What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-11-30 compared with 2021-08-27 · 242 added, 244 removed, 249 unchanged (66% of the section changed)

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

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

The Thirteen Weeks (third quarter) and Thirty-Nine Weeks (nine months) Ended October 30, 2021

The Thirteen Weeks (third quarter) and Thirty-Nine Weeks (nine months) Ended October 31, 2020

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

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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 four distinctive branded e-commerce sites .

We operate over 4,600 stores through our four main segments:

We operate nearly 4,700 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 and Homesense);

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);

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

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.

During the first nine months of fiscal 2022, our stores in the United States remained open for the entire period.

Stores were temporarily closed for approximately 1% of the third quarter due to temporary closures in Australia and 6% of the first nine months of fiscal 2022, due to temporary closures in Europe, Canada and Australia.

Stores were temporarily closed for approximately 1% of the third quarter of fiscal 2021 due to temporary closures in Europe and Australia and for approximately 27% of the first nine months of fiscal 2021 due to temporary closures across all geographies.

Overall, our third quarter and first nine months results for fiscal 2022 were significantly better than our results for the same periods 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 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.

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

Overview of our financial performance for the quarter ended October 30, 2021 includes the following:

– Net sales were $12.5 billion, $10.1 billion and $10.5 billion for the third quarter of fiscal 2022, fiscal 2021 and fiscal 2020, respectively.

As of October 30, 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 third quarter.

– Diluted earnings per share were $0.84, $0.71 and $0.68 for the third quarter of fiscal 2022, fiscal 2021 and fiscal 2020, respectively.

– Pre-tax margin (the ratio of pre-tax income to net sales) was 11.0%, 10.0% and 10.7% for the third quarter of fiscal 2022, fiscal 2021 and fiscal 2020, respectively.

– Our cost of sales, including buying and occupancy costs, ratio was 70.5%, 69.8% and 71.2% for the third quarter of fiscal 2022, fiscal 2021 and fiscal 2020, respectively.

– Our selling, general and administrative (“SG&A”) expense ratio was 18.3%, 19.6% and 18.0% for the third quarter of fiscal 2022, fiscal 2021 and fiscal 2020, respectively.

– Consolidated merchandise inventories as of the end of the third quarter of fiscal 2022 increased 33% compared to the third quarter of fiscal 2021 and increased 6% compared to the third quarter of fiscal 2020.

On a constant currency basis, consolidated merchandise inventories as of the end of the third quarter of fiscal 2022 increased 31% compared to the third quarter of fiscal 2021 and increased 4% compared to the third quarter of fiscal 2020.

– During the third quarter of fiscal 2022, we returned $1.1 billion 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,

Thirteen Weeks Ended Thirty-Nine Weeks Ended

2021 October 31,

2020 November 2,

2019 October 30,

2021 October 31,

2020 November 2,

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

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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 included occupancy limits and reducing in-store inventory levels).

Upon reopening 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 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,

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 third quarter and first nine 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 third quarter and first nine months of fiscal 2022 and fiscal 2021 by segment.

Thirteen Weeks Ended Thirty-Nine Weeks Ended

2021 October 31,

2020 October 30,

2021 October 31,

Marmaxx — % — % — % 27 %

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TJX Consolidated 1 % 1 % 6 % 27 %

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.

All of our e-commerce businesses remained open throughout the first nine 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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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.

These additional customs duties and the related operational costs have impacted 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.

and EU countries may also have a negative impact on our ability to recruit and retain current and future talent in the region.

We continue to communicate with our Associates about the new immigration requirements.

In addition to these operational impacts, factors including changes in legislation, consumer confidence and behavior, economic conditions, interest rates and foreign currency exchange rates could result in a significant financial impact to our European operations, particularly in the short term.

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 $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.

Net sales totaled $12.5 billion, $10.1 billion and $10.5 billion for the third 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 third quarters of fiscal 2022, fiscal 2021 and fiscal 2020.

Net sales totaled $34.7 billion, $21.2 billion and $29.5 billion for the first nine 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 nine 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 practice 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 third quarters of fiscal 2022 and fiscal 2021.

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

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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.

For the third quarter and first nine months 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 third quarter and the first nine months 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.

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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.

Net sales increased 24% in the third quarter of fiscal 2022 compared to the third quarter of fiscal 2021 primarily due to an increase in customer traffic.

Net sales increased 64% for the first nine months of fiscal 2022 compared to the first nine months of fiscal 2021.

This increase reflects the temporary closures of all our stores and online businesses during portions of the first nine months of fiscal 2021 as a result of the COVID-19 pandemic.

Stores were closed for approximately 6% of the first nine months of fiscal 2022, due to temporary store closures in Europe, Canada and Australia, as compared to stores across all geographies being temporarily closed for approximately 27% of the first nine 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.

Net sales increased 20% and open-only comp store sales were up 14% for the third quarter of fiscal 2022 compared to the third quarter of fiscal 2020.

Net sales increased 18% and open-only comp store sales were up 17% for the first nine months fiscal 2022 compared to the first nine months of fiscal 2020.

These reflect an increase in average basket across all divisions for both periods.

Customer traffic was up in the U.S., where stores were open for the entire third quarter and the first nine 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 significantly exceed those of apparel, we had strong positive open-only comp store sales in apparel during the quarter and first nine months of fiscal 2022 compared to the same periods in fiscal 2020.

Historical Definition of Comp Store Sales

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

– Sales from our e-commerce sites, meaning sierra.com, tjmaxx.com, marshalls.com and tkmaxx.com

– Sales from our e-commerce sites, meaning sierra.com, tjmaxx.com, marshalls.com, tkmaxx.com and homegoods.com

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.

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Cost of Sales, Including Buying and Occupancy 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.

Cost of sales, including buying and occupancy costs, was $8.8 billion, or 70.5% of net sales, $7.1 billion, or 69.8% of net sales and $7.4 billion, or 71.2% of net sales for the third quarters of fiscal 2022, fiscal 2021 and fiscal 2020, respectively.

Cost of sales, including buying and occupancy costs, was $24.6 billion or 71.0% of net sales, $16.7 billion, or 78.6% of net sales and $21.1 billion, or 71.5% of net sales for the first nine 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.

The increase in the total cost of sales, including buying and occupancy costs, was primarily attributable to the additional cost of merchandise sold due to a higher level of sales in the third quarter of fiscal 2022 compared to fiscal 2021.

In addition, the third quarter of fiscal 2022 reflects higher supply chain costs, which were due to additional investments in distribution capacity and higher wages, as well as higher freight costs, which are both expected to continue into the next fiscal year.

The increase in the total cost of sales, including buying and occupancy costs, for the first nine months of fiscal 2022 was primarily due to the additional cost of merchandise sold due to a higher level of sales compared to fiscal 2021.

Our stores were temporarily closed in the aggregate for approximately 6% of the first nine months of fiscal 2022 and approximately 27% of the first nine months of fiscal 2021.

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

In addition, supply chain costs increased due to additional investments in distribution capacity and higher wages, which, along with freight costs, are expected to continue into the next fiscal year.

Cost of sales, including buying and occupancy costs, was favorably impacted by approximately $2 million and $4 million of government programs for the third quarters of fiscal 2022 and fiscal 2021, respectively, as well as $25 million and $67 million of government programs for the first nine 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 expense ratios decreased 0.7% for the third quarter of fiscal 2022 and 0.5% for the first nine 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.

Within merchandise margin, strong markon and lower markdowns collectively more than offset 1.6 percentage points of incremental freight costs in the third quarter of fiscal 2022.

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

Selling, General and Administrative Expenses

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.

SG&A expenses were $2.3 billion, or 18.3% of net sales, $2.0 billion, or 19.6% of net sales and $1.9 billion, or 18.0% of net sales for the third quarters of fiscal 2022, fiscal 2021 and fiscal 2020, respectively.

SG&A expenses were $6.6 billion, or 19.0% of net sales, $4.8 billion, or 22.8% of net sales and $5.3 billion, or 18.0% of net sales for the first nine 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.

The increases in SG&A expenses for both the third quarter and the first nine months of fiscal 2022 compared to the same periods of fiscal 2021 were primarily driven by higher store payroll costs to support a higher sales volume.

In addition to these costs, incentive compensation costs and other variable store costs, such as advertising spend and credit processing fees, were higher in fiscal 2022 as compared to the third quarter and the first nine months of fiscal 2021.

SG&A expenses were favorably impacted by $9 million and $29 million from government programs for the third quarter of fiscal 2022 and fiscal 2021, respectively, as well as $215 million and $377 million from government programs for the first nine 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.

The expense ratios increased 0.3% for the third quarter of fiscal 2022 and 1.0% for the first nine months of fiscal 2022 compared to the same periods of fiscal 2020.

The increases for both periods were driven by higher store payroll costs, primarily due to incremental COVID-19 related payroll costs and higher incentive compensation accruals.

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

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The components of interest expense, net are summarized below:

Thirteen Weeks Ended Twenty-Six Weeks Ended

In millions July 31,

2021 August 1,

2020 July 31,

2021 August 1,

Thirteen Weeks Ended Thirty-Nine Weeks Ended

In millions October 30,

2021 October 31,

2020 October 30,

2021 October 31,

Interest expense $ 22.9 $ 55.8 $ 100.3 $ 148.6

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Interest expense, net $ 20.7 $ 52.9 $ 94.0 $ 133.6

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.

Net interest expense decreased for both the third quarter of fiscal 2022 and the nine months ended October 30, 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 nine months of fiscal 2022.

Provision for Income Taxes

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.

The e ffective income tax rate was 25.8%, 14.7% and 26.2% for the third quarters of fiscal 2022, fiscal 2021 and fiscal 2020, respectively.

The increase in the third quarter effective income tax rate is primarily due to a benefit of the jurisdictional mix of profits and losses, and the better than anticipated results, as of the third quarter of fiscal 2021.

The e ffective income tax rate was 25.7%, 43.9% and 25.7% for the first nine months of fiscal 2022, fiscal 2021 and fiscal 2020, respectively.

The decrease in the first nine months effective income tax rate of fiscal 2022 was primarily due to the significant increase in profit through the third quarter of fiscal 2022 as compared to the mix of income and losses by jurisdictions through the third quarter of fiscal 2021.

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

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.

Net income was $1.0 billion, $0.9 billion and $0.8 billion for the third quarters of fiscal 2022, fiscal 2021 and fiscal 2020, respectively.

Net income (loss) was $2.3 billion, $(0.2) billion and $2.3 billion for the first nine months of fiscal 2022, fiscal 2021 and fiscal 2020, respectively.

Net income per diluted share was $0.84, $0.71 and $0.68 for the third quarters of fiscal 2022, fiscal 2021 and fiscal 2020, respectively.

Net income (loss) per diluted share was $1.92, which included a second quarter debt extinguishment charge of $0.15, $(0.20) and $1.86 for the first nine 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 our HomeGoods segment (HomeGoods and Homesense) both operate in the United States.

Maxx, Marshalls, tjmaxx.com and marshalls.com) and our HomeGoods segment (HomeGoods, Homesense and homegoods.com) 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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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 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 entities.

“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.

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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.

This measure reports the sales increase or decrease of these stores for the days the stores were open in the third quarter and first nine months 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.

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

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,

Thirteen Weeks Ended Thirty-Nine Weeks Ended

dollars in millions October 30,

2021 October 31,

2020 November 2,

2019 October 30,

2021 October 31,

2020 November 2,

Net sales $ 7,214 $ 5,785 $ 6,354 $ 21,203 $ 12,442 $ 18,262

Segment profit (loss) $ 1,014 $ 101 $ 855 $ 1,839 $ (609) $ 1,651

Segment profit $ 990 $ 665 $ 820 $ 2,829 $ 56 $ 2,472

Segment margin 13.7 % 11.5 % 12.9 % 13.3 % 0.4 % 13.5 %

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Total 54,985 54,483 54,323

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)

Net sales for Marmaxx were $7.2 billion for the third quarter of fiscal 2022, an increase of 25% compared to $5.8 billion for the third quarter of fiscal 2021.

Net sales were $21.2 billion for the first nine months of fiscal 2022, an increase of 70% compared to $12.4 billion for the first nine months of fiscal 2021.

The increase for the third quarter was primarily driven by an increase in customer traffic.

The increase for the first nine months reflected significant temporary store closings during the first nine months of fiscal 2021.

Stores were closed for approximately 27% of the first nine months of fiscal 2021 as a result of the COVID-19 pandemic.

Net sales increased 14% compared to $6.4 billion for the third quarter of fiscal 2020 and increased 16% compared to $18.3 billion for the first nine months of fiscal 2020.

Open-only comp store sales were up 11% for the third quarter of fiscal 2022 and 14% for the first nine months of fiscal 2022 compared to the same periods of fiscal 2020.

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

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

Segment Profit

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.

Segment profit was $990 million for the third quarter of fiscal 2022, an increase of $325 million, compared to a segment profit of $665 million for the third quarter of fiscal 2021.

This increase was driven by additional sales, resulting in an improved segment profit margin of 13.7% for the third quarter of fiscal 2022 compared to 11.5% for the third quarter of fiscal 2021.

Segment profit was $2.8 billion for the first nine months of fiscal 2022, an increase of $2.8 billion, compared to a segment profit of $56 million for the first nine months of fiscal 2021.

This increase was primarily driven by increased sales due to the temporary store closures in the first nine months of fiscal 2021.

The first nine months of fiscal 2021 also benefited $171 million from government programs.

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.

Segment profit increased by $170 million compared to a segment profit of $820 million for the third quarter of fiscal 2020.

Segment profit margin increased to 13.7% for the third quarter of fiscal 2022 compared to 12.9% for the third quarter of fiscal 2020.

Segment profit increased by $357 million compared to a segment profit of $2.5 billion for the first nine months of fiscal 2020.

Segment profit margin decreased to 13.3% for the first nine months of fiscal 2022 compared to 13.5% for the first nine months of fiscal 2020.

For both periods, segment profit margin reflected improved merchandise margin and leverage on 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,

These improvements were partially offset in the third quarter and more than offset in the first nine months of fiscal 2022 by incremental COVID-19 related store payroll costs and higher supply chain costs.

Our Marmaxx e-commerce businesses, which represented less than 4% of Marmaxx’s net sales for each of the third quarter and the first nine 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 third quarter and the first nine months of fiscal 2022.

Thirteen Weeks Ended Thirty-Nine Weeks Ended

dollars in millions October 30,

2021 October 31,

2020 November 2,

2019 October 30,

2021 October 31,

2020 November 2,

Net sales $ 2,254 $ 1,876 $ 1,582 $ 6,479 $ 3,872 $ 4,404

Segment profit (loss) $ 182 $ 98 $ 129 $ 434 $ (56) $ 266

Segment profit $ 263 $ 291 $ 173 $ 697 $ 235 $ 439

Segment margin 11.7 % 15.5 % 10.9 % 10.8 % 6.1 % 10.0 %

7 unchanged sentences

Total 16,387 15,767 15,477

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.

Net sales for HomeGoods were $2.3 billion for the third quarter of fiscal 2022, an increase of 20%, compared to $1.9 billion for the third quarter of fiscal 2021.

The increase for the third quarter was primarily driven by an increase in customer traffic.

Net sales were $6.5 billion for the first nine months of fiscal 2022, an increase of 67%, compared to $3.9 billion for the first nine months of fiscal 2021.

The increase for the first nine months of fiscal 2022 reflected significant temporary store closings during the first nine months of fiscal 2021.

Stores were temporarily closed for approximately 27% of the first nine months of fiscal 2021 as a result of the COVID-19 pandemic.

Net sales increased 42% compared to $1.6 billion for the third quarter of fiscal 2020 and increased 47% compared to $4.4 billion for the first nine months of fiscal 2020.

Open-only comp store sales were up 34% for the third quarter of fiscal 2022 and 36% for the first nine 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

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.

Segment profit was $263 million for the third quarter of fiscal 2022, a decrease of $28 million compared to a segment profit of $291 million for the third quarter of fiscal 2021.

The decrease for the third quarter was due to lower merchandise margin primarily driven by increased freight costs and lower markon.

Segment profit was $697 million for the first nine months of fiscal 2022, an increase of $462 million compared to a segment profit of $235 million for the first nine months of fiscal 2021.

The increase for the first nine months of fiscal 2022 was primarily driven by increased sales due to the temporary store closures in the first nine months of fiscal 2021, partially offset by lower merchandise margin due to increased freight costs and lower markon.

The first nine months of fiscal 2021 also benefited from $46 million of government programs.

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.

Segment profit increased by $90 million compared to a segment profit of $173 million for the third quarter of fiscal 2020.

Segment profit margin increased to 11.7% for the third quarter of fiscal 2022 compared to 10.9% for the third quarter of fiscal 2020.

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

Merchandise margin was up slightly with strong markon and lower markdowns mostly offset by incremental freight costs.

Segment profit increased by $258 million compared to a segment profit of $439 million for the first nine months of fiscal 2020.

Segment profit margin increased to 10.8% for the first nine months of fiscal 2022 compared to 10.0% for the first nine 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.

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

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

During the third quarter of fiscal 2022, HomeGoods made online shopping available at www.homegoods.com.

FOREIGN SEGMENTS

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,

Thirteen Weeks Ended Thirty-Nine Weeks Ended

dollars in millions October 30,

2021 October 31,

2020 November 2,

2019 October 30,

2021 October 31,

2020 November 2,

Net sales $ 1,301 $ 1,028 $ 1,082 $ 3,088 $ 1,999 $ 2,897

Segment profit (loss) $ 118 $ 22 $ 118 $ 190 $ (75) $ 215

Segment profit $ 169 $ 177 $ 170 $ 359 $ 101 $ 386

Segment margin 13.0 % 17.2 % 15.7 % 11.6 % 5.1 % 13.3 %

9 unchanged sentences

Total 11,232 10,800 10,519

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)

Net sales for TJX Canada were $1.3 billion for the third quarter of fiscal 2022, an increase of 27% compared to $1.0 billion for the third quarter of fiscal 2021.

The increase for the third quarter was primarily driven by an increase in customer traffic and average basket.

Net sales were $3.1 billion for the first nine months of fiscal 2022, an increase of 54% compared to $2.0 billion for the first nine months of fiscal 2021.

The increase for the nine-month period reflected temporary store closings, which were approximately 16% of the first nine months of fiscal 2022, and 27% of the first nine months of fiscal 2021, as a result of the COVID-19 pandemic.

Net sales for TJX Canada increased 20% compared to $1.1 billion for the third quarter of fiscal 2020 and increased 7% compared to $2.9 billion for the first nine months of fiscal 2020.

On a constant currency basis, net sales increased 14% for the third quarter and 1% for the first nine months of fiscal 2022, respectively.

Open-only comp store sales were up 8% for the third quarter of fiscal 2022 and up 11% for the first nine 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.

Segment Profit

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.

Segment profit was $169 million for the third quarter of fiscal 2022, a decrease of $8 million compared to a segment profit of $177 million for the third quarter of fiscal 2021.

The decrease for the third quarter was primarily due to lower merchandise margin driven by higher freight costs, partially offset by improved markon.

Segment profit was $359 million for the first nine months of fiscal 2022, an increase of $258 million compared to a segment profit of $101 million for the first nine months of fiscal 2021.

The increase for the first nine months of fiscal 2022 was primarily driven by increased sales due to having fewer temporary store closures in fiscal 2022 compared to the same periods in fiscal 2021.

The third quarter and the first nine months of fiscal 2022 also reflected $10 million and $84 million, respectively, of government programs compared to $27 million for the third quarter and $131 million for the first nine 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.

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

Segment profit margin decreased to 13.0% for the third quarter of fiscal 2022 compared to 15.7% for the third quarter of fiscal 2020.

The decrease in segment profit margin was primarily driven by higher supply chain costs, the unfavorable impact of the mark-to-market on inventory derivatives and incremental COVID-19 related costs.

Merchandise margin improved due to higher markon and lower markdowns, mostly offset by incremental freight.

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

Segment profit decreased $27 million compared to a segment profit of $386 million for the first nine months of fiscal 2020.

Segment profit margin decreased to 11.6% for the first nine months of fiscal 2022 compared to 13.3% for the same period of fiscal 2020.

The decrease in segment profit margin was primarily driven by higher supply chain costs, incremental COVID-19 related 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 Twenty-Six Weeks Ended

dollars in millions July 31,

2021 August 1,

2020 August 3,

2019 July 31,

2021 August 1,

2020 August 3,

Thirteen Weeks Ended Thirty-Nine Weeks Ended

dollars in millions October 30,

2021 October 31,

2020 November 2,

2019 October 30,

2021 October 31,

2020 November 2,

Net sales $ 1,764 $ 1,429 $ 1,433 $ 3,926 $ 2,881 $ 3,947

11 unchanged sentences

Total 14,726 14,350 14,138

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 second quarter of fiscal 2022.

Net sales for TJX International were $1.8 billion for the third quarter of fiscal 2022, an increase of 23% compared to $1.4 billion for the third quarter of fiscal 2021.

Net sales were $3.9 billion for the first nine months of fiscal 2022, an increase of 36% compared to $2.9 billion for the first nine months of fiscal 2021.

The increase for the third quarter of fiscal 2022 was primarily driven by an increase in customer traffic and average basket.

The increase for the nine-month period reflected temporary store closings, as a result of the COVID-19 pandemic, which were approximately 26% of the first nine months of fiscal 2022, and 29% of the first nine months of fiscal 2021.

Net sales for TJX International increased 23% compared to $1.4 billion for the third quarter of fiscal 2020 and decreased 1% compared to $3.9 billion for the first nine months of fiscal 2020.

On a constant currency basis, net sales increased 14% for the third quarter and decreased 8% for the first nine months of fiscal 2022 compared to the same periods of fiscal 2020.

Open-only comp store sales were up 10% for the third quarter of fiscal 2022 and up 11% for the first nine 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.

E-commerce sales represented less than 6% of TJX International’s net sales for both the third quarters and first nine months of fiscal 2022, fiscal 2021 and fiscal 2020.

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.

Segment profit was $127 million for the third quarter of fiscal 2022, an increase of $40 million compared to a segment profit of $87 million for the third quarter of fiscal 2021.

This increase was driven by additional sales resulting in an improved segment profit margin of 7.2% for the third quarter of fiscal 2022 compared to 6.1% for the third quarter of fiscal 2021.

Segment profit was $79 million for the first nine months of fiscal 2022, an increase of $382 million compared to a segment loss of $(303) million for the first nine months of fiscal 2021.

The increase in segment profit for the first nine months of fiscal 2022 was primarily driven by improved merchandise margin due to lower markdowns.

The first nine months of fiscal 2022 reflected $157 million of government programs compared to $90 million for the nine 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.

Segment profit increased $28 million compared to a segment profit of $99 million for the third quarter of fiscal 2020.

Segment profit margin increased to 7.2% for the third quarter of fiscal 2022 compared to 6.9% for the third quarter of fiscal 2020.

The increase in segment profit margin was primarily driven by expense leverage on occupancy costs due to strong open-only comp store growth and the favorable impact of the mark-to-market on inventory derivatives.

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

Segment profit decreased $99 million compared to a segment profit of $178 million for the first nine 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 nine months of fiscal 2022.

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

GENERAL CORPORATE EXPENSE

Thirteen Weeks Ended Twenty-Six Weeks Ended

In millions July 31,

2021 August 1,

2020 July 31,

2021 August 1,

Thirteen Weeks Ended Thirty-Nine Weeks Ended

In millions October 30,

2021 October 31,

2020 October 30,

2021 October 31,

General corporate expense $ 148 $ 150 $ 472 $ 374

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 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.

The slight decrease in general corporate expense for the third quarter of fiscal 2022 was primarily due to timing of funding to TJX’s charitable foundations offset by higher share-based and incentive compensation costs in fiscal 2022.

The increase in general corporate expense for the first nine months of fiscal 2022 was primarily driven by higher share-based and incentive compensation costs partially offset by a favorable mark-to-market adjustment on fuel hedges.

ANALYSIS OF FINANCIAL CONDITION

Liquidity and Capital Resources

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 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.

1 unchanged sentence

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, 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.

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 October 30, 2021, 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 July 31, 2021, there were no short-term bank borrowings or commercial paper outstanding.

As of October 30, 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 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.

In the first nine 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 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 July 31, 2021.

As of October 30, 2021, we held $6.8 billion in cash.

Approximately $1.5 billion of our cash was held by our foreign subsidiaries with $0.7 billion held in countries where we indefinitely reinvest any undistributed earnings.

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 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.

Operating activities resulted in net cash inflows of $1.9 billion for the nine months ended October 30, 2021 and $4.3 billion for the nine months ended October 31, 2020.

Operating cash flows decreased compared to fiscal 2021 primarily due to the $5.0 billion change in merchandise inventories net of accounts payable, driven by higher inventory levels in fiscal 2022 as well as timing of merchandise payments in fiscal 2021.

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.

The decrease in operating cash flows was partially offset by an increase in net income.

Temporary store closures in fiscal 2021 resulted in a net loss of $0.2 billion in the first nine months of fiscal 2021 compared to net income of $2.3 billion for the first nine months of fiscal 2022.

Investing Activities

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.

Investing activities resulted in net cash outflows of $0.7 billion for the nine months ended October 30, 2021 and $0.4 billion for the nine months ended October 31, 2020.

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

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.

Investing activities in the first nine 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 .

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Financing Activities

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 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.

Financing activities resulted in net cash outflows of $4.9 billion for the first nine months of fiscal 2022 and net cash inflows of $3.5 billion for the nine months ended October 31, 2020.

The cash outflows in the first nine 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 half of fiscal 2022.

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

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

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

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.

During the second quarter of fiscal 2022, we lifted the temporary suspension of our repurchase program and we plan to repurchase approximately $1.75 billion to $2 billion of stock in fiscal 2022 under our previously authorized stock repurchase programs.

Under our stock repurchase programs, we paid $1.1 billion to repurchase and retire 16.3 million shares of our stock on a settlement basis in the first nine months of fiscal 2022.

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

As of October 30, 2021, approximately $1.9 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.

We declared quarterly dividends on our common stock of $0.26 per share for each of the quarters in fiscal 2022 and expect to declare a similar dividend in the fourth 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 nine months of fiscal 2021.

Cash payments for dividends on our common stock totaled $0.9 billion for the first nine months of fiscal 2022 and $0.3 billion for the first nine months of fiscal 2021.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

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serious disruptions or catastrophic events;

disproportionate impact of disruptions in the second half of the fiscal year;

disproportionate impact of disruptions in the final quarter of the fiscal year;

commodity availability and pricing;

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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