We are the leading off-price retailer of apparel and home fashions in the United
States and worldwide. Our seven off-price chains are synergistic in their philosophies
and operating platforms. We offer off-price family apparel and home fashions through
our T.J. Maxx, Marshalls and A.J. Wright chains in the United States, our Winners
chain in Canada and our T.K. Maxx chain in the United Kingdom and Ireland. We
offer exclusively off-price home fashions through our HomeGoods chain in the United
States and our Canadian HomeSense chain operated by Winners. The target customer
for all of our off-price chains, except A.J. Wright, is the middle to upper-middle
income shopper, with the same profile as a department or specialty store customer.
A.J. Wright targets a more moderate income customer. We acquired Bob's Stores
in December 2003, a 31-store, value-oriented, branded apparel retailer based in
the Northeast United States that offers casual, family apparel. Bob's Stores'
target customer demographic includes a large percentage of male shoppers and spans
the moderate to upper-middle income bracket.
Our off-price mission is to deliver an exciting, fresh and rapidly changing
assortment of brand-name merchandise at excellent values to our customers. We
define value as the combination of quality, brand, fashion and price. With over
400 buyers worldwide and over 10,000 vendors, we believe we are well positioned
to continue accomplishing this goal. Our key strengths include:
expertise in off-price buying
substantial buying power
solid relationships with many manufacturers and other merchandise suppliers
deep organization with decades of experience in off-price retailing
off-price inventory management systems and distribution networks and
financial strength and an excellent credit rating.
As an off-price retailer, we offer fine-quality, name brand and designer family
apparel and home fashions every day at substantial savings from comparable department
and specialty store regular prices. We can offer these everyday savings as a
result of our opportunistic buying strategies, disciplined inventory management,
including rapid inventory turns, and low expense structure.
In our off-price concepts, we purchase much of our inventory opportunistically
with only a small percentage specifically manufactured for us. Different from
traditional retailers that order goods far in advance of the time they will
appear on the selling floor, TJX buyers are in the marketplace virtually every
week. By maintaining a liquid inventory position, our buyers can buy close to
need, enabling them to buy into current market trends and take advantage of
the opportunities in the marketplace. Due to the unpredictable nature of consumer
demand in the marketplace and the mismatch of supply and demand, we are regularly
able to buy the vast majority of our inventory directly from manufacturers,
with some merchandise coming from retailers and others. Virtually all of our
buys are made at significant discounts from initial wholesale prices. We generally
purchase merchandise to sell in the current selling season as well as a limited
quantity of packaway merchandise that we buy specifically to warehouse and sell
in a future selling season.
We are willing to purchase less than a full assortment of styles and sizes.
We pay promptly and do not ask for typical retail concessions such as promotional
and markdown allowances or delivery concessions such as drop shipments to stores
or delayed deliveries. Our financial strength, strong reputation and ability
to sell large quantities of merchandise through a geographically diverse network
of stores gives us excellent access to leading branded merchandise. Our opportunistic
buying permits us to consistently offer our customers a rapidly changing merchandise
assortment at everyday prices which are below department and specialty store
regular prices.
We are extremely disciplined in our inventory management and we rapidly turn
the inventory in our off-price chains. We rely heavily on sophisticated, internally
developed inventory systems and controls that permit a virtually continuous
flow of merchandise into our stores and an expansive distribution infrastructure
that supports our close-to-need buying by delivering goods to the selling floor
quickly and efficiently. For example, highly automated storage and distribution
systems track, allocate and deliver an average of 12,000 items per week to each
T.J. Maxx and Marshalls store. In addition, specialized computer inventory planning,
purchasing and monitoring systems, coupled with warehouse storage, processing,
handling and shipping systems, permit a continuous evaluation and rapid replenishment
of store inventory. Pricing, markdown decisions and store inventory replenishment
requirements are determined centrally, using satellite-transmitted information
provided by point-of-sale computer terminals and are designed to move inventory
through our stores in a timely and disciplined manner. These inventory management
and distribution systems allow us to achieve rapid in-store inventory turnover
on a vast array of product and sell substantially all merchandise within targeted
selling periods.
We operate with a low cost structure relative to many other retailers. While
we seek to provide a pleasant, easy shopping environment with emphasis on customer
convenience, we do not spend large sums on store fixtures. Our selling floor
space is flexible and largely free of permanent fixtures, so we can easily expand
and contract departments in response to customer demand and available merchandise.
Also, our large presence and expertise in the real estate market allows us to
retain very favorable lease terms. In our off-price concepts, our advertising
budget as a percentage of sales is low compared to traditional department and
specialty stores, with our advertising focused on awareness of shopping at our
stores rather than promoting particular merchandise. Our high sales per square
foot productivity and rapid inventory turnover also provide expense efficiencies.
With all our off-price chains operating with the same off-price strategies
and systems, we are able to capitalize upon expertise and best practices throughout
our divisions, develop associates by transferring them from one chain to another
and grow our various businesses efficiently and effectively.
COMPETITION
The retail apparel and home fashion business is highly competitive. Our customers
focus upon fashion, quality, price, merchandise selection and freshness, brand
name recognition and, to a lesser degree, store location. We compete with local,
regional and national department, specialty and off-price stores. We also compete
to some degree with any retailer that sells apparel or home fashions in stores,
through catalogues or over the internet. We purchase most of our inventory opportunistically
and compete for that merchandise with other national and regional off-price
apparel and outlet stores. We also compete with other retailers for store locations.