The TJX Companies, Inc.

Company Overview

Business Model: The TJX Companies, Inc. operates as the leading off-price apparel and home fashions retailer globally, offering a rapidly changing assortment of quality, fashionable, brand name, and designer merchandise. Products are sold at prices generally 20% to 60% below full-price retailers' regular prices. The business model is characterized by opportunistic buying strategies, flexible operations, a "treasure hunt" shopping experience, and rapid inventory turnover, encouraging frequent customer visits. Revenue is primarily generated through sales in its over 5,000 physical stores and six branded e-commerce sites.

Market Position: The TJX Companies, Inc. holds a leading position as the largest off-price apparel and home fashions retailer in the United States and worldwide. Its competitive advantages stem from its opportunistic buying, which allows it to acquire merchandise at substantial discounts, and a flexible business model that enables frequent adjustments to merchandise assortments and store layouts. The Company leverages its global vendor relationships and substantial buying power, operating with a low-cost structure and focusing advertising on banner promotion rather than individual products.

Recent Strategic Developments:

• New Market Entry: The Company plans to enter Spain with its TK Maxx banner in fiscal 2027.
• E-commerce Expansion: Launched tkmaxx.de and tkmaxx.at e-commerce sites in Europe in fiscal 2023.
• Strategic Investments:
  • Acquired a 49% ownership stake in Multibrand Outlet Stores S.A.P.I. de C.V. (MOS), Grupo Axo, S.A.P.I de C.V.'s off-price, physical store business in Mexico, for $193 million in fiscal 2025. This includes over 200 stores under the Promoda, Reduced, and Urban Store banners. The Company has an option to increase its ownership long-term.
  • Acquired a 35% non-controlling, minority ownership stake in privately held Brands for Less (BFL), a major off-price branded apparel, toys, and home fashions retailer operating over 100 stores primarily in the UAE and Saudi Arabia, for $358 million in fiscal 2025.

Geographic Footprint: The Company operates across four primary segments:

• United States: Marmaxx (TJ Maxx, Marshalls, Sierra) and HomeGoods (HomeGoods, Homesense).
• Canada: TJX Canada (Winners, HomeSense, Marshalls).
• Europe: TJX International (TK Maxx, Homesense in the U.K., Ireland, Germany, Poland, Austria, and the Netherlands).
• Australia: TJX International (TK Maxx). As of February 1, 2025, The TJX Companies, Inc. operated 5,085 stores across nine countries.

Financial Performance

Revenue Analysis

Profitability Metrics (Fiscal 2025):

• Gross Margin: 30.6%
• Operating Margin: 11.2%
• Net Margin: 8.6%

Investment in Growth:

• Capital Expenditures: $1.92 billion (Fiscal 2025)
  • New stores: $176 million
  • Store renovations and improvements: $788 million
  • Office and distribution centers (including information technology systems): $954 million
• Strategic Investments:
  • $193 million for a 49% ownership stake in Multibrand Outlet Stores S.A.P.I. de C.V. (Mexico).
  • $358 million for a 35% ownership stake in Brands for Less (Middle East).

Business Segment Analysis

Marmaxx

Financial Performance:

• Revenue: $34.60 billion (+4% YoY)
• Segment Profit: $4.90 billion (+6.5% YoY)
• Operating Margin: 14.1% (up from 13.8% in fiscal 2024)
• Comp Store Sales: +4% YoY (driven by increased customer transactions)
• Key Growth Drivers: Higher merchandise margin due to higher markon and lower inventory shrink expense, partially offset by incremental store wage and payroll costs and higher occupancy and administrative costs. Home comp store sales growth outperformed apparel.

Product Portfolio: Family apparel (including footwear), accessories (including beauty and jewelry), home fashions (including home basics, decorative accessories, giftware), active and outdoor apparel, footwear, and gear (sporting goods, snow and water sport, camping, fishing), as well as pet and home fashions.

Market Dynamics: Largest off-price retailer in the United States. Differentiates TJ Maxx (expanded jewelry/accessories, high-end designer department "The Runway") and Marshalls (full line of footwear, broader men’s offering) to encourage cross-shopping.

Sub-segment Breakdown:

• TJ Maxx: 1,333 stores (average size 27,000 sq ft)
• Marshalls: 1,230 stores (average size 28,000 sq ft)
• Sierra: 117 stores (average size 21,000 sq ft)
• Marmaxx e-commerce sites (tjmaxx.com, marshalls.com) and sierra.com represented less than 3% of Marmaxx’s net sales.

HomeGoods

Financial Performance:

• Revenue: $9.39 billion (+4% YoY)
• Segment Profit: $1.02 billion (+18.6% YoY)
• Operating Margin: 10.9% (up from 9.6% in fiscal 2024)
• Comp Store Sales: +4% YoY (driven by increased customer transactions, partially offset by decreased average basket)
• Key Growth Drivers: Higher merchandise margin (lower freight costs, higher markon) and the year-over-year benefit from closing HomeGoods’ e-commerce business, partially offset by incremental store wage and payroll costs. Comp store sales growth was strongest in the West and Midwest regions.

Product Portfolio: Eclectic assortment of home fashions, including furniture, rugs, lighting, soft home, decorative accessories, tabletop, cookware, expanded pet, and gourmet food departments. Homesense complements HomeGoods with a differentiated mix and expanded departments like large furniture and ceiling lighting.

Market Dynamics: Leading off-price retailer of home fashions in the U.S.

Sub-segment Breakdown:

• HomeGoods: 943 stores (average size 23,000 sq ft)
• Homesense: 72 stores (average size 27,000 sq ft)

TJX Canada

Financial Performance:

• Revenue: $5.19 billion (+3% YoY)
• Segment Profit: $703 million (-1.7% YoY)
• Operating Margin: 13.5% (down from 14.2% in fiscal 2024)
• Comp Store Sales: +5% YoY (driven by increased customer transactions)
• Key Growth Drivers: Incremental store wage and payroll costs, third-party supply chain exit costs, and an unfavorable year-over-year impact related to an insurance claim recovery in the prior year.

Product Portfolio: Winners is the leading off-price family apparel and home fashions retailer. HomeSense offers home decor, furniture, and seasonal home merchandise. Marshalls offers off-price family apparel, footwear, and home fashions.

Market Dynamics: Leading off-price family apparel and home fashions retailer in Canada.

Sub-segment Breakdown:

• Winners: 307 stores (average size 27,000 sq ft)
• HomeSense: 160 stores (average size 24,000 sq ft)
• Marshalls: 109 stores (average size 27,000 sq ft)

TJX International

Financial Performance:

• Revenue: $7.18 billion (+6% YoY)
• Segment Profit: $422 million (+27.1% YoY)
• Operating Margin: 5.9% (up from 4.9% in fiscal 2024)
• Comp Store Sales: +4% YoY (driven by increased customer transactions)
• Key Growth Drivers: Higher merchandise margin (higher markon and lower markdowns) and a favorable year-over-year impact from a prior year reserve related to a German COVID program receivable, partially offset by incremental store wage costs.
• E-commerce sales represented less than 4% of TJX International’s net sales.

Product Portfolio: TK Maxx offers a merchandise mix similar to TJ Maxx (apparel and home fashions). Homesense offers home fashions similar to HomeGoods in the U.S.

Market Dynamics: Europe’s largest major brick-and-mortar off-price retailer of apparel and home fashions.

Sub-segment Breakdown:

• TK Maxx (Europe): 655 stores (average size 28,000 sq ft) across the U.K., Ireland, Germany, Poland, Austria, and the Netherlands.
• Homesense (Europe): 75 stores (average size 19,000 sq ft) in the U.K. and Ireland.
• TK Maxx (Australia): 84 stores (average size 21,000 sq ft).

Capital Allocation Strategy

Shareholder Returns:

• Share Repurchases: $2.5 billion (22.3 million shares repurchased and retired in fiscal 2025).
• Dividend Payments: $1.65 billion (cash payments in fiscal 2025).
• Dividend Per Share: $1.50 per share declared in fiscal 2025.
• Future Capital Return Commitments:
  • Board approved a new stock repurchase program authorizing up to an additional $2.5 billion of common stock in February 2025. Approximately $3.6 billion remained available under existing programs as of February 1, 2025.
  • Plans to repurchase approximately $2 billion to $2.5 billion of stock in fiscal 2026.
  • Expects to pay quarterly dividends of $0.425 per share in fiscal 2026, totaling an annual dividend of $1.70 per share, representing a 13% increase over fiscal 2025.

Balance Sheet Position (as of February 1, 2025):

• Cash and Equivalents: $5.34 billion (approximately $1.4 billion held by foreign subsidiaries, with $875 million intended for indefinite reinvestment).
• Total Long-Term Debt: $2.87 billion (net of unamortized debt discounts).
• Net Cash Position: $2.47 billion.
• Credit Rating: The Company emphasizes maintaining strong credit ratings, though a specific rating is not disclosed in the filing.
• Debt Maturity Profile:
  • Fiscal 2027: $1.00 billion (2.250% senior unsecured notes)
  • Fiscal 2029: $500 million (1.150% senior unsecured notes)
  • Later years: $1.38 billion (3.875% senior unsecured notes maturing April 2030, 1.600% senior unsecured notes maturing May 2031, 4.500% senior unsecured notes maturing April 2050).

Cash Flow Generation (Fiscal 2025):

• Operating Cash Flow: $6.12 billion.
• Free Cash Flow: Not explicitly stated, but capital expenditures were $1.92 billion.
• Cash Conversion Metrics: Operating cash flows increased by $59 million compared to fiscal 2024, primarily due to a $390 million increase in net income, partially offset by a $215 million decrease in accrued expenses reflecting lower incentive compensation costs.

Operational Excellence

Production & Service Model: The Company employs a flexible business model centered on opportunistic buying, rapid inventory turnover, and a "treasure hunt" shopping experience. Buyers operate globally, acquiring merchandise from over 100 countries, often closer to the selling season, to capitalize on market opportunities like closeouts, special productions, and order cancellations. Inventory management systems are specialized to tailor merchandise to local preferences, achieve rapid in-store turnover, and facilitate timely sales. Stores are designed with flexible layouts, free of permanent fixtures, to easily adapt to changing merchandise assortments. The Company maintains a low-cost operating structure, with advertising focused on banners rather than individual products and efficient distribution networks. Customer service is supported by trained Associates and customer-friendly return policies.

Supply Chain Architecture: The Company's supply chain is designed to support global buying strategies and facilitate quick, efficient, and differentiated delivery of merchandise to stores. It aims to operate with lean inventory levels and precisely allocate merchandise.

Key Suppliers & Partners: The Company sources merchandise from an expansive and changing universe of more than 21,000 vendors across the globe, including thousands of new vendors in fiscal 2025. These vendors are located in over 100 countries, particularly China, India, and Southeast Asia. The Company is an attractive channel for vendors due to its willingness to purchase varied assortments and quantities, ability to disperse merchandise geographically, prompt payments, and avoidance of typical retail concessions.

Facility Network (as of February 1, 2025):

• Distribution: Operates distribution centers encompassing approximately 30 million square feet across six countries. These include 15 million sq ft for Marmaxx (9 owned, 6 leased), 5 million sq ft for HomeGoods (5 owned, 0 leased), 2 million sq ft for Sierra (1 owned, 1 leased), 3 million sq ft for TJX Canada (0 owned, 3 leased), and 5 million sq ft for TJX International (1 owned, 4 leased).
• Office Space: Owns and leases a combined 3.7 million square feet of office space, primarily within the United States, including corporate headquarters in Massachusetts.

Operational Metrics: Consolidated average per store inventories, including inventory on hand at distribution centers (excluding in-transit inventory, e-commerce sites, and Sierra stores), increased by 1% at the end of fiscal 2025 compared to the prior year.

Market Access & Customer Relationships

Go-to-Market Strategy: The Company's strategy focuses on delivering value through a "treasure hunt" shopping experience in its physical stores and through its e-commerce platforms. Distribution Channels:

• Physical Stores: Over 5,000 stores globally across its Marmaxx, HomeGoods, TJX Canada, and TJX International segments.
• Digital Platforms: Six branded e-commerce sites: tjmaxx.com, marshalls.com, sierra.com (U.S.), tkmaxx.com (U.K.), tkmaxx.de (Germany), and tkmaxx.at (Austria). E-commerce sites combined represented less than 2% of total sales in fiscal 2025.

Customer Portfolio: The Company aims to reach a broad range of customers across income levels with its value proposition on a wide range of items. No specific customer concentration metrics are disclosed.

Geographic Revenue Distribution (Fiscal 2025):

• United States: 78% of total revenue (Northeast 21%, Midwest 13%, South 28%, West 16%)
• Canada: 9% of total revenue
• Europe: 12% of total revenue
• Australia: 1% of total revenue

Competitive Intelligence

Market Structure & Dynamics

Industry Characteristics: The retail apparel and home fashion business is highly competitive, characterized by numerous factors including brand, fashion, price, quality, selection, freshness, in-store and online shopping experience, service, reputation, and store location. The market is subject to rapidly evolving consumer trends and preferences, and increasing e-commerce spending.

Competitive Positioning Matrix:

Direct Competitors

Primary Competitors: The Company competes with local, regional, national, and international department, specialty, off-price, discount, warehouse, and outlet stores, as well as other retailers that sell similar merchandise through stores, online, or other media, including omnichannel retailers. Some competitors are larger or have more experience in certain product lines or channels.

Emerging Competitive Threats: New market entrants, disruptive technologies (e.g., artificial intelligence), and the continued increase in consumer e-commerce spending pose competitive threats.

Competitive Response Strategy: The Company's strategy to maintain competitive advantage includes its flexible business model, opportunistic buying, rapid inventory turnover, low-cost operations, continuous store renovations, and expansion of its e-commerce capabilities. It also focuses on identifying and responding to consumer trends and preferences.

Risk Assessment Framework

Strategic & Market Risks

• Opportunistic Buying & Inventory Management: Failure to acquire and allocate the right merchandise at the right times, quantities, prices, and mix could adversely affect sales, margins, and financial results. Inaccurate merchant assessments or external factors (inflation, supply chain disruptions) can impact execution.
• Consumer Trends & Preferences: Inability to effectively identify and meet rapidly changing consumer trends and expectations across diverse merchandise categories and markets could negatively impact performance, customer attraction, and retention.
• Competition: Operating in highly competitive markets with various retail formats (department, specialty, off-price, discount, online, omnichannel). Competitors may increase presence, consolidate, expand offerings, or adopt new technologies more effectively, potentially disadvantaging the Company.
• Marketing Effectiveness: Failure to successfully implement marketing efforts or if competitors' programs are more effective could adversely affect revenue and results. Challenges in rapidly evolving digital/social media channels and managing consistent strategies across banners exist.
• Business Expansion: Failure to successfully expand within current markets, into new geographies (e.g., Spain), or through new channels/businesses (e.g., joint ventures in Mexico, minority investment in the Middle East) could impact financial performance. Growth adds operational complexity and requires effective management.
• Large Size & Scale Management: Challenges in effectively managing complex operations, internal resources, third-party providers, and ensuring consistent implementation of systems, controls, and policies across multiple banners and geographies.
• Stock Price Volatility: Failure to meet market expectations for financial performance could lead to stock price decline. Suspension or changes in stock repurchase programs or dividend distributions could also adversely affect stock price.
• Inventory or Asset Loss: Inherent risk of loss or theft of assets, including inventory shrinkage, which can be impacted by macroeconomic factors and organized retail crime. Inability to prevent or accurately accrue for these losses could adversely affect financial performance and customer/Associate safety.

Operational & Execution Risks

• Merchandise Sourcing & Transport: Risks associated with global sourcing (particularly China, India, Southeast Asia), including disruptions in manufacturing/supply, transport availability/costs, tariffs, trade restrictions, compliance with international laws (labor, environmental, human rights), supply chain interruptions, IT challenges, and geopolitical disruptions (e.g., Ukraine, Russia, Middle East, Red Sea).
• Cybersecurity & IT Systems: Dependence on IT systems for key business aspects (planning, purchasing, sales, supply chain, inventory, HR, finance). Risks include sophisticated cyber-attacks (malware, ransomware, phishing, AI-driven attacks), data breaches, system disruptions, and failure to satisfy IT needs. Regulatory demands for information security and privacy are increasing.
• Labor Costs & Workforce Challenges: Increased labor costs (wages, benefits, unionization, health/safety costs) or inability to meet labor needs due to external factors (minimum wage laws, market pressures, inflation, demographics) could adversely affect profitability and talent attraction/retention. Many distribution center Associates are unionized, posing risks of labor actions.
• Talent Management: Challenges in recruiting, hiring, developing, training, and retaining a large, diverse workforce, particularly in key areas like buying and IT. High turnover in entry-level positions and competition for talent in management roles.
• Corporate & Retail Banner Reputation: Incidents eroding trust (company policies, executives, sourcing, third-party providers, merchandise quality, product recalls, ESG matters) could lead to adverse publicity, litigation, boycotts, and negatively impact sales, customer loyalty, vendor relationships, and talent acquisition.

Financial & Regulatory Risks

• Economic Conditions & Consumer Spending: Global and local economic conditions (inflation, recession, unemployment, disposable income, interest rates, tax rates) and geopolitical uncertainty (war, conflict, terrorism, pandemics) can adversely affect consumer confidence and discretionary spending, impacting sales and financial results.
• Trade Policies & Regulations: Changes in import/export policies, tariffs (e.g., China, Canada, Mexico), quotas, embargoes, or sanctions could affect merchandise margins, operating costs, and business relationships. Non-compliance with regulations (e.g., Uyghur Forced Labor Prevention Act) could lead to liability and reputational harm.
• Liquidity & Capital Costs: Volatility in financial markets, interest rate increases, or disruptions in banking institutions could adversely affect access to capital, increase financing costs, and impede compliance with debt covenants.
• Litigation & Legal Proceedings: Involvement in various legal proceedings (employment, consumer protection, tax, intellectual property, product safety) could result in significant defense costs, fines, penalties, and reputational harm.
• Merchandise Quality & Safety: Failure to comply with quality and safety regulations (e.g., U.S. CPSC, FDA, California's Proposition 65) or issues with merchandise authenticity could lead to product recalls, fines, litigation, and reputational damage.
• Tax Matters: Subject to income and other taxes in numerous jurisdictions. Effective tax rate and future tax liability can be affected by tax audits, changes in tax rates, transfer pricing, valuation of deferred tax assets, and changes in tax legislation (e.g., Pillar Two Model Rules).

Geopolitical & External Risks

• Severe Weather & Catastrophic Events: Natural disasters, extreme weather, public health crises (e.g., COVID-19), acts of war/conflict (e.g., Russia-Ukraine, Middle East, Red Sea), terrorism, or cyberterrorism could disrupt operations, damage facilities, limit transportation, and adversely affect financial results.
• Business Cyclicality & Seasonality: Higher sales and earnings typically occur in the second half of the fiscal year (back-to-school, holiday seasons). Significant unplanned decreases in sales or disruptions during this period could have a disproportionately adverse effect on operating results.
• Utility, Transportation & Logistics Costs: Fluctuations in energy and fuel costs (oil, gasoline), increased global/U.S. environmental regulations (cap and trade, carbon taxes), and supply chain shortages/disruptions can increase operating costs and impact merchandise pricing and margins.
• Foreign Currency Exchange Rates: Fluctuations in currency exchange rates (e.g., U.S. dollar, Canadian dollar, British pound, Euro) can impact translation of foreign operations' sales and earnings into U.S. dollars, increase inventory purchase costs, and affect merchandise margins. Hedging strategies may not be fully effective.

Innovation & Technology Leadership

Research & Development Focus: While not explicitly detailed as R&D expenditure, the Company invests significantly in its information technology systems. Capital expenditures for offices and distribution centers include investments in information technology systems to support growth.

Core Technology Areas: The Company relies heavily on IT systems for planning, purchasing, sales (including point-of-sale processing and e-commerce), supply chain management, inventory management, human resources, financial management, communications, information security, and legal and regulatory compliance. It is focused on successfully developing, implementing, and maintaining appropriate systems, adopting new technologies (including artificial intelligence and other emerging technologies) in a timely manner, and maintaining effective disaster recovery plans.

Intellectual Property Portfolio: The Company holds rights to principal trademarks and service marks, including TJ Maxx, Marshalls, HomeGoods, Winners, Homesense/HomeSense, TK Maxx, and Sierra, in relevant countries. It also acquires or licenses other trademarks for private label merchandise. The Marshalls tradename is considered to have an indefinite life.

Leadership & Governance

Executive Leadership Team (as of April 2, 2025)

Leadership Continuity: The Company prioritizes Associate development and advancement, with many Associates in managerial positions having over 10 years of tenure. It focuses on teaching and mentoring to support career growth and success, which promotes retention, stability, and increased expertise.

Board Composition: The Board of Directors oversees the systems and processes for reporting and monitoring significant business risks, including cybersecurity, directly and through its Audit and Finance Committee. The Audit and Finance Committee reviews IT and cybersecurity risks with senior management at least quarterly.

Human Capital Strategy

Workforce Composition (as of February 1, 2025):

• Total Employees: Approximately 364,000 Associates.
• Geographic Distribution: Approximately 86% of Associates work in retail stores.
• Skill Mix: The Company offers positions at various levels in stores, distribution/fulfillment centers, and offices, with opportunities for growth and advancement.

Talent Management:

• Acquisition & Retention: The Company constantly recruits for entry-level and part-time positions, and seasonal talent. It faces challenges in recruiting and retaining sufficient talent due to labor market shifts, wage pressures, competition, flexible scheduling needs, and health/safety concerns. Retention is supported by a culture that prioritizes Associate development and advancement.
• Employee Value Proposition: Compensation programs are designed to be competitive and equitable, based on skills, qualifications, role, and abilities. The "One TJX" approach to annual incentive compensation measures all eligible Associates against global TJX performance goals.

Diversity & Development:

• Diversity Metrics: The global workforce reflects a diversity of races, ethnicities, sexual orientations, gender identities, abilities, and religions, with a broad range of backgrounds and experience.
• Development Programs: Global strategies include increasing diverse talent representation, providing leaders with tools for awareness and fairness, and integrating inclusive behaviors. Programs include recruitment strategies, training and education, Associate-led Inclusion & Diversity advisory boards, and Associate Resource Groups. Training occurs broadly, from informal mentoring to career and leadership development programs like TJX University for merchandising Associates.
• Culture & Engagement: The Company fosters a strong, supportive, and inclusive culture, promoting open and honest communication through an open-door philosophy and Associate engagement.

Environmental & Social Impact

Environmental Commitments: The Company has announced initiatives related to corporate responsibility, focused under four pillars: workplace, environmental sustainability, communities, and responsible sourcing. Specific emissions targets, carbon neutrality commitments, or renewable energy adoption strategies are not detailed in the provided text.

Supply Chain Sustainability: The Company is subject to increasing regulations requiring reporting, new policies, and mitigation of supply chain risks related to international sourcing. This includes compliance with laws concerning ethical business practices, human rights, working conditions, and environmental impact (greenhouse gas emissions, waste, water usage, deforestation, biodiversity) in countries where merchandise is produced or materials are sourced.

Social Impact Initiatives: The Company's corporate responsibility efforts include a focus on workplace, environmental sustainability, communities, and responsible sourcing. Specific community investment or product impact details are not provided in the filing.

Business Cyclicality & Seasonality

Demand Patterns: The Company's business is subject to seasonal influences, with generally higher levels of sales and income realized in the second half of the fiscal year, which includes the back-to-school and year-end holiday seasons. Demand patterns can also be affected by economic conditions and consumer spending trends.

Planning & Forecasting: Inventory purchases are based, in part, on sales forecasts. The Company's inventory management systems are designed to move inventory through stores in a timely and disciplined manner, with pricing, markdown, and store inventory decisions made centrally.

Regulatory Environment & Compliance

Regulatory Framework: The Company is subject to national, state, provincial, regional, and local laws, rules, regulations, mandates, accounting standards, principles, and government orders in the various countries where it operates. This includes new and changing requirements and evolving interpretations.

Industry-Specific Regulations: Compliance requirements cover a wide range of areas, including:

• Labor and employment practices and benefits (e.g., pay transparency, unions, works councils).
• Import/export, supply chain, social compliance, trade restrictions, and logistics (e.g., Uyghur Forced Labor Prevention Act, Countering America’s Adversaries Through Sanctions Act, sanctions related to Russia-Ukraine conflict).
• Climate change, energy, waste, deforestation, biodiversity, chemicals management, and water.
• Consumer protection, product safety, and product compliance (e.g., U.S. Consumer Product Safety Commission, U.S. Food and Drug Administration, California’s Proposition 65).
• Marketing, financial regulations, tax, cybersecurity, data protection, and privacy (e.g., GDPR, CCPA).
• Internet regulations (e-commerce, electronic communications).
• Protection of intellectual property rights.
• Health, welfare, and safety requirements.

Trade & Export Controls: Changes in import and export policies, including trade restrictions, new or increased tariffs (e.g., from China, Canada, Mexico), quotas, embargoes, sanctions, and customs restrictions, could impact business operations, merchandise margins, and relationships. The U.S. government recently announced tariffs on product imports from certain countries, which may result in retaliatory measures.

Legal Proceedings: The Company is involved in various legal proceedings, regulatory reviews, audits, and claims arising in the ordinary course of business. These include employment and employee benefits, whistleblower claims, harassment, tax, securities, real estate, environmental matters, tort, business practices, consumer protection, privacy/cybersecurity, product safety, advertising, and intellectual property. Material litigation and regulatory investigations are assessed, and reserves are accrued for probable and reasonably estimable losses.

Tax Strategy & Considerations

Tax Profile: The Company is subject to income and other taxes in the U.S. and numerous foreign jurisdictions.

• Effective Tax Rate: 25.0% for fiscal 2025 and fiscal 2024.
• Geographic Tax Planning: The Company has provided for all applicable state and foreign withholding taxes on undistributed earnings of foreign subsidiaries in Canada, Puerto Rico, Italy, India, Hong Kong, and Vietnam. Approximately $1.6 billion of undistributed earnings from other foreign subsidiaries are considered indefinitely reinvested, with no federal, state, or foreign withholding taxes provided.
• Tax Reform Impact: The Organization for Economic Co-operation and Development's Pillar Two Model Rules for a global minimum tax of 15% did not have a material impact on fiscal 2025 financial statements and are not expected to materially increase global tax costs, as the Company does not have material operations in jurisdictions with tax rates lower than the Pillar Two minimum. The Company is evaluating the impact of enacted and pending legislation.

Insurance & Risk Transfer

Risk Management Framework: The Company manages market risks from changes in interest rates, foreign currency exchange rates, and fuel costs through the use of derivative financial instruments.

• Insurance Coverage: Not explicitly detailed beyond general mention of paying insurance premiums as part of lease obligations.
• Risk Transfer Mechanisms:
  • Diesel Fuel Contracts: Hedges portions of estimated notional diesel fuel requirements to mitigate volatility in transportation costs.
  • Foreign Currency Contracts: Enters into forward foreign currency exchange contracts to hedge merchandise purchases denominated in non-local currencies (primarily for TJX Canada and TJX International) and intercompany debt. These are used for economic hedges and fair value hedges.
  • The Company's foreign exchange risk management policy prohibits using derivatives for trading or speculative purposes.