||||||||||||||
| Balance, April 30, 2022 | 1,172,711 | $ | 1,172,711 | $ | — | $ | (740,984) | $ | 5,163,713 | $ | 5,595,440 |
| Thirteen Weeks Ended | ||||||||||||||||||||
| Common Stock | ||||||||||||||||||||
| Shares | Par Value $1 | Additional Paid-In Capital | Accumulated Other Comprehensive Loss | Retained Earnings | Total | |||||||||||||||
| Balance, January 30, 2021 | 1,204,698 | $ | 1,204,698 | $ | 260,515 | $ | (606,071) | $ | 4,973,542 | $ | 5,832,684 | |||||||||
| Net income | — | — | — | — | 533,930 | 533,930 | ||||||||||||||
| Other comprehensive income, net of tax | — | — | — | 24,887 | — | 24,887 | ||||||||||||||
| Cash dividends declared on common stock | — | — | — | — | (314,936) | (314,936) | ||||||||||||||
| Recognition of share-based compensation | — | — | 50,536 | — | — | 50,536 | ||||||||||||||
| Issuance of common stock under stock incentive plan, and related tax effect | 1,689 | 1,689 | 10,424 | — | — | 12,113 | ||||||||||||||
| Balance, May 1, 2021 | 1,206,387 | $ | 1,206,387 | $ | 321,475 | $ | (581,184) | $ | 5,192,536 | $ | 6,139,214 |
The accompanying notes are an integral part of the unaudited consolidated financial statements.
THE TJX COMPANIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note A. Basis of Presentation and Summary of Significant Accounting Policies
Basis of Presentation
The Consolidated Financial Statements and Notes thereto have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information. These Consolidated Financial Statements and Notes thereto are unaudited and, in the opinion of management, reflect all normal recurring adjustments, accruals and deferrals among periods required to match costs properly with the related revenue or activity, considered necessary by The TJX Companies, Inc. (together with its subsidiaries, “TJX”) for a fair statement of its Consolidated Financial Statements for the periods reported, all in conformity with GAAP consistently applied. Investments for which the Company exercises significant influence but does not have control are accounted for under the equity method. The Consolidated Financial Statements and Notes thereto should be read in conjunction with the audited Consolidated Financial Statements, including the related notes, contained in TJX’s Annual Report on Form 10-K for the fiscal year ended January 29, 2022 (“fiscal 2022”).
These interim results are not necessarily indicative of results for the full fiscal year. TJX’s business, in common with the businesses of retailers generally, is subject to seasonal influences, with higher levels of sales and income generally realized in the second half of the year.
The January 29, 2022 balance sheet data was derived from audited Consolidated Financial Statements and does not include all disclosures required by GAAP.
Fiscal Year
TJX’s fiscal year ends on the Saturday nearest to the last day of January of each year. The current fiscal year ends January 28, 2023 (“fiscal 2023”) and is a 52-week fiscal year. Fiscal 2022 was also a 52-week fiscal year.
Use of Estimates
The preparation of financial statements, in conformity with GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements as well as the reported amounts of revenues and expenses during the reporting period. TJX considers its accounting policies relating to inventory valuation, reserves for uncertain tax positions and loss contingencies to be the most significant accounting policies that involve management estimates and judgments. Actual amounts could differ from these estimates, and such differences could be material. TJX considered the impact of COVID-19 on its estimates and the Company cannot reasonably estimate with certainty the duration and severity of this pandemic which has had, and may continue to have, a material impact on its business, results of operations, financial position and cash flows.
Equity Investment
In fiscal 2020, the Company acquired a minority ownership stake in privately held Familia, an off-price retailer of apparel and home fashions domiciled in Luxembourg that operates stores throughout Russia. During the quarter ended April 30, 2022, the Company announced that it has committed to divesting its minority investment and as a result, the Company performed an impairment analysis of this investment. Based on this analysis the Company concluded that there was an other-than-temporary impairment of this investment and recorded an impairment charge of $218 million representing the entirety of the Company’s investment. See Note F—Fair Value Measurements for additional information.
Deferred Gift Card Revenue
The following table presents deferred gift card revenue activity:
| In thousands | April 30, 2022 | May 1, 2021 | ||||||
| Balance, beginning of year | $ | 685,202 | $ | 576,187 | ||||
| Deferred revenue | 383,892 | 323,773 | ||||||
| Effect of exchange rates changes on deferred revenue | (2,645) | 2,899 | ||||||
| Revenue recognized | (443,944) | (365,854) | ||||||
| Balance, end of period | $ | 622,505 | $ | 537,005 |
Gift cards are combined in one homogeneous pool and are not separately identifiable. As such, the revenue recognized consists of gift cards that were part of the deferred revenue balance at the beginning of the period as well as gift cards that were issued during the period.
Leases
Supplemental cash flow information related to leases is as follows:
| Thirteen Weeks Ended | ||||||||
| In thousands | April 30, 2022 | May 1, 2021 | ||||||
| Operating cash flows paid for operating leases | $ | 488,233 | $ | 531,836 | ||||
| Lease liabilities arising from obtaining right of use assets | $ | 756,609 | $ | 488,666 |
Future Adoption of New Accounting Standards
From time to time, the Financial Accounting Standards Board (“FASB”) or other standard setting bodies issue new accounting pronouncements. Updates to the FASB Accounting Standards Codification are communicated through issuance of an Accounting Standards Update (“ASU”). The Company has reviewed the new guidance and has determined that it will either not apply to TJX or is not expected to be material to its Consolidated Financial Statements upon adoption and therefore, they are not disclosed.
Note B. Property at Cost
The following table presents the components of property at cost:
| In thousands | April 30, 2022 | January 29, 2022 | May 1, 2021 | ||||||||
| Land and buildings | $ | 1,929,521 | $ | 1,911,569 | $ | 1,723,049 | |||||
| Leasehold costs and improvements | 3,615,202 | 3,652,280 | 3,611,943 | ||||||||
| Furniture, fixtures and equipment | 6,961,560 | 6,871,777 | 6,602,759 | ||||||||
| Total property at cost | $ | 12,506,283 | $ | 12,435,626 | $ | 11,937,751 | |||||
| Less: accumulated depreciation and amortization | 7,217,119 | 7,164,799 | 6,869,927 | ||||||||
| Net property at cost | $ | 5,289,164 | $ | 5,270,827 | $ | 5,067,824 |
Depreciation expense was $218 million for the three months ended April 30, 2022 and $212 million for the three months ended May 1, 2021.
Non-cash investing activities in the cash flows consist of accrued capital additions of $176 million and $90 million as of the periods ended April 30, 2022 and May 1, 2021, respectively.
Note C. Accumulated Other Comprehensive (Loss) Income
Amounts included in Accumulated other comprehensive (loss) are recorded net of taxes. The following table details the changes in Accumulated other comprehensive (loss) for the twelve months ended January 29, 2022 and the three months ended April 30, 2022:
| In thousands | Foreign Currency Translation | Deferred Benefit Costs | Cash Flow Hedge on Debt | Accumulated Other Comprehensive (Loss) Income | ||||||||||
| Balance, January 30, 2021 | $ | (441,532) | $ | (164,802) | $ | 263 | $ | (606,071) | ||||||
| Additions to other comprehensive loss: | ||||||||||||||
| Foreign currency translation adjustments (net of taxes of $207) | (46,715) | — | — | (46,715) | ||||||||||
| Recognition of net gains/losses on benefit obligations (net of taxes of $17,659) | — | (48,504) | — | (48,504) | ||||||||||
| Reclassifications from other comprehensive loss to net income: | ||||||||||||||
| Amortization of loss on cash flow hedge (net of taxes of $603) | — | — | (263) | (263) | ||||||||||
| Amortization of prior service cost and deferred gains/losses (net of taxes of $4,588) | — | 14,403 | — | 14,403 | ||||||||||
| Balance, January 29, 2022 | $ | (488,247) | $ | (198,903) | $ | — | $ | (687,150) | ||||||
| Additions to other comprehensive loss: | ||||||||||||||
| Foreign currency translation adjustments (net of taxes of $574) | (57,612) | (57,612) | ||||||||||||
| Reclassifications from other comprehensive loss to net income: | ||||||||||||||
| Amortization of prior service cost and deferred gains/losses (net of taxes of $1,375) | — | 3,778 | — | 3,778 | ||||||||||
| Balance, April 30, 2022 | $ | (545,859) | $ | (195,125) | $ | — | $ | (740,984) |
Note D. Capital Stock and Earnings Per Share
Capital Stock
TJX repurchased and retired 9.5 million shares of its common stock at a cost of approximately $0.6 billion during the quarter ended April 30, 2022, on a “trade date” basis. TJX reflects stock repurchases in its consolidated financial statements on a “settlement date” or cash basis. TJX had cash expenditures under repurchase programs of $0.6 billion for the three months ended April 30, 2022. These expenditures were funded by cash generated from operations.
In February 2022, the Company announced that its Board of Directors had approved a new stock repurchase program that authorizes the repurchase of up to an additional $3.0 billion of TJX common stock from time to time. Under this program and previously announced programs, TJX had approximately $3.2 billion available for repurchase as of April 30, 2022.
All shares repurchased under the stock repurchase programs have been retired.
Earnings Per Share
The following table presents the calculation of basic and diluted earnings per share:
| Thirteen Weeks Ended | ||||||||||||||
| Amounts in thousands, expect per share amounts | April 30, 2022 | May 1, 2021 | ||||||||||||
| Basic earnings per share: | ||||||||||||||
| Net income | $ | 587,473 | $ | 533,930 | ||||||||||
| Weighted average common shares outstanding for basic earnings per share calculation | 1,177,141 | 1,205,439 | ||||||||||||
| Basic earnings per share | $ | 0.50 | $ | 0.44 | ||||||||||
| Diluted earnings per share: | ||||||||||||||
| Net income | $ | 587,473 | $ | 533,930 | ||||||||||
| Weighted average common shares outstanding for basic earnings per share calculation | 1,177,141 | 1,205,439 | ||||||||||||
| Assumed exercise / vesting of stock options and awards | 12,122 | 16,078 | ||||||||||||
| Weighted average common shares outstanding for diluted earnings per share calculation | 1,189,263 | 1,221,517 | ||||||||||||
| Diluted earnings per share | $ | 0.49 | $ | 0.44 | ||||||||||
| Cash dividends declared per share | $ | 0.295 | $ | 0.26 |
The weighted average common shares for the diluted earnings per share calculation excludes the impact of outstanding stock options if the assumed proceeds per share of the option is in excess of the average price of TJX’s common stock for the related fiscal period. Such options are excluded because they would have an antidilutive effect. There were 5.1 million such options excluded for the thirteen weeks ended April 30, 2022 and there were no such options excluded for the thirteen weeks ended May 1, 2021.
Note E. Financial Instruments
As a result of its operating and financing activities, TJX is exposed to market risks from changes in interest and foreign currency exchange rates and fuel costs. These market risks may adversely affect TJX’s operating results and financial position. TJX seeks to minimize risk from changes in interest and foreign currency exchange rates and fuel costs through the use of derivative financial instruments when and to the extent deemed appropriate. TJX does not use derivative financial instruments for trading or other speculative purposes and does not use any leveraged derivative financial instruments. TJX recognizes all derivative instruments as either assets or liabilities in the Consolidated Balance Sheet and measures those instruments at fair value. The fair values of the derivatives are classified as assets or liabilities, current or non-current, based upon valuation results and settlement dates of the individual contracts. Changes to the fair value of derivative contracts that do not qualify for hedge accounting are reported in earnings in the period of the change. For derivatives that qualify for hedge accounting, changes in the fair value of the derivatives are either recorded in shareholders’ equity as a component of Accumulated other comprehensive (loss) or are recognized currently in earnings, along with an offsetting adjustment against the basis of the item being hedged.
Diesel Fuel Contracts
TJX hedges portions of its estimated notional diesel requirements based on the diesel fuel expected to be consumed by independent freight carriers transporting TJX’s inventory. Independent freight carriers transporting TJX’s inventory charge TJX a mileage surcharge based on the price of diesel fuel. The hedge agreements are designed to mitigate the volatility of diesel fuel pricing (and the resulting per mile surcharges payable by TJX) by setting a fixed price per gallon for the period being hedged. During fiscal 2022, TJX entered into agreements to hedge a portion of its estimated notional diesel requirements for fiscal 2023, and during the first three months of fiscal 2023, TJX entered into agreements to hedge a portion of its estimated notional diesel requirements for the first three months of fiscal 2024. The hedge agreements outstanding at April 30, 2022 relate to approximately 51% of TJX’s estimated notional diesel requirements for the remainder of fiscal 2023 and approximately 47% of TJX’s estimated notional diesel requirements for the first three months of fiscal 2024. These diesel fuel hedge agreements will settle throughout fiscal 2023 and throughout the first four months of fiscal 2024. TJX elected not to apply hedge accounting to these contracts.
Foreign Currency Contracts
TJX enters into forward foreign currency exchange contracts to obtain economic hedges on portions of merchandise purchases made and anticipated to be made by the Company’s operations in currencies other than their respective functional currencies. The contracts outstanding at April 30, 2022 cover merchandise purchases the Company is committed to over the next several months. Additionally, TJX’s operations in Europe are subject to foreign currency exposure as a result of their buying function being centralized in the U.K. All merchandise is purchased centrally in the U.K. and then shipped and billed to the retail entities in other countries. This intercompany billing to TJX’s European businesses’ Euro denominated operations creates exposure to the central buying entity for changes in the exchange rate between the Euro and British Pound. A portion of the inflows of Euros to the central buying entity provides a natural hedge for merchandise purchased from third-party vendors that is denominated in Euros. TJX calculates any excess Euro exposure each month and enters into forward contracts of approximately 30 days' duration to mitigate this exposure.
TJX also enters into derivative contracts, generally designated as fair value hedges, to hedge intercompany debt. The changes in fair value of these contracts are recorded in Selling, general and administrative expenses and are offset by marking the underlying item to fair value in the same period. Upon settlement, the realized gains and losses on these contracts are offset by the realized gains and losses of the underlying item in Selling, general and administrative expenses.
The following is a summary of TJX’s derivative financial instruments, related fair value and balance sheet classification at April 30, 2022:
| In thousands | Pay | Receive | Blended Contract Rate | Balance Sheet Location | Current Asset U.S.$ | Current (Liability) U.S.$ | Net Fair Value in U.S.$ at April 30, 2022 | ||||||||||||||||||||||
| Fair value hedges: | |||||||||||||||||||||||||||||
| Intercompany balances, primarily debt related: | |||||||||||||||||||||||||||||
| zł | 25,000 | £ | 4,541 | 0.1816 | Prepaid Exp | $ | 149 | $ | — | $ | 149 | ||||||||||||||||||
| € | 60,000 | £ | 50,568 | 0.8428 | (Accrued Exp) | — | (145) | (145) | |||||||||||||||||||||
| A$ | 170,000 | U.S.$ | 122,061 | 0.7180 | Prepaid Exp | 1,868 | — | 1,868 | |||||||||||||||||||||
| U.S.$ | 74,646 | £ | 55,000 | 0.7368 | (Accrued Exp) | — | (5,584) | (5,584) | |||||||||||||||||||||
| £ | 150,000 | U.S.$ | 203,667 | 1.3578 | Prepaid Exp | 15,501 | — | 15,501 | |||||||||||||||||||||
| € | 200,000 | U.S.$ | 229,237 | 1.1462 | Prepaid Exp | 16,758 | — | 16,758 | |||||||||||||||||||||
| Economic hedges for which hedge accounting was not elected: | |||||||||||||||||||||||||||||
| Diesel fuel contracts | Fixed on 3.2M – 4.0M gal per month | Float on 3.2M – 4.0M gal per month | N/A | Prepaid Exp | 53,779 | — | 53,779 | ||||||||||||||||||||||
| Intercompany billings in TJX International, primarily merchandise related: | |||||||||||||||||||||||||||||
| € | 260,000 | £ | 216,610 | 0.8331 | (Accrued Exp) | — | (2,348) | (2,348) | |||||||||||||||||||||
| Merchandise purchase commitments: | |||||||||||||||||||||||||||||
| C$ | 826,057 | U.S.$ | 655,000 | 0.7929 | Prepaid Exp | 14,162 | — | 14,162 | |||||||||||||||||||||
| C$ | 30,949 | € | 22,000 | 0.7108 | (Accrued Exp) | — | (802) | (802) | |||||||||||||||||||||
| £ | 436,036 | U.S.$ | 582,300 | 1.3354 | Prepaid Exp / (Accrued Exp) | 36,363 | (210) | 36,153 | |||||||||||||||||||||
| A$ | 69,520 | U.S.$ | 50,500 | 0.7264 | Prepaid Exp | 1,394 | — | 1,394 | |||||||||||||||||||||
| zł | 615,000 | £ | 110,481 | 0.1796 | Prepaid Exp | 2,458 | — | 2,458 | |||||||||||||||||||||
| U.S.$ | 152,073 | € | 135,500 | 0.8910 | (Accrued Exp) | — | (8,897) | (8,897) | |||||||||||||||||||||
| Total fair value of derivative financial instruments | $ | 142,432 | $ | (17,986) | $ | 124,446 |
The following is a summary of TJX’s derivative financial instruments, related fair value and balance sheet classification at January 29, 2022:
| In thousands | Pay | Receive | Blended Contract Rate | Balance Sheet Location | Current Asset U.S.$ | Current (Liability) U.S.$ | Net Fair Value in U.S.$ at January 29, 2022 | ||||||||||||||||||||||
| Fair value hedges: | |||||||||||||||||||||||||||||
| Intercompany balances, primarily debt related: | |||||||||||||||||||||||||||||
| zł | 25,000 | £ | 4,541 | 0.1816 | Prepaid Exp | $ | 72 | $ | — | $ | 72 | ||||||||||||||||||
| € | 60,000 | £ | 50,568 | 0.8428 | Prepaid Exp | 111 | — | 111 | |||||||||||||||||||||
| A$ | 170,000 | U.S.$ | 122,061 | 0.7180 | Prepaid Exp | 2,047 | — | 2,047 | |||||||||||||||||||||
| U.S.$ | 74,646 | £ | 55,000 | 0.7368 | (Accrued Exp) | — | (918) | (918) | |||||||||||||||||||||
| € | 200,000 | U.S.$ | 230,319 | 1.1516 | Prepaid Exp | 4,535 | — | 4,535 | |||||||||||||||||||||
| Economic hedges for which hedge accounting was not elected: | |||||||||||||||||||||||||||||
| Diesel fuel contracts | Fixed on 3.6M – 4.0M gal per month | Float on 3.6M– 4.0M gal per month | N/A | Prepaid Exp | 23,649 | — | 23,649 | ||||||||||||||||||||||
| Intercompany billings in TJX International, primarily merchandise related: | |||||||||||||||||||||||||||||
| € | 91,000 | £ | 75,894 | 0.8340 | (Accrued Exp) | — | (145) | (145) | |||||||||||||||||||||
| Merchandise purchase commitments: | |||||||||||||||||||||||||||||
| C$ | 987,756 | U.S.$ | 783,000 | 0.7927 | Prepaid Exp / (Accrued Exp) | 6,641 | (80) | 6,561 | |||||||||||||||||||||
| C$ | 38,138 | € | 26,500 | 0.6948 | (Accrued Exp) | — | (248) | (248) | |||||||||||||||||||||
| £ | 325,482 | U.S.$ | 442,100 | 1.3583 | Prepaid Exp / (Accrued Exp) | 6,023 | (632) | 5,391 | |||||||||||||||||||||
| zł | 453,000 | £ | 82,112 | 0.1813 | Prepaid Exp / (Accrued Exp) | 744 | (449) | 295 | |||||||||||||||||||||
| A$ | 65,551 | U.S.$ | 47,500 | 0.7246 | Prepaid Exp | 1,270 | — | 1,270 | |||||||||||||||||||||
| U.S.$ | 66,989 | € | 59,000 | 0.8807 | (Accrued Exp) | — | (820) | (820) | |||||||||||||||||||||
| Total fair value of derivative financial instruments | $ | 45,092 | $ | (3,292) | $ | 41,800 |
The following is a summary of TJX’s derivative financial instruments, related fair value and balance sheet classification at May 1, 2021:
| In thousands | Pay | Receive | Blended Contract Rate | Balance Sheet Location | Current Asset U.S.$ | Current (Liability) U.S.$ | Net Fair Value in U.S.$ at May 1, 2021 | ||||||||||||||||||||||
| Fair value hedges: | |||||||||||||||||||||||||||||
| Intercompany balances, primarily debt related: | |||||||||||||||||||||||||||||
| zł | 45,000 | £ | 8,846 | 0.1966 | Prepaid Exp | $ | 353 | $ | — | $ | 353 | ||||||||||||||||||
| A$ | 80,000 | U.S.$ | 62,032 | 0.7754 | (Accrued Exp) | — | (98) | (98) | |||||||||||||||||||||
| U.S.$ | 75,102 | £ | 55,000 | 0.7323 | Prepaid Exp | 1,505 | — | 1,505 | |||||||||||||||||||||
| £ | 450,000 | U.S.$ | 620,918 | 1.3798 | Prepaid Exp / (Accrued Exp) | 40 | (5,582) | (5,542) | |||||||||||||||||||||
| € | 200,000 | U.S.$ | 244,699 | 1.2235 | Prepaid Exp | 2,301 | — | 2,301 | |||||||||||||||||||||
| Economic hedges for which hedge accounting was not elected: | |||||||||||||||||||||||||||||
| Diesel fuel contracts | Fixed on 3.1M – 3.8M gal per month | Float on 3.1M – 3.8M gal per month | N/A | Prepaid Exp | 17,816 | — | 17,816 | ||||||||||||||||||||||
| Intercompany billings in TJX International, primarily merchandise related: | |||||||||||||||||||||||||||||
| € | 163,000 | £ | 141,240 | 0.8665 | (Accrued Exp) | — | (166) | (166) | |||||||||||||||||||||
| Merchandise purchase commitments: | |||||||||||||||||||||||||||||
| C$ | 574,390 | U.S.$ | 457,000 | 0.7956 | (Accrued Exp) | — | (11,054) | (11,054) | |||||||||||||||||||||
| C$ | 29,455 | € | 19,500 | 0.6620 | (Accrued Exp) | — | (444) | (444) | |||||||||||||||||||||
| £ | 282,746 | U.S.$ | 391,800 | 1.3857 | Prepaid Exp / (Accrued Exp) | 1,939 | (3,751) | (1,812) | |||||||||||||||||||||
| A$ | 50,830 | U.S.$ | 39,125 | 0.7697 | Prepaid Exp / (Accrued Exp) | 42 | (356) | (314) | |||||||||||||||||||||
| U.S.$ | 53,680 | € | 44,400 | 0.8271 | Prepaid Exp / (Accrued Exp) | 185 | (267) | (82) | |||||||||||||||||||||
| Total fair value of derivative financial instruments | $ | 24,181 | $ | (21,718) | $ | 2,463 |
The impact of derivative financial instruments on the Consolidated Statements of Income is presented below:
| Amount of Gain (Loss) Recognized in Income by Derivative | |||||||||||||||||
| Location of Gain (Loss) Recognized in Income by Derivative | Thirteen Weeks Ended | ||||||||||||||||
| In thousands | April 30, 2022 | May 1, 2021 | |||||||||||||||
| Fair value hedges: | |||||||||||||||||
| Intercompany balances, primarily debt related | Selling, general and administrative expenses | $ | 24,395 | $ | (2,864) | ||||||||||||
| Economic hedges for which hedge accounting was not elected: | |||||||||||||||||
| Diesel fuel contracts | Cost of sales, including buying and occupancy costs | 44,173 | 13,570 | ||||||||||||||
| Intercompany billings in TJX International, primarily merchandise related | Cost of sales, including buying and occupancy costs | (370) | 118 | ||||||||||||||
| Merchandise purchase commitments | Cost of sales, including buying and occupancy costs | 40,929 | (15,969) | ||||||||||||||
| Gain (loss) recognized in income | $ | 109,127 | $ | (5,145) |
Note F. Fair Value Measurements
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date or “exit price”. The inputs used to measure fair value are generally classified into the following hierarchy:
| Level 1: | Unadjusted quoted prices in active markets for identical assets or liabilities | |||||||
| Level 2: | Unadjusted quoted prices in active markets for similar assets or liabilities, or unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability | |||||||
| Level 3: | Unobservable inputs for the asset or liability |
The following table sets forth TJX’s financial assets and liabilities that are accounted for at fair value on a recurring basis:
| In thousands | April 30, 2022 | January 29, 2022 | May 1, 2021 | ||||||||
| Level 1 | |||||||||||
| Assets: | |||||||||||
| Executive Savings Plan investments | $ | 366,038 | $ | 387,666 | $ | 384,442 | |||||
| Level 2 | |||||||||||
| Assets: | |||||||||||
| Foreign currency exchange contracts | $ | 88,653 | $ | 21,443 | $ | 6,365 | |||||
| Diesel fuel contracts | 53,779 | 23,649 | 17,816 | ||||||||
| Liabilities: | |||||||||||
| Foreign currency exchange contracts | $ | 17,986 | $ | 3,292 | $ | 21,718 | |||||
Investments designed to meet obligations under the Executive Savings Plan are invested in registered investment companies traded in active markets and are recorded at unadjusted quoted prices.
Foreign currency exchange contracts and diesel fuel contracts are valued using broker quotations, which include observable market information. TJX does not make adjustments to quotes or prices obtained from brokers or pricing services but does assess the credit risk of counterparties and will adjust final valuations when appropriate. Where independent pricing services provide fair values, TJX obtains an understanding of the methods used in pricing. As such, these instruments are classified within Level 2.
The fair value of TJX’s general corporate debt was estimated by obtaining market quotes given the trading levels of other bonds of the same general issuer type and market perceived credit quality. These inputs are considered to be Level 2. The fair value of long-term debt as of April 30, 2022 was $3.2 billion compared to a carrying value of $3.4 billion. The fair value of long-term debt as of January 29, 2022 was $3.5 billion compared to a carrying value of $3.4 billion. The fair value of long-term debt as of May 1, 2021 was $5.8 billion compared to a carrying value of $5.3 billion. These estimates do not necessarily reflect provisions or restrictions in the various debt agreements that might affect TJX’s ability to settle these obligations. For additional information on long-term debt, see Note I—Long-Term Debt and Credit Lines.
TJX’s cash equivalents are stated at cost, which approximates fair value due to the short maturities of these instruments.
Certain assets and liabilities are measured at fair value on a nonrecurring basis, whereas the majority of assets and liabilities are not measured at fair value on an ongoing basis, but are subject to fair value adjustments in certain circumstances, such as when there is evidence of an impairment. For the periods ended April 30, 2022, January 29, 2022 and May 1, 2021, the Company did not record any material impairments to long-lived assets.
During the first quarter of fiscal 2023, the Company announced its intention to divest from its position in its equity investment in Familia and re-characterized this investment as held-for-sale valued as a Level 3 position. Given the lack of an active market or observable inputs, the Company derived an exit price which indicated that this investment had no market value. The Company recorded a $218 million charge in the first quarter of fiscal 2023 which represents the entirety of its investment.
Note G. Segment Information
TJX operates four main business segments. The Marmaxx segment (T.J. Maxx, Marshalls, tjmaxx.com and marshalls.com) and the HomeGoods segment (HomeGoods, Homesense, and homegoods.com) both operate in the United States, the TJX Canada segment operates Winners, HomeSense and Marshalls in Canada, and the TJX International segment operates T.K. Maxx, Homesense and tkmaxx.com in Europe and T.K. Maxx in Australia. In addition to the Company’s four main business segments, Sierra operates sierra.com and retail stores in the U.S. The results of Sierra are included in the Marmaxx segment.
All of TJX’s stores, with the exception of HomeGoods and HomeSense, sell family apparel and home fashions. HomeGoods and HomeSense offer home fashions.
TJX evaluates the performance of its segments based on “segment profit or loss,” which it defines as pre-tax income or loss before general corporate expense, interest expense, net and certain separately disclosed unusual or infrequent items. “Segment profit or loss,” as defined by TJX, may not be comparable to similarly titled measures used by other entities. This measure of performance should not be considered an alternative to net income or cash flows from operating activities as an indicator of TJX’s performance or as a measure of liquidity.
Presented below is financial information with respect to TJX’s business segments:
| Thirteen Weeks Ended | ||||||||||||||
| In thousands | April 30, 2022 | May 1, 2021 | ||||||||||||
| Net sales: | ||||||||||||||
| In the United States: | ||||||||||||||
| Marmaxx | $ | 6,872,270 | $ | 6,640,486 | ||||||||||
| HomeGoods | 2,035,785 | 2,141,756 | ||||||||||||
| TJX Canada | 1,081,528 | 765,536 | ||||||||||||
| TJX International | 1,416,891 | 538,883 | ||||||||||||
| Total net sales | $ | 11,406,474 | $ | 10,086,661 | ||||||||||
| Segment profit (loss): | ||||||||||||||
| In the United States: | ||||||||||||||
| Marmaxx | $ | 904,222 | $ | 824,855 | ||||||||||
| HomeGoods | 121,985 | 251,602 | ||||||||||||
| TJX Canada | 126,618 | 71,577 | ||||||||||||
| TJX International | 13,232 | (221,558) | ||||||||||||
| Total segment profit | 1,166,057 | 926,476 | ||||||||||||
| General corporate expense | 77,378 | 160,442 | ||||||||||||
| Impairment on equity investment | 217,619 | — | ||||||||||||
| Interest expense, net | 18,785 | 44,688 | ||||||||||||
| Income before income taxes | $ | 852,275 | $ | 721,346 |
Note H. Pension Plans and Other Retirement Benefits
Presented below is financial information relating to TJX’s funded defined benefit pension plan (“qualified pension plan” or “funded plan”) and its unfunded supplemental pension plan (“unfunded plan”) for the periods shown:
| Funded Plan | Unfunded Plan | |||||||||||||
| Thirteen Weeks Ended | Thirteen Weeks Ended | |||||||||||||
| In thousands | April 30, 2022 | May 1, 2021 | April 30, 2022 | May 1, 2021 | ||||||||||
| Service cost | $ | 12,168 | $ | 12,219 | $ | 727 | $ | 755 | ||||||
| Interest cost | 14,426 | 12,812 | 931 | 780 | ||||||||||
| Expected return on plan assets | (22,228) | (23,992) | — | — | ||||||||||
| Amortization of net actuarial loss and prior service cost | 4,274 | 2,803 | 879 | 1,154 | ||||||||||
| Total expense | $ | 8,640 | $ | 3,842 | $ | 2,537 | $ | 2,689 | ||||||
TJX’s policy with respect to the funded plan is to fund, at a minimum, the amount required to maintain a funded status of 80% of the applicable pension liability (the Funding Target pursuant to the Internal Revenue Code section 430) or such other amount as is sufficient to avoid restrictions with respect to the funding of nonqualified plans under the Internal Revenue Code. The Company does not anticipate any required funding in fiscal 2023 for the funded plan. The Company anticipates making contributions of $4 million to provide current benefits coming due under the unfunded plan in fiscal 2023.
The amounts included in amortization of net actuarial loss and prior service cost in the table above have been reclassified in their entirety from Accumulated other comprehensive loss to the Consolidated Statements of Income, net of related tax effects, for the periods presented.
Note I. Long-Term Debt and Credit Lines
The table below presents long-term debt, exclusive of current installments, as of April 30, 2022, January 29, 2022 and May 1, 2021. All amounts are net of unamortized debt discounts.
| In thousands | April 30, 2022 | January 29, 2022 | May 1, 2021 | ||||||||
| 2.500% senior unsecured notes, maturing May 15, 2023 (effective interest rate of 2.51% after reduction of unamortized debt discount of $45 at April 30, 2022, $56 at January 29, 2022 and $89 at May 1, 2021) | $ | 499,955 | $ | 499,944 | $ | 499,911 | |||||
| 3.500% senior unsecured notes, redeemed on June 4, 2021 (effective interest rate of 3.58% after reduction of unamortized debt discount of $3,956 at May 1, 2021) | — | — | 1,246,044 | ||||||||
| 2.250% senior unsecured notes, maturing September 15, 2026 (effective interest rate of 2.32% after reduction of unamortized debt discount of $3,233 at April 30, 2022, $3,419 at January 29, 2022 and $3,979 at May 1, 2021) | 996,767 | 996,581 | 996,021 | ||||||||
| 3.750% senior unsecured notes, redeemed on June 4, 2021 (effective interest rate of 3.76% after reduction of unamortized debt discount of $437 at May 1, 2021) | — | — | 749,563 | ||||||||
| 1.150% senior unsecured notes, maturing May 15, 2028 (effective interest rate of 1.18% after reduction of unamortized debt discount of $779 at April 30, 2022, $811 at January 29, 2022, and $907 at May 1, 2021) | 499,221 | 499,189 | 499,093 | ||||||||
| 3.875% senior unsecured notes, maturing April 15, 2030 (effective interest rate of 3.89% after reduction of unamortized debt discount of $491 at April 30, 2022, $506 at January 29, 2022 and $553 at May 1, 2021) | 495,359 | 495,344 | 495,297 | ||||||||
| 1.600% senior unsecured notes, maturing May 15, 2031 (effective interest rate of 1.61% after reduction of unamortized debt discount of $535 at April 30, 2022, $551 at January 29, 2022, and $595 at May 1, 2021) | 499,465 | 499,449 | 499,405 | ||||||||
| 4.500% senior unsecured notes, maturing April 15, 2050 (effective interest rate of 4.52% after reduction of unamortized debt discount of $2,113 at April 30, 2022, $2,132 at January 29, 2022 and $2,189 at May 1, 2021) | 383,386 | 383,367 | 383,310 | ||||||||
| Total debt | 3,374,153 | 3,373,874 | 5,368,644 | ||||||||
| Debt issuance costs | (18,338) | (19,033) | (33,780) | ||||||||
| Long-term debt | $ | 3,355,815 | $ | 3,354,841 | $ | 5,334,864 |
Senior Unsecured Notes
On June 4, 2021, the Company completed make-whole calls for its $1.25 billion aggregate principal amount of 3.500% Notes maturing in 2025 and its $750 million aggregate principal amount of 3.750% Notes maturing in 2027, which 3.500% Notes and 3.750% Notes were originally issued and sold on April 1, 2020. Interest on the Company's remaining outstanding notes is payable semi-annually.
Credit Facilities
The Company has two revolving credit facilities, a $1 billion senior unsecured revolving credit facility maturing in June 2026 (the “2026 Revolving Credit Facility”) and a $500 million revolving credit facility that matures in May 2024 (the “2024 Revolving Credit Facility”). Under these credit facilities, the Company has maintained a borrowing capacity of $1.5 billion. The terms of these revolving credit facilities require quarterly payments on the committed amount and payment of interest on borrowings at rates based on LIBOR or a base rate plus a variable margin, in each case based on the Company’s long-term debt ratings. The 2024 Revolving Credit Facility requires usage fees based on total credit extensions under the facility. As of April 30, 2022, January 29, 2022 and May 1, 2021, there were no amounts outstanding under any of the Company’s facilities. Each of these facilities require TJX to maintain a ratio of funded debt to earnings before interest, taxes, depreciation and amortization and rentals (EBITDAR) of not more than 3.50 to 1.00 on a rolling four-quarter basis. TJX was in compliance with all covenants related to its credit facilities at the end of all periods presented.
As of April 30, 2022, January 29, 2022 and May 1, 2021, TJX Canada had two uncommitted credit lines, a C$10 million facility for operating expenses and a C$10 million letter of credit facility. As of April 30, 2022, January 29, 2022 and May 1, 2021, and during the quarters and year then ended, there were no amounts outstanding on the Canadian credit lines. As of April 30, 2022, January 29, 2022 and May 1, 2021, the Company’s European business at TJX International had an uncommitted credit line of £5 million. As of April 30, 2022, January 29, 2022 and May 1, 2021, and during the quarters and year then ended, there were no amounts outstanding on the European credit line.
Note J. Income Taxes
The effective income tax rate was 31.1% for the first quarter of fiscal 2023 and 26.0% for the first quarter of fiscal 2022. The increase in the effective income tax rate is primarily due to the impairment of our minority investment stake in Familia, which at this time we estimate to have no associated tax benefit, and a reduction of excess tax benefits from share-based compensation, partially offset by the change of jurisdictional mix of profits and losses and the resolution of various tax matters.
TJX had net unrecognized tax benefits of $273 million as of April 30, 2022, $288 million as of January 29, 2022 and $278 million as of May 1, 2021.
TJX is subject to U.S. federal income tax as well as income tax in multiple state, local and foreign jurisdictions. In the U.S. and India, fiscal years through 2010 are no longer subject to examination. In all other jurisdictions, fiscal years through 2011 are no longer subject to examination.
TJX’s accounting policy is to classify interest and penalties related to income tax matters as part of income tax expense. The accrued amounts for interest and penalties on the Consolidated Balance Sheets was $44 million as of April 30, 2022, $43 million as of January 29, 2022 and $38 million as of May 1, 2021.
Based on the final resolution of tax examinations, judicial or administrative proceedings, changes in facts or law, expirations of statutes of limitations in specific jurisdictions or other resolutions of, or changes in, tax positions, it is reasonably possible that unrecognized tax benefits for certain tax positions taken on previously filed tax returns may change materially from those represented on the consolidated financial statements as of April 30, 2022. During the next 12 months, it is reasonably possible that tax audit resolutions may reduce unrecognized tax benefits by up to $44 million, which would reduce the provision for taxes on earnings.
Note K. Contingent Obligations, Contingencies, and Commitments
Contingent Contractual Obligations
TJX is a party to various agreements under which it may be obligated to indemnify the other party with respect to certain losses related to matters including title to assets sold, specified environmental matters or certain income taxes. These obligations are sometimes limited in time or amount. There are no amounts reflected in the Company’s Consolidated Balance Sheets with respect to these contingent obligations.
Legal Contingencies
TJX is subject to certain legal proceedings, lawsuits, disputes and claims that arise from time to time in the ordinary course of its business. TJX has accrued immaterial amounts in the accompanying Consolidated Financial Statements for certain of its legal proceedings.
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