TJX Companies 10-Q 2023-07-29

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(mark one)

For the quarterly period ended July 29, 2023

OR

For the transition period from to

Commission file number 1-4908

The TJX Companies, Inc.

(Exact name of registrant as specified in its charter)

(508) 390-1000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ☐ NO ☒

The number of shares of registrant’s common stock outstanding as of August 18, 2023: 1,144,080,554

The TJX Companies, Inc.

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION

THE TJX COMPANIES, INC.

CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

IN MILLIONS EXCEPT PER SHARE AMOUNTS

The accompanying notes are an integral part of the unaudited consolidated financial statements.

THE TJX COMPANIES, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

IN MILLIONS

The accompanying notes are an integral part of the unaudited consolidated financial statements.

THE TJX COMPANIES, INC.

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

IN MILLIONS, EXCEPT SHARE DATA

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The Thirteen Weeks (second quarter) and Twenty-Six Weeks (six months) Ended July 29, 2023

Compared to

The Thirteen Weeks (second quarter) and Twenty-Six Weeks (six months) Ended July 30, 2022

OVERVIEW

We are the leading off-price apparel and home fashions retailer in the U.S. and worldwide. Our mission is to deliver great value to our customers every day. We do this by selling a rapidly changing assortment of apparel, home fashions and other merchandise at prices generally 20% to 60% below full-price retailers’ (including department, specialty and major online retailers) regular prices on comparable merchandise, every day through our stores and seven e-commerce sites. We operate nearly 4,900 stores through our four main segments: in the U.S., Marmaxx (which operates T.J. Maxx, Marshalls, tjmaxx.com and marshalls.com) and HomeGoods (which operates HomeGoods, Homesense and homegoods.com); TJX Canada (which operates Winners, HomeSense and Marshalls in Canada); and TJX International (which operates T.K. Maxx, Homesense, tkmaxx.com, tkmaxx.de, and tkmaxx.at in Europe, and T.K. Maxx in Australia). In addition to our four main segments, Sierra operates retail stores and sierra.com in the U.S. The results of Sierra are included in the Marmaxx segment.

RESULTS OF OPERATIONS

As an overview of our financial performance, results for the quarter ended July 29, 2023 include the following:

–Net sales increased 8% to $12.8 billion for the second quarter of fiscal 2024 versus last year’s second quarter sales of $11.8 billion. As of July 29, 2023, both the number of stores in operation and the selling square footage increased 3% compared to the end of the second quarter of fiscal 2023.

*–*Consolidated comp store sales increased 6% for the second quarter of fiscal 2024. See Net Sales below for definition of comp store sales.

*–*Diluted earnings per share for the second quarter of fiscal 2024 were $0.85 versus $0.69 in the second quarter of fiscal 2023.

*–*Pre-tax profit margin (the ratio of pre-tax income to net sales) for the second quarter of fiscal 2024 was 10.4%, a 1.2 percentage point increase compared with 9.2% in the second quarter of fiscal 2023.

–Our cost of sales, including buying and occupancy costs, ratio for the second quarter of fiscal 2024 was 69.8%, a 2.6 percentage point decrease compared with 72.4% in the second quarter of fiscal 2023.

–Our selling, general and administrative (“SG&A”) expense ratio for the second quarter of fiscal 2024 was 20.1%, a 1.7 percentage point increase compared with 18.4% in the second quarter of fiscal 2023.

–Our consolidated average per store inventories, including inventory on hand at our distribution centers (which excludes inventory in transit) and excluding our e-commerce sites and Sierra stores, were down 6% on both a reported basis and constant currency basis at the end of the second quarter of fiscal 2024.

–During the second quarter of fiscal 2024, we returned $932 million to our shareholders through share repurchases and dividends.

Operating Results as a Percentage of Net Sales

The following table sets forth our consolidated operating results as a percentage of net sales:

*Figures may not foot due to rounding.

Net Sales

Net sales for the quarter ended July 29, 2023 totaled $12.8 billion, an 8% increase versus second quarter fiscal 2023 net sales of $11.8 billion. The increase reflects a 6% increase in comp store sales and a 2% increase from non-comp store sales. Net sales from our e-commerce sites combined amounted to less than 2% of total sales for each of the second quarters of fiscal 2024 and fiscal 2023.

Net sales for the six months ended July 29, 2023 totaled $24.5 billion, a 6% increase versus net sales of $23.2 billion for the first six months fiscal 2023. The increase reflects a 4% increase in comp store sales and a 2% increase from non-comp store sales. Net sales from our e-commerce sites combined amounted to less than 2% of total sales for each of the first six months of fiscal 2024 and fiscal 2023.

We have returned to our historical definition of comparable store sales (as defined below). While stores in the U.S. were open for all of fiscal 2022, a significant number of stores in TJX Canada and TJX International experienced COVID-related temporary store closures and government-mandated shopping restrictions during fiscal 2022. Therefore, in fiscal 2023, we could not measure year-over-year comparable store sales with fiscal 2022 in these geographies in a meaningful way. As a result, the comparable stores included in the fiscal 2023 measure consisted of U.S. stores only, which we referred to as U.S. comparable store sales (“U.S. comp store sales”), and were calculated against sales for the comparable period in fiscal 2022.

Comp store sales increased 6% for the second quarter of fiscal 2024. U.S. comp store sales decreased 5% for the second quarter of fiscal 2023. Apparel comp store sales (as defined below) growth outperformed home fashions comp store sales (as defined below) growth for the second quarter of fiscal 2024.

Comp store sales increased 4% for the first six months of fiscal 2024. U.S. comp store sales decreased 2% for the first six months of fiscal 2023. Apparel comp store sales growth outperformed a decline in home fashions comp store sales for the first six months ended July 29, 2023.

Comp store sales for both periods were driven by an increase in customer traffic, partially offset by a decrease in average basket.

As of July 29, 2023, both our store count and selling square footage increased 3% compared to the end of the second quarter last year.

Definition of Comparable Store Sales

We define comparable store sales, or comp store sales, to be sales of stores that have been in operation for all or a portion of two consecutive fiscal years, or, in other words, stores that are starting their third fiscal year of operation. We calculate comp store sales on a 52-week basis by comparing the current and prior year weekly periods that are most closely aligned. Relocated stores and stores that have changed in size are generally classified in the same way as the original store, and we believe that the impact of these stores on the consolidated comp percentage is immaterial.

Sales excluded from comp store sales (“non-comp store sales”) consist of sales from:

–New stores - stores that have not yet met the comp store sales criteria, which represents a substantial majority of non-comp store sales

–Stores that are closed permanently or for an extended period of time

–Sales from our e-commerce sites

We determine which stores are included in the comp store sales calculation at the beginning of a fiscal year and the classification remains constant throughout that year unless a store is closed permanently or for an extended period during that fiscal year.

Comp store sales of our foreign segments are calculated by translating the current year’s comp store sales using the prior year’s exchange rates. This removes the effect of changes in currency exchange rates, which we believe is a more accurate measure of segment operating performance.

Comp store sales may be referred to as “same store” sales by other retail companies. The method for calculating comp store sales varies across the retail industry; therefore, our measure of comp store sales may not be comparable to that of other retail companies. Comparable store sales for a category such as home fashions or apparel include sales from merchandise within such category combined across all divisions at the stores that fall within the Company’s definition of comparable stores for such period.

We define customer traffic to be the number of transactions in stores and average ticket to be the average retail price of the units sold. We define average transaction or average basket to be the average dollar value of transactions.

Impact of Foreign Currency Exchange Rates

Our operating results are affected by foreign currency exchange rates as a result of changes in the value of the U.S. dollar or a division’s local currency in relation to other currencies. We specifically refer to “foreign currency” as the impact of translational foreign currency exchange and mark-to-market of inventory derivatives, as described in detail below. This does not include the impact foreign currency exchange rates can have on various transactions that are denominated in a currency other than an operating division's local currency, which is referred to as “transactional foreign exchange,” and also described below.

Translation Foreign Exchange

In our consolidated financial statements, we translate the operations of TJX Canada and TJX International from local currencies into U.S. dollars using currency rates in effect at different points in time. Significant changes in foreign exchange rates between comparable prior periods can result in meaningful variations in assets, liabilities, net sales, net income and earnings per share growth as well as the net sales and operating results of these segments. Currency translation generally does not affect operating margins, or affects them only slightly, as sales and expenses of the foreign operations are translated at approximately the same rates within a given period.

Mark-to-Market Inventory Derivatives

We routinely enter into inventory-related hedging instruments to mitigate the impact on earnings of changes in foreign currency exchange rates on merchandise purchases denominated in currencies other than the local currencies of our divisions, principally TJX Canada and TJX International. As we have not elected “hedge accounting” for these instruments, as defined by U.S. generally accepted accounting principles (“GAAP”), we record a mark-to-market gain or loss on the derivative instruments in our results of operations at the end of each reporting period. In subsequent periods, the income statement impact of the mark-to-market adjustment is effectively offset when the inventory being hedged is received and paid for. While these effects occur every reporting period, they are of much greater magnitude when there are sudden and significant changes in currency exchange rates during a short period of time. The mark-to-market adjustment on these derivatives does not affect net sales, but it does affect the cost of sales, operating margins and earnings we report.

Transactional Foreign Exchange

When discussing the impact on our results of the effect of foreign currency exchange rates on certain transactions, we refer to it as “transactional foreign exchange”. This primarily includes the impact that foreign currency exchange rates may have on the year-over-year comparison of merchandise margin as well as “foreign currency gains and losses” on transactions that are denominated in a currency other than the operating division's local currency. These two items can impact segment margin comparison of our foreign divisions, and we have highlighted them when they are meaningful to understanding operating trends.

Cost of Sales, Including Buying and Occupancy Costs

Cost of sales, including buying and occupancy costs, as a percentage of net sales was 69.8% for the second quarter of fiscal 2024, a decrease of 2.6 percentage points over 72.4% for the second quarter of fiscal 2023. The decrease in the cost of sales ratio, including buying and occupancy costs, for the second quarter of fiscal 2024 was primarily attributable to higher merchandise margin and the favorable impact on the mark-to-market adjustments on fuel and inventory hedges. Merchandise margin reflects favorable freight costs, partially offset by higher shrink accrual rates in the current year.

Cost of sales, including buying and occupancy costs, as a percentage of net sales was 70.4% for the first six months of fiscal 2024, a decrease of 1.8 percentage points over 72.2% for the first six months of fiscal 2023. The decrease in the cost of sales ratio, including buying and occupancy costs, for the first six months of fiscal 2024 was primarily attributable to higher merchandise margin, which reflects favorable freight costs, partially offset by higher shrink accrual rates in the current year.

Selling, General and Administrative Expenses

SG&A expenses, as a percentage of net sales, was 20.1% for the second quarter of fiscal 2024, an increase of 1.7 percentage points over 18.4% for the second quarter of fiscal 2023.

SG&A expenses, as a percentage of net sales, was 19.5% for the first six months of fiscal 2024, an increase of 1.1 percentage points over 18.4% for the first six months of fiscal 2023.

The increase in the SG&A ratio for both the second quarter and first six months of fiscal 2024 was primarily attributable to higher incentive and share-based compensation costs, a reserve related to a German government COVID program receivable, incremental store wage and a contribution to our U.S. charitable foundation.

Impairment on Equity Investment

During fiscal 2023, we announced and completed the divestiture of our minority investment in Familia. As a result, we recorded an impairment charge of $218 million in the first quarter of fiscal 2023 representing the entire carrying value of the investment. Additionally, we realized a $54 million tax benefit when we completed the divestiture of this investment during the third quarter of fiscal 2023.

Interest (Income) Expense, net

The components of interest (income) expense, net are summarized below:

Net interest (income) expense decreased for both the second quarter of fiscal 2024 and first six months ended July 29, 2023 compared to the same periods in fiscal 2023 due to an increase in interest income driven by an increase in prevailing rates and a higher average cash balance.

Provision for Income Taxes

In August 2022, the Inflation Reduction Act of 2022 (“IRA”), was signed into law. Among other things, the IRA imposes a 15% corporate alternative minimum tax (the “Corporate AMT”) for tax years beginning after December 31, 2022 and levies a 1% excise tax on net stock repurchases after December 31, 2022. The excise tax on the net stock repurchase, Corporate AMT, or other provisions of the IRA did not have a material impact on our results of operations or financial position for the first six months of fiscal 2024.

The effective income tax rate was 25.5% for the second quarter of fiscal 2024 and 25.4% for the second quarter of fiscal 2023. The effective income tax rate was 25.8% for the first six months of fiscal 2024 and 27.9% for the first six months of fiscal 2023. The decrease in the effective income tax rate for the first six months of fiscal 2024 was primarily due to the first six months of fiscal 2023 reflecting the impairment of our minority investment in Familia with no estimated tax benefit and the increase in excess tax benefit from share-based compensation in fiscal 2024, partially offset by the resolution of various tax matters in fiscal 2024.

Net Income and Diluted Earnings Per Share

Net income was $1 billion, or $0.85 per diluted share, and $810 million, or $0.69 per diluted share, for the second quarters of fiscal 2024 and fiscal 2023, respectively. Foreign currency had a $0.01 negative impact on earnings per share and a $0.03 negative impact on earnings per share for the second quarters of fiscal 2024 and fiscal 2023, respectively.

Net income was $1.9 billion, or $1.62 per diluted share, and $1.4 billion, or $1.18 per diluted share, for the first six months of fiscal 2024 and fiscal 2023, respectively. The $218 million impairment on our equity investment in Familia had a $0.18 negative impact on earnings per share for the first six months of fiscal 2023. Foreign currency had a $0.01 negative impact on earnings per share and a $0.02 negative impact on earnings per share for the first six months of fiscal 2024 and fiscal 2023, respectively.

We have offered eligible former TJX Associates who have not yet commenced their qualified pension plan benefit an opportunity to receive a voluntary lump sum payout of their vested pension plan benefit. As a result, we anticipate an immaterial non-cash settlement charge. This potential non-cash settlement charge is expected to be incurred in the third quarter of fiscal 2024 and would impact our pretax profit margin and earnings per share results.

Segment Information

We operate four main business segments. In the United States, our Marmaxx segment operates T.J. Maxx, Marshalls, tjmaxx.com and marshalls.com and our HomeGoods segment operates HomeGoods, Homesense and homegoods.com. Our TJX Canada segment operates Winners, HomeSense and Marshalls in Canada, and our TJX International segment operates T.K. Maxx, Homesense, tkmaxx.com, tkmaxx.de, and tkmaxx.at in Europe and T.K. Maxx in Australia. In addition to our four main segments, Sierra operates retail stores and sierra.com in the U.S. The results of Sierra are included in the Marmaxx segment.

We evaluate the performance of our segments based on “segment profit or loss,” which we define as pre-tax income or loss before general corporate expense and interest (income) expense, net, and certain separately disclosed unusual or infrequent items. “Segment profit or loss,” as we define the term, may not be comparable to similarly titled measures used by other companies. The terms “segment margin” or “segment profit margin” are used to describe segment profit or loss as a percentage of net sales. These measures of performance should not be considered an alternative to net income or cash flows from operating activities as an indicator of our performance or as a measure of liquidity.

Presented below is selected financial information related to our business segments.

U.S. SEGMENTS

Marmaxx

Net Sales

Net sales for Marmaxx were $7.9 billion for the second quarter of fiscal 2024, an increase of 9% compared to $7.2 billion for the second quarter of fiscal 2023. This increase in the second quarter reflects an 8% increase from comp store sales and a 1% increase from non-comp store sales. The increase in comp store sales was driven by an increase in customer traffic, partially offset by a decrease in average basket.

Net sales for Marmaxx were $15.3 billion for the first six months of fiscal 2024, an increase of 8% compared to $14.1 billion for the first six months of fiscal 2023. This increase in the first six months reflects a 7% increase from comp store sales and a 1% increase from non-comp store sales. The increase in comp store sales was driven by an increase in customer traffic.

For the second quarter of fiscal 2024, Marmaxx had strong apparel and home fashions comp store sales growth. For the first six months of fiscal 2024, strong apparel comp store sales growth outperformed home fashions comp store sales growth. For both periods, all geographies generally performed in line with the overall comp store sales increase.

Segment Profit Margin

Segment profit margin increased to 13.7% for the second quarter of fiscal 2024 compared to 12.9% for the same period last year. Segment profit margin increased to 13.8% for the first six months of fiscal 2024 compared to 13.0% for the same period last year. The increase in segment profit margin for both periods was driven by improved merchandise margin, partially offset by higher incentive compensation costs and incremental store wage. Merchandise margin was primarily driven by favorable freight costs and markon, partially offset by higher shrink accrual rates in the current year.

Our Marmaxx e-commerce sites, tjmaxx.com and marshalls.com, together with sierra.com, represented less than 3% of Marmaxx’s net sales for both the second quarter and the first six months of fiscal 2024 and fiscal 2023, and did not have a significant impact on year-over-year segment margin comparisons.

HomeGoods

Net Sales

Net sales for HomeGoods were $2 billion for the second quarter of fiscal 2024, an increase of 8%, compared to $1.9 billion for the second quarter of fiscal 2023. This increase in the second quarter reflects a 4% increase from comp store sales and a 4% increase from non-comp store sales. The increase in comp store sales for the second quarter was driven by an increase in customer traffic, partially offset by a decrease in average basket. All geographies performed in line with the overall comp store sales increase.

Net sales for HomeGoods were $4 billion for the first six months of fiscal 2024, an increase of 2%, compared to $3.9 billion for the first six months of fiscal 2023. This increase in the first six months reflects a 4% increase from non-comp store sales, partially offset by a 2% decrease from comp store sales. The decrease in comp store sales for the first six months was driven by a decrease in average basket, partially offset by an increase in customer traffic. All geographies performed in line with the overall comp store sales decline.

Segment Profit Margin

Segment profit margin increased to 8.7% for the second quarter of fiscal 2024 compared to 2.7% for the same period last year. The increase in segment profit margin for the second quarter of fiscal 2024 was driven by higher merchandise margin, partially offset by higher incentive compensations costs and incremental store wage. Merchandise margin was driven by favorable freight costs, partially offset by lower markon.

Segment profit margin increased to 8.0% for the first six months of fiscal 2024 compared to 4.4% for the same period last year. The increase in segment profit margin for the first six months of fiscal 2024 was driven by higher merchandise margin driven by favorable freight costs, partially offset by deleverage on lower comp store sales, primarily in occupancy and administrative costs and incremental store wage.

Our HomeGoods e-commerce website, homegoods.com, represented less than 1% of HomeGoods net sales for both the second quarter and the first six months of fiscal 2024, and did not have a significant impact on year-over-year segment margin comparisons.

FOREIGN SEGMENTS

TJX Canada

(a)Comp store sales reported for fiscal 2024 and was not applicable for fiscal 2023.

Net Sales

Net sales for TJX Canada were $1.2 billion for the second quarter of fiscal 2024, a decrease of 2%, compared to net sales for the second quarter of fiscal 2023. This decrease in the second quarter reflects a negative foreign currency exchange rate impact of 4%, partially offset by a 1% increase in comp store sales and a 1% increase in non-comp store sales.

Net sales for TJX Canada were $2.3 billion for the first six months of fiscal 2024, a decrease of 3%, compared to net sales for the first six months of fiscal 2023. This decrease in the first six months reflects a negative foreign currency exchange rate impact of 5%, partially offset by a 1% increase in comp store sales and a 1% increase in non-comp store sales.

The increase in comp store sales for both the second quarter and first six months of fiscal 2024 was driven by an increase in customer traffic, partially offset by a decrease in average basket.

Segment Profit Margin

Segment profit margin decreased to 15.7% for the second quarter of fiscal 2024 compared to 15.8% for the same period last year. The decrease for the second quarter of fiscal 2024 was driven by higher incentive compensation costs, partially offset by higher merchandise margin. Merchandise margin reflects favorable freight costs, partially offset by higher markdowns, higher shrink accrual rates in the current year, and lower markon.

Segment profit margin decreased to 13.7% for the first six months of fiscal 2024 compared to 13.9% for the same period last year. The decrease for the first six months of fiscal 2024 was driven by higher administrative costs and higher incentive compensation costs, which were partially offset by higher merchandise margin. Merchandise margin reflects favorable freight costs, partially offset by higher shrink accrual rates in the current year.

TJX International

(a)Comp store sales reported for fiscal 2024 and was not applicable for fiscal 2023.

Net Sales

Net sales for TJX International were $1.6 billion for the second quarter of fiscal 2024, an increase of 8%, compared to $1.5 billion for the second quarter of fiscal 2023. This increase in the second quarter reflects a positive foreign currency exchange rate impact of 4%, a 3% increase in comp store sales and a 1% increase in non-comp store sales.

Net sales for TJX International were $3 billion for the first six months of fiscal 2024, an increase of 4%, compared to $2.9 billion for the first six months of fiscal 2023. This increase in the first six months of fiscal 2024 reflects a 4% increase in comp store sales and a 1% increase in non-comp store sales, partially offset by a negative foreign currency exchange rate impact of 1%.

The increase in comp store sales for both the second quarter and first six months of fiscal 2024 was driven by an increase in both customer traffic and average basket.

During the second quarter of fiscal 2024, TJX International made online shopping available in Germany at tkmaxx.de and in Austria at tkmaxx.at. E-commerce sales represented less than 3% of TJX International’s net sales for the second quarters of both fiscal 2024 and fiscal 2023 and less than 4% for the first six months of the same periods.

Segment Profit Margin

Segment profit margin decreased to 2.0% for the second quarter of fiscal 2024 compared to 7.0% for the same period last year. The decrease for the second quarter of fiscal 2024 was primarily due to a reserve related to a German government COVID program receivable, and higher administrative costs, incremental store wage and higher incentive compensation costs, partially offset by the favorable impact of transactional foreign exchange.

Segment profit margin decreased to 2.3% for the first six months of fiscal 2024 compared to 4.0% for the same period last year. The decrease for the first six months of fiscal 2024 was primarily due to a reserve related to a German government COVID program receivable, and higher administrative costs, incremental store wage and higher incentive compensation costs, partially offset by the favorable impact of transactional foreign exchange and higher merchandise margin. Merchandise margin reflects strong markon and favorable freight costs.

GENERAL CORPORATE EXPENSE

General corporate expense for segment reporting purposes represents those costs not specifically related to the operations of our business segments. General corporate expenses are primarily included in SG&A expenses. The mark-to-market adjustment of our fuel and inventory hedges is included in cost of sales, including buying and occupancy costs.

The increase in general corporate expense for the second quarter of fiscal 2024 was primarily driven by a contribution to TJX’s U.S. charitable foundation and higher incentive and share-based compensation costs, partially offset by favorable mark-to-market adjustments on fuel and inventory hedges.

The increase in general corporate expense for the first six months of fiscal 2024 was primarily driven by higher incentive and share-based compensation costs, a contribution to TJX’s U.S. charitable foundation and unfavorable mark-to-market adjustments on fuel hedges, partially offset by favorable mark-to-market adjustments on inventory hedges.

ANALYSIS OF FINANCIAL CONDITION

Liquidity and Capital Resources

Our liquidity requirements have traditionally been funded through cash generated from operations, supplemented, as needed, by short-term bank borrowings and the issuance of commercial paper. As of July 29, 2023, there were no short-term bank borrowings or commercial paper outstanding. We believe our existing cash and cash equivalents, internally generated funds and our credit facilities, under which facilities we have $1.5 billion available as of the period ended July 29, 2023, as described in Note I—Long-Term Debt and Credit Lines of Notes to Consolidated Financial Statements, are adequate to meet our operating needs for the foreseeable future.

As of July 29, 2023, we held $4.6 billion in cash. Approximately $1.3 billion of our cash was held by our foreign subsidiaries with $771 million held in countries where we intend to indefinitely reinvest any undistributed earnings. We have provided for all applicable state and foreign withholding taxes on all undistributed earnings of our foreign subsidiaries in Canada, Puerto Rico, Italy, India, Hong Kong and Vietnam through July 29, 2023. If we repatriate cash from such subsidiaries, we should not incur additional tax expense and our cash would be reduced by the amount of withholding taxes paid.

We monitor debt financing markets on an ongoing basis and from time to time may incur additional long-term indebtedness depending on prevailing market conditions, liquidity requirements, existing economic conditions and other factors. In fiscal 2024 we have used, and in the future we may continue to use, operating cash flow and cash on hand to repay portions of our indebtedness, depending on prevailing market conditions, liquidity requirements, existing economic conditions, contractual restrictions and other factors. As such, we may, from time to time, seek to retire, redeem, prepay or purchase our outstanding debt through redemptions, cash purchases, prepayments, refinancings and/or exchanges, in open market purchases, privately negotiated transactions, by tender offer or otherwise. If we use our operating cash flow and/or cash on hand to repay our debt, it will reduce the amount of cash available for additional capital expenditures.

Operating Activities

Operating activities resulted in net cash inflows of $2.1 billion for the six months ended July 29, 2023 and net cash inflows of $6 million for the six months ended July 30, 2022.

Operating cash flows increased compared to fiscal 2023 primarily due to the $1.4 billion change in merchandise inventories net of accounts payable, due to elevated inventories in the prior year attributable to larger in-transit inventory associated with the fiscal 2023 supply chain delays.

Investing Activities

Investing activities resulted in net cash outflows of $819 million for the six months ended July 29, 2023 and $703 million for the six months ended July 30, 2022. The cash outflows for both periods were driven by capital expenditures.

Investing activities in the first six months of fiscal 2024 primarily reflected property additions for store improvements and renovations, investments in our new stores, as well as investments in our distribution centers and offices, including information technology. We anticipate that capital spending for the full fiscal year 2024 will be approximately $1.7 billion to $1.9 billion. We plan to fund these expenditures with our existing cash balances and through internally generated funds.

Financing Activities

Financing activities resulted in net cash outflows of $2.2 billion for the first six months of fiscal 2024 and net cash outflows of $1.9 billion for the first six months of fiscal 2023. The cash outflows for both periods were primarily driven by equity repurchases and dividend payments. Additionally the first six months of fiscal 2024 included a $500 million debt repayment upon maturity.

Debt

The cash outflows in the first six months of fiscal 2024 were due to the repayment of our $500 million 2.500% ten-year Notes due May 2023 during the second quarter of fiscal 2024, upon maturity. For further information regarding long-term debt, see Note I—Long-Term Debt and Credit Lines of Notes to Consolidated Financial Statements.

Equity

Under our stock repurchase programs, we paid $1 billion to repurchase and retire 13.1 million shares of our stock on a settlement basis in the first six months of fiscal 2024. As of July 29, 2023, approximately $2.5 billion remained available under our existing stock repurchase programs. We paid $1.3 billion to repurchase and retire 21.5 million shares of our stock on a settlement basis in the first six months of fiscal 2023. We currently plan to repurchase approximately $2 billion to $2.5 billion of stock under our stock repurchase programs in fiscal 2024. For further information regarding equity repurchases, see Note D – Capital Stock and Earnings Per Share of Notes to Consolidated Financial Statements.

The Inflation Reduction Act of 2022, which became law in August 2022, levies a 1% excise tax on net stock repurchases after December 31, 2022. Beginning on January 1, 2023, these purchases are subject to the excise tax. The excise tax on the net stock repurchase portion of the IRA did not have a material impact on our results of operations or financial position for the first six months ended July 29, 2023. See Note J—Income Taxes of Notes to Consolidated Financial Statements for additional information.

Dividends

We declared quarterly dividends on our common stock of $0.3325 per share in the first six months of fiscal 2024 and $0.295 per share in the first six months of fiscal 2023. Cash payments for dividends on our common stock totaled $725 million for the first six months of fiscal 2024 and $655 million for the first six months of fiscal 2023.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

There have been no material changes to the critical accounting estimates as discussed in TJX's Annual Report on Form 10-K for the fiscal year ended January 28, 2023. For a discussion of accounting standards, see Note A—Basis of Presentation and Summary of Significant Accounting Policies of Notes to Consolidated Financial Statements included in TJX’s Annual Report on Form 10-K for the fiscal year ended January 28, 2023 and Note A—Basis of Presentation and Summary of Significant Accounting Policies of Notes to Consolidated Financial Statements in this Quarterly Report on Form 10-Q.

FORWARD-LOOKING STATEMENTS

Various statements made in this Quarterly Report on Form 10-Q are forward-looking, and are inherently subject to a number of risks and uncertainties. All statements that address activities, events or developments that we intend, expect or believe may occur in the future are forward-looking statements, including, among others, statements regarding the Company's anticipated operating and financial performance, business plans and prospects, anticipated dividends and share repurchases, plans with respect to long-term indebtedness, and the Company's plans related to, and expected impact of, a pension payout offer. These statements are typically accompanied by the words “aim,” “anticipate,” “aspire,” “believe,” “continue,” “could,” “should,” “estimate,” “expect,” “forecast,” “goal,” “hope,” “intend,” “may,” “plan,” “project,” “potential,” “seek,” “strive,” “target,” “will,” “would,” or similar words, although not all forward-looking statements contain these identifying words. Each forward-looking statement is subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. Applicable risks and uncertainties include, among others, execution of buying strategy and inventory management; customer trends and preferences; competition; various marketing efforts; operational and business expansion; management of large size and scale; COVID-19 or other public health and public safety issues that affect our operations and consumers; merchandise sourcing and transport; data security and maintenance and development of information technology systems; labor costs and workforce challenges; personnel recruitment, training and retention; corporate and retail banner reputation; evolving corporate governance and public disclosure regulations and expectations with respect to environmental, social and governance matters; expanding international operations; fluctuations in quarterly operating results and market expectations; inventory or asset loss; cash flow; mergers, acquisitions, or business investments and divestitures, closings or business consolidations; real estate activities; economic conditions and consumer spending; market instability; severe weather, serious disruptions or catastrophic events; disproportionate impact of disruptions in the second half of the fiscal year; commodity availability and pricing; fluctuations in currency exchange rates; compliance with laws, regulations and orders and changes in laws, regulations and applicable accounting standards; outcomes of litigation, legal proceedings and other legal or regulatory matters; quality, safety and other issues with our merchandise; tax matters; and other factors that may be described in our filings with the Securities and Exchange Commission (the “SEC”), including our most recent Annual Report on Form 10-K filed with the SEC. You are encouraged to read our filings with the SEC, available at www.sec.gov, for a discussion of these and other risks and uncertainties. We caution investors, potential investors and others not to place considerable reliance on the forward-looking statements contained in this Form 10-Q. The forward-looking statements in this report speak only as of the date of this Form 10-Q, and we do not undertake any obligation to publicly update or revise our forward-looking statements, even if experience or future changes make it clear that any projected results expressed or implied in such statements will not be realized.

There have been no material changes in our primary risk exposures or management of market risks from those disclosed in our Annual Report on Form 10-K for the fiscal year ended January 28, 2023.

We have carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of July 29, 2023 pursuant to Rules 13a-15(b) and 15d-15(b) of the Securities Exchange Act of 1934, as amended (the “Act”). Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective at the reasonable assurance level in ensuring that information required to be disclosed by us in the reports that we file or submit under the Act is (i) recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms; and (ii) accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosures. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of implementing controls and procedures.

There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Act) during the fiscal quarter ended July 29, 2023 identified in connection with the evaluation by our management, including our Chief Executive Officer and Chief Financial Officer, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION

Item 1. Legal Proceedings

See Note K—Contingent Obligations, Contingencies, and Commitments of Notes to Consolidated Financial Statements for information on legal proceedings.

There have been no material changes to the risk factors disclosed in the “Risk Factors” section of our Annual Report on Form 10-K for the year ended January 28, 2023, as filed with the Securities Exchange Commission on March 29, 2023.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

INFORMATION ON SHARE REPURCHASES

The number of shares of common stock repurchased by TJX during the second quarter of fiscal 2024 and the average price paid per share are as follows:

(a)Consists of shares repurchased under publicly announced stock repurchase programs.

(b)Includes commissions for the shares repurchased under stock repurchase programs.

(c)In February 2023, we announced that our Board of Directors had approved a new stock repurchase program that authorized the repurchase of up to an additional $2 billion of our common stock from time to time. Under this program and a previously announced program, we had approximately $2.5 billion available for repurchase as of July 29, 2023.

During the fiscal quarter ended July 29, 2023, none of our directors or officers adopted, modified, or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as those terms are defined in Item 408(a) of Regulation S-K.

• Management contract or compensatory plan or arrangement.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934 the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.