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SECURITIES AND EXCHANGE COMMISSION

Form 10-K

The TJX Companies, Inc.

Registrant’s telephone number, including area code (508) 390-1000

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

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

      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 þ          No o

      Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

      Indicate by check mark whether the registrant is an accelerated filer (as defined by Rule 12b-2 of the Act).     Yes þ          No o

      The aggregate market value of the voting common stock held by non-affiliates of the Registrant on July 26, 2003 was $10,018,786,069.

      There were 499,181,639 shares of the Registrant’s common stock, $1.00 par value, outstanding as of January 31, 2004.

DOCUMENTS INCORPORATED BY REFERENCE

      Portions of the Proxy Statement for the Annual Meeting of Stockholders to be held on June 1, 2004 (Part III).

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PART I

      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

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      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.

      During the fiscal year ended January 31, 2004 we derived 83.1% of our sales from the United States (29.7% from the Northeast, 15.2% from the Midwest, 24.5% from the South, 0.8% from the Central Plains, 12.9% from the West), 8.1% from Canada, 7.5% from Europe (specifically in the United Kingdom and Ireland) and 1.3% from Puerto Rico.

      Unless otherwise indicated, all store information is as of January 31, 2004. All references to store square footage are to gross square feet. Fiscal 2003 means the fiscal year ended January 25, 2003, fiscal 2004 means the fiscal year ended January 31, 2004 and fiscal 2005 means the fiscal year ending January 29, 2005. Our business is subject to seasonal influences, which causes us generally to realize higher levels of sales and income in the second half of the year. This is common in the apparel retail business.

T.J. MAXX AND MARSHALLS

      T.J. Maxx is the largest off-price retail chain in the United States, with 745 stores in 47 states. Marshalls is the second-largest off-price retailer in the United States, with 659 stores in 42 states as well as 14 stores in Puerto Rico. We maintain the separate identities of the T.J. Maxx and Marshalls stores through product assortment and merchandising, marketing and store appearance. This encourages our customers to shop at both chains.

      T.J. Maxx and Marshalls primarily target female customers who have families with middle to upper-middle incomes and who generally fit the profile of a department or specialty store shopper. These chains operate with a common buying and merchandising organization and have consolidated administrative functions, including finance and human resources. The combined organization, known internally as The Marmaxx Group, offers us increased leverage to purchase merchandise at favorable prices and allows us to operate with a lower cost structure. These advantages are key to our ability to sell quality, brand name merchandise at substantial discounts from department and specialty store regular prices.

      T.J. Maxx and Marshalls sell quality brand name merchandise at prices generally 20%-60% below department and specialty store regular prices. Both chains offer family apparel, accessories, giftware and home fashions. T.J. Maxx also offers women’s shoes and fine jewelry, while Marshalls also offers a full-line footwear department and a larger men’s department. In fiscal 2004, T.J. Maxx tested expanded jewelry and accessories

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      In fiscal 2005, we plan to launch a T.J. Maxx e-commerce website. This website will offer a rapidly changing, wide selection of quality, brand name fashions priced below department and specialty store regular prices, designed to create a shopping experience similar to shopping in our stores. We see this website as a means to further service our existing customer base and attract new customers to both the website and to our stores.

      T.J. Maxx and Marshalls stores are generally located in suburban community shopping centers. T.J. Maxx stores average approximately 30,000 square feet. Marshalls stores average approximately 31,000 square feet. We currently expect to add a net of 60 stores in fiscal 2005. Ultimately, we believe that T.J. Maxx and Marshalls together can operate approximately 1,800 stores in the United States and Puerto Rico.

HOMEGOODS

      HomeGoods is our off-price retail chain that focuses exclusively on the home fashions market. HomeGoods offers a broad array of giftware, accent furniture, lamps, rugs, accessories and seasonal merchandise for the home. In fiscal 2004, HomeGoods increased its lighting and accent furniture selections. Many of the HomeGoods stores are stand-alone stores; however, we also combine HomeGoods stores with a T.J. Maxx or Marshalls store in a superstore format that we call T.J. Maxx ’N More or Marshalls Mega-Store. We count the superstores as both a T.J. Maxx or Marshalls store and a HomeGoods store.

      HomeGoods, like T.J. Maxx, also plans to launch an e-commerce website in fiscal 2005, with a similar off-price approach. The HomeGoods website will offer home fashions in a wide array of rapidly changing assortments priced below department and specialty store regular prices. We believe an e-commerce business is well suited for HomeGoods and will attract new customers to the website and to our stores.

      Stand-alone HomeGoods stores average approximately 28,000 square feet. In superstores, which average approximately 52,000 square feet, we dedicate an average of 21,000 square feet to HomeGoods. The 182 stores open at year-end include 106 stand-alone stores and 76 superstores. In fiscal 2005, we anticipate adding a net of 40 HomeGoods stores, including 22 superstores. We believe that the U.S. market could support approximately 500 freestanding HomeGoods stores and 150 superstores in the long-term.

WINNERS AND HOMESENSE

      Winners is the leading off-price retailer in Canada, offering off-price brand name women’s apparel and shoes, lingerie, accessories, home fashions, giftware, fine jewelry, menswear and children’s clothing. In fiscal 2002, Winners opened its first seven HomeSense stores in Canada. Like our HomeGoods chain, HomeSense offers a wide and rapidly changing assortment of off-price home fashions including giftware, accent furniture, lamps, rugs, accessories and seasonal merchandise for the home. In fiscal 2004, Winners also opened its first superstore, which combines a Winners store with a HomeSense store. We count the superstores as both a Winners store and a HomeSense store.

      We currently operate a total of 160 Winners stores, which average approximately 28,000 square feet and 25 HomeSense stores, which average approximately 24,000 square feet. We expect to add 8 Winners stores and 15 HomeSense stores in fiscal 2005, including seven superstores. Ultimately, we believe the Canadian market can support approximately 200 Winners stores and approximately 80 HomeSense stores.

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T.K. MAXX

      T.K. Maxx is the only major off-price retailer in any European country. T.K. Maxx utilizes the same off-price strategies employed by T.J. Maxx, Marshalls and Winners and offers the same type of merchandise. We currently operate 147 T.K. Maxx stores in the United Kingdom and Ireland. T.K. Maxx stores average approximately 27,000 square feet. T.K. Maxx has been successfully expanding its selling square footage with the addition of mezzanines in some of its stores. This increases sales productivity with little additional rental costs. T.K. Maxx expects to continue to add mezzanines to its stores where possible. T.K. Maxx opened 23 stores in the United Kingdom and one store in Ireland in fiscal 2004. We currently expect to add a total of 25 stores in the United Kingdom and Ireland in fiscal 2005. We believe that the U.K. and Ireland can support approximately 300 stores in the long term.

A.J. WRIGHT

      A.J. Wright, a relatively young chain launched in fiscal 1999, brings our off-price concept to a different demographic customer, the moderate income shopper. A.J. Wright stores offer brand-name family apparel, accessories, footwear, home fashions, giftware and special, market-driven purchases. A.J. Wright has advanced its understanding of its target customers’ tastes and has transitioned to offering both “hot” fashion items as well as basic apparel assortments. A.J. Wright stores average approximately 26,000 square feet. We added a net of 24 A.J. Wright stores in fiscal 2004 and operated 99 stores at fiscal year end. We currently expect to open 32 A.J. Wright stores in fiscal 2005. We believe this developing business offers us the long-term opportunity to open over 1,000 A.J. Wright stores throughout the United States.

BOB’S STORES

      Bob’s Stores was acquired by TJX on December 24, 2003. With large, high-volume stores, branded apparel selections, a value orientation and a loyal customer base, Bob’s Stores shares many characteristics with our off-price chains. Bob’s Stores offers casual, family apparel and footwear with emphasis on men’s clothing, footwear, workwear, activewear and licensed team apparel. Bob’s Stores customer demographics span the moderate to upper-middle income bracket with a large percentage of male shoppers. TJX purchased Bob’s Stores as a long-term growth vehicle and plans to grow Bob’s Stores slowly in the short-term. We currently operate 31 Bob’s Stores in the Northeast United States and expect to open 2 additional Bob’s Stores in fiscal 2005. We see the potential over time of growing Bob’s Stores to a chain of 400 stores in the United States.

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      We operated stores in the following locations as of January 31, 2004:

*	The HomeGoods store locations include the HomeGoods portion of a T.J. Maxx ’N More or a Marshalls Mega-Store.

      Winners operated 160 stores in Canada: 21 in Alberta, 5 in Manitoba, 73 in Ontario, 26 in Quebec, 4 in Nova Scotia, 6 in Saskatchewan, 19 in British Columbia, 3 in New Brunswick, 2 in Newfoundland and 1 on Prince Edward Island.

      HomeSense operated 25 stores in Canada: 23 in Ontario and 2 in British Columbia. The HomeSense store locations include the HomeSense portion of a superstore.

      T.K. Maxx operated 143 stores in the United Kingdom and 4 stores in the Republic of Ireland.

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EMPLOYEES

      At January 31, 2004, we had approximately 105,000 employees, many of whom work less than 40 hours per week. In addition, we hire temporary employees during the peak back-to-school and holiday seasons.

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.

CREDIT

      Our stores operate primarily on a cash-and-carry basis. Each chain accepts credit sales through programs offered by banks and others. While we do not operate our own customer credit card program or maintain customer credit receivables, a TJX Visa card is offered through a major bank for our domestic off-price divisions. The rewards program associated with this card is partially funded by TJX.

BUYING AND DISTRIBUTION

      We operate a centralized buying organization that services both the T.J. Maxx and Marshalls chains while each of our other chains has its own centralized buying organization. All of our chains are serviced through their own distribution networks.

TRADEMARKS

      Our principal trademarks and service marks, which are T.J. Maxx, Marshalls, HomeGoods, Winners, HomeSense, T.K. Maxx, A.J. Wright and Bob’s Stores, are registered in relevant countries. Our rights in these trademarks and service marks endure for as long as they are used.

SAFE HARBOR STATEMENTS UNDER THE

      Various statements made in this annual report, including some of the statements made under Item 1, “Business,” Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and Item 8, “Financial Statements and Supplementary Data,” are forward-looking and involve a number of risks and uncertainties. All statements that address activities, events or developments that we intend, expect or believe may occur in the future are forward-looking statements. The following are some of the factors that could cause actual results to differ materially from the forward-looking statements:

	•	Our ability to continue our successful expansion of our operations including expansion of our store base across all chains at the projected rate, and our ability to continue to increase both total sales and same store sales and to manage rapid growth.
	•	Risks of expansion of existing businesses in existing and new markets and of entry into new businesses.
	•	Our ability to implement our opportunistic inventory strategies successfully including availability, selection and acquisition of appropriate merchandise on favorable terms and at the appropriate times.

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	•	Our ability to effectively manage our inventories including effective and timely distribution to stores and maintenance of appropriate mix and levels of inventory and effective management of pricing and mark-downs.
	•	Consumer confidence, demand, spending habits and buying preferences.
	•	Effects of unseasonable weather patterns on consumer demand.
	•	Competitive factors, including pricing and promotional activities of competitors and in the retail industry generally, changes in competitive practices, new competitors, competition from alternative distribution channels and excess retail capacity.
	•	Factors affecting the availability of adequate numbers of desirable store and distribution center locations on suitable terms.
	•	Factors affecting our recruitment and employment of associates including our ability to recruit, develop and retain quality sales associates and management personnel in adequate numbers; labor contract negotiations; and effects of immigration, wage, entitlement and other governmental regulation of employment.
	•	Factors affecting expenses including pressure on wages, health care costs and other benefits, pension plan returns, energy and fuel costs and availability and costs of insurance.
	•	Success of our acquisition and divestiture activities.
	•	Our ability to successfully implement new technologies and systems and maintain adequate disaster recovery systems.
	•	Our ability to continue to generate cash flows to support capital expansion, general operating activities and stock repurchase programs.
	•	General economic conditions in countries and regions where we operate including consumer credit availability, consumer debt levels and delinquencies and default rates, financial market performance, inflation, commodity prices and unemployment that affect consumer demand.
	•	Potential disruptions due to wars, other military actions and terrorist incidents, civil unrest, epidemics, natural disasters and other events beyond our control.
	•	Changes in currency and exchange rates in our foreign and buying operations and with respect to our financial statements.
	•	Import risks, including potential disruptions in supply, duties, tariffs and quotas on imported merchandise and economic, political or other problems in countries from, or through, which merchandise is imported.
	•	Adverse outcomes for any significant litigation.
	•	Changes in laws and regulations and accounting rules and principles.

      We do not undertake to publicly update or revise our forward-looking statements even if experience or future changes make it clear that any projected results expressed or implied therein will not be realized.

SEC FILINGS

      Copies of our annual reports on Form 10-K, proxy statements, quarterly reports on Form 10-Q and current reports on Form 8-K, and any amendments to those filings, are available free of charge on our website, www.tjx.com under “SEC Filings,” as soon as reasonably practicable after they are filed electronically. They are also available free of charge from TJX Investor Relations, 770 Cochituate Road, Framingham, Massachusetts, 01701.

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CORPORATE GOVERNANCE INFORMATION

      Corporate Governance information, including our Corporate Governance Principles, Charters for the Committees of our Board of Directors, our Associate Code of Conduct, our Code of Ethics for TJX Executives (including any waiver or amendment related to the Code made from time to time), as well as information about Vendor Compliance, is available on the TJX corporate website, www.tjx.com. This information is also available in print, free of charge, upon request to the TJX Investor Relations department at the above address. In addition, we will be adopting a Code of Business Conduct and Ethics for Directors, which, when adopted, will be available on our website and in print, as described above.

      We lease virtually all of our store locations, generally for 10 years with an option to extend the lease for one or more 5-year periods. We have the right to terminate some of these leases before the expiration date under specified circumstances and for specified payment.

      The following is a summary of our primary distribution centers and administration office locations as of January 31, 2004. Square footage information for the distribution centers represents total “ground cover” of the facility. Square footage information for office space represents total space occupied:

Distribution Centers

Office Space

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      The table below indicates the approximate average store size as well as the gross square footage of stores and distribution centers, by division, as of January 31, 2004.

(1)	Distribution centers currently service both Winners and HomeSense stores.
(2)	A HomeSense stand-alone store averages 25,000 square feet, while the HomeSense portion of a superstore format averages 21,000 square feet.
(3)	A HomeGoods stand-alone store averages 28,000 square feet, while the HomeGoods portion of a superstore format averages 21,000 square feet.

      Effective October 2, 2003, the California Superior Court granted final approval of the settlement of four lawsuits alleging that TJX improperly classified store managers and assistant store managers as exempt from California overtime law and entered a dismissal of the entire matter. The administration of the settlement was concluded January 28, 2004.

      There was no matter submitted to a vote of TJX’s security holders during the fourth quarter of fiscal 2004.

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      All officers hold office until the next annual meeting of the Board in June 2004 and until their successors are elected, or appointed, and qualified.

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PART II

      The following per share data reflects the two-for-one stock split distributed in May 2002.

      TJX’s common stock is listed on the New York Stock Exchange (Symbol: TJX). The quarterly high and low trading stock prices for fiscal 2004 and fiscal 2003 are as follows:

      The approximate number of common shareholders at January 31, 2004 was 49,915.

      TJX declared four quarterly dividends of $.035 per share for fiscal 2004 and $.03 per share for fiscal 2003.

      The number of shares of common stock repurchased by TJX during the fourth quarter of fiscal 2004 and the average price per share paid is as follows:

      The shares were repurchased under our current $1 billion stock repurchase program announced in fiscal 2003. As of January 31, 2004, we had repurchased 43.0 million shares at a cost of $818.6 million under the current $1 billion stock repurchase program, with $181.4 million that may yet be repurchased pursuant to this program.

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Selected Financial Data (Continuing Operations)

(1)	Includes long-term debt, exclusive of current installments and obligation under capital lease, less portion due within one year.
(2)	Total capitalization includes shareholders’ equity, short-term debt, long-term debt and capital lease obligation, including current maturities.

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      The following discussion contains forward-looking information and should be read in conjunction with the consolidated financial statements and notes thereto included elsewhere in this report. Our actual results could differ materially from the results contemplated by these forward-looking statements due to various factors, including those discussed in Item 1 of this report under the section entitled “Safe Harbor Statements under the Private Securities Litigation Reform Act of 1995.”

Results of Operations

      During the fiscal year ended January 31, 2004 (fiscal 2004) the Company’s diluted earnings per share increased 19% to $1.28, which was in the upper end of our planned range. Our strong results helped us to achieve an after-tax return on average shareholders’ equity of 44%. We achieved this performance, despite below plan growth in both same store and total sales, by growing our pre-tax profit margin (the ratio of pre-tax income to sales). The pre-tax profit margin increase was achieved primarily through improvement to our merchandise margins, the result of effective inventory management and merchandising strategies. Pre-tax profit margin also benefited from disciplined expense management and was favorably impacted by the 53rd week in the fiscal 2004 calendar. We continued to grow our business, opening 188 new stores (net of closings) and, excluding the acquisition of Bob’s Stores, increasing our store count 10% to 2,031. Bob’s Stores, a value-oriented chain of 31 stores located in the Northeast United States, was acquired in December 2003, as a platform for future growth. Strong cash flows from operations allowed us to fund our capital expenditure requirements and the Bob’s Stores acquisition, while continuing our stock buyback program. During fiscal 2004, we repurchased 27 million shares at a cost of $515 million, which contributed to earnings per share growth. Our ability to continue to report annual earnings per share growth will be driven by revenue growth from our new store openings along with increases in same store sales, maintaining steady profit margins, and the benefit from our share repurchase program. The execution of our buying strategies and disciplined inventory management, leading to rapid inventory turns, are key factors to our continued success.

      The following is a summary of the operating results of TJX at the consolidated level. This discussion is followed by an overview of operating results by segment. All references to earnings per share are diluted earnings per share unless otherwise indicated. All earnings per share calculations and per share data have been adjusted to give effect for the two-for-one stock split distributed on May 8, 2002.

      Net sales for TJX for our fiscal year ended January 31, 2004, totaled $13.3 billion, an 11.2% increase over sales of $12.0 billion for our fiscal year ended January 25, 2003 (fiscal 2003). The net sales for fiscal 2003 represented an 11.9% increase over sales of $10.7 billion for our fiscal year ended January 26, 2002 (fiscal 2002). Our reporting period for fiscal 2004 included 53 weeks compared to 52 weeks in both fiscal 2003 and 2002. The 53rd week in fiscal 2004 increased net sales by an estimated 1.5% over fiscal 2003.

      The 11% increase in net sales for fiscal 2004 includes approximately 8% from new stores, 1% from same store sales growth, with the balance primarily due to the 53rd week. Each of these factors includes the favorable effect of changes in the currency exchange rates of our Winners and T.K. Maxx operations. Same store sales in fiscal 2004 benefited approximately 1  1/2 percentage points from foreign currency exchange rates. The 11% growth in net sales for the year was less than we had planned, primarily due to lower than expected same store sales. The increase in net sales of 12% in fiscal 2003 includes approximately 9% from new stores and 3% from same store sales growth. Foreign currency exchange rate changes also favorably impacted fiscal 2003 sales growth but to a much lesser extent than the impact in fiscal 2004.

      New stores are our major source of sales growth. Our consolidated store count, excluding Bob’s Stores, increased by 10.2% in fiscal 2004 and 10.7% in fiscal 2003 over the respective prior year period. Our selling square footage, excluding Bob’s Stores, increased by 9.6% in fiscal 2004 and by 10.1% in fiscal 2003, in each case over the prior year. Our acquisition of Bob’s Stores on December 24, 2003, added 31 units as of the end of

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      Consolidated same store sales growth of 1% in fiscal 2004 (including foreign currency benefit) was less than planned, largely due to the effect of unseasonable weather in the first half of the year. The sales results for fiscal 2003 reflected strong demand for home fashions and were achieved despite a weak economy, geopolitical concerns and a highly promotional retail environment. Same store sales growth in both years was favorably affected by our younger divisions as their share of consolidated results continues to increase.

      We expect to add 182 stores (net of store closings) in fiscal 2005, an 8.8% increase in our consolidated store base and we expect to increase our selling square footage base by 8.9%. We have planned a 4% to 5% increase in same store sales and a 13% increase in total sales for fiscal 2005. We estimate that approximately 1% to 1.5% of this sales growth will come from favorable currency exchange rates. We plan on adding or expanding certain departments in many of our stores to help drive our same store sales growth. These initiatives are discussed in more detail below.

      We define same store sales to be sales of those stores that have been in operation for all or a portion of two consecutive fiscal years, or in other words, stores that are starting their third fiscal year of operation. We classify a store as a new store until it meets the same store criteria. We determine which stores are included in the same store sales calculation at the beginning of a fiscal year and the classification remains constant throughout that year, unless a store is closed. We calculate same store sales results by comparing the current and prior year weekly periods that are most closely aligned. Relocated stores and expanded stores are generally classified in the same way as the original store. We believe that the impact of relocated or expanded stores on the same store percentage is immaterial. Consolidated and divisional same store sales are calculated in U.S. dollars. We also show divisional same store sales in local currency for our foreign divisions, because this removes the effect of changes in currency exchange rates, and we believe it is a more appropriate measure of their operating performance.

      The following table sets forth our consolidated operating results as a percentage of net sales:

      Cost of sales, including buying and occupancy costs, as a percentage of net sales was 75.6% in fiscal 2004, 75.8% in fiscal 2003 and 75.9% in fiscal 2002. This ratio in fiscal 2004 was better than our plan and reflects a significant improvement in merchandise margin, primarily in the second half of fiscal 2004. The improved merchandise margin contributed to an approximate .6% reduction in our consolidated cost of sales ratio. Successful execution of our inventory and merchandising strategies and buying closer to need led to this improvement. The improvement in this ratio in fiscal 2004 was partially offset by higher store occupancy costs as a percentage of sales due to lower-than-planned same store sales growth and higher distribution costs, as a result of opening our new T.J. Maxx distribution facility in Pittston, Pennsylvania. Store occupancy costs as a percentage of net sales increased by .3% for fiscal 2004 over last year and distribution costs as a percentage of net sales increased by .1%. The cost of sales ratio was favorably impacted by the 53rd week in the fiscal 2004 reporting period as the sales volume from this extra week helped lever certain fixed costs. The benefit from the

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      The improvement in the cost of sales ratio in fiscal 2003 is largely due to the improvement in merchandise margin at Winners, HomeGoods and T.K. Maxx due to reduced markdowns resulting from improved inventory liquidity. These improvements in fiscal 2003 offset an increase in this ratio of approximately .3% at Marmaxx. In fiscal 2003, Marmaxx experienced higher distribution costs, store occupancy costs and insurance and employee benefit costs as a percentage of net sales. Marmaxx was also impacted in fiscal 2003 by a less-than-planned sales performance.

      We anticipate the cost of sales ratio in fiscal 2005 will be similar to fiscal 2004.

      Selling, general and administrative expenses as a percentage of net sales were 16.2% in fiscal 2004 and fiscal 2003 and 15.7% in fiscal 2002. Overall, selling, general and administrative expenses as a percentage of sales were flat compared to fiscal 2003 and in line with our plan. Store payroll costs as a percentage of sales increased in fiscal 2004 as a result of the levering impact of less-than-planned sales, but this increase in the expense ratio was offset by the effect of higher costs in fiscal 2003 due to a $16 million litigation charge. The litigation charge was for the estimated cost of settling claims related to four California lawsuits that alleged TJX had improperly classified store managers and assistant store managers as exempt from California overtime laws. The lawsuits were settled and paid in fiscal 2004 for slightly less than $16 million. Selling, general and administrative expenses as a percentage of net sales for fiscal 2003 increased by approximately .3% due to increased costs for medical and retirement benefits and increases in store payroll attributable to lower employee turnover. The charge for the California lawsuits in fiscal 2003 increased selling, general and administrative expenses as a percentage of sales by .1%. We anticipate this expense ratio to increase in fiscal 2005 by .3% to .4% compared to fiscal 2004. This anticipated increase is largely due to the impact of the planned expansion of certain departments at many of our stores as well as increased costs for medical and retirement benefits.

      Interest expense, net of interest income, was $27.3 million in fiscal 2004, $25.4 million in fiscal 2003 and $25.6 million in fiscal 2002. Interest income was $6.5 million in fiscal 2004 versus $10.5 million in fiscal 2003 and $15.0 million in fiscal 2002. The reduction in interest income in fiscal 2004 was due to lower cash balances and lower interest rates. The reduction in interest income in fiscal 2003 was due to lower interest rates. The decrease in gross interest expense in fiscal 2003 is due to the inclusion in fiscal 2002’s interest expense of amortization of debt expenses relating to the zero coupon convertible notes issued in February 2001 (see Note C to the consolidated financial statements). We expect net interest expense to increase slightly in fiscal 2005.

      Our effective annual income tax rate was 38.4% in fiscal 2004, 38.3% in fiscal 2003 and 38.2% in fiscal 2002. The effective income tax rate for fiscal 2004 reflects increases in state income taxes compared to fiscal 2003. The effective income tax rate for fiscal 2003 includes the favorable effect of the tax benefit for payment of executive retirement benefits in exchange for the termination of split-dollar arrangements as described in Note I to the consolidated financial statements. This improvement in the effective tax rate was completely offset by the effect of increases in state income tax rates in fiscal 2003. The slight increase in the effective rate for fiscal 2003 as compared to fiscal 2002 is due to the impact of a one-time benefit in foreign taxes in fiscal 2002. Based on our operating plans for fiscal 2005 and an anticipated increase in state income taxes, we are planning a tax rate for fiscal 2005 of 38.6%.

      Income from continuing operations was $658.4 million in fiscal 2004, $578.4 million in fiscal 2003, and $540.4 million in fiscal 2002. Income from continuing operations per share was $1.28 in fiscal 2004, versus

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      The following is a discussion of the operating results of our business segments. We consider each of our operating divisions to be a segment. We evaluate the performance of our segments based on “segment profit or loss,” which we define as pre-tax income before general corporate expense, goodwill amortization (prior to fiscal 2003) and interest. “Segment profit or loss,” as defined by TJX, may not be comparable to similarly titled measures used by other entities. In addition, this measure of performance should not be considered an alternative to net income or cash flows from operating activities as an indicator of our performance or as a measure of liquidity. More detailed information about our segments, including a reconciliation of “segment profit or loss” to “income from continuing operations before provision for income taxes” can be found in Note O to the consolidated financial statements.

MARMAXX:

      Marmaxx had a 1% same store sales decrease in fiscal 2004, which was below our plan and also below last year’s 2% increase. Despite a below-plan sales performance, Marmaxx segment profit margin was above plan as a result of sharp execution of its merchandising and inventory strategies and effective expense control. With an expanded distribution capacity, Marmaxx was able to make closer-to-need buys in fiscal 2004, leading to a strong markon and an improved merchandise margin, especially in the second half of the year. The Marmaxx segment profit margin was also favorably impacted in fiscal 2004 by the 53rd week, as the sales volume from this extra week helped lever certain fixed costs. We estimate this impact to be ..2%. Marmaxx segment profit improvement in fiscal 2004 also reflects the effect of higher costs in fiscal 2003 due to the $16 million litigation charge. This charge also reduced segment profit margin by .2% in fiscal 2003 compared to fiscal 2002. In fiscal 2003, Marmaxx maintained a liquid inventory position throughout the year, a key factor in this division’s maintaining its merchandise margin in fiscal 2003 compared to fiscal 2002. The overall reduction in segment profit margin for fiscal 2003 reflected increases in insurance and employee benefits, which accounted for a .3% drop in the segment profit margin. Lower-than-planned sales and increased store payroll costs, due in part to lower attrition, also reduced the segment profit margin in fiscal 2003. New stores for Marmaxx in both fiscal 2004 and 2003 performed above expectations.

      We added a net of 76 new stores in fiscal 2004 and increased total selling square footage by 6%. We expect to open a net of 60 new stores in fiscal 2005, increasing the Marmaxx store base by 4%. We expect to increase our selling square footage by 5%.

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WINNERS AND HOMESENSE:

      Same store sales (in local currency) for Winners and HomeSense increased by 4% in fiscal 2004, slightly less than planned, on top of a 5% increase in the prior year. New stores for Winners and HomeSense performed above expectations in both fiscal 2004 and fiscal 2003. Segment profit increased 25% in fiscal 2004 versus a 44% increase in fiscal 2003, and was slightly above our plan due to favorable changes in currency exchange rates. We estimate that approximately two-thirds of the increase in segment profit in fiscal 2004 over fiscal 2003 was due to changes in currency exchange rates. Winners and HomeSense segment profit margin for fiscal 2004 was below plan and last year. The reduction in segment profit margin as compared to fiscal 2003 reflects increased markdowns at Winners and the increasing impact of HomeSense on their combined results. HomeSense is at an earlier stage of development and operates with higher expense ratios than does Winners. In fiscal 2003, results were driven by a significant improvement in merchandise margin as a result of better inventory management as well as improved merchandise flow and mix throughout the year. HomeSense net sales were 10% of this group’s total net sales in fiscal 2004 and 7% of total net sales in fiscal 2003.

      We added 14 Winners stores and 10 HomeSense stores in fiscal 2004, and expanded selling square footage in Canada by 14%. In fiscal 2004, Winners also opened its first superstore which combines a Winners store with a HomeSense store. We expect to open 8 Winners and 15 HomeSense stores in fiscal 2005, including seven superstores, increasing our total Canadian store base by 12%, and increasing selling square footage by 13%.

T.K. MAXX: