SEC Filing | The TJX Companies, Inc.

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tjx-20230729

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(mark one)


☒			Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended July 29, 2023


☐			Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to

Commission file number 1-4908

The TJX Companies, Inc.

(Exact name of registrant as specified in its charter)


Delaware						04-2207613
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

770 Cochituate Road Framingham, Massachusetts						01701
(Address of principal executive offices)						(Zip Code)

(508) 390-1000

(Registrant’s telephone number, including area code)

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


Title of Each Class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $1.00 per share	TJX	New York Stock Exchange

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

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

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

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

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

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

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

The TJX Companies, Inc.

TABLE OF CONTENTS


PART I
ITEM 1. Consolidated Financial Statements			3
Consolidated Statements of Income			3
Consolidated Statements of Comprehensive Income			4
Consolidated Balance Sheets			5
Consolidated Statements of Cash Flows			6
Consolidated Statements of Shareholders' Equity			7
Notes To Consolidated Financial Statements			9
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			21
ITEM 3. Quantitative and Qualitative Disclosures about Market Risk			32
ITEM 4. Controls and Procedures			32

PART II
ITEM 1. Legal Proceedings			33
ITEM 1A. Risk Factors			33
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds			33
ITEM 5. Other Information			33
ITEM 6. Exhibits			33

SIGNATURE			34

PART I - FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

THE TJX COMPANIES, INC.

CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

IN MILLIONS EXCEPT PER SHARE AMOUNTS


	Thirteen Weeks Ended				Twenty-Six Weeks Ended
	July 29, 2023		July 30, 2022		July 29, 2023		July 30, 2022
Net sales	$	12,758	$	11,843	$	24,541	$	23,249
Cost of sales, including buying and occupancy costs	8,910		8,571		17,284		16,794





Selling, general and administrative expenses	2,559		2,175		4,797		4,269
Impairment on equity investment	—		—		—		218



Interest (income) expense, net	(38)		11		(75)		30
Income before income taxes	1,327		1,086		2,535		1,938
Provision for income taxes	338		276		655		541
Net income	$	989	$	810	$	1,880	$	1,397
Basic earnings per share	$	0.86	$	0.69	$	1.63	$	1.19
Weighted average common shares – basic	1,148		1,168		1,151		1,173
Diluted earnings per share	$	0.85	$	0.69	$	1.62	$	1.18
Weighted average common shares – diluted	1,161		1,178		1,163		1,184

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

THE TJX COMPANIES, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

IN MILLIONS


	Thirteen Weeks Ended
	July 29, 2023		July 30, 2022
Net income	$	989	$	810
Additions to other comprehensive income (loss):
Foreign currency translation adjustments, net of related tax provisions of $1 in fiscal 2024 and $0.4 in fiscal 2023	40		(30)
Reclassifications from other comprehensive income (loss) to net income:

Amortization of prior service cost and deferred gains/losses, net of related tax provisions of $0.1 in fiscal 2024 and $2 in fiscal 2023	1		4

Other comprehensive income (loss), net of tax	41		(26)
Total comprehensive income	$	1,030	$	784


	Twenty-Six Weeks Ended
	July 29, 2023		July 30, 2022
Net income	$	1,880	$	1,397
Additions to other comprehensive income (loss):
Foreign currency translation adjustments, net of related tax provision of $0.4 in fiscal 2024 and tax benefit of $0.2 in fiscal 2023	54		(89)


Reclassifications from other comprehensive income (loss) to net income:

Amortization of prior service cost and deferred gains/losses, net of related tax provisions of $0.2 in fiscal 2024 and $3 in fiscal 2023	1		8

Other comprehensive income (loss), net of tax	55		(81)
Total comprehensive income	$	1,935	$	1,316

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

THE TJX COMPANIES, INC.

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

IN MILLIONS, EXCEPT SHARE DATA


	July 29, 2023		January 28, 2023		July 30, 2022
Assets
Current assets:
Cash and cash equivalents	$	4,550	$	5,477	$	3,531

Accounts receivable, net	548		563		556
Merchandise inventories	6,585		5,819		7,083
Prepaid expenses and other current assets	507		478		553
Federal, state and foreign income taxes recoverable	148		119		112
Total current assets	12,338		12,456		11,835
Net property at cost	6,166		5,783		5,390
Non-current deferred income taxes, net	149		158		172
Operating lease right of use assets	9,406		9,086		8,987
Goodwill	95		97		97
Other assets	768		769		610
Total assets	$	28,922	$	28,349	$	27,091
Liabilities
Current liabilities:
Accounts payable	$	4,438	$	3,794	$	4,085
Accrued expenses and other current liabilities	4,244		4,346		3,928
Current portion of operating lease liabilities	1,618		1,610		1,572
Current portion of long-term debt	—		500		500
Federal, state and foreign income taxes payable	17		55		62
Total current liabilities	10,317		10,305		10,147
Other long-term liabilities	915		919		917
Non-current deferred income taxes, net	132		127		67
Long-term operating lease liabilities	8,089		7,775		7,706
Long-term debt	2,861		2,859		2,857
Commitments and contingencies (See Note K)
Shareholders’ equity
Preferred stock, authorized 5,000,000 shares, par value $1, no shares issued	—		—		—
Common stock, authorized 1,800,000,000 shares, par value $1, issued and outstanding 1,144,948,031; 1,155,437,908 and 1,161,886,769 respectively	1,145		1,155		1,162
Additional paid-in capital	—		—		—
Accumulated other comprehensive (loss) income	(551)		(606)		(768)
Retained earnings	6,014		5,815		5,003
Total shareholders’ equity	6,608		6,364		5,397
Total liabilities and shareholders’ equity	$	28,922	$	28,349	$	27,091

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

THE TJX COMPANIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

IN MILLIONS


	Twenty-Six Weeks Ended
	July 29, 2023		July 30, 2022
Cash flows from operating activities:
Net income	$	1,880	$	1,397
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	467		438

Impairment on equity investment	—		218
Loss on property disposals and impairment charges	21		5

Deferred income tax provision	16		26
Share-based compensation	70		58
Changes in assets and liabilities:
Decrease (increase) in accounts receivable	19		(48)
(Increase) in merchandise inventories	(734)		(1,207)
(Increase) decrease in income taxes recoverable	(28)		2
(Increase) in prepaid expenses and other current assets	(34)		(50)
Increase (decrease) in accounts payable	619		(311)
(Decrease) in accrued expenses and other liabilities	(170)		(393)
(Decrease) in income taxes payable	(36)		(123)
Increase in net operating lease liabilities	0		6
Other, net	(4)		(12)
Net cash provided by operating activities	2,086		6
Cash flows from investing activities:
Property additions	(820)		(693)


Purchases of investments	(17)		(21)
Sales and maturities of investments	18		11

Net cash (used in) investing activities	(819)		(703)
Cash flows from financing activities:
Repayment of debt	(500)		—


Payments for repurchase of common stock	(1,041)		(1,307)
Cash dividends paid	(725)		(655)
Proceeds from issuance of common stock	81		50

Other	(29)		(33)
Net cash (used in) financing activities	(2,214)		(1,945)
Effect of exchange rate changes on cash	20		(54)
Net (decrease) in cash and cash equivalents	(927)		(2,696)
Cash and cash equivalents at beginning of year	5,477		6,227
Cash and cash equivalents at end of period	$	4,550	$	3,531

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

THE TJX COMPANIES, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(UNAUDITED)

IN MILLIONS


	Thirteen Weeks Ended
	Common Stock
	Shares	Par Value $1		Additional Paid-In Capital		Accumulated Other Comprehensive (Loss) Income		Retained Earnings		Total
Balance, April 29, 2023	1,150	$	1,150	$	—	$	(592)	$	5,864	$	6,422
Net income	—	—		—		—		989		989

Other comprehensive income, net of tax	—	—		—		41		—		41
Cash dividends declared on common stock	—	—		—		—		(381)		(381)
Recognition of share-based compensation	—	—		36		—		—		36
Issuance of common stock under stock incentive plan and related tax effect	2	2		54		—		(1)		55
Common stock repurchased	(7)	(7)		(90)		—		(457)		(554)
Balance, July 29, 2023	1,145	$	1,145	$	—	$	(551)	$	6,014	$	6,608


	Thirteen Weeks Ended
	Common Stock
	Shares	Par Value $1		Additional Paid-In Capital		Accumulated Other Comprehensive (Loss) Income		Retained Earnings		Total
Balance, April 30, 2022	1,173	$	1,173	$	—	$	(742)	$	5,164	$	5,595
Net income	—	—		—		—		810		810

Other comprehensive (loss), net of tax	—	—		—		(26)		—		(26)
Cash dividends declared on common stock	—	—		—		—		(343)		(343)
Recognition of share-based compensation	—	—		31		—		—		31
Issuance of common stock under stock incentive plan and related tax effect	0	0		31		—		(1)		30
Common stock repurchased	(11)	(11)		(62)		—		(627)		(700)
Balance, July 30, 2022	1,162	$	1,162	$	—	$	(768)	$	5,003	$	5,397

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

THE TJX COMPANIES, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(UNAUDITED)

IN MILLIONS


	Twenty-Six Weeks Ended
	Common Stock
	Shares	Par Value $1		Additional Paid-In Capital		Accumulated Other Comprehensive (Loss) Income		Retained Earnings		Total
Balance, January 28, 2023	1,155	$	1,155	$	—	$	(606)	$	5,815	$	6,364
Net income	—	—		—		—		1,880		1,880

Other comprehensive income, net of tax	—	—		—		55		—		55
Cash dividends declared on common stock	—	—		—		—		(764)		(764)
Recognition of share-based compensation	—	—		70		—		—		70
Issuance of common stock under stock incentive plan and related tax effect	3	3		51		—		(1)		53
Common stock repurchased and retired	(13)	(13)		(121)		—		(916)		(1,050)
Balance, July 29, 2023	1,145	$	1,145	$	—	$	(551)	$	6,014	$	6,608


	Twenty-Six Weeks Ended
	Common Stock
	Shares	Par Value $1		Additional Paid-In Capital		Accumulated Other Comprehensive (Loss) Income		Retained Earnings		Total
Balance, January 29, 2022	1,181	$	1,181	$	—	$	(687)	$	5,509	$	6,003
Net income								1,397		1,397

Other comprehensive (loss), net of tax	—	—		—		(81)				(81)
Cash dividends declared on common stock	—	—		—		—		(690)		(690)
Recognition of share-based compensation	—	—		58		—		—		58
Issuance of common stock under stock incentive plan and related tax effect	2	2		16		—		(1)		17
Common stock repurchased and retired	(21)	(21)		(74)		—		(1,212)		(1,307)
Balance, July 30, 2022	1,162	$	1,162	$	—	$	(768)	$	5,003	$	5,397

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

THE TJX COMPANIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note A. Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation

The Consolidated Financial Statements and Notes thereto have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information. These Consolidated Financial Statements and Notes thereto are unaudited and, in the opinion of management, reflect all normal recurring adjustments, accruals and deferrals among periods required to match costs properly with the related revenue or activity, considered necessary by The TJX Companies, Inc. (together with its subsidiaries, “TJX”) for a fair statement of its Consolidated Financial Statements for the periods reported, all in conformity with GAAP consistently applied. The Consolidated Financial Statements and Notes thereto should be read in conjunction with the audited Consolidated Financial Statements, including the related notes, contained in TJX’s Annual Report on Form 10-K for the fiscal year ended January 28, 2023 (“fiscal 2023”).

These interim results are not necessarily indicative of results for the full fiscal year. TJX’s business, in common with the businesses of retailers generally, is subject to seasonal influences, with higher levels of sales and income generally realized in the second half of the year.

The January 28, 2023 balance sheet data was derived from audited Consolidated Financial Statements and does not include all disclosures required by GAAP.

Fiscal Year

TJX’s fiscal year ends on the Saturday nearest to the last day of January of each year. The current fiscal year ends February 3, 2024 (“fiscal 2024”) and is a 53-week fiscal year. Fiscal 2023 was a 52-week fiscal year. Fiscal 2025 will be a 52-week fiscal year and will end February 1, 2025.

Use of Estimates

The preparation of financial statements, in conformity with GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements as well as the reported amounts of revenues and expenses during the reporting period. TJX considers its accounting policies relating to inventory valuation, reserves for uncertain tax positions and loss contingencies to be the most significant accounting policies that involve management estimates and judgments. Actual amounts could differ from these estimates, and such differences could be material.

Equity Investment

In fiscal 2020, the Company acquired a minority ownership stake in privately held Familia, an off-price retailer of apparel and home fashions domiciled in Luxembourg that operates stores throughout Russia. During the first quarter of fiscal 2023, the Company announced that it had committed to divesting its minority investment, resulting in an impairment charge of $218 million representing the entire carrying value of the Company’s investment. Additionally, the Company realized a $54 million tax benefit when the Company completed the divestiture of this investment during the third quarter of fiscal 2023. See Note F—Fair Value Measurements for additional information.

Deferred Gift Card Revenue

The following table presents deferred gift card revenue activity:


In millions	July 29, 2023		July 30, 2022
Balance, beginning of year	$	721	$	685
Deferred revenue	858		852
Effect of exchange rates changes on deferred revenue	1		(3)
Revenue recognized	(916)		(905)
Balance, end of period	$	664	$	629

TJX recognized $472 million in gift card revenue for the three months ended July 29, 2023 and $462 million for the three months ended July 30, 2022. Gift cards are combined in one homogeneous pool and are not separately identifiable. As such, the revenue recognized consists of gift cards that were part of the deferred revenue balance at the beginning of the period as well as gift cards that were issued during the period.

Leases

Supplemental cash flow information related to leases is as follows:


	Twenty-Six Weeks Ended
In millions	July 29, 2023		July 30, 2022
Operating cash flows paid for operating leases	$	999	$	972
Lease liabilities arising from obtaining right of use assets	$	1,148	$	1,151

Future Adoption of New Accounting Standards

From time to time, the Financial Accounting Standards Board (“FASB”) or other standard setting bodies issue new accounting pronouncements. Updates to the FASB Accounting Standards Codification are communicated through issuance of an Accounting Standards Update (“ASU”). The Company has reviewed the new guidance and has determined that it will either not apply to TJX or is not expected to be material to its Consolidated Financial Statements upon adoption, and, therefore, the guidance is not disclosed.

Note B. Property at Cost

The following table presents the components of property at cost:


In millions	July 29, 2023		January 28, 2023		July 30, 2022
Land and buildings	$	2,086	$	2,043	$	1,960
Leasehold costs and improvements	4,147		3,874		3,667
Furniture, fixtures and equipment	7,797		7,400		7,080
Total property at cost	$	14,030	$	13,317	$	12,707
Less: accumulated depreciation and amortization	7,864		7,534		7,317
Net property at cost	$	6,166	$	5,783	$	5,390

Depreciation expense was $234 million for the three months ended July 29, 2023 and $216 million for the three months ended July 30, 2022. Depreciation expense was $464 million for the six months ended July 29, 2023 and $434 million for the six months ended July 30, 2022.

Non-cash investing activities in the cash flows consist of accrued capital additions of $192 million and $145 million as of the periods ended July 29, 2023 and July 30, 2022, respectively.

Note C. Accumulated Other Comprehensive (Loss) Income

Amounts included in Accumulated other comprehensive (loss) income are recorded net of taxes. The following table details the changes in Accumulated other comprehensive loss for the twelve months ended January 28, 2023 and the six months ended July 29, 2023:


In millions and net of immaterial taxes	Foreign Currency Translation		Deferred Benefit Costs		Accumulated Other Comprehensive (Loss) Income
Balance, January 29, 2022	$	(488)	$	(199)	$	(687)
Additions to other comprehensive loss:
Foreign currency translation adjustments, net of taxes	(56)		—		(56)

Recognition of net gains/losses on benefit obligations, net of taxes	—		121		121

Reclassifications from other comprehensive loss to net income:

Amortization of prior service cost and deferred gains/losses, net of taxes	—		16		16
Balance, January 28, 2023	$	(544)	$	(62)	$	(606)
Additions to other comprehensive loss:
Foreign currency translation adjustments, net of taxes	54		—		54
Reclassifications from other comprehensive loss to net income:


Amortization of prior service cost and deferred gains/losses, net of taxes	—		1		1
Balance, July 29, 2023	$	(490)	$	(61)	$	(551)

Note D. Capital Stock and Earnings Per Share

Capital Stock

TJX repurchased and retired 6.7 million shares of its common stock at a cost of approximately $555 million, including applicable excise tax, during the quarter ended July 29, 2023, on a “trade date” basis. During the six months ended July 29, 2023, TJX repurchased and retired 13.2 million shares of its common stock at a cost of approximately $1.1 billion, on a “trade date” basis. TJX reflects stock repurchases in its consolidated financial statements on a “settlement date” or cash basis. TJX had cash expenditures under repurchase programs of $1 billion for the six months ended July 29, 2023 and $1.3 billion for the six months ended July 30, 2022. These expenditures were funded by cash on hand and cash generated from current and prior period operations.

In February 2023, the Company announced that its Board of Directors had approved a new stock repurchase program that authorizes the repurchase of up to an additional $2 billion of TJX common stock from time to time. Under this program and previously announced programs, TJX had approximately $2.5 billion available for repurchase as of July 29, 2023.

All shares repurchased under the stock repurchase programs have been retired.

Earnings Per Share

The following table presents the calculation of basic and diluted earnings per share:


	Thirteen Weeks Ended				Twenty-Six Weeks Ended
Amounts in millions, except per share amounts	July 29, 2023		July 30, 2022		July 29, 2023		July 30, 2022
Basic earnings per share:
Net income	$	989	$	810	$	1,880	$	1,397
Weighted average common shares outstanding for basic earnings per share calculation	1,148		1,168		1,151		1,173
Basic earnings per share	$	0.86	$	0.69	$	1.63	$	1.19
Diluted earnings per share:
Net income	$	989	$	810	$	1,880	$	1,397

Weighted average common shares outstanding for basic earnings per share calculation	1,148		1,168		1,151		1,173
Assumed exercise/vesting of stock options and awards	13		10		12		11
Weighted average common shares outstanding for diluted earnings per share calculation	1,161		1,178		1,163		1,184
Diluted earnings per share	$	0.85	$	0.69	$	1.62	$	1.18
Cash dividends declared per share	$	0.3325	$	0.295	$	0.665	$	0.59

The weighted average common shares for the diluted earnings per share calculation excludes the impact of outstanding stock options if the assumed proceeds per share of the option is in excess of the average price of TJX’s common stock for the related fiscal periods. Such options are excluded because they would have an antidilutive effect. There were no such options excluded for the thirteen weeks and twenty-six weeks ended July 29, 2023. There were 5.1 million such options excluded for the thirteen weeks and twenty-six weeks ended July 30, 2022.

Note E. Financial Instruments

As a result of its operating and financing activities, TJX is exposed to market risks from changes in interest and foreign currency exchange rates and fuel costs. These market risks may adversely affect TJX’s operating results and financial position. TJX seeks to minimize risk from changes in interest and foreign currency exchange rates and fuel costs through the use of derivative financial instruments when and to the extent deemed appropriate. TJX does not use derivative financial instruments for trading or other speculative purposes and does not use any leveraged derivative financial instruments. TJX recognizes all derivative instruments as either assets or liabilities in the Consolidated Balance Sheet and measures those instruments at fair value. The fair values of the derivatives are classified as assets or liabilities, current or non-current, based upon valuation results and settlement dates of the individual contracts. Changes to the fair value of derivative contracts that do not qualify for hedge accounting are reported in earnings in the period of the change. For derivatives that qualify for hedge accounting, changes in the fair value of the derivatives are either recorded in shareholders’ equity as a component of Accumulated other comprehensive (loss) income or are recognized currently in earnings, along with an offsetting adjustment against the basis of the item being hedged.

Diesel Fuel Contracts

TJX hedges portions of its estimated notional diesel fuel requirements based on the diesel fuel expected to be consumed by independent freight carriers transporting TJX’s inventory. Independent freight carriers transporting TJX’s inventory charge TJX a mileage surcharge based on the price of diesel fuel. The hedge agreements are designed to mitigate the volatility of diesel fuel pricing, and the resulting per mile surcharges payable by TJX, by setting a fixed price per gallon for the period being hedged. During fiscal 2023, TJX entered into agreements to hedge a portion of its estimated notional diesel fuel requirements for fiscal 2024, and during the first six months of fiscal 2024, TJX entered into agreements to hedge a portion of its estimated notional diesel fuel requirements for the first six months of fiscal 2025. The hedge agreements outstanding at July 29, 2023 relate to approximately 50% of TJX’s estimated notional diesel fuel requirements for the remainder of fiscal 2024 and the first six months of fiscal 2025. These diesel fuel hedge agreements will settle throughout fiscal 2024 and throughout the first seven months of fiscal 2025. TJX elected not to apply hedge accounting to these contracts.

Foreign Currency Contracts

TJX enters into forward foreign currency exchange contracts to obtain economic hedges on portions of merchandise purchases made and anticipated to be made by the Company’s operations in currencies other than their respective functional currencies. The contracts outstanding at July 29, 2023 cover merchandise purchases the Company is committed to over the next several months in fiscal 2024. Additionally, TJX’s operations in Europe are subject to foreign currency exposure as a result of their buying function being centralized in the U.K. Merchandise is purchased centrally in the U.K. and then shipped and billed to the retail entities in other countries. This intercompany billing to TJX’s European businesses’ Euro denominated operations creates exposure to the central buying entity for changes in the exchange rate between the Euro and British Pound. A portion of the inflows of Euros to the central buying entity provides a natural hedge for Euro denominated merchandise purchases from third-party vendors. TJX calculates any excess Euro exposure each month and enters into forward contracts of approximately 30 days' duration to mitigate this exposure.

TJX also enters into derivative contracts, generally designated as fair value hedges, to hedge intercompany debt. The changes in fair value of these contracts are recorded in Selling, general and administrative expenses and are offset by marking the underlying item to fair value in the same period. Upon settlement, the realized gains and losses on these contracts are offset by the realized gains and losses of the underlying item in Selling, general and administrative expenses.

The following is a summary of TJX’s derivative financial instruments, related fair value and balance sheet classification at July 29, 2023:


In millions		Pay	Receive		Blended Contract Rate	Balance Sheet Location	Current Asset U.S.$		Current (Liability) U.S.$		Net Fair Value in U.S.$ at July 29, 2023
Fair value hedges:
Intercompany balances, primarily debt:

	€	60	£	52	0.8738	Prepaid Exp	$	0.6	$	—	$	0.6
	A$	162	U.S.$	112	0.6926	Prepaid Exp	3.5		—		3.5
	U.S.$	69	£	55	0.8010	Prepaid Exp	2.0		—		2.0
	£	200	U.S.$	244	1.2191	(Accrued Exp)	—		(13.4)		(13.4)
	€	200	U.S.$	219	1.0964	Prepaid Exp / (Accrued Exp)	0.3		(3.3)		(3.0)

Economic hedges for which hedge accounting was not elected:
	Diesel fuel contracts	Fixed on 3.0M – 3.8M gal per month	Float on 3.0M – 3.8M gal per month		N/A	(Accrued Exp)	—		(2.0)		(2.0)
Intercompany billings in TJX International, primarily merchandise:
	€	107	£	91	0.8526	(Accrued Exp)	—		(0.8)		(0.8)
Merchandise purchase commitments:
	C$	876	U.S.$	655	0.7473	Prepaid Exp / (Accrued Exp)	0.2		(9.0)		(8.8)
	C$	28	€	19	0.6799	Prepaid Exp / (Accrued Exp)	0.1		(0.3)		(0.2)
	£	376	U.S.$	468	1.2462	Prepaid Exp / (Accrued Exp)	0.5		(15.5)		(15.0)
	A$	96	U.S.$	65	0.6810	Prepaid Exp	1.3		—		1.3
	zł	605	£	114	0.1878	(Accrued Exp)	—		(4.4)		(4.4)

	U.S.$	110	€	101	0.9139	Prepaid Exp / (Accrued Exp)	1.3		(0.3)		1.0
Total fair value of derivative financial instruments							$	9.8	$	(49.0)	$	(39.2)

The following is a summary of TJX’s derivative financial instruments, related fair value and balance sheet classification at January 28, 2023:


In millions		Pay	Receive		Blended Contract Rate	Balance Sheet Location	Current Asset U.S.$		Current (Liability) U.S.$		Net Fair Value in U.S.$ at January 28, 2023
Fair value hedges:
Intercompany balances, primarily debt:

	€	60	£	53	0.8807	(Accrued Exp)	$	—	$	(0.3)	$	(0.3)
	A$	150	U.S.$	105	0.7003	(Accrued Exp)	—		(2.6)		(2.6)
	U.S.$	69	£	55	0.8010	(Accrued Exp)	—		(0.3)		(0.3)
	£	200	U.S.$	244	1.2191	(Accrued Exp)	—		(5.5)		(5.5)
	€	200	U.S.$	213	1.0652	Prepaid Exp / (Accrued Exp)	0.8		(7.0)		(6.2)
Economic hedges for which hedge accounting was not elected:
	Diesel fuel contracts	Fixed on 3.2M – 3.6M gal per month	Float on 3.2M– 3.6M gal per month		N/A	Prepaid Exp	3.9		—		3.9
Intercompany billings in TJX International, primarily merchandise:
	€	146	£	129	0.8834	Prepaid Exp	0.8		—		0.8
Merchandise purchase commitments:
	C$	705	U.S.$	525	0.7449	Prepaid Exp / (Accrued Exp)	2.2		(7.1)		(4.9)
	C$	23	€	16	0.7064	Prepaid Exp / (Accrued Exp)	0.4		(0.0)		0.4
	£	299	U.S.$	356	1.1916	Prepaid Exp / (Accrued Exp)	0.1		(15.4)		(15.3)
	zł	507	£	91	0.1788	(Accrued Exp)	—		(3.6)		(3.6)
	A$	104	U.S.$	71	0.6819	(Accrued Exp)	—		(3.3)		(3.3)
	U.S.$	85	€	82	0.9634	Prepaid Exp	4.3		—		4.3
Total fair value of derivative financial instruments							$	12.5	$	(45.1)	$	(32.6)

The following is a summary of TJX’s derivative financial instruments, related fair value and balance sheet classification at July 30, 2022:


In millions		Pay	Receive		Blended Contract Rate	Balance Sheet Location	Current Asset U.S.$		Current (Liability) U.S.$		Net Fair Value in U.S.$ at July 30, 2022
Fair value hedges:
Intercompany balances, primarily debt:

	€	60	£	51	0.8428	Prepaid Exp	$	0.3	$	—	$	0.3
	A$	170	U.S.$	120	0.7034	Prepaid Exp / (Accrued Exp)	0.8		(1.0)		(0.2)
	U.S.$	75	£	55	0.7368	(Accrued Exp)	—		(6.8)		(6.8)
	£	150	U.S.$	204	1.3578	Prepaid Exp	19.1		—		19.1
	€	200	U.S.$	223	1.1156	Prepaid Exp / (Accrued Exp)	14.7		(0.1)		14.6

Economic hedges for which hedge accounting was not elected:
	Diesel fuel contracts	Fixed on 2.6M – 3.9M gal per month	Float on 2.6M – 3.9M gal per month		N/A	Prepaid Exp	38.2		—		38.2
Intercompany billings in TJX International, primarily merchandise:
	€	206	£	174	0.8462	Prepaid Exp	2.1		—		2.1


Merchandise purchase commitments:
	C$	807	U.S.$	635	0.7867	Prepaid Exp / (Accrued Exp)	6.7		(1.0)		5.7
	C$	26	€	19	0.7314	(Accrued Exp)	—		(0.7)		(0.7)
	£	440	U.S.$	569	1.2941	Prepaid Exp / (Accrued Exp)	30.0		(2.2)		27.8
	A$	71	U.S.$	51	0.7141	Prepaid Exp / (Accrued Exp)	1.1		(0.4)		0.7
	zł	701	£	124	0.1770	Prepaid Exp / (Accrued Exp)	2.2		(0.0)		2.2

	U.S.$	114	€	105	0.9188	Prepaid Exp / (Accrued Exp)	0.1		(6.0)		(5.9)
Total fair value of derivative financial instruments							$	115.3	$	(18.2)	$	97.1

The impact of derivative financial instruments on the Consolidated Statements of Income is presented below:


		Amount of (Loss) Gain Recognized in Income by Derivative
	Location of (Loss) Gain Recognized in Income by Derivative	Thirteen Weeks Ended				Twenty-Six Weeks Ended
In millions		July 29, 2023		July 30, 2022		July 29, 2023		July 30, 2022
Fair value hedges:
Intercompany balances, primarily debt	Selling, general and administrative expenses	$	(3)	$	9	$	3	$	33
Economic hedges for which hedge accounting was not elected:

Diesel fuel contracts	Cost of sales, including buying and occupancy costs	10		10		(8)		54
Intercompany billings in TJX International, primarily merchandise	Cost of sales, including buying and occupancy costs	4		0		4		0

Merchandise purchase commitments	Cost of sales, including buying and occupancy costs	(30)		7		(22)		48
(Loss) gain recognized in income		$	(19)	$	26	$	(23)	$	135

Note F. Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date or “exit price”. The inputs used to measure fair value are generally classified into the following hierarchy:


Level 1:						Unadjusted quoted prices in active markets for identical assets or liabilities

Level 2:						Unadjusted quoted prices in active markets for similar assets or liabilities, or unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability

Level 3:						Unobservable inputs for the asset or liability

The following table sets forth TJX’s financial assets and liabilities that are accounted for at fair value on a recurring basis:


In millions	July 29, 2023		January 28, 2023		July 30, 2022
Level 1
Assets:
Executive Savings Plan investments	$	394.8	$	371.6	$	364.3
Level 2
Assets:

Foreign currency exchange contracts	$	9.8	$	8.6	$	77.1
Diesel fuel contracts	—		3.9		38.2
Liabilities:
Foreign currency exchange contracts	$	47.0	$	45.1	$	18.2
Diesel fuel contracts	2.0		—		—

Investments designed to meet obligations under the Executive Savings Plan are invested in registered investment companies traded in active markets and are recorded at unadjusted quoted prices.

Foreign currency exchange contracts and diesel fuel contracts are valued using broker quotations, which include observable market information. TJX does not make adjustments to quotes or prices obtained from brokers or pricing services but does assess the credit risk of counterparties and will adjust final valuations when appropriate. Where independent pricing services provide fair values, TJX obtains an understanding of the methods used in pricing. As such, these instruments are classified within Level 2.

The fair value of TJX’s general corporate debt was estimated by obtaining market quotes given the trading levels of other bonds of the same general issuer type and market perceived credit quality. These inputs are considered to be Level 2 inputs. The fair value of long-term debt as of July 29, 2023 was $2.6 billion compared to a carrying value of $2.9 billion primarily due to the recent increase in interest rates. The fair value of long-term debt as of January 28, 2023 was $2.6 billion compared to a carrying value of $2.9 billion. The fair value of the current portion of long-term debt as of January 28, 2023 was $497 million compared to a carrying value of $500 million. The fair value of long-term debt as of July 30, 2022 was $2.7 billion compared to a carrying value of $2.9 billion. The fair value of the current portion of long-term debt as of July 30, 2022 was $497 million compared to a carrying value of $500 million. These estimates do not necessarily reflect provisions or restrictions in the various debt agreements that might affect TJX’s ability to settle these obligations. For additional information on long-term debt, see Note I—Long-Term Debt and Credit Lines.

TJX’s cash equivalents are stated at cost, which approximates fair value due to the short maturities of these instruments.

Certain assets and liabilities are measured at fair value on a nonrecurring basis, whereas the majority of assets and liabilities are not measured at fair value on an ongoing basis, but are subject to fair value adjustments in certain circumstances, such as when there is evidence of an impairment. For the periods ended July 29, 2023, January 28, 2023 and July 30, 2022, the Company did not record any material impairments to long-lived assets.

During the first quarter of fiscal 2023, the Company announced its intention to divest from its position in its minority investment in Familia and re-characterized this investment as held-for-sale valued as a Level 3 position. Given the lack of an active market or observable inputs, the Company derived an exit price which indicated that this investment had no market value. As a result, the Company recorded a $218 million charge in the first quarter of fiscal 2023, which represented the entirety of its investment. See Note A—Basis of Presentation and Summary of Significant Accounting Policies for additional information.

Note G. Segment Information

TJX operates four main business segments. In the United States, the Marmaxx segment operates T.J. Maxx, Marshalls, tjmaxx.com and marshalls.com and the HomeGoods segment operates HomeGoods, Homesense, and homegoods.com. The TJX Canada segment operates Winners, HomeSense and Marshalls in Canada, and the TJX International segment operates T.K. Maxx and Homesense, as well as tkmaxx.com, tkmaxx.de, and tkmaxx.at in Europe and T.K. Maxx in Australia. In addition to the Company’s four main business segments, Sierra operates retail stores and sierra.com in the U.S. The results of Sierra are included in the Marmaxx segment.

All of TJX’s stores, with the exception of HomeGoods and HomeSense/Homesense, sell family apparel and home fashions. HomeGoods and HomeSense/Homesense offer home fashions.

TJX evaluates the performance of its segments based on “segment profit or loss,” which it defines as pre-tax income or loss before general corporate expense, interest (income) expense, net and certain separately disclosed unusual or infrequent items. “Segment profit or loss,” as defined by TJX, may not be comparable to similarly titled measures used by other entities. This measure of performance should not be considered an alternative to net income or cash flows from operating activities as an indicator of TJX’s performance or as a measure of liquidity.

Presented below is financial information with respect to TJX’s business segments:


	Thirteen Weeks Ended				Twenty-Six Weeks Ended
In millions	July 29, 2023		July 30, 2022		July 29, 2023		July 30, 2022
Net sales:
In the United States:
Marmaxx	$	7,903	$	7,236	$	15,269	$	14,107
HomeGoods	2,011		1,856		3,977		3,892
TJX Canada	1,223		1,248		2,261		2,330
TJX International	1,621		1,503		3,034		2,920
Total net sales	$	12,758	$	11,843	$	24,541	$	23,249
Segment profit:
In the United States:
Marmaxx	$	1,084	$	933	$	2,112	$	1,837
HomeGoods	175		50		319		172
TJX Canada	192		197		309		324
TJX International	32		105		70		118
Total segment profit	1,483		1,285		2,810		2,451
General corporate expense	194		188		350		265

Impairment on equity investment	—		—		—		218

Interest (income) expense, net	(38)		11		(75)		30
Income before income taxes	$	1,327	$	1,086	$	2,535	$	1,938

Note H. Pension Plans and Other Retirement Benefits

Presented below is financial information relating to TJX’s funded defined benefit pension plan (“qualified pension plan” or “funded plan”) and its unfunded supplemental pension plan (“unfunded plan”) for the periods shown:


	Funded Plan				Unfunded Plan
	Thirteen Weeks Ended				Thirteen Weeks Ended
In millions	July 29, 2023		July 30, 2022		July 29, 2023		July 30, 2022
Service cost	$	9	$	11	$	0	$	0
Interest cost	18		14		2		1
Expected return on plan assets	(20)		(22)		—		—
Amortization of net actuarial loss and prior service cost	0		5		1		1


Total expense	$	7	$	8	$	3	$	2

	Funded Plan				Unfunded Plan
	Twenty-Six Weeks Ended				Twenty-Six Weeks Ended
In millions	July 29, 2023		July 30, 2022		July 29, 2023		July 30, 2022
Service cost	$	17	$	23	$	1	$	1
Interest cost	36		29		3		2
Expected return on plan assets	(40)		(44)		—		—
Amortization of net actuarial loss and prior service cost	0		9		1		2


Total expense	$	13	$	17	$	5	$	5

TJX’s policy with respect to the funded plan is to fund, at a minimum, the amount required to maintain a funded status of 80% of the applicable pension liability (the Funding Target pursuant to the Internal Revenue Code section 430) or such other amount as is sufficient to avoid restrictions with respect to the funding of nonqualified plans under the Internal Revenue Code. The Company does not anticipate any required funding in fiscal 2024 for the funded plan. The Company anticipates making contributions of $4 million to provide current benefits coming due under the unfunded plan in fiscal 2024.

The amounts included in Amortization of net actuarial loss and prior service cost in the table above have been reclassified in their entirety from Accumulated other comprehensive (loss) income to the Consolidated Statements of Income, net of related tax effects, for the periods presented.

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

Note I. Long-Term Debt and Credit Lines

The table below presents long-term debt as of July 29, 2023, January 28, 2023 and July 30, 2022. All amounts are net of unamortized debt discounts.


In millions and net of immaterial unamortized debt discounts	July 29, 2023		January 28, 2023		July 30, 2022
General corporate debt:
2.500% senior unsecured notes, maturing May 15, 2023 (effective interest rate of 2.51% after reduction of unamortized debt discount)	$	—	$	500	$	500
2.250% senior unsecured notes, maturing September 15, 2026 (effective interest rate of 2.32% after reduction of unamortized debt discount)	998		997		997