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Financial Instruments | 3 Months Ended
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Apr. 30, 2022
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Financial Instruments | 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) 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 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 2022, TJX entered into agreements to hedge a portion of its estimated notional diesel requirements for fiscal 2023, and during the first three months of fiscal 2023, TJX entered into agreements to hedge a portion of its estimated notional diesel requirements for the first three months of fiscal 2024. The hedge agreements outstanding at April 30, 2022 relate to approximately 51% of TJX’s estimated notional diesel requirements for the remainder of fiscal 2023 and approximately 47% of TJX’s estimated notional diesel requirements for the first three months of fiscal 2024. These diesel fuel hedge agreements will settle throughout fiscal 2023 and throughout the first four months of fiscal 2024. 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 April 30, 2022 cover merchandise purchases the Company is committed to over the next several months. 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. All 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 merchandise purchased from third-party vendors that is denominated in Euros. 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 April 30, 2022:
In thousands | Pay | Receive | Blended Contract Rate | Balance Sheet Location | Current Asset U.S.$ | Current (Liability) U.S.$ | Net Fair Value in U.S.$ at April 30, 2022
Fair value hedges: |  |  |  |  |  |  |
Intercompany balances, primarily debt related: |  |  |
| zł | 25,000 |  | £ | 4,541 |  | 0.1816 |  | Prepaid Exp | $ | 149 |  | $ | — |  | $ | 149 |
| € | 60,000 |  | £ | 50,568 |  | 0.8428 |  | (Accrued Exp) | — |  | (145) |  | (145) |
| A$ | 170,000 |  | U.S.$ | 122,061 |  | 0.7180 |  | Prepaid Exp | 1,868 |  | — |  | 1,868 |
| U.S.$ | 74,646 |  | £ | 55,000 |  | 0.7368 |  | (Accrued Exp) | — |  | (5,584) |  | (5,584) |
| £ | 150,000 |  | U.S.$ | 203,667 |  | 1.3578 |  | Prepaid Exp | 15,501 |  | — |  | 15,501 |
| € | 200,000 |  | U.S.$ | 229,237 |  | 1.1462 |  | Prepaid Exp | 16,758 |  | — |  | 16,758 |
Economic hedges for which hedge accounting was not elected: |  |  |
| Diesel fuel contracts | Fixed on 3.2M – 4.0M gal per month |  | Float on 3.2M – 4.0M gal per month | N/A | Prepaid Exp | 53,779 |  | — |  | 53,779 |
Intercompany billings in TJX International, primarily merchandise related: |  |
| € | 260,000 |  | £ | 216,610 |  | 0.8331 |  | (Accrued Exp) | — |  | (2,348) |  | (2,348) |
Merchandise purchase commitments: |  |  |  |  |
| C$ | 826,057 |  | U.S.$ | 655,000 |  | 0.7929 |  | Prepaid Exp | 14,162 |  | — |  | 14,162 |
| C$ | 30,949 |  | € | 22,000 |  | 0.7108 |  | (Accrued Exp) | — |  | (802) |  | (802) |
| £ | 436,036 |  | U.S.$ | 582,300 |  | 1.3354 |  | Prepaid Exp / (Accrued Exp) | 36,363 |  | (210) |  | 36,153 |
| A$ | 69,520 |  | U.S.$ | 50,500 |  | 0.7264 |  | Prepaid Exp | 1,394 |  | — |  | 1,394 |
| zł | 615,000 |  | £ | 110,481 |  | 0.1796 |  | Prepaid Exp | 2,458 |  | — |  | 2,458 |
| U.S.$ | 152,073 |  | € | 135,500 |  | 0.8910 |  | (Accrued Exp) | — |  | (8,897) |  | (8,897) |
Total fair value of derivative financial instruments |  | $ | 142,432 |  | $ | (17,986) |  | $ | 124,446 |
The following is a summary of TJX’s derivative financial instruments, related fair value and balance sheet classification at January 29, 2022:
In thousands | Pay | Receive | Blended Contract Rate | Balance Sheet Location | Current Asset U.S.$ | Current (Liability) U.S.$ | Net Fair Value in U.S.$ at January 29, 2022
Fair value hedges: |  |  |  |  |  |  |
Intercompany balances, primarily debt related: |  |  |
| zł | 25,000 |  | £ | 4,541 |  | 0.1816 |  | Prepaid Exp | $ | 72 |  | $ | — |  | $ | 72 |
| € | 60,000 |  | £ | 50,568 |  | 0.8428 |  | Prepaid Exp | 111 |  | — |  | 111 |
| A$ | 170,000 |  | U.S.$ | 122,061 |  | 0.7180 |  | Prepaid Exp | 2,047 |  | — |  | 2,047 |
| U.S.$ | 74,646 |  | £ | 55,000 |  | 0.7368 |  | (Accrued Exp) | — |  | (918) |  | (918) |
| € | 200,000 |  | U.S.$ | 230,319 |  | 1.1516 |  | Prepaid Exp | 4,535 |  | — |  | 4,535 |
Economic hedges for which hedge accounting was not elected: |  |  |
| Diesel fuel contracts | Fixed on 3.6M – 4.0M gal per month |  | Float on 3.6M– 4.0M gal per month | N/A | Prepaid Exp | 23,649 |  | — |  | 23,649 |
Intercompany billings in TJX International, primarily merchandise related: |  |
| € | 91,000 |  | £ | 75,894 |  | 0.8340 |  | (Accrued Exp) | — |  | (145) |  | (145) |
Merchandise purchase commitments: |  |  |  |
| C$ | 987,756 |  | U.S.$ | 783,000 |  | 0.7927 |  | Prepaid Exp / (Accrued Exp) | 6,641 |  | (80) |  | 6,561 |
| C$ | 38,138 |  | € | 26,500 |  | 0.6948 |  | (Accrued Exp) | — |  | (248) |  | (248) |
| £ | 325,482 |  | U.S.$ | 442,100 |  | 1.3583 |  | Prepaid Exp / (Accrued Exp) | 6,023 |  | (632) |  | 5,391 |
| zł | 453,000 |  | £ | 82,112 |  | 0.1813 |  | Prepaid Exp / (Accrued Exp) | 744 |  | (449) |  | 295 |
| A$ | 65,551 |  | U.S.$ | 47,500 |  | 0.7246 |  | Prepaid Exp | 1,270 |  | — |  | 1,270 |
| U.S.$ | 66,989 |  | € | 59,000 |  | 0.8807 |  | (Accrued Exp) | — |  | (820) |  | (820) |
Total fair value of derivative financial instruments |  | $ | 45,092 |  | $ | (3,292) |  | $ | 41,800 |
The following is a summary of TJX’s derivative financial instruments, related fair value and balance sheet classification at May 1, 2021:
In thousands | Pay | Receive | Blended Contract Rate | Balance Sheet Location | Current Asset U.S.$ | Current (Liability) U.S.$ | Net Fair Value in U.S.$ at May 1, 2021
Fair value hedges: |  |  |  |  |  |  |
Intercompany balances, primarily debt related: |  |
| zł | 45,000 |  | £ | 8,846 |  | 0.1966 |  | Prepaid Exp | $ | 353 |  | $ | — |  | $ | 353 |
| A$ | 80,000 |  | U.S.$ | 62,032 |  | 0.7754 |  | (Accrued Exp) | — |  | (98) |  | (98) |
| U.S.$ | 75,102 |  | £ | 55,000 |  | 0.7323 |  | Prepaid Exp | 1,505 |  | — |  | 1,505 |
| £ | 450,000 |  | U.S.$ | 620,918 |  | 1.3798 |  | Prepaid Exp / (Accrued Exp) | 40 |  | (5,582) |  | (5,542) |
| € | 200,000 |  | U.S.$ | 244,699 |  | 1.2235 |  | Prepaid Exp | 2,301 |  | — |  | 2,301 |
Economic hedges for which hedge accounting was not elected: |  |  |
| Diesel fuel contracts | Fixed on 3.1M – 3.8M gal per month |  | Float on 3.1M – 3.8M gal per month | N/A | Prepaid Exp | 17,816 |  | — |  | 17,816 |
Intercompany billings in TJX International, primarily merchandise related: |  |
| € | 163,000 |  | £ | 141,240 |  | 0.8665 |  | (Accrued Exp) | — |  | (166) |  | (166) |
Merchandise purchase commitments: |  |  |
| C$ | 574,390 |  | U.S.$ | 457,000 |  | 0.7956 |  | (Accrued Exp) | — |  | (11,054) |  | (11,054) |
| C$ | 29,455 |  | € | 19,500 |  | 0.6620 |  | (Accrued Exp) | — |  | (444) |  | (444) |
| £ | 282,746 |  | U.S.$ | 391,800 |  | 1.3857 |  | Prepaid Exp / (Accrued Exp) | 1,939 |  | (3,751) |  | (1,812) |
| A$ | 50,830 |  | U.S.$ | 39,125 |  | 0.7697 |  | Prepaid Exp / (Accrued Exp) | 42 |  | (356) |  | (314) |
| U.S.$ | 53,680 |  | € | 44,400 |  | 0.8271 |  | Prepaid Exp / (Accrued Exp) | 185 |  | (267) |  | (82) |
Total fair value of derivative financial instruments |  | $ | 24,181 |  | $ | (21,718) |  | $ | 2,463 |
The impact of derivative financial instruments on the Consolidated Statements of Income is presented below:
|  | Amount of Gain (Loss) Recognized in Income by Derivative
| Location of Gain (Loss) Recognized in Income by Derivative | Thirteen Weeks Ended |
In thousands | April 30, 2022 | May 1, 2021 |  |
Fair value hedges: |  |  |  |  |
Intercompany balances, primarily debt related | Selling, general and administrative expenses | $ | 24,395 |  | $ | (2,864) |  |  |
Economic hedges for which hedge accounting was not elected: |  |  |
Diesel fuel contracts | Cost of sales, including buying and occupancy costs | 44,173 |  | 13,570 |  |  |
Intercompany billings in TJX International, primarily merchandise related | Cost of sales, including buying and occupancy costs | (370) |  | 118 |  |  |
Merchandise purchase commitments | Cost of sales, including buying and occupancy costs | 40,929 |  | (15,969) |  |  |
Gain (loss) recognized in income | $ | 109,127 |  | $ | (5,145) |  |  |

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- Definition The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -URI http://asc.fasb.org/topic&trid=2229140 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 40 -Section 50 -Paragraph 5 -Subparagraph (f) -URI http://asc.fasb.org/extlink&oid=123477628&loc=d3e90205-114008 + Details
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