What changed in this filing

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Item 1A. Risk Factors

2022-03-30 compared with 2021-03-31 · 107 added, 96 removed, 244 unchanged (45% of the section changed)

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OPERATIONAL AND STRATEGIC RISKS

Our business has been and may continue to be materially and adversely affected by the impact of the ongoing COVID-19 pandemic.

After COVID-19 emerged and spread worldwide, the World Health Organization declared COVID-19 a pandemic in March 2020.

National, state and local governments as well as private entities began issuing various restrictions, including travel restrictions, restrictions on public gatherings, limitations on business operations, stay at home orders and advisories, and quarantining protocols.

The temporary closures of our stores, online businesses, and distribution centers, and additional operating expenses and other impacts from the ongoing pandemic, have had and may continue to have an adverse impact on our business operations, financial position, and liquidity.

For example, during the time our facilities were closed in the first half of fiscal 2021 and our day-to-day retail operations were suspended, we were unable to generate sales.

At the same time, we continued to incur expenses, including labor, occupancy and other costs, such as continued pay for certain Associates during closures, continued employee benefits coverage for eligible Associates during temporary furloughs at no cost to impacted Associates in the U.S.

and Canada and comparable actions with respect to portions of our TJX Europe workforce.

As our stores and facilities reopened, we implemented new practices and protocols, including enhanced cleaning protocols, occupancy limitations, and additional health and safety protocols that resulted in additional payroll and continued or increased expenses while potentially impacting sales opportunities.

Many stores have had additional temporary closures since we began reopening in May 2020, with the vast majority of the closures in Europe and Canada, and some stores and facilities are currently closed and/or may be closed again in the future, further adversely impacting sales opportunities.

Some of these pandemic-related expenses and/or operational limits have continued into the beginning of fiscal 2022 and we expect they may continue to some extent in the future.

In addition, the pandemic may have changed our Associates’ willingness or ability to staff our stores and distribution centers or otherwise continue employment as a result of health concerns, economic pressures or otherwise.

Further, changes in our customers’ willingness to shop our stores, the levels of our customers’ spending at our stores, and the more general impact of the ongoing pandemic on the economy and consumer discretionary spending (for example, as a result of erosion in consumer sentiment or the impact of high unemployment or otherwise) have also impacted and may continue to impact our business operations, financial performance, and liquidity.

We have seen reduced customer traffic and sales declines in most of our divisions.

These declines could continue or accelerate for the remainder of the pandemic and beyond.

In addition, market conditions and the impact of the pandemic on the global economy have impacted and may continue to impact the financial viability or business operations of some of our suppliers and transportation or logistics providers, which has interrupted and increased costs for, and may in the future interrupt and further increase costs for, our supply chain and could require additional changes to our operations.

The extent of the impact of the COVID-19 pandemic on our business will depend on future developments, which remain highly uncertain and difficult to predict, including the duration, severity and sustained geographic spread of the pandemic, additional waves of increased infections, the virulence and spread of different strains of the virus, and the extent to which associated prevention, containment, remediation and treatment efforts, including global vaccination programs, are successful.

Our business, financial condition and results of operations have been and are expected to continue to be adversely affected by the impact of the COVID-19 pandemic.

The COVID-19 pandemic has had, and is continuing to have, a significant impact on our business, financial condition and results of operations.

Many governments and private entities have issued various restrictions at different points in time since the emergence and spread of COVID-19 worldwide, including, for example, travel restrictions, restrictions on public gatherings, limitations on business operations, mask mandates, vaccination requirements, stay at home orders and advisories and quarantining protocols.

For a period in fiscal 2021 during the first major peak of the COVID-19 outbreak, all of our stores, online businesses and distribution centers were temporarily closed, during which time we were unable to generate sales, though we continued to incur expenses.

In response to the COVID-19 pandemic we also implemented new practices and protocols in our operations, including enhanced cleaning protocols, occupancy limitations and additional health and safety protocols that resulted in additional payroll and continued or increased expenses while potentially impacting sales opportunities.

Many stores have had, and in the future may again have, additional temporary closures or be subject to additional restrictions, further adversely impacting customer traffic and sales opportunities.

For example, as of March 25, 2022, certain countries in Europe remained subject to COVID-19-related shopping restrictions.

In addition, market conditions and the impact of the pandemic on the global economy and global supply chain have impacted and may continue to impact the financial viability or business operations of some of our suppliers and transportation or logistics providers, which has interrupted and increased costs for, and may in the future interrupt and further increase costs for, our supply chain, and could require additional changes to our operations.

We expect that our operations will continue to be impacted by the effects of the COVID-19 pandemic as it continues to evolve.

The extent of the impact will depend in part on future developments that are difficult to predict, including the continued severity and spread of the virus and the success of prevention, treatment and containment efforts globally.

The COVID-19 pandemic has also required and may continue to require us to make decisions that may be considered controversial about precautionary measures, such as requiring vaccinations, proof of vaccinations and face coverings, that could impact our results, including by impacting our brand reputation, our Associate retention and satisfaction, and the willingness of customers to shop our stores.

Further, it remains difficult to predict with certainty the full impact of COVID-19 on the broader economy and how consumer behavior may change, and whether such changes are temporary or permanent (whether during the pandemic or possibly in a post-pandemic epidemic or endemic phase).

Levels of our customers’ spending at our stores and consumer discretionary spending more generally may be impacted by the ongoing pandemic and its impact on the economy.

Social distancing, telecommunicating and reductions in travel may become more typical and replace past patterns.

In addition, the pandemic and related factors may have changed or change our Associates’ willingness or ability to staff our stores and distribution centers or otherwise continue employment as a result of health concerns, economic pressures or otherwise.

All of these conditions could impact the way our Associates work, affect our company culture and reputation and could have continuing adverse effects on our business, financial condition and results of operations.

Failure to execute our opportunistic buying strategy and successfully manage our inventory could adversely affect our results.

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The ongoing COVID-19 pandemic has impacted, and may continue to impact, execution of our opportunistic buying strategy and inventory management.

Our ability to allocate, deliver and maintain an appropriate mix and level of inventory was also impacted during fiscal 2021 by temporary closures of our stores, distribution centers, and e-commerce sites, including by affecting decisions on mark-downs, pack-away, and perishables, particularly in the second quarter when our stores and distribution centers reopened after the first temporary closures, and by other operational and market changes related to the global pandemic.

If we fail to successfully implement our various marketing efforts or if our competitors’ programs are more effective than ours, our revenue or results of operations may be adversely affected.

Customer traffic and demand for our merchandise may be influenced by our marketing efforts.

Although we use marketing to drive customer traffic through various media including television, radio, print, outdoor, digital/social media, email, mobile, and direct mail, some of our competitors may expend more for their programs than we do, or use different approaches than we do, which may provide them with a competitive advantage.

Further, we may not effectively develop or implement strategies with respect to rapidly evolving digital communication channels.

If our marketing efforts are not as successful or cost effective as anticipated, our revenue and results of operations could be adversely affected.

Our ability to allocate, deliver and maintain our preferred mix and level of inventory has been impacted by temporary store closures and global supply chain disruptions, including, for example, by increasing competition for limited shipping capacity and by other operational and market changes related to the global pandemic.

Failure to identify consumer trends and preferences, or to otherwise meet customer demand or expectations, in new or existing markets or channels could negatively impact our performance.

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However, we may not do so effectively and/or on a timely basis across our diverse merchandise categories and in each of the many markets in the U.S., Canada, Europe and Australia in which we do business.

Trends and preferences in markets may differ from what we anticipate, and could change rapidly, as they did during fiscal 2021 in connection with the ongoing COVID-19 pandemic.

Trends and preferences in markets may differ from what we anticipate and could change rapidly.

Although our business model allows us greater flexibility than many traditional retailers to meet consumer product preferences and trends (for example, by expanding and contracting merchandise categories in response to consumers’ changing tastes), we may not successfully do so, which could impact inventory turns, customer traffic and sales and add difficulty in attracting new customers, retaining existing customers, and encouraging frequent customer visits, which could adversely affect our results.

Customers may also have expectations about how they shop in stores or through e-commerce or more generally engage with businesses across different channels (for example, through various digital platforms).

These expectations may vary both across and within demographics and geographies and may evolve rapidly or be impacted by external factors, such as the COVID-19 pandemic’s impact on consumers’ comfort levels in visiting stores as well as their expectations for our stores, including health and safety protocols.

These expectations may vary both across and within demographics and geographies and may evolve rapidly or be impacted by external factors, such as the COVID-19 pandemic’s impact on consumers’ shopping habits as well as their expectations for our stores, including health and safety protocols.

Meeting these expectations effectively generally involves identifying the right opportunities and making the right investments at the right time and with the right speed, among other things, and failure to do so may impact our financial results.

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Additionally, existing competitors may enter or increase their presence in markets in which we operate, consolidate with other retailers, expand their merchandise offerings, expand their e-commerce capabilities and/or add new sales channels or change their pricing strategies.

During fiscal 2021, additional regulations or health and safety concerns related to the ongoing pandemic impacted our competitors differently, based on factors such as location, sales channel strategy, merchandising strategy and others.

Consumer spending online, which has been increasing, also appears to have accelerated as a result of the COVID-19 pandemic.

Consumer e-commerce spending has been increasing over the past few years.

E-commerce may continue to increase, while our business is primarily in brick and mortar stores.

If we fail to compete effectively, our sales and results of operations could be adversely affected.

If we fail to successfully implement our marketing efforts and these marketing efforts are not successful in driving expected traffic to our stores or if our competitors’ marketing programs are more effective than ours, our revenue or results of operations may be adversely affected.

Customer traffic and demand for our merchandise may be influenced by our marketing efforts.

Although we use marketing to drive customer traffic through various media including television, radio, print, outdoor, digital/social media, email, mobile and direct mail, some of our competitors may expend more for their marketing programs than we do, or use different approaches than we do, which may provide them with a competitive advantage.

Further, we may not effectively develop or implement strategies with respect to rapidly evolving digital communication channels.

If our marketing efforts are not as successful or cost effective as anticipated, our revenue and results of operations could be adversely affected.

Failure to continue to expand our business successfully could adversely affect our financial results

Our growth strategy includes successfully expanding within our current markets and/or into new geographic regions, product lines and channels, including e-commerce, and, as appropriate, adding new businesses, whether by development, investment or acquisition.

If any aspect of our expansion strategy does not achieve the success we expect, in whole or in part, we may fail to meet our financial performance expectations generally or within certain markets or divisions, and/or may be required to increase investments, slow our planned growth, or close stores or operations.

For example, if we are not able to find and lease appropriate real estate on attractive terms in the locations where we seek to open brick and mortar stores, or if new stores do not perform as well as we anticipated, we may need to change our planned growth in those markets.

If any aspect of our expansion strategy does not achieve the success we expect, in whole or in part, we may fail to meet our financial performance expectations generally or within certain markets or divisions, and/or may be required to increase or decrease investments, slow our planned growth or close stores or operations.

Even if a particular market has high commercial vacancies, if we are not able to find and lease appropriate real estate on attractive terms in the locations where we seek to open brick and mortar stores, or, for example, if new stores do not perform as well as we anticipated, we may need to change our planned growth in those markets.

Growth can add complexity to effective information sharing and requires significant attention from our management and other functions across our business.

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The size and scale of our business also creates challenges in effectively managing, training, retaining and engaging a large, disparate workforce.

These challenges may be exacerbated if a large portion of our workforce is unable to work on site, temporarily furloughed or working remotely, as was the case during parts of fiscal 2021.

These challenges may be exacerbated if a portion of our workforce is working remotely for all or part of their time, as started to be the case during fiscal 2021, or is unable to work on site or is temporarily furloughed, as was the case in recent years.

If we are unable to manage our size and scale effectively, our results of operations may be adversely affected.

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We are subject to various risks of sourcing merchandise, particularly from other countries, including risks related to moving merchandise internationally.

Many of the products sold in our stores are sourced by our vendors and, to a lesser extent, by us, in locations, particularly China, India, and southeastern Asia, which are outside of the country where they will be sold.

Many of the products sold in our stores are sourced by our vendors and, to a lesser extent, by us, in locations, particularly China, India and southeastern Asia, different from the country in which they will be sold.

Where we are the importer of record, we may be subject to regulatory or other requirements, including those similar to requirements imposed upon the manufacturer of such products.

Risks related to sourcing merchandise include:

– problems in third-party distribution and warehousing, logistics, transportation and other supply chain interruptions;

– potential disruptions in manufacturing and supply;

– changes in duties, tariffs, trade restrictions, sanctions, quotas and voluntary export restrictions on imported merchandise, including, for example, changes to trade requirements resulting from the U.K.’s withdrawal in January 2020 from the European Union (commonly referred to as “Brexit”);

tariffs and border adjustment taxes;

changes to the United States Mexico Canada Agreement (the successor to the North American Free Trade Agreement) or successor or other trade agreements;

– transport availability, capacity and costs;

– information technology challenges;

– problems in third-party distribution and warehousing, logistics, transportation and other supply chain interruptions;

– changes in duties, tariffs, trade restrictions, sanctions, quotas and voluntary export restrictions on imported merchandise, including, for example, additional trade requirements resulting from “Brexit,” the U.K.’s withdrawal from the European Union;

tariffs and border adjustment taxes;

changes to the United States Mexico Canada Agreement (the successor to the North American Free Trade Agreement) or successor or other trade agreements;

– pandemics and epidemics (including the ongoing COVID-19 pandemic) affecting sourcing, including manufacturing, buying or delivery;

– strikes, threats of strikes and other events affecting delivery;

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– intellectual property enforcement and infringement issues;

– pandemics and epidemics (including the ongoing COVID-19 pandemic) affecting sourcing, including manufacturing, buying or delivery;

– concerns about human rights, working conditions and other labor rights and conditions in countries where merchandise is produced or materials are sourced, such as the concerns related to treatment of the Uyghur population in the Xinjiang province of China;

– concerns about human rights, working conditions and other labor rights and conditions in countries where merchandise is produced or materials are sourced, such as concerns related to treatment of the Uyghur population in the Xinjiang province of China;

– concerns about transparent sourcing and supply chains;

– currency exchange rates and financial or economic instability;

– political or other disruptions in countries from, to or through which merchandise is imported.

– political, military, or other disruptions in countries from, to or through which merchandise is imported, including in Ukraine and Russia.

These and other factors relating to sourcing, international trade and imported merchandise could affect the availability and the price of our inventory and our operating costs.

Furthermore, although we have implemented policies and procedures designed to facilitate compliance with laws and regulations relating to production of merchandise, international operations and importing merchandise, there can be no assurance that our Associates and our contractors, agents, vendors or other third parties with whom we do business or to whom we outsource business operations will not violate such laws and regulations or our policies, which could subject us to liability and could adversely affect our reputation, operations or operating results.

Our results and profitability could be adversely affected by labor costs, including wage, pension and healthcare costs, or other challenges from our large workforce.

Our results and profitability could be adversely affected by labor costs, including wage, pension, health and other costs, or other challenges from our large workforce.

Our Associates are key to supporting our business and operations effectively, and increased labor costs put pressure on our operating expenses, which could adversely affect our financial results.

We have a large workforce, and our ability to meet our labor needs and control labor costs is subject to various external factors such as minimum wage laws and benefits requirements;

market pressures, including prevailing wage rates and benefit levels and unemployment levels;

changing demographics;

economic conditions;

market pressures, including prevailing wage rates and benefit levels, unemployment levels and competition for labor from other industries;

changing demographics and workforce trends;

economic conditions, including inflation;

interest rate changes;

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the costs of providing and managing retirement, health and other employee benefits, including health and insurance costs;

and a dynamic regulatory and policy environment, including with respect to health care, immigration, labor, employment, pension and other employee benefits, and taxes.

Any of these factors could increase our labor costs.

and a dynamic regulatory and policy environment, including with respect to COVID-19 related mandates and protocols, health care, immigration, labor, employment, pension and other employee benefits, and taxes.

Any of these factors could increase our labor costs (and the labor costs of our service providers, which could be passed on to us).

Increased labor costs may adversely affect our results of operations.

In addition, when wage rates or benefit levels have increased in particular markets, increasing our wages or benefits has negatively impacted and may continue to negatively impact our earnings.

In addition, when wage rates or benefit levels have increased in particular markets, increasing our wages or benefits has and may continue to increase expenses and impact our earnings.

Conversely, failing to offer competitive wages or benefits could adversely affect our ability to attract or retain sufficient or quality Associates, causing our customer service or performance to suffer.

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Failure to employ quality Associates in appropriate numbers and to retain key Associates and management could adversely affect our performance.

We need to employ capable, engaged Associates in large numbers for our stores and distribution centers and, to a lesser extent, for other areas of our business, including information technology functions.

We must constantly recruit new Associates to fill entry level and part-time positions with historically high rates of turnover and at times find seasonal talent in sufficient numbers.

We need to employ capable, engaged Associates for our stores and distribution centers in large numbers, and for other areas of our business, including information technology functions.

We must constantly recruit new Associates to fill entry level and part-time positions with high rates of turnover and at times find seasonal talent in sufficient numbers.

The availability and skill of Associates may differ across markets in which we do business and in new markets we enter, and we may be unable to meet or manage our labor needs effectively.

In addition, due to the ongoing COVID-19 pandemic, we have faced and may continue to face additional challenges in recruiting sufficient talent due to health and safety concerns and disruption to the availability of school or childcare, among other factors, as well as the challenges in engaging, overseeing and training those Associates who would typically work from our offices, most of whom have been working remotely since March 2020.

In addition, due to the ongoing COVID-19 pandemic and economic conditions, we have faced and may continue to face additional challenges in recruiting sufficient talent due to shifts in the labor market, wage pressures and competition, and health and safety concerns, among other factors, as well as the challenges in engaging, overseeing and training those Associates who would typically work from our offices, most of whom have worked primarily remotely since March 2020 and continue to work primarily remotely.

Our performance also depends on recruiting, hiring, developing, training and retaining talented Associates in key areas such as buying and management.

Similar to other retailers, we face challenges in securing and retaining sufficient talent in management and other key areas for many reasons, including competition for talent in the retail industry and in various geographic markets.

In addition, because of the distinctive nature of our off-price model, we must provide significant internal training and development for key Associates across the Company, including within our buying organization, and must effectively manage succession planning.

If we do not effectively attract qualified individuals, train them in our business model, support their development, engage them in our business, and retain them in sufficient numbers and at appropriate levels of the organization, our growth could be limited, and the successful execution of our business model could be adversely affected.

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Our business depends on our information technology (“IT”) systems, which collect and process information of customers, Associates and other persons, as well as information of our business and of our suppliers, service providers and other third parties.

We rely heavily on information technology systems, including those operated and maintained by our suppliers, service providers, and other third parties to manage all key aspects of our business, including planning;

We rely heavily on IT systems, including those operated and maintained by our suppliers, service providers and other third parties, to manage all key aspects of our business, including:

sales, including point-of-sale processing and e-commerce;

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and legal and regulatory compliance.

This reliance requires us to accurately anticipate our current and future information technology needs and successfully develop, implement, and maintain appropriate systems, as well as effective disaster recovery plans for such systems.

Our ongoing operations and successful growth are dependent on doing so, as well as the ongoing integrity, security and consistent operations of these systems, including related back-up systems.

As is common in the retail industry, our information technology systems, as well as those of our suppliers, service providers, and other third parties whose information technology systems we utilize directly or indirectly, are targeted by attempts to access or obtain personal or sensitive information, attempts at monetary theft, and attempts to disrupt business.

These attempts could include use of malware, ransomware, phishing, social engineering, denial-of-service attacks, exploitation of system vulnerabilities, employee malfeasance, digital and physical skimmers, account takeovers, and other forms of cyber attacks.

These attempts are becoming increasingly sophisticated, heightening the risk of compromise or disruption.

Our information technology systems and those of our suppliers, service providers and other third parties also may be damaged or disrupted, or personal or sensitive information compromised, from a number of other causes, including power outages, system failures, catastrophic events, or employee error.

This reliance requires us to accurately anticipate our current and future IT needs and successfully develop, implement and maintain appropriate systems, as well as effective disaster recovery plans for such systems.

Our ongoing operations and successful growth are dependent on doing so, as well as on the ongoing integrity, security and consistent operations of these systems, including related back-up systems.

As is common in the retail industry, our IT systems, as well as those of our suppliers, service providers and other third parties whose information technology systems we utilize directly or indirectly, are targeted by attempts to access or obtain personal or sensitive information, attempts at monetary theft, and attempts to disrupt business.

These attempts could include use of malware, ransomware, phishing, social engineering, denial-of-service attacks, exploitation of system vulnerabilities or misconfigurations, employee malfeasance, digital and physical payment card skimmers, account takeovers and other forms of cyber-attacks.

These attempts continue to increase in sophistication, heightening the risk of compromise or disruption.

While certain of these attempts have resulted in data security incidents, the unauthorized intrusion into our network discovered late in 2006 is the only such data security incident to date that has been material to the results of our operations.

Our IT systems and those of our suppliers, service providers and other third parties also may be damaged or disrupted, or personal or sensitive information compromised, from a number of other causes, including power outages, system failures, catastrophic events or Associate or contractor error.

Such damage, disruption or compromise could materially impair our ability to operate our business or otherwise result in material impacts on our operating results.

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These factors have led to additional mitigation strategies and investments across our IT Security workforce, technologies and processes.

In addition, the global regulatory environment surrounding information security and privacy is increasingly demanding, and unauthorized access of personal or sensitive information could result in regulatory enforcement actions, class actions, contract liability, or other forms of material legal liability.

Any successful compromise or disruption of our information technology systems, or other compromise of the information of our customers, Associates or other persons that we collect, could result in material reputational harm and impact our customers’ willingness to shop in our stores or online and/or our suppliers’, service providers’ or other third parties’ willingness to do business with us.

We maintain policies, procedures, and controls designed to reduce the risks of data security compromises and information technology failures or disruptions, but such controls cannot fully eliminate such risks and may fail to operate as intended or be circumvented.

While we have implemented measures designed to further strengthen these policies, procedures and controls since the unauthorized intrusions into our network discovered late in 2006, we may suffer a similar or different cyber event in the future.

These measures also require costly and ongoing investment in technologies, hiring, training, and compliance.

There is a risk of material business disruption, liability and reputational damage associated with ongoing actions intended to update, enhance, modify or replace our systems and infrastructure, including from not accurately capturing and maintaining data, efficiently testing and implementing changes, realizing the expected benefit of the change and managing the potential disruption of the actions and diversion of internal teams’ attention as the changes are implemented.

In addition, the global regulatory environment surrounding information security and privacy is increasingly demanding, and data security compromises and disruptions in our IT systems could result in regulatory enforcement actions, class actions, contract liability or other forms of material legal liability.

Any successful compromise or disruption of our IT systems, or other compromise of the information of our customers, Associates or other persons that we collect, could result in material reputational harm and impact our customers’ willingness to shop in our stores or online and/or our suppliers’, service providers’ or other third parties’ willingness to do business with us.

We maintain policies, procedures and controls designed to reduce the risks of data security compromises and IT failures or disruptions, but such controls cannot fully eliminate such risks and may fail to operate as intended or be circumvented.

These policies, procedures and controls also require costly and ongoing investment in technologies, hiring, training and compliance.

There is also a risk of material business disruption, liability and reputational damage associated with ongoing actions intended to update, enhance, modify or replace our systems and infrastructure, including from not accurately capturing and maintaining data, efficiently testing and implementing changes, realizing the expected benefit of the change and managing the potential disruption of the actions and diversion of internal teams’ attention as the changes are implemented.

Damage to our corporate reputation or those of our retail banners could adversely affect our sales and operating results.

Our relationships with our customers and our reputation are based, in part, on perceptions of subjective qualities.

Incidents involving us, our retail banners, our executives and other Associates, our board of directors, our policies and practices, our third party providers, our vendors and others within our supply chain, the merchandise and brands, including our licensed or owned brands, that we sell, our partners and our industry more generally that erode trust or confidence could adversely affect our reputation and thereby impact our business, particularly if the incidents result in rapid or significant adverse publicity, protest, litigation, or governmental inquiry.

Incidents involving us, our retail banners, our executives and other Associates, our board of directors, our policies and practices, our third-party providers, our vendors and others within our supply chain, the merchandise and brands, including our licensed or owned brands, that we sell, our investments, in regions where we have operations or investments, our partners and our industry more generally that erode trust or confidence could adversely affect our reputation and thereby impact our business, particularly if the incidents result in rapid or significant adverse publicity, protest, litigation or governmental inquiry.

Information on such incidents that is publicized through traditional or digital media platforms, including social media, websites, blogs and other forums that facilitate rapid, broad communications to an audience of consumers and other interested persons, may adversely affect our reputation and brand, even if the information is inaccurate, incomplete or unverified.

Similarly, challenges or reactions to action (or inaction), or perceived action (or inaction), by our company to crises, including the COVID-19 pandemic, or on issues like corporate responsibility, responsible sourcing, environmental sustainability, inclusion and diversity (including racial justice and equity), human rights, politics and lobbying, privacy, merchandising, product safety, compensation and benefits, labor compliance, workforce reductions or other employment actions, or other sensitive topics, and any perceived lack of transparency about such matters, could harm our reputation, particularly as expectations of corporate action and of companies’ corporate responsibility obligations have changed and may continue to change.

Similarly, challenges or reactions to action (or inaction), or perceived action (or inaction), by our company to crises, including the Russian invasion of Ukraine or a public health crisis like the COVID-19 pandemic, or on issues like corporate responsibility, responsible sourcing, environmental sustainability, climate change, inclusion and diversity, racial justice and equity, human rights, politics and lobbying, privacy, merchandising, product safety, compensation and benefits, workplace environment, labor compliance, workforce reductions or other employment actions, or other sensitive topics, and any perceived lack of transparency about such matters, could harm our reputation, particularly as expectations of corporate action and of companies’ responsibilities in areas related to environmental, social and governance (“ESG”) issues have changed and may continue to change.

This kind of reputational damage could occur locally or globally and could impact our company or our individual retail banners.

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divert the attention and resources of management, including to respond to inquiries or additional regulatory scrutiny;

and otherwise adversely affect our results.

and otherwise adversely affect our financial results.

We depend upon strong cash flows from our operations to supply capital to fund our operations, growth, stock repurchases and dividends and interest and debt repayment.

Our business depends upon our operations to continue to generate strong cash flow to supply capital to support our general operating activities, to fund our growth and our return of cash to stockholders through our stock repurchase programs and dividends, and to pay our interest and debt repayments.

If we are unable to generate sufficient cash flows (due to the ongoing pandemic or otherwise) or to repatriate cash from our international operations in a manner that is cost effective, our growth plans, capital expenditures, operating expenses, and financial performance, including our earnings per share, could be adversely affected.

Our business depends upon our operations continuing to generate strong cash flow to supply capital to support our general operating activities, to fund our growth and our return of cash to stockholders through our stock repurchase programs and dividends, and to pay our interest and debt repayments.

If we are unable to generate sufficient cash flows or to repatriate cash from our international operations in a manner that is cost effective, our growth plans, capital expenditures, operating expenses and financial performance, including our earnings per share, could be adversely affected.

Changes in the capital and credit markets, including market disruptions, limited liquidity and interest rate fluctuations, may increase the cost of financing or restrict our access to these potential sources of liquidity.

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Our quarterly operating results fluctuate and may fall short of prior periods, our projections or the expectations of securities analysts or investors, which could adversely affect our stock price.

Our operating results have fluctuated from quarter to quarter at points in the past, including varying significantly from past quarters during fiscal 2021, and may do so again in the future.

Our operating results have fluctuated from quarter to quarter at points in the past, including varying significantly from past quarters in recent years, and may do so again in the future.

If we fail to increase our results over prior periods, to achieve our projected results or to meet the expectations of securities analysts or investors, our stock price may decline (as it did at times during fiscal 2021), and the decrease in the stock price may be disproportionate to the shortfall in our financial performance.

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If we do not control costs or appropriately adjust costs to actual results, or if actual results differ significantly from our forecast, our financial performance could be adversely affected.

In addition, if we suspend our buyback program, as we did during fiscal 2021, or if we have an active buyback program and are repurchasing shares but do not repurchase the number of shares we contemplated pursuant to our stock repurchase programs, or if we reduce or suspend our dividend distributions, our earnings per share may be adversely affected.

If we engage in mergers or acquisitions or investments in new businesses, or divest, close or consolidate any of our current businesses, our business could be subject to additional risks.

We may acquire new businesses (as we have in the past with our Australia business and with Sierra), invest in other businesses (as we did with our minority investment interest in privately held Familia, a Russian off-price apparel and home fashions retailer, in fiscal 2020) or enter into joint ventures with other businesses, develop new businesses internally (as with Homesense, our additional U.S.

home store concept launched in fiscal 2018), launch or expand e-commerce platforms (as we plan to do in fiscal 2022 with a HomeGoods e-commerce business), and divest, close or consolidate businesses.

home store concept launched in fiscal 2018), launch or expand e-commerce platforms (as we did in fiscal 2022 with homegoods.com, a HomeGoods e-commerce business), and divest (as we plan to do with our Familia interest), close or consolidate businesses.

Furthermore, we may not be able to strategically divest certain assets or investments due to developments outside of our control.

Failure to execute on mergers, acquisitions, investments, divestitures, closings and consolidations in a satisfactory manner could adversely affect our future results of operations and financial condition.

Acquisition, investment or divestiture activities may divert attention of management from operating the existing businesses, and we may not effectively evaluate target companies, investments or investment partners or assess the risks, benefits and costs of buying, investing in or closing businesses or of the integration of acquired businesses, all of which can be difficult, time-consuming and dilutive.

These activities may not meet our performance and other expectations and may expose us to unexpected or greater-than-expected costs, liabilities and risks.

Acquisition, investment or divestiture activities may divert attention of management from operating the existing businesses, and we may not effectively evaluate target companies, investments or investment partners or assess the risks, benefits and costs of buying, investing in or closing businesses or of the integration or attendant risks of acquired businesses or investments, all of which can be difficult, time-consuming and dilutive.

These activities may not meet our performance and other expectations and may expose us to unexpected or greater-than-expected costs, liabilities and risks, including, for example, from changes in law, market conditions, the retail industry or political conditions.

In addition, we recorded intangible assets and goodwill and the value of the tradenames in connection with our last acquisitions and may similarly do so in the future in connection with other acquisitions.

If we are unable to realize the anticipated benefits from acquisitions, we may be required to impair some or all of the goodwill associated with an acquisition, which would adversely impact our results of operations and balance sheet, such as with an impairment charge.

If we are unable to realize the anticipated benefits from acquisitions or investments, we may be required to impair some or all of the goodwill associated with an acquisition or investment, which would adversely impact our results of operations and balance sheet, such as with an impairment charge.

For example, in connection with the ongoing conflict between Russia and Ukraine, we announced our intention to divest our ownership interest in Familia.

Depending on how and when that divestment occurs, we may not recover the full value of our investment.

Divestitures, closings and consolidations could involve risks such as significant costs and obligations of closure, including exposure on leases, owned real estate and other contractual, employment, pension and severance obligations, and potential liabilities that may arise under law as a result of the disposition or as a result of the credit risk of an acquirer.

Our real estate leases generally obligate us for long periods, which subjects us to financial risks.

We anticipate that we may recognize an investment loss or be required to record an impairment charge in connection with our planned divestiture of Familia.

Our large number of real estate leases, which generally obligate us for long periods, subject us to potential financial risk.

We lease virtually all of our store locations and either own or lease for long periods our primary distribution centers and administrative offices.

Accordingly, we are subject to the risks associated with leasing and owning real estate, which can adversely affect our results.

Accordingly, we are subject to the risks associated with leasing and owning real estate, which can adversely affect our financial results.

While we have the right to terminate some of our leases under specified conditions, including by making specified payments, we may not be able to terminate most of our leases if or when we would like to do so.

If we decide or are required to permanently close stores, we are typically required to continue to perform obligations under the applicable leases, which generally include, among other things, paying rent and operating expenses for the balance of the lease term or paying to exercise rights to terminate, and the performance of any of these obligations may be significant.

When we assign leases or sublease space to third parties, or if we sell or close a business, we can remain liable on the lease obligations if the assignee or sublessee does not perform (as was the case with some of our former operations).

When we assign leases to third parties, or if we sell or close a business, we can remain liable on the lease obligations for the balance of the term and we are contingently liable if the assignee does not perform (as was the case with some of our former operations).

We also remain primarily liable if we sublease space to a third party.

In addition, when the lease terms for the stores in our ongoing operations expire, we may be unable to negotiate renewals, either on commercially reasonable terms or at all, which could cause us to permanently close stores or to relocate stores within a market on less favorable terms or in a less favorable location.

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Risk of loss or theft of assets, including inventory shrinkage, is inherent in the retail business.

Loss may be caused by error or misconduct of Associates, customers, vendors or other third parties.

Loss may be caused by error or misconduct of Associates, customers, vendors or other third parties including through organized retail crime and professional theft.

Our inability to effectively prevent and/or minimize the loss or theft of assets, or to effectively reduce the impact of those losses, could adversely affect our financial performance.

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Consumer confidence and discretionary spending can be affected by various economic conditions, both on a global level and in particular markets, that can, in turn, affect our business or the retail industry generally.

These factors include, among others, economic recession;

These factors include, among others, inflation and deflation;

actual or perceived declines in consumer purchasing power;

economic recession;

unemployment levels;

availability of disposable income and actual and perceived wealth;

actual or perceived declines in consumer purchasing power;

health care costs;

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volatility in capital markets;

credit availability;

and inflation and deflation.

and credit availability.

Similarly, in addition to the impact of regulatory or policy changes, regulatory volatility or uncertainty, including in areas such as international trade, including U.S.

tariff policies;

challenges presented by implementation following Brexit, as well as threats or occurrences of war, terrorism, pandemics or epidemics (such as the ongoing COVID-19 pandemic), geopolitical instability or uncertainty and political or social unrest and/or conflict (locally or across regions) may have significant effects on consumer confidence and spending that can in turn, affect our financial results and impact the retail industry generally.

challenges presented by implementation following Brexit, as well as threats or occurrences of war (including Russia’s invasion of Ukraine), terrorism, pandemics or epidemics (such as the ongoing COVID-19 pandemic), supply chain disruptions, geopolitical instability or uncertainty and political or social unrest and/or conflict (locally or across regions) may have significant effects on consumer confidence and spending that can in turn, affect our financial results and impact the retail industry generally.

These conditions and factors also shift trends in consumer spending that could affect our business.

Although we believe our flexible off-price model helps us react to such changes, they may adversely affect our sales, cash flows, merchandise orders and results of operations and performance.

Instability in financial markets or other factors may adversely affect economic conditions, on a global level or in particular markets, impacting our sources of liquidity and costs of capital and increasing our financial exposure, and our strategies for managing these financial risks may not be effective or sufficient.

Changes in economic conditions, on a global level or in particular markets, may adversely affect our sources of liquidity and costs of capital and increase our financial exposure, and our strategies for managing these financial risks may not be effective or sufficient.

Global financial markets can experience volatility, disruption and credit contraction, which could adversely affect global economic conditions.

Changes in economic conditions could adversely affect sources of liquidity available to us or our costs of capital, including through capital markets, could adversely affect plan asset values and investment performance, and increase our pension liabilities, expenses, and funding requirements and other related financial exposure with respect to company-sponsored and multiemployer pension plans.

Changes in economic conditions could adversely affect sources of liquidity available to us or our costs of capital, including through capital markets.

In particular, prolonged volatility or significant disruption of global financial markets due in part to the COVID-19 pandemic and Russia’s invasion of Ukraine could have a negative impact on our ability to access capital markets and other funding sources, on acceptable terms or at all, and impede our ability to comply with debt covenants.

In addition, changes in economic conditions could adversely affect plan asset values and investment performance, and increase our pension liabilities, expenses and funding requirements and other related financial exposure with respect to company-sponsored and multiemployer pension plans.

Our strategies for managing these financial risks and exposures may not be effective or sufficient or may expose us to risk.

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climate conditions;

unforeseen public health issues, such as pandemics and epidemics (such as the ongoing COVID-19 pandemic);

public health issues, such as pandemics and epidemics (such as the ongoing COVID-19 pandemic);

fires or explosions;

and acts of war, domestic or foreign terrorism, or violence, including riots or active shooter situations, could disrupt our operations in a number of ways, including by causing injury or serious harm to our Associates, including when traveling on business, or customers;

acts of war (such as Russia’s invasion of Ukraine);

domestic or foreign terrorism or other acts of violence, including riots or active shooter situations;

or cyberterrorism, nation-state cyber-attacks, or other cyber events could disrupt our operations in a number of ways, including by causing injury or serious harm to our Associates, including when traveling on business, or customers;

severely damaging or destroying one or more of our stores, distribution facilities, data centers or office facilities, or could disrupt the operations of, or require the closure of, one or more of our vendors or other parts of our supply chain located in the affected areas.

Day-to-day operations, including our ability to receive products from our vendors or third party service providers or transport products to our stores or to our e-commerce customers could be adversely affected, transportation to and from our stores (by customers or Associates) could be limited, or we could temporarily close stores or distribution centers in the affected areas or in areas served by affected distribution centers for a short or extended period of time (as with closures of our stores and other facilities beginning in March 2020).

Day-to-day operations, including our ability to receive products from our vendors or third-party service providers or transport products to our stores or to our e-commerce customers could be adversely affected, transportation to and from our stores (by customers or Associates) could be limited, or we could temporarily close stores or distribution centers in the affected areas or in areas served by affected distribution centers for a short or extended period of time (as with closures of our stores and other facilities at various times due to the COVID-19 pandemic).

As our business is subject to seasonal influences, a decrease in sales or margins, a severe disruption or other significant event that impacts our business during the second half of the year could have a disproportionately adverse effect on our operating results.

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Although we typically enter into derivative instruments designed to manage a portion of our transportation costs (a hedging strategy), any such strategy may not be effective or sufficient and could result in increased operating costs.

Increased regulation related to environmental costs, including cap and trade, carbon taxes or other emissions management systems could also adversely affect our costs of doing business, including utility, transportation and logistics costs, as could other shortages or disruptions impacting transportation, such as those relating to trucking and freight hauling.

For example, in recent years, increased freight cost related to labor, equipment and capacity shortages, as well as other factors, had an impact on our margins, and in fiscal 2021, the ongoing pandemic impacted operations of many third parties along our supply chain, impacting our inventory flow and financial performance.

Shortages or disruptions, including from increased demand and other factors, impacting transportation within our supply chain also negatively impacts our cost of business.

For example, in recent years, increased freight costs related to labor, equipment and capacity shortages involving freight hauling, as well as other factors, had an adverse impact on our margins.

In fiscal 2023, we anticipate that the conflict in Ukraine and related sanctions on Russia may impact fuel resources and operations of third parties along our supply chain such that our inventory flow and financial performance may be negatively impacted.

Similarly, other commodity prices can fluctuate dramatically.

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Adverse or unseasonable weather may adversely affect our sales and operating results.

Adverse or unseasonable weather, such as storms, severe cold or heat or unseasonable temperatures (even if not extreme) may affect customers’ buying patterns and willingness to shop at all or in certain categories we offer, particularly in apparel and seasonal merchandise, possibly impacting our sales and customer satisfaction with our stores and increasing our markdowns.

Adverse or unseasonable weather, such as storms, severe cold or heat or unseasonable temperatures (even if not extreme) may affect customers’ buying patterns and willingness to shop at all or in certain categories we offer, particularly in apparel and seasonal merchandise, which could impact our sales, customer satisfaction with our stores and our markdowns.

As a result, our business could be adversely affected.

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Additionally, we routinely enter into inventory-related derivative instruments (a hedging strategy) to mitigate the impact of currency exchange rates on merchandise margins resulting from merchandise purchases by our segments denominated in currencies other than their local currencies.

In accordance with GAAP, we evaluate the fair value of these derivative instruments and make mark-to-market adjustments at the end of each accounting period.

These mitigation strategies may not be effective or sufficient.

In addition, in accordance with GAAP, we evaluate the fair value of these derivative instruments and make mark-to-market adjustments at the end of each accounting period.

These adjustments are of a much greater magnitude when there is significant volatility in currency exchange rates and may have a significant impact on our earnings.

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– labor and employment practices and benefits, including for labor unions and works councils;

– health, welfare and safety requirements, such as those implemented in connection with the COVID-19 pandemic;

– import/export, supply chain, trade restrictions and logistics, including resulting from changes to requirements or policies from the outcome of Brexit;

– health, welfare and safety requirements, including vaccination and/or testing requirements, such as those implemented and proposed in connection with the COVID-19 pandemic;

– import/export, supply chain, social compliance, trade restrictions and logistics, including resulting from changes to requirements or policies from the outcome of Brexit or the Uyghur Forced Labor Act;

– climate change, energy and waste;

– consumer protection and product safety;

– consumer protection, product safety and product compliance;

– financial regulations and reporting;

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However, our vendors may not comply with such obligations.

If we or our merchandise vendors are unable to comply with regulatory requirements on a timely basis or at all, or to adequately monitor new regulations that may apply to existing or new merchandise categories or in new geographies, we could incur significant fines or penalties or we could have to curtail some aspects of our sales or operations, which could have an adverse effect on our financial results.

If we or our merchandise vendors are unable or fail to comply with regulatory requirements on a timely basis or at all, or to adequately monitor new regulations that may apply to existing or new merchandise categories or in new geographies, we could incur significant fines or penalties or we could have to curtail some aspects of our sales or operations, which could have an adverse effect on our financial results.

Although our arrangements with our vendors frequently provide for indemnification for product liabilities, the vendors may fail to honor these obligations to an extent we consider sufficient or at all.

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and numerous foreign jurisdictions.

Our effective income tax rate and future tax liability could be adversely affected by numerous factors including the results of tax audits and examinations, income before taxes being lower than anticipated in countries with lower statutory income tax rates and higher than anticipated in countries with higher statutory income tax rates, changes in income tax rates, changes in transfer pricing, changes in the valuation of deferred tax assets and liabilities, changes in applicable tax legislation, regulations, treaties and other guidance, and changes in accounting principles and interpretations relating to tax matters, any of which could adversely impact our results of operations and financial condition in future periods.

Our effective income tax rate and future tax liability could be adversely affected by numerous factors including the results of tax audits and examinations, income before taxes being lower than anticipated in countries with lower statutory income tax rates and higher than anticipated in countries with higher statutory income tax rates, changes in income tax rates, changes in transfer pricing, changes in the valuation of deferred tax assets and liabilities, changes in applicable tax legislation (including proposed legislation in the Build Back Better Act), regulations, treaties and other guidance, and changes in accounting principles and interpretations relating to tax matters, any of which could adversely impact our results of operations and financial condition in future periods.

Tax Cuts and Jobs Act of 2017 (the “2017 Tax Act”) significantly revised the previous federal income tax code.

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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-K

Item 1A. Risk Factors