What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-08-27 compared with 2021-05-28 · 274 added, 188 removed, 219 unchanged (68% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The Thirteen Weeks (first quarter) Ended May 1, 2021

The Thirteen Weeks (first quarter) Ended May 2, 2020

The Thirteen Weeks (second quarter) and Twenty-Six Weeks (six months) Ended July 31, 2021

The Thirteen Weeks (second quarter) and Twenty-Six Weeks (six months) Ended August 1, 2020

We are the leading off-price apparel and home fashions retailer in the U.S.

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The novel coronavirus disease (“COVID-19”) continues to impact our financial results.

During the first quarter of fiscal 2022, while our stores in the United States remained open for the entire first quarter, we had store closures primarily in Europe and Canada, and continue to have store closures, as discussed below.

Overall, our first quarter results for fiscal 2022 are significantly better than our results for the first quarter of fiscal 2021, when the pandemic resulted in the temporary closure of all our stores for approximately 50% of the quarter.

In addition to comparing current year results to fiscal 2021, we may, where meaningful, also compare these results to a comparable period in fiscal 2020, prior to the emergence of the pandemic.

During the second quarter of fiscal 2022, our stores in the United States remained open for the entire quarter.

However, we had temporary store closures in Europe, Canada and Australia during the second quarter of fiscal 2022, and in the beginning of the third quarter of fiscal 2022 continued to have temporary store closures in Australia, as discussed below.

Stores were temporarily closed for approximately 3% of the second quarter and 8% of the first six months of fiscal 2022, due to temporary closures in Europe, Canada and Australia, as compared to stores across all geographies being closed for approximately 31% of the second quarter and 41% of the first six months of fiscal 2021.

Overall, our second quarter and first six months results for fiscal 2022 were significantly better than our results for the second quarter and first six months of fiscal 2021.

In addition to comparing current year results to fiscal 2021, we may, where meaningful, also compare these results to a comparable period in the fiscal year ended February 1, 2020 (“fiscal 2020”), prior to the emergence of the pandemic.

Although we are not fully past the negative impacts of the pandemic, we feel this additional comparison provides insight into how we are managing the business and performing as compared to pre-pandemic results.

Overview of our financial performance for the quarter ended May 1, 2021 includes the following:

– Net sales were $10.1 billion, $4.4 billion and $9.3 billion for the first quarter of fiscal 2022, fiscal 2021 and fiscal 2020, respectively.

As of May 1, 2021, the number of stores in operation (including stores that had been or continue to be temporarily closed due to COVID-19) increased 2% and selling square footage increased 2% compared to the end of the fiscal 2021 first quarter.

– Diluted earnings (loss) per share were $0.44, $(0.74) and $0.57 for the first quarter of fiscal 2022, fiscal 2021 and fiscal 2020, respectively.

– Pre-tax margin (the ratio of pre-tax income (loss) to net sales) was 7.2%, (30.5)% and 10.1% for the first quarter of fiscal 2022, fiscal 2021 and fiscal 2020, respectively.

– Our cost of sales, including buying and occupancy costs, ratio was 71.9%, 100.1% and 71.5% for the first quarter of fiscal 2022, fiscal 2021 and fiscal 2020, respectively.

– Our selling, general and administrative (“SG&A”) expense ratio was 20.5%, 29.8% and 18.3% for the first quarter of fiscal 2022, fiscal 2021 and fiscal 2020, respectively.

– 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 8% on a reported basis and down 11% on a constant currency basis at the end of the first quarter of fiscal 2022 as compared to a 7% decrease in average per store inventories on a reported basis and 6% decrease on a constant currency basis in the first quarter of fiscal 2021.

– A dividend of $0.26 per share was declared in the first quarter of fiscal 2022 and no dividends were declared during the first quarter of fiscal 2021.

There were no share repurchases during the first quarter of fiscal 2022.

During the first quarter of fiscal 2021, we returned approximately $0.5 billion to our shareholders through payment of the dividend declared in the fourth quarter of fiscal 2020 and share repurchases.

– In April 2021, we redeemed $750 million of debt that was due to mature in June 2021 at par.

– Subsequent to the end of the first quarter of fiscal 2022, we announced make-whole calls that will, upon completion, reduce outstanding debt by $2 billion.

We also lifted the temporary suspension of our share repurchase programs.

Overview of our financial performance for the quarter ended July 31, 2021 includes the following:

– Net sales were $12.1 billion, $6.7 billion and $9.8 billion for the second quarter of fiscal 2022, fiscal 2021 and fiscal 2020, respectively.

As of July 31, 2021, the number of stores in operation (including stores that had been or continue to be temporarily closed due to COVID-19) increased 2% and selling square footage increased 2% compared to the end of the fiscal 2021 second quarter.

– Diluted earnings (loss) per share were $0.64, $(0.18) and $0.62 for the second quarter of fiscal 2022, fiscal 2021 and fiscal 2020, respectively.

– Stores were temporarily closed for approximately 3% and 31% of the second quarter of fiscal 2022 and fiscal 2021, respectively.

– Pre-tax margin (the ratio of pre-tax income (loss) to net sales) was 8.7%, (1.4)% and 10.4% for the second quarter of fiscal 2022, fiscal 2021 and fiscal 2020, respectively.

– During the second quarter of fiscal 2022, we completed make-whole calls for $2 billion of our debt that was due to mature in 2025 and 2027 and recorded a pre-tax loss on the early extinguishment of these notes of $242 million.

This reduced fiscal 2022 pre-tax margin by 2.0 percentage points and reduced earnings per share by $0.15 per share.

– Our cost of sales, including buying and occupancy costs, ratio was 70.6%, 77.6% and 71.8% for the second quarter of fiscal 2022, fiscal 2021 and fiscal 2020, respectively.

– Our selling, general and administrative (“SG&A”) expense ratio was 18.4%, 22.9% and 17.7% for the second quarter of fiscal 2022, fiscal 2021 and fiscal 2020, respectively.

– Consolidated merchandise inventories as of the end of the second quarter of fiscal 2022 increased 36% compared to the second quarter of fiscal 2021 and was essentially flat compared to the second quarter of fiscal 2020.

On a constant currency basis, consolidated merchandise inventories as of the end of the second quarter of fiscal 2022 increased 33% compared to the second quarter of fiscal 2021 and decreased 3% compared to the second quarter of fiscal 2020.

– During the second quarter of fiscal 2022, we returned $614 million to our shareholders through share repurchases and dividends.

Operating Results as a Percentage of Net Sales

The following table sets forth certain information about our operating results as a percentage of net sales for the following periods:

Thirteen Weeks Ended Twenty-Six Weeks Ended

2021 August 1,

2020 August 3,

2019 July 31,

2021 August 1,

2020 August 3,

Net sales 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 %

Cost of sales, including buying and occupancy costs 70.6 77.6 71.8 71.2 86.6 71.7

Selling, general and administrative expenses 18.4 22.9 17.7 19.4 25.7 18.0

Loss on early extinguishment of debt 2.0 — — 1.1 — —

Interest expense, net 0.2 0.9 — 0.3 0.7 —

Income (loss) before provision for income taxes *

8.7 % (1.4) % 10.4 % 8.0 % (13.0) % 10.3 %

* Figures may not foot due to rounding.

Recent Events and Trends

COVID-19 was first identified in December 2019 before spreading worldwide and being declared a pandemic by the World Health Organization in March 2020.

COVID-19 was identified in December 2019 before spreading worldwide and being declared a pandemic by the World Health Organization in March 2020.

In response to the COVID-19 pandemic, we temporarily closed all of our stores, online businesses, distribution centers and offices in March 2020, with Associates working remotely where possible.

When we began to reopen stores and distribution centers in May 2020, we implemented new health and safety practices, including practices related to personal protective equipment, enhanced cleaning and social distancing protocols (which include occupancy limits and reducing i n-store inventory levels).

When we began to reopen stores and distribution centers in May 2020, we implemented new health and safety practices, including practices related to personal protective equipment, enhanced cleaning and social distancing protocols (which included occupancy limits and reducing in-store inventory levels).

In response to the pandemic, primarily during the first quarter of fiscal 2021, we took several steps to strengthen our financial position and balance sheet and to maintain financial liquidity and flexibility.

In response to increasing cases of COVID-19 and due to government mandates, hundreds of stores had additional temporary closures during the first quarter of fiscal 2022, primarily located in Europe and Canada.

Our results for the first quarter of fiscal 2022 and fiscal 2021 were negatively impacted by the temporary closure of our stores for approximately 14% of the first quarter of fiscal 2022 and approximately 50% of the first quarter of fiscal 2021 in the aggregate.

This represents total store days closed due to the COVID-19 pandemic as a percentage of potential total store days open.

The below tables represents the first quarter of fiscal 2022 and the first quarter of fiscal 2021 store closures by segment (in percentage of store days closed).

Thirteen Weeks Ended

In response to increasing cases of COVID-19 and due to government mandates, hundreds of stores located in Canada, Australia and Europe had additional temporary closures during fiscal 2022, and many additional stores, while open, were operating with stringent COVID-19-related occupancy restrictions, negatively impacting our results during the second quarter and first six months of fiscal 2022.

The below table represents total store days closed due to the COVID-19 pandemic as a percentage of potential total store days open in the second quarter and first six months of fiscal 2022 and fiscal 2021 by segment.

Thirteen Weeks Ended Twenty-Six Weeks Ended

2021 August 1,

2020 July 31,

2021 August 1,

Marmaxx — % 31 % — % 40 %

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TJX International 3 % 35 % 37 % 42 %

Total 14 % 50 %

As of May 23, 2021, we had approximately 260 stores, primarily located in Canada, that were still temporarily closed due to government mandates in response to the COVID-19 pandemic.

In total, based on the restrictions currently in place, we expect stores to be closed for approximately 3% of the second quarter of fiscal 2022.

All of our e-commerce businesses remained open throughout the first quarter of fiscal 2022, including tkmaxx.com in the U.K.

TJX Consolidated 3 % 31 % 8 % 41 %

As of August 20, 2021, we had approximately 40 stores located in Australia that were temporarily closed due to government mandates in response to the COVID-19 pandemic.

All of our e-commerce businesses remained open throughout the first six months of fiscal 2022.

We continue to monitor developments, including government requirements and recommendations at the national, state, and local level that could result in possible additional impacts to our operations.

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However, a portion of the merchandise we source in the U.K.

and the EU is produced somewhere else in the world, and therefore will be subject to additional customs duty costs under the new trade deal.

These additional customs duties and the related operational costs are likely to impact the profitability of our European division, at least in the short term.

and the EU is produced somewhere else in the world, and therefore is subject to additional customs duty costs under the new trade deal.

These additional customs duties and the related operational costs have started to impact the profitability of our European division, and may continue to do so, at least in the short term.

New immigration requirements between the U.K.

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These impacts may not be known until we are fully operational after the COVID-19 restrictions are lifted, as the COVID-19 pandemic has led to modifications of our operations in fiscal 2021 and continuing into fiscal 2022.

Net sales totaled $10.1 billion, $4.4 billion and $9.3 billion for the first quarter of fiscal 2022, fiscal 2021 and fiscal 2020, respectively.

Net sales from our e-commerce businesses combined amounted to less than 3% of total sales for the first quarters of fiscal 2022, fiscal 2021 and fiscal 2020.

As a result of the extended store closures during fiscal 2021 due to the COVID-19 pandemic and our policy relating to the treatment of extended store closures when calculating comp store sales, we had no stores classified as comp stores at the end of the first quarter fiscal 2022 and fiscal 2021.

Net sales totaled $12.1 billion, $6.7 billion and $9.8 billion for the second quarters of fiscal 2022, fiscal 2021 and fiscal 2020, respectively.

Net sales from our e-commerce businesses combined amounted to less than 3% of total sales for the second quarters of fiscal 2022, fiscal 2021 and fiscal 2020.

Net sales totaled $22.2 billion, $11.1 billion and $19.1 billion for the first six months of fiscal 2022, fiscal 2021 and fiscal 2020, respectively.

Net sales from our e-commerce businesses combined amounted to less than 3% of total sales for the first six months of fiscal 2022, fiscal 2021 and fiscal 2020.

As a result of the extensive temporary store closures during fiscal 2021 due to the COVID-19 pandemic and our policy relating to the treatment of extended temporary store closures when calculating comp store sales, we had no stores classified as comp stores at the end of the second quarters of fiscal 2022 and fiscal 2021.

Our historical definition of comp store sales is presented below for reference.

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In order to provide a performance indicator for our stores as they reopened, since the second quarter of fiscal 2021, we have been temporarily reporting a new sales measure, open-only comp store sales.

Open-only comp store sales includes stores initially classified as comp stores at the beginning of fiscal 2021 that have had to temporarily close due to the COVID-19 pandemic.

For the first quarter of fiscal 2022, this measure reports the sales increase or decrease of these stores for the days the stores were open in the current period against sales for the same days in the first quarter of fiscal 2020 prior to the pandemic.

Open-only comp sales of our foreign segments are calculated by translating the current year using the first quarter of fiscal 2020’s exchange rates.

Open-only comp store sales includes stores initially classified as comp stores at the beginning of fiscal 2021 that had to temporarily close due to the COVID-19 pandemic.

For the second quarter and first half of fiscal 2022, this measure reports the sales increase or decrease of these stores for the days the stores were open in the current period against sales for the same days in fiscal 2020, prior to the pandemic.

Open-only comp store sales of our foreign segments are calculated by translating the current year using the second quarter and the first half of fiscal 2020’s exchange rates.

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.

Q1 Fiscal 2022 vs Q1 Fiscal 2021

Net sales increased 129% in the first quarter of fiscal 2022 compared to the first quarter of fiscal 2021 due to the temporary closures of all stores and online businesses during the first quarter of fiscal 2021 as a result of the COVID-19 pandemic.

Stores were closed for approximately 14% of the first quarter of fiscal 2022, primarily in Europe and portions of Canada, as compared to stores across all geographies being closed for approximately 50% of the first quarter of fiscal 2021 as a result of the COVID-19 pandemic.

Q1 Fiscal 2022 vs Q1 Fiscal 2020

Net sales increased 9% in the first quarter of fiscal 2022 compared to the first quarter of fiscal 2020.

Open-only comp store sales were up 16% for fiscal 2022 as compared to fiscal 2020.

This reflects an increase in average basket across all divisions partially offset by a reduction in customer traffic.

Home fashion across all major segments outperformed apparel for the first quarter of fiscal 2022.

Fiscal 2022 vs Fiscal 2021

Net sales increased 81% in the second quarter of fiscal 2022 compared to the second quarter of fiscal 2021.

Net sales increased 100% for the first six months of fiscal 2022 compared to the first six months of fiscal 2021.

The increases for these periods are primarily due to the temporary closures of all stores and online businesses during portions of the second quarter and first six months of fiscal 2021 as a result of the COVID-19 pandemic.

Stores were closed for approximately 3% of the second quarter and 8% of the first six months of fiscal 2022, due to temporary closures in Europe, Canada and Australia, as compared to stores across all geographies being temporarily closed for approximately 31% of the second quarter and 41% of the first six months of fiscal 2021.

Fiscal 2022 vs Fiscal 2020

Net sales increased 23% and open-only comp store sales were up 20% for the second quarter of fiscal 2022 compared to the second quarter of fiscal 2020.

Net sales increased 16% and open-only comp store sales were up 18% for the first six months fiscal 2022 compared to the first six months of fiscal 2020.

These reflect an increase in average basket across all divisions, partially offset by a reduction in customer traffic for both periods.

Customer traffic was up in the U.S., where stores were open for the entire second quarter and the first six months of fiscal 2022, and was down in geographies where we had temporary store closures or stores operating under COVID-19-related occupancy restrictions.

While our open-only comp store sales in home fashions continued to exceed those of apparel, we had strong improvement in our open-only comp store sales in apparel during the quarter and first six months of fiscal 2022.

Historical Definition of Comp Store Sales

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We determine which stores are included in the comp 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.

Beginning in fiscal 2020, Sierra stores that otherwise fit the comp store definition are included in comp stores in our Marmaxx segment.

Beginning in fiscal 2020, Sierra stores that fit the comp store definition were included in comp stores in our Marmaxx segment.

Comp sales of our foreign segments are calculated by translating the current year’s comp sales using the prior year’s exchange rates.

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The method for calculating comp sales varies across the retail industry, therefore our measure of comp sales may not be comparable to that of other retail companies.

The following table sets forth certain information about our operating results as a percentage of net sales for the following periods:

Thirteen Weeks Ended

Net sales 100.0 % 100.0 % 100.0 %

Cost of sales, including buying and occupancy costs 71.9 100.1 71.5

Selling, general and administrative expenses 20.5 29.8 18.3

Interest expense, net 0.4 0.5 —

Income (loss) before provision for income taxes *

7.2 % (30.5) % 10.1 %

* Figures may not foot due to rounding.

Impact of Foreign Currency Exchange Rates

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Cost of Sales, Including Buying and Occupancy Costs

Cost of sales, including buying and occupancy costs, was $7.3 billion, or 71.9% of net sales, $4.4 billion, or 100.1% of net sales and $6.6 billion, or 71.5% of net sales for the first quarters of fiscal 2022, fiscal 2021 and fiscal 2020, respectively.

Q1 Fiscal 2022 vs Q1 Fiscal 2021

The increase in the total cost of sales, including buying and occupancy costs, was mainly attributable to the reduction in cost of merchandise sold due to a lower level of sales in the first quarter of fiscal 2021, due to our stores being temporarily closed in the aggregate for approximately 50% of the first quarter of fiscal 2021.

In addition, merchandise margin significantly improved compared to the first quarter of fiscal 2021 primarily driven by lower markdowns in the first quarter of fiscal 2022 as a result of the incremental markdowns taken in fiscal 2021 due to the temporary store closures.

The first quarter of fiscal 2022 also reflects higher supply chain costs.

Cost of sales, including buying and occupancy costs was favorably impacted by approximately $21 million and $35 million of government programs for the first quarters of fiscal 2022 and fiscal 2021, respectively, in regions where we had closures.

Q1 Fiscal 2022 vs Q1 Fiscal 2020

The increase in the expense ratio of 0.4% in the first quarter of fiscal 2022 compared to fiscal 2020 reflects higher supply chain costs primarily driven by higher wages and expenses related to the additional distribution capacity.

Additionally, in the first quarter of fiscal 2022, the expense deleveraged on the supply chain costs due to lost sales as a result of the temporary store closures.

The increase in the expense ratio was partially offset by the leverage on our occupancy costs due to the strong open-only comp sales growth as well as improved merchandise margin in the first quarter of fiscal 2022.

Merchandise margin reflects strong markon and lower markdowns, mostly offset by higher freight costs.

Cost of sales, including buying and occupancy costs, was $8.5 billion, or 70.6% of net sales, $5.2 billion, or 77.6% of net sales and $7.0 billion, or 71.8% of net sales for the second quarters of fiscal 2022, fiscal 2021 and fiscal 2020, respectively.

Cost of sales, including buying and occupancy costs, was $15.8 billion or 71.2% of net sales, $9.6 billion, or 86.6% of net sales and $13.7 billion, or 71.7% of net sales for the first six months of fiscal 2022, fiscal 2021 and fiscal 2020, respectively.

Fiscal 2022 vs Fiscal 2021

The increases in the total cost of sales, including buying and occupancy costs, were mainly attributable to the additional cost of merchandise sold due to a higher level of sales in both the second quarter and the first six months of fiscal 2022 compared to fiscal 2021.

In fiscal 2021, our stores were temporarily closed in the aggregate for approximately 31% of the second quarter and approximately 41% of the first six months of fiscal 2021.

The cost of merchandise sold during the second quarter of fiscal 2022 includes higher freight costs.

Merchandise margin significantly improved during the first six months of fiscal 2022, primarily driven by favorable markdowns, which were partially offset by increased freight costs.

The second quarter and first six months of fiscal 2022 reflect higher supply chain costs.

Cost of sales, including buying and occupancy costs, was favorably impacted by approximately $3 million and $28 million of government programs for the second quarters of fiscal 2022 and fiscal 2021, respectively, as well as $24 million and $63 million of government programs for the first six months of fiscal 2022 and fiscal 2021, respectively, in regions where we had temporary store closures.

Fiscal 2022 vs Fiscal 2020

The expense ratios decreased 1.2% for the second quarter of fiscal 2022 and 0.5% for the first six months of fiscal 2022 compared to the same periods of fiscal 2020.

The decreases reflect the leverage on our occupancy costs due to the strong open-only comp store sales growth as well as improved merchandise margin.

Within merchandise margin, strong markon and lower markdowns collectively more than offset incremental freight costs.

In addition, the expense ratio decreases were partially offset by higher supply chain costs primarily due to additional distribution capacity and higher wages.

Selling, General and Administrative Expenses

SG&A expenses were $2.1 billion, or 20.5% of net sales, $1.3 billion, or 29.8% of net sales and $1.7 billion, or 18.3% of net sales for the first quarters of fiscal 2022, fiscal 2021 and fiscal 2020, respectively.

Q1 Fiscal 2022 vs Q1 Fiscal 2021

The increase in SG&A expenses for the first quarter of fiscal 2022 compared to the first quarter of fiscal 2021 was driven by higher store payroll and store supply costs primarily due to incremental COVID-19 expenses.

Additionally, these costs and other variable store costs such as advertising spend and credit processing fees were up as compared to the first quarter of fiscal 2021 as a result of increased store operating days.

Payroll was favorably impacted by $121 million and $152 million of government programs for both the first quarter of fiscal 2022 and fiscal 2021, respectively, in regions where we had store closures.

Q1 Fiscal 2022 vs Q1 Fiscal 2020

The increase in the expense ratio of 2.2% in the first quarter of fiscal 2022 compared to the first quarter of fiscal 2020 was driven by higher store payroll and store supply costs primarily due to incremental COVID-19 expenses.

These incremental costs were partially offset by the government programs received in fiscal 2022.

SG&A expenses were $2.2 billion, or 18.4% of net sales, $1.5 billion, or 22.9% of net sales and $1.7 billion, or 17.7% of net sales for the second quarters of fiscal 2022, fiscal 2021 and fiscal 2020, respectively.

SG&A expenses were $4.3 billion, or 19.4% of net sales, $2.8 billion, or 25.7% of net sales and $3.4 billion, or 18.0% of net sales for the first six months of fiscal 2022, fiscal 2021 and fiscal 2020, respectively.

Fiscal 2022 vs Fiscal 2021

The increases in SG&A expenses for both the second quarter and the first six months of fiscal 2022 compared to the same periods of fiscal 2021 were driven by higher store payroll costs primarily due to increased store operating days in fiscal 2022.

In addition to these costs, incentive compensation costs and other variable store costs, such as advertising spend and credit processing fees, were up in fiscal 2022 as compared to the second quarter and the first six months of fiscal 2021 as a result of increased store operating days.

SG&A expenses were favorably impacted by $85 million and $196 million from government programs for the second quarter of fiscal 2022 and fiscal 2021, respectively, as well as $206 million and $348 million from government programs for the first six months of fiscal 2022 and fiscal 2021, respectively, in regions where we had temporary store closures.

Fiscal 2022 vs Fiscal 2020

The expense ratios increased 0.7% for the second quarter of fiscal 2022 and 1.4% for the first six months of fiscal 2022 compared to the same periods of fiscal 2020.

The increases were driven by higher store payroll and store supply costs primarily due to incremental COVID-19 expenses and higher share-based and incentive compensation costs.

These costs were partially offset by credits received from government programs in fiscal 2022.

Loss On Early Extinguishment of Debt

On June 4, 2021, we completed make-whole calls for our $1.25 billion aggregate principal amount of 3.50% Notes maturing in 2025 and our $750 million aggregate principal amount of 3.75% Notes maturing in 2027.

As a result of these redemptions prior to their scheduled maturities, we recorded a pre-tax debt extinguishment charge of $242 million in the second quarter of fiscal 2022.

For additional information on the debt transactions, see Note I—Long-Term Debt and Credit Lines of Notes to Consolidated Financial Statements.

Interest Expense, net

The components of interest expense, net are summarized below:

Thirteen Weeks Ended

In millions May 1,

Thirteen Weeks Ended Twenty-Six Weeks Ended

In millions July 31,

2021 August 1,

2020 July 31,

2021 August 1,

Interest expense $ 30.4 $ 60.2 $ 77.4 $ 92.8

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Interest expense, net $ 28.6 $ 57.3 $ 73.3 $ 80.7

Net interest expense increased for the first quarter of fiscal 2022 compared to the same period in fiscal 2021, primarily due to the additional borrowings initiated in fiscal 2021, which only partially impacted the first quarter of fiscal 2021.

Net interest expense decreased for both the second quarter of fiscal 2022 and the six months ended July 31, 2021 compared to the same periods in fiscal 2021, primarily due to the prior year’s refinancing of certain notes in December 2020 as well as the $2.75 billion pay down of outstanding debt during the first six months of fiscal 2022.

Provision for Income Taxes

The e ffective income tax rate was 26.0%, 33.9% and 25.2% for the first quarters of fiscal 2022, fiscal 2021 and fiscal 2020, respectively.

The decrease in the first quarter effective income tax rate of fiscal 2022 was primarily a result of the ability to carry back the anticipated loss from the first quarter of fiscal 2021 to earlier tax years with higher tax rates due to a benefit provided by the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) enacted on March 27, 2020.

The e ffective income tax rate was 25.5%, (132.8)% and 25.7% for the second quarters of fiscal 2022, fiscal 2021 and fiscal 2020, respectively.

The e ffective income tax rate was 25.7%, 23.2% and 25.5% for the first six months of fiscal 2022, fiscal 2021 and fiscal 2020, respectively.

The increase in the second quarter and the first six months effective income tax rate of fiscal 2022 was primarily due to the decrease of anticipated benefit from the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) enacted on March 27, 2020 in the second quarter of fiscal 2021.

Net Income / (Loss) and Diluted Earnings (Loss) Per Share

Net income (loss) was $534 million, $(887) million and $700 million for the first quarters of fiscal 2022, fiscal 2021 and fiscal 2020, respectively.

Net income (loss) per diluted share was $0.44, $(0.74) and $0.57 for the first quarters of fiscal 2022, fiscal 2021 and fiscal 2020, respectively.

Net income (loss) was $786 million, $(214) million and $759 million for the second quarters of fiscal 2022, fiscal 2021 and fiscal 2020, respectively.

Net income (loss) was $1.3 billion, $(1.1) billion and $1.5 billion for the first six months of fiscal 2022, fiscal 2021 and fiscal 2020, respectively.

Net income (loss) per diluted share was $0.64, $(0.18) and $0.62 for the second quarters of fiscal 2022, fiscal 2021 and fiscal 2020, respectively.

Net income (loss) per diluted share was $1.08, $(0.92) and $1.19 for the first six months of fiscal 2022, fiscal 2021 and fiscal 2020, respectively.

Segment Information

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Our Marmaxx segment (T.J.

Maxx, Marshalls, tjmaxx.com and marshalls.com) and the HomeGoods segment (HomeGoods and Homesense) both operate in the United States.

Maxx, Marshalls, tjmaxx.com and marshalls.com) and our HomeGoods segment (HomeGoods and Homesense) both operate in the United States.

Our TJX Canada segment operates Winners, HomeSense and Marshalls in Canada, and our TJX International segment operates T.K.

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In order to provide a performance indicator for our stores as they reopen, we have been temporarily reporting a new sales measure, open-only comp store sales.

Open-only comp store sales includes stores initially classified as comp stores at the beginning of fiscal 2021 that have had to temporarily close due to the COVID-19 pandemic.

This measure reports the sales increase or decrease of these stores for the days the stores were open in the first quarter of fiscal 2022 against sales for the same days in fiscal 2020, prior to the emergence of the pandemic.

Open-only comp store sales includes stores initially classified as comp stores at the beginning of fiscal 2021 that had to temporarily close due to the COVID-19 pandemic.

This measure reports the sales increase or decrease of these stores for the days the stores were open in the second quarter and first half of fiscal 2022 against sales for the same days in fiscal 2020, prior to the emergence of the pandemic.

When discussing current year segment results, in addition to comparing to fiscal 2021, we may, where meaningful, also compare these results to a comparable period in fiscal 2020, prior to the emergence of the pandemic.

As the TJX International segment results for the first quarter of fiscal 2022 were significantly impacted by temporary store closures due to the COVID-19 pandemic, we do not believe a comparison to fiscal 2020 would be meaningful.

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

Thirteen Weeks Ended

dollars in millions May 1,

Thirteen Weeks Ended Twenty-Six Weeks Ended

dollars in millions July 31,

2021 August 1,

2020 August 3,

2019 July 31,

2021 August 1,

2020 August 3,

Net sales $ 7,349 $ 3,959 $ 6,107 $ 13,989 $ 6,657 $ 11,908

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Marshalls 1,145 1,134 1,107

Sierra 52 46 39

Total 2,480 2,451 2,406

4 unchanged sentences

Total 54,878 54,475 53,765

Net sales for Marmaxx were $6.6 billion for the first quarter of fiscal 2022, an increase of 146% compared to $2.7 billion for the first quarter of fiscal 2021.

The increase reflects significant temporary store closings in the first quarter of fiscal 2021.

Stores were closed for nearly half of the first quarter of fiscal 2021 as a result of the COVID-19 pandemic.

Net sales increased 14% compared to $5.8 billion for the first quarter of fiscal 2020.

Open-only comp store sales were up 12% for the first quarter of fiscal 2022 compared to the first quarter of fiscal 2020.

The increase in open-only comp sales was primarily driven by an increase in average basket.

Home fashions outperformed apparel for the first quarter of fiscal 2022.

Net sales for Marmaxx were $7.3 billion for the second quarter of fiscal 2022, an increase of 86% compared to $4.0 billion for the second quarter of fiscal 2021.

Net sales were $14.0 billion for the first six months of fiscal 2022, an increase of 110% compared to $6.7 billion for the first six months of fiscal 2021.

Both increases reflect significant temporary store closings in the second quarter and the first six months of fiscal 2021.

Stores were closed for approximately 31% of the second quarter and 40% of the first six months of fiscal 2021, respectively, as a result of the COVID-19 pandemic.

Net sales increased 20% compared to $6.1 billion for the second quarter of fiscal 2020 and increased 17% compared to $11.9 billion for the first six months of fiscal 2020.

Open-only comp store sales were up 18% for the second quarter of fiscal 2022 and 15% for the first six months of fiscal 2022 compared to the same periods of fiscal 2020.

The increases in open-only comp store sales were primarily driven by an increase in average basket as well as an increase in customer traffic.

Segment Profit / (Loss)

Segment profit was $825 million for the first quarter of fiscal 2022, an increase of $1.5 billion, compared to a segment loss of $(710) million for the first quarter of fiscal 2021.

The increase for the first quarter was primarily driven by increased sales due to the temporary store closures in the first quarter of fiscal 2021.

The first quarter of fiscal 2021 also reflects $88 million of government programs.

Segment profit increased by $29 million compared to a segment profit of $796 million for the first quarter of fiscal 2020.

Segment profit margin decreased to 12.4% for the first quarter of fiscal 2022 compared to 13.7% for the first quarter of fiscal 2020.

This decrease was primarily driven by incremental COVID-19 store payroll costs and higher supply chain costs.

The higher supply chain costs were driven by higher wages and expenses related to the additional distribution capacity.

These decreases in segment profit margin were partially offset by expense leverage on our occupancy costs and improved merchandise margin.

Merchandise margin reflects strong markon and lower markdowns, mostly offset by higher freight costs.

e-commerce businesses, which represented approximately 3% of Marmaxx’s net sales for each of the first quarters of fiscal 2022, fiscal 2021 and fiscal 2020 did not have a significant impact on year-over-year segment margin comparisons for the first quarter of fiscal 2022.

We temporarily closed our online businesses for a portion of the first quarter of fiscal 2021 as a result of the COVID-19 pandemic.

Thirteen Weeks Ended

dollars in millions May 1,

Fiscal 2022 vs Fiscal 2021

Segment profit was $1.0 billion for the second quarter of fiscal 2022, an increase of $913 million, compared to a segment profit of $101 million for the second quarter of fiscal 2021.

Segment profit was $1.8 billion for the first six months of fiscal 2022, an increase of $2.4 billion, compared to a segment loss of $(609) million for the first six months of fiscal 2021.

The increases for both periods were primarily driven by increased sales due to the temporary store closures in the second quarter and first six months of fiscal 2021.

In addition, the second quarter and first six months of fiscal 2021 reflect $83 million and $171 million from government programs, respectively.

Fiscal 2022 vs Fiscal 2020

Segment profit increased by $159 million compared to a segment profit of $855 million for the second quarter of fiscal 2020.

Segment profit margin decreased to 13.8% for the second quarter of fiscal 2022 compared to 14.0% for the second quarter of fiscal 2020.

Segment profit increased by $188 million compared to a segment profit of $1.7 billion for the first six months of fiscal 2020.

Segment profit margin decreased to 13.1% for the first six months of fiscal 2022 compared to 13.9% for the first six months of fiscal 2020.

The decreases in segment profit margin for both periods were primarily driven by incremental COVID-19 store payroll costs and higher supply chain costs.

The higher supply chain costs were driven by expenses related to the additional distribution capacity and higher wages.

These decreases in segment profit margin were partially offset by improved merchandise margin and the expense leverage on our occupancy costs due to the strong open-only comp store sales growth.

Within merchandise margin, strong markon and lower markdowns collectively more than offset incremental freight costs.

e-commerce businesses, which represented less than 5% of Marmaxx’s net sales for each of the second quarters and the first six months of fiscal 2022, fiscal 2021 and fiscal 2020, respectively, did not have a significant impact on year-over-year segment margin comparisons for the second quarter and the first six months of fiscal 2022.

Thirteen Weeks Ended Twenty-Six Weeks Ended

dollars in millions July 31,

2021 August 1,

2020 August 3,

2019 July 31,

2021 August 1,

2020 August 3,

Net sales $ 2,083 $ 1,236 $ 1,425 $ 4,225 $ 1,996 $ 2,822

9 unchanged sentences

Total 16,312 15,719 14,875

Net sales for HomeGoods were $2.1 billion for the first quarter of fiscal 2022, an increase of 182%, compared to $760 million for the first quarter of fiscal 2021.

The increase reflects significant temporary store closings in the first quarter of fiscal 2021.

Stores were closed for nearly half of the first quarter of fiscal 2021 as a result of the COVID-19 pandemic.

Net sales increased 53% compared to $1.4 billion for the first quarter of fiscal 2020.

Open-only comp store sales were up 40% for the first quarter of fiscal 2022 compared to the first quarter of fiscal 2020.

The increase in open-only comp sales was driven by an increase in customer traffic and average basket.

Net sales for HomeGoods were $2.1 billion for the second quarter of fiscal 2022, an increase of 69%, compared to $1.2 billion for the second quarter of fiscal 2021.

Net sales were $4.2 billion for the first six months of fiscal 2022, an increase of 112%, compared to $2.0 billion for the first six months of fiscal 2021.

Both increases reflect significant temporary store closings in both the second quarter and the first six months of fiscal 2021.

Stores were temporarily closed for approximately 31% of the second quarter and 40% of the first six months of fiscal 2021, respectively, as a result of the COVID-19 pandemic.

Net sales increased 46% compared to $1.4 billion for the second quarter of fiscal 2020 and increased 50% compared to $2.8 billion for the first six months of fiscal 2020.

Open-only comp store sales were up 36% for the second quarter of fiscal 2022 and 38% for the first six months of fiscal 2022 compared to the same periods of fiscal 2020.

The increases in open-only comp store sales for both periods were driven by an increase in customer traffic and average basket.

Segment Profit / (Loss)

Segment profit was $252 million for the first quarter of fiscal 2022, an increase of $406 million compared to a segment loss of $(154) million for the first quarter of fiscal 2021.

The increase for the first quarter of fiscal 2022 was primarily driven by increased sales due to the temporary store closures in the first quarter of fiscal 2021.

The first quarter of fiscal 2021 also reflects $22 million of government programs.

Segment profit increased by $115 million compared to a segment profit of $137 million for the first quarter of fiscal 2020.

Segment profit margin increased to 11.7% for the first quarter of fiscal 2022 compared to 9.8% for the first quarter of fiscal 2020.

The increase in segment profit margin was primarily driven by expense leverage on our occupancy costs due to the strong open-only comp sales growth and lower travel spend.

This was partially offset by store payroll costs as a result of incremental COVID-19 costs and higher wages, as well as a reduction in merchandise margin.

Merchandise margin reflects increased freight costs partially offset by favorable markdowns.

We plan to make online shopping available on www.homegoods.com in the fall of fiscal 2022.

Fiscal 2022 vs Fiscal 2021

Segment profit was $182 million for the second quarter of fiscal 2022, an increase of $84 million compared to a segment profit of $98 million for the second quarter of fiscal 2021.

Segment profit was $434 million for the first six months of fiscal 2022, an increase of $490 million compared to a segment loss of $(56) million for the first six months of fiscal 2021.The increases for both the second quarter and first six months of fiscal 2022 were primarily driven by increased sales due to the temporary store closures in the second quarter and first six months of fiscal 2021.

The second quarter and first six months of fiscal 2021 also reflect $24 million and $46 million of government programs, respectively.

Fiscal 2022 vs Fiscal 2020

Segment profit increased by $53 million compared to a segment profit of $129 million for the second quarter of fiscal 2020.

Segment profit margin decreased to 8.8% for the second quarter of fiscal 2022 compared to 9.0% for the second quarter of fiscal 2020.

The decrease in segment profit margin was primarily driven by higher supply chain costs and store payroll costs as a result of incremental COVID-19 costs and higher wages as well as lower merchandise margin.

Within merchandise margin, incremental freight costs more than offset strong markon and lower markdowns.

This decrease in segment profit margin was partially offset by the expense leverage on our occupancy and administrative costs due to the strong open-only comp store sales growth.

Segment profit increased by $168 million compared to a segment profit of $266 million for the first six months of fiscal 2020.

Segment profit margin increased to 10.3% for the first six months of fiscal 2022 compared to 9.4% for the first six months of fiscal 2020.

The increase in segment profit margin was primarily driven by the expense leverage on our occupancy and administrative costs due to the strong open-only comp store sales growth.

This increase was partially offset by lower merchandise margin, store payroll costs as a result of incremental COVID-19 costs and higher wages as well as higher supply chain costs.

Within merchandise margin, incremental freight costs more than offset strong markon and lower markdowns.

We plan to make online shopping available on www.homegoods.com in the third quarter of fiscal 2022.

FOREIGN SEGMENTS

Thirteen Weeks Ended

dollars in millions May 1,

Thirteen Weeks Ended Twenty-Six Weeks Ended

dollars in millions July 31,

2021 August 1,

2020 August 3,

2019 July 31,

2021 August 1,

2020 August 3,

Net sales $ 1,022 $ 592 $ 967 $ 1,787 $ 972 $ 1,815

11 unchanged sentences

Total 11,175 10,735 10,236

Net sales for TJX Canada were $766 million for the first quarter of fiscal 2022, an increase of 102% compared to $380 million for the first quarter of fiscal 2021.

The increase reflects temporary store closings for both periods, which were approximately 25% of the first quarter of fiscal 2022 and approximately 53% of the first quarter of fiscal 2021 as a result of the COVID-19 pandemic.

In addition, many stores that have remained open or have subsequently reopened continue to be subject to capacity constraints.

Net sales for TJX Canada decreased 10% compared to $848 million for the first quarter of fiscal 2020.

Open-only comp store sales were up 9% for the first quarter of fiscal 2022 compared to the first quarter of fiscal 2020.

The increase in open-only comp sales was driven by an increase in average basket, partially offset by reduced customer traffic.

Net sales for TJX Canada were $1.0 billion for the second quarter of fiscal 2022, an increase of 73% compared to $592 million for the second quarter of fiscal 2021.

Net sales were $1.8 billion for the first six months of fiscal 2022, an increase of 84% compared to $972 million for the first six months of fiscal 2021.

Both increases reflect temporary store closings which were approximately 22% of the second quarter and 24% of the first six months of fiscal 2022, and approximately 29% of the second quarter and 41% of the first six months of fiscal 2021 as a result of the COVID-19 pandemic.

Net sales for TJX Canada increased 6% compared to $967 million for the second quarter of fiscal 2020 and decreased 2% compared to $1.8 billion for the first six months of fiscal 2020.

On a constant currency basis, net sales decreased 2% for the second quarter and 8% for the first six months of fiscal 2022, respectively.

Open-only comp store sales were up 18% for the second quarter of fiscal 2022 and up 14% for the first six months of fiscal 2022 compared to the same periods of fiscal 2020.

The increases in open-only comp store sales were driven by an increase in average basket, partially offset by reduced customer traffic due to the temporary store closures or stores operating under COVID-19-related occupancy restrictions.

Segment Profit / (Loss)

Segment profit was $72 million for the first quarter of fiscal 2022, an increase of $169 million compared to a segment loss of $(97) million for the first quarter of fiscal 2021.

The increase for the first quarter of fiscal 2022 was primarily driven by increased sales due to the reduction in store closures compared to the first quarter of fiscal 2021.

The first quarters of fiscal 2022 and 2021 also reflect $58 million and $31 million, respectively, of government programs.

Segment profit decreased by $25 million compared to a segment profit of $97 million for the first quarter of fiscal 2020.

Segment profit margin decreased to 9.3% for the first quarter of fiscal 2022 compared to 11.4% for the first quarter of fiscal 2020.

The decrease in segment profit margin was primarily driven by expense deleverage on our occupancy costs due to the reduction in sales because of store closures, the unfavorable impact of the mark-to-market of the inventory derivatives as well as higher supply chain costs.

This was partially offset by improved merchandise margin, which reflects strong markon partially offset by increased freight costs.

Fiscal 2022 vs Fiscal 2021

Segment profit was $118 million for the second quarter of fiscal 2022, an increase of $96 million compared to a segment profit of $22 million for the second quarter of fiscal 2021.

Segment profit was $190 million for the first six months of fiscal 2022, an increase of $265 million compared to a segment loss of $(75) million for the first six months of fiscal 2021.

The increases for both periods were primarily driven by increased sales due to having fewer temporary store closures in fiscal 2022 compared to the same periods in fiscal 2021.

The second quarter and the first six months of fiscal 2022 also reflect $15 million and $73 million, respectively, of government programs compared to $73 million for the second quarter and $104 million for the first six months of fiscal 2021.

Fiscal 2022 vs Fiscal 2020

Segment profit was flat compared to the second quarter of fiscal 2020.

Segment profit margin decreased to 11.6% for the second quarter of fiscal 2022 compared to 12.2% for the second quarter of fiscal 2020.

The decrease in segment profit margin was primarily driven by higher supply chain costs, incremental COVID-19 costs, net of government programs as well as higher incentive compensation costs.

This was partially offset by improved merchandise margin and the favorable impact of the mark-to-market of the inventory derivatives.

Within merchandise margin, strong markon and lower markdowns collectively more than offset incremental freight costs.

Segment profit decreased $25 million compared to a segment profit of $215 million for the first six months of fiscal 2020.

Segment profit margin decreased to 10.6% for the first six months of fiscal 2022 compared to 11.9% for the same period of fiscal 2020.

The decrease in segment profit margin was primarily driven by higher supply chain costs and the expense deleverage on our occupancy costs due to the reduction in sales as a result of the temporary store closures in fiscal 2022.

The decline in segment profit margin also reflects incremental COVID-19 costs, net of government programs, and higher incentive compensation costs.

This was partially offset by improved merchandise margin which reflected strong markon and lower markdowns that collectively offset incremental freight costs.

TJX International

Thirteen Weeks Ended

dollars in millions May 1,

Thirteen Weeks Ended Twenty-Six Weeks Ended

dollars in millions July 31,

2021 August 1,

2020 August 3,

2019 July 31,

2021 August 1,

2020 August 3,

Net sales $ 1,623 $ 880 $ 1,283 $ 2,162 $ 1,452 $ 2,514

Segment (loss) $ (222) $ (259)

Segment profit (loss) $ 174 $ (131) $ 50 $ (48) $ (390) $ 79

Segment margin 10.7 % (14.9) % 3.9 % (2.2) % (26.9) % 3.1 %

Stores in operation at end of period:

Maxx 616 597 580

Homesense 78 78 72

5 unchanged sentences

Maxx Australia 1,143 1,035 937

14,445 14,180

Net sales for TJX International were $539 million for the first quarter of fiscal 2022, a decrease of 6% compared to $572 million for the first quarter of fiscal 2021.

The decrease reflects temporary store closings for both periods, which were approximately 69% of the first quarter of fiscal 2022 and approximately 49% of the first quarter of fiscal 2021 as a result of the COVID-19 pandemic.

In addition, many stores that have remained open or have subsequently reopened continue to be subject to capacity constraints.

E-commerce sales were approximately 12% and 4% of TJX International’s net sales for the first quarter of fiscal 2022 and fiscal 2021, respectively.

Total 14,658 14,204 13,860

Net sales for TJX International were $1.6 billion for the second quarter of fiscal 2022, an increase of 84% compared to $0.9 billion for the second quarter of fiscal 2021.

Net sales were $2.2 billion for the first six months of fiscal 2022, an increase of 49% compared to $1.5 billion for the first six months of fiscal 2021.

These increases reflect temporary store closings, which were approximately 3% of the second quarter and 37% of the first six months of fiscal 2022 and approximately 35% of the second quarter and 42% of the first six months of fiscal 2021 as a result of the COVID-19 pandemic.

Net sales for TJX International increased 27% compared to $1.3 billion for the second quarter of fiscal 2020 and decreased 14% compared to $2.5 billion for the first six months of fiscal 2020.

Open-only comp store sales were up 12% for both the second quarter of fiscal 2022 and for the first six months of fiscal 2022 compared to the same periods of fiscal 2020.

E-commerce sales were approximately 5%, 4% and 3% of TJX International’s net sales for the second quarters of fiscal 2022, fiscal 2021 and fiscal 2020, and 7%, 4% and 3% for the first six months of the same periods.

Along with our stores, we temporarily closed all of our online business during the first quarter of fiscal 2021.

Since reopening in the second quarter of fiscal 2021, our online businesses have remained open through the first quarter of fiscal 2022.

Segment (Loss)

Segment loss was $(222) million for the first quarter of fiscal 2022, an improvement of $37 million compared to a segment loss of $(259) million for the first quarter of fiscal 2021.

The segment loss reflects significant temporary store closures for both periods.

The improvement in segment loss for the first quarter of fiscal 2022 was primarily the result of improved merchandise margin due to favorable markdowns compared with the first quarter of fiscal 2021.

The improvement in merchandise margin was partially offset by incremental COVID-19 related costs, net of government programs.

The first quarters of fiscal 2022 and 2021 reflect $84 million and $46 million, respectively, of government programs.

Since reopening in the second quarter of fiscal 2021, our online businesses have remained open through the second quarter of fiscal 2022.

Segment Profit / (Loss)

Fiscal 2022 vs Fiscal 2021

Segment profit was $174 million for the second quarter of fiscal 2022, an improvement of $305 million compared to a segment loss of $(131) million for the second quarter of fiscal 2021.

Segment loss was $(48) million for the first six months of fiscal 2022, an improvement of $342 million compared to a segment loss of $(390) million for the first six months of fiscal 2021.

The improvements in segment profit (loss) for both periods were primarily driven by increased sales due to the reduction in temporary store closures compared to the same periods in fiscal 2021.

The second quarter and the first six months of fiscal 2022 reflect $73 million and $157 million, respectively, of government programs compared to $40 million for the second quarter and $86 million for the six months of fiscal 2021.

Fiscal 2022 vs Fiscal 2020

Segment profit increased $124 million compared to a segment profit of $50 million for the second quarter of fiscal 2020.

The improvement in segment profit was primarily driven by increased sales as well as improved merchandise margin.

Within merchandise margin, lower markdowns were partially offset by incremental freight costs and unfavorable markon in the second quarter of fiscal 2020.

These increases were partially offset by incremental COVID-19 related costs and higher supply chain costs.

Segment profit was favorably impacted by the government programs received in the second quarter of fiscal 2022.

Segment profit decreased $127 million compared to a segment profit of $79 million for the first six months of fiscal 2020.

The decrease in segment profit was primarily driven by a reduction in sales due to the temporary store closures for the first six months of fiscal 2022.

Segment profit was favorably impacted by the government programs received in the first six months of fiscal 2022.

GENERAL CORPORATE EXPENSE

Thirteen Weeks Ended

In millions May 1,

Thirteen Weeks Ended Twenty-Six Weeks Ended

In millions July 31,

2021 August 1,

2020 July 31,

2021 August 1,

General corporate expense $ 164 $ 123 $ 324 $ 224

2 unchanged sentences

The mark-to-market adjustment of our fuel hedges is included in cost of sales, including buying and occupancy costs.

The increase in general corporate expense for the first quarter of fiscal 2022 was primarily driven by higher share-based and incentive compensation costs and contributions to TJX’s charitable foundations, partially offset by the mark-to-market adjustment on the fuel hedges.

The increase in general corporate expense for the second quarter and the first six months of fiscal 2022 was primarily driven by higher share-based and incentive compensation costs.

In addition, the increase for the second quarter of fiscal 2022 reflects an unfavorable mark-to-market adjustment on the fuel hedges.

ANALYSIS OF FINANCIAL CONDITION

Liquidity and Capital Resources

Subsequent to the end of the first quarter of fiscal 2022, we announced make-whole calls for our $1.25 billion aggregate principal outstanding 3.50% Notes and our $750 million aggregate principal outstanding 3.75% notes, both of which series of notes were issued in the first quarter of fiscal 2021 in response to the COVID-19 pandemic.

These make-whole calls are expected to settle on June 4, 2021 and we anticipate recording a pre-tax loss on the early extinguishment of these notes of approximately $250 million in the second quarter of fiscal 2022.

On June 4, 2021, we completed make-whole calls for our $1.25 billion principal outstanding, 3.50% Notes due April 15, 2025, and our $750 million principal outstanding, 3.75% Notes due April 15, 2027, both of which series of notes were issued in the first quarter of fiscal 2021 in response to the COVID-19 pandemic.

As a result of these redemptions prior to their scheduled maturities, we recorded a pre-tax debt extinguishment charge of $242 million in the second quarter of fiscal 2022.

Additionally, in the first quarter of fiscal 2022, we redeemed $750 million principal outstanding, 2.75% Notes due June 15, 2021.

The result of these debt redemptions once completed are expected to be a $2.75 billion reduction of outstanding debt since the beginning of fiscal 2022 and more than $90 million of annualized interest expense savings.

The result of these debt redemptions resulted in a $2.75 billion reduction of outstanding debt since the beginning of fiscal 2022 and will result in more than $90 million of annualized interest expense savings.

For additional information on these transactions, see Note I—Long-Term Debt and Credit Lines of Notes to Consolidated Financial Statements.

The challenges posed by the COVID-19 pandemic on our business continue to evolve and the severity and duration of the pandemic is still unknown.

Consequently, we will continue to evaluate our financial position in light of future developments.

We believe our existing cash and cash equivalents, internally generated funds and our credit facilities, described in Note I—Long-Term Debt and Credit Lines of Notes to Consolidated Financial Statements, are adequate to meet our operating needs over the next twelve months.

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 described in Note I—Long-Term Debt and Credit Lines of Notes to Consolidated Financial Statements, are adequate to meet our operating needs over the next twelve months.

Our liquidity requirements have traditionally been funded through cash generated from operations, supplemented, as needed, by bank borrowings and the issuance of commercial paper.

As of May 1, 2021, there were no short-term bank borrowings or commercial paper outstanding.

As of July 31, 2021, there were no short-term bank borrowings or commercial paper outstanding.

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 the first quarter of fiscal 2022 we have used, and in the future we may 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.

In the first six months of fiscal 2022 we have used, and in the future we may 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.

As of May 1, 2021, we held $8.8 billion in cash.

As of July 31, 2021, we held $7.1 billion in cash.

Approximately $1.5 billion of our cash was held by our foreign subsidiaries with $0.8 billion held in countries where we provisionally intend to indefinitely reinvest any undistributed earnings.

TJX 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 May 1, 2021.

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.

Operating Activities

Operating activities resulted in net cash outflows of $0.4 billion for the three months ended May 1, 2021 and $3.2 billion for the three months ended May 2, 2020.

Our operating cash flows for the three months ended May 1, 2021 increased by $2.7 billion compared to the first three months of fiscal 2021.

Our fiscal 2022 operating cash flows improved significantly compared to fiscal 2021, which is primarily attributable to additional stores being open in fiscal 2022 after the temporary closures of all our stores for approximately 50% of the first quarter of fiscal 2021.

The fiscal 2021 loss of sales as a result of the temporarily closures resulted in a net loss of $0.9 billion in the first three months of fiscal 2021 compared to net income of $0.5 billion for the first three months of fiscal 2022.

The decrease in income taxes recoverable, net favorably impacted operating cash flows by $0.6 billion.

The increase in operating cash flows was also attributable to the $0.5 billion favorable impact of the change in merchandise inventories, net of accounts payable, driven by the timing of payments for merchandise sold.

Operating activities resulted in net cash inflows of $0.9 billion for the six months ended July 31, 2021 and $0.2 billion for the six months ended August 1, 2020.

Our fiscal 2022 operating cash flows improved significantly compared to fiscal 2021, which was primarily attributable to additional stores being open in fiscal 2022 after the temporary closures of all our stores for approximately 41% of the first six months of fiscal 2021.

The fiscal 2021 loss of sales as a result of the temporarily closures resulted in a net loss of $1.1 billion in the first six months of fiscal 2021 compared to net income of $1.3 billion for the first six months of fiscal 2022.

This increase in operating cash flows was partially offset by the $2.0 billion change in merchandise inventories, net of accounts payable, driven by higher inventory levels in fiscal 2022.

In addition, operating cash flows were negatively impacted by the $0.3 billion decrease in net operating lease liabilities due to the repayment of many of the rent deferrals negotiated in fiscal 2021.

Investing Activities

Investing activities resulted in net cash outflows of $0.2 billion for both the three months ended May 1, 2021 and the three months ended May 2, 2020.

Investing activities resulted in net cash outflows of $0.4 billion for the six months ended July 31, 2021 and $0.3 billion for the six months ended August 1, 2020.

The cash outflows for both periods were driven by capital expenditures.

Investing activities in the first three months of fiscal 2022 primarily reflected property additions for new stores, store improvements and renovations as well as investments in our distribution centers and offices, including buying and merchandising systems and other information systems.

Cash outflows for property additions were $0.2 billion for both the first three months of fiscal 2022 and the first three months of fiscal 2021.

Investing activities in the first six months of fiscal 2022 primarily reflected property additions for new stores, store improvements and renovations as well as investments in our distribution centers and offices, including buying and merchandising systems and other information systems.

Our expected fiscal 2022 capital investments total $1.2 billion to $1.4 billion .

We plan to fund these expenditures through internally generated funds.

We plan to fund these expenditures through cash flows from operations.

Financing Activities

Financing activities resulted in net cash outflows of $1.1 billion in the first three months of fiscal 2022 and net cash inflows of $4.5 billion for the three months ended May 2, 2020.

The cash outflows in the first three months of fiscal 2022 were a result of the redemption at par of certain of our notes maturing in the second quarter of fiscal 2022.

The cash inflows in the first three months of fiscal 2021 were a result of completing the issuance and sale of $4 billion aggregate principal amount of notes.

In addition, in the first quarter of fiscal 2021, we drew down $1 billion on our previously undrawn revolving credit facilities, which we subsequently repaid in July 2020.

Financing activities resulted in net cash outflows of $3.9 billion for the first six months of fiscal 2022 and net cash inflows of $3.5 billion for the six months ended August 1, 2020.

The cash outflows in the first six months of fiscal 2022 were due to the completion of make-whole calls and the redemption at par of certain of our notes during the first six months of fiscal 2022.

The cash inflows in the first six months of fiscal 2021 were a result of completing the issuance and sale of $4 billion aggregate principal amount of notes.

See Note I—Long-Term Debt and Credit Lines of Notes to Consolidated Financial Statements for additional information.

The cash inflows in the first three months of fiscal 2022 were a result of proceeds from the exercise of employee stock options, net of shares withheld for taxes.

The cash outflows in the first three months of fiscal 2021 were a result of the $0.2 billion repurchase and retirement of 3.4 million shares of our stock on a settlement basis under our stock repurchase program.

These outflows were partially offset by proceeds from the exercise of employee stock options, net of shares withheld for taxes in the first three months of fiscal 2021 .

The cash outflows in the first six months of fiscal 2022 and the first six months of fiscal 2021 were primarily driven by equity repurchases and dividend payments.

In March 2020, in connection with the actions taken related to the COVID-19 pandemic, we suspended our share repurchase program.

Subsequent to the end of the first quarter of fiscal 2022, we lifted the temporary suspension of our repurchase program and announced plans to repurchase approximately $1.0 billion to $1.25 billion of stock in fiscal 2022 under our previously authorized stock repurchase programs.

As of May 1, 2021, approximately $3 billion remained available under our existing stock repurchase programs.

We declared a quarterly dividend on our common stock which totaled $0.26 per share in the first quarter of fiscal 2022 .

As a result of the uncertainty surrounding the COVID-19 pandemic, n o dividends were declared in the first quarter of fiscal 2021.

Cash payments for dividends on our common stock totaled $0.3 billion for both the first quarter of fiscal 2022 and the first quarter of fiscal 2021.

We also declared a dividend of $0.26 per share in the second quarter of fiscal 2022 payable in September 2021.

During the second quarter of fiscal 2022, we lifted the temporary suspension of our repurchase program and announced plans to repurchase approximately $1.25 billion to $1.5 billion of stock in fiscal 2022 under our previously authorized stock repurchase programs.

Under our stock repurchase programs, we paid $0.3 billion to repurchase and retire 4.6 million shares of our stock on a settlement basis in the first six months of fiscal 2022.

Prior to the temporary suspension of our share repurchase program related to the COVID-19 pandemic, we paid $0.2 billion to repurchase and retire 3.4 million shares on a settlement basis in the first six months of fiscal 2021.

These outflows were partially offset by proceeds from the exercise of employee stock options, net of shares withheld for taxes in the first six months of fiscal 2021.

As of July 31, 2021, approximately $2.7 billion remained available under our existing stock repurchase programs.

For further information regarding equity repurchases, see Note D – Capital Stock and Earnings Per Share of Notes to Consolidated Financial Statements.

We declared quarterly dividends on our common stock which totaled $0.26 per share in the first six months of fiscal 2022 and expect to declare a similar dividend in the third quarter of fiscal 2022, subject to approval by the Board of Directors.

As a result of the uncertainty surrounding the COVID-19 pandemic, no dividends were declared in the first half of fiscal 2021.

Cash payments for dividends on our common stock totaled $0.6 billion for the first half of fiscal 2022 and $0.3 billion for the first half of fiscal 2021.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

35 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis