THE TJX COMPANIES, INC. 2011 ANNUAL REPORT 35 YEARS of SUCCESSFUL GROWTH and counting… More U.S./International Customers More Powerful Marketing More Brands …what’s next? More Vendors Faster-Turning Inventories Supply Chain Precision Exciting Store Locations Upgraded Shopping Experience Investing for the Future In 2011, net sales reached $23.2 To our fellow billion, up 6% over the prior year. Consolidated comparable store shareholders: sales grew 4% over last year’s 4% increase. Income from con- tinuing operations rose to $1.5 billion. Adjusted diluted earnings per share from continuing oper- ations were $1.99, up 14% The year 2011 marked another over the prior year’s significant great year for our Company. The double-digit increase.1 The year power of our extraordinary values on ever-changing 2011 marks the 16th consecutive year of earnings assortments of current fashions and great brands per share growth on a continuing operations basis. continues to resonate with our loyal customers and Overall, we netted a total of 46 additional stores to attract new ones. In 2011, for the third consecutive end the fiscal year with 2,905 stores, and we grew year, we ended the year with significant increases in total square footage by 2%. (Excluding the impact of A.J. Wright store closings and consolidations, square customer traffic. Since opening the first two T.J. Maxx footage increased 4% in 2011.) stores 35 years ago, our successful growth through so many years demonstrates the ability of our flexible business model to perform in virtually all kinds of retail Raising the Bar to and economic environments. In 2011, we ran our Continue Momentum business with even leaner store inventories, which We are convinced we will continue to attract more drove faster inventory turns and strong merchandise U.S. and international customers with our extra- margins, and we believe we have further opportunities ordinary values and believe that value will remain a in this area. top priority for consumers. While we have substan- tially added to our customer base and widened our It is a fair question for our investors to ask, “What’s already broad demographic reach, our data indicates next?” We are excited to lay out what we believe that in the U.S. alone, our market penetration is the future holds for TJX as we grow toward becoming still well below that of most department stores, a $30 billion, then $40 billion, company and beyond! which translates into tens of millions of untapped We enter a new year with tremendous momentum U.S. consumers. Beyond the U.S., we see vast for 2012 and the long term. To continue this opportunities in Europe and Canada. In Europe, momentum, we must raise the we are the only major off-price bar in executing our mission retailer and believe we can trade throughout our business, striving in a very wide demographic to maximize all of the elements range, and in Canada, we have of our flexible business model substantial growth potential that have made this Company through Marshalls. great. Importantly, we are proud of our ability to invest for the We will also raise the bar with long term while simultaneously even more powerful market- driving strong, consistent sales ing to gain new customers. and earnings growth. During the 2011 holiday season, 2 we increased our advertising impressions by 30% to over one billion. Our tri-branding campaign for T.J. Maxx, Marshalls and HomeGoods worked very well as did our dual-branding advertisements for T.J. Maxx and Marshalls. In 2012, we plan to further increase our advertising penetration, leverage our global marketing abilities, and aggressively engage consumers through social media, educating them about our current fashions and exciting values. One of our favorite sayings is that our brilliance is in our brands. We will be working to make our best brand penetration even better with more brands. We firmly believe that our frequently changing mix of great brands at great prices differentiates us from other retailers. The flexibility of our off-price model allows us to offer consumers an exciting selection of apparel and home fashions that is virtually an entire mall in a single store! We believe we have some of the best vendor relation- ships in the retail industry, yet we are constantly working to make our current relationships even stronger and to forge new ones. We have been extremely successful in opening the doors of many more more vendors over the last several years and believe adding vendors helps us gain even greater U.S. and flexibility in sourcing. We have built a flexible, value- international driven, global sourcing machine over the last 35 years. Our vendor universe now numbers over 15,000 and customers our buying organization is over 700 people strong. A major factor in our confidence in sustaining our top- and bottom-line growth is our belief that there is still significant opportunity for operating more with leaner and even faster-turning inventories. powerful Our distribution network and inventory planning systems are highly efficient, allowing us to tailor marketing our merchandise mix for particular regions and customer preferences. One of our major areas of investment in 2012, which is discussed below, will be in supply chain precision. As effective as our supply chain is, we believe we 3 can become even more precise in delivering the right goods to the right stores at the right time. Exciting store locations, both within the U.S. and internationally, have helped widen our demographic reach and customer appeal. We are capitalizing on advantageous real estate opportunities to open stores in very favorable locations and believe we will continue to do so. In 2011, we were extremely proud to see our T.J. Maxx banner hanging across the front of the New York Stock Exchange (see photo on page 10) in honor of our T.J. Maxx store opening on Wall Street! Our store remodeling program and in-store initiatives have been very successful in offering our customers an upgraded shopping experience. With our enhanced amenities, customers have found shopping in our stores much more enjoyable. In 2012, we plan to net 150 new stores, growing square footage by 5%, and remodel stores throughout the Company to continue to make shopping in our stores a truly more great experience. brands U.S. and International Growth Opportunities Our vision to grow TJX to be a global, $40 billion more value retailer is as clear as it has ever been. Our Company is comprised of a focused portfolio of vendors four large divisions, which we believe all have very appealing short- and long-term economics, and together represent tremendous growth potential for TJX in the U.S. and internationally. Our businesses operate as “one TJX,” sharing best practices, information, ideas, and talent across divisions. With over 2,900 stores today, we see the potential to grow to up to approximately 4,500 stores long term, representing what we believe to be our potential with just our current portfolio of businesses in our current markets alone. Marmaxx achieved another year of outstanding performance in 2011 with a comparable store 5 sales increase of 5%, on top of vehicle in that country. Long substantial increases in each term, we see the potential to of the two prior years. Segment grow TJX Canada overall to profit surpassed $2 billion, up approximately 430 stores, with 11% over the prior year and nearly Marshalls being a 90–100 double what it was three years store chain. ago! With Marmaxx’s continued At TJX Europe, we slowed outperformance, we are very growth in 2011 to refocus the confident in our potential to grow organization on the fundamen- Marmaxx to 2,300–2,400 stores tals of our value proposition and long term. Marmaxx has significantly widened its we ended the year with a very strong finish. We began customer demographic reach in the past three 2012 with strong momentum and are confident this years and has been very successful in moderate- business is back on its solid track. Importantly, our income markets. Another factor in our confidence is customer traffic increases in the fourth quarter of Marmaxx’s new store performance over the last three 2011 tell us that our combination of great fashions, years, which has been extraordinarily strong! brands, quality and price is once again resonating HomeGoods also delivered excellent performance with consumers. Our European team has learned in 2011. Comparable store sales grew 6% over a lot, and while we plan to proceed prudently with 6% and 9% increases in each of the two prior years, growth, we remain as confident as ever in our vast respectively, and HomeGoods’ segment profit has growth opportunities in Europe. Long term, we see increased five-fold in the last three years! HomeGoods the potential to expand our store base to 750– is becoming a more and more powerful brand, and 875 stores with our existing brands in our existing we now believe that we have the potential to grow markets alone. this chain to 750 stores, 150 more stores than we previously envisioned. Further, HomeGoods’ new Investing for the Future store performance has been outstanding over the Beyond the growth catalysts we have in our current last three years. We still have over 100 markets in portfolio, we view e-commerce as a major opportunity the U.S. where we operate a T.J. Maxx or Marshalls for TJX. We envision a marriage between our without a HomeGoods store, which speaks to our stores and the web and plan to lever our $23 billion growth opportunities for this chain.