Leases

12 Months Ended

Jan. 28, 2023

TJX is committed under long-term leases related to its continuing operations for the rental of real estate and certain service contracts containing embedded leases, all of which are operating leases. Real estate leases represent virtually all of the Company’s store locations as well as some of its distribution centers and office space. Most of TJX’s leases in the U.S. and Canada are store operating leases with ten-year terms and options to extend for one or more five-year periods. Leases in Europe generally have an initial term of ten to fifteen years and leases in Australia generally have an initial lease term of primarily seven to ten years, some of which have options to extend. Many of the Company's leases have options to terminate prior to the lease expiration date. The exercise of both lease renewal and termination options is at the Company’s sole discretion, as opposed to the landlord’s discretion, and is not reasonably certain at lease commencement. The Company has deemed that the expense of store renovations makes the renewal of the next lease option reasonably certain to be exercised after these renovations occur.

While the overwhelming majority of leases have fixed payment schedules, some leases have variable lease payments based on market indices adjusted periodically for inflation, or include rental payments based on a percentage of retail sales over contractual levels. In addition, for real estate leases, TJX is generally required to pay insurance, real estate taxes and certain other expenses including common area maintenance based on a proportionate share of premises as compared to the shopping center, and some of these costs are based on a market index, primarily in Canada. For leases with these payments based on a market index, the initial lease payment amount is used in the calculation of the operating lease liability and corresponding operating lease assets included on the Consolidated Balance Sheets. Future payment changes to these market index rate leases are not reflected in the operating lease liability and are instead included in variable lease cost. Variable lease cost also includes variable operating expenses for third party service centers and dedicated transportation contracts that are deemed embedded leases. The operating lease ROU assets also includes any lease payments made in advance of the assets’ use and is reduced by lease incentives received. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

Supplemental balance sheet information related to leases is as follows:


	Fiscal Year Ended
	January 28, 2023		January 29, 2022
Weighted-average remaining lease term	6.5 years		6.6 years
Weighted-average discount rate	2.7	%	2.4	%

The following table is a summary of the Company’s components of net lease cost for the fiscal years ended:


		Fiscal Year Ended
In millions	Classification	January 28, 2023		January 29, 2022		January 30, 2021
Operating lease cost	Cost of sales, including buying and occupancy costs	$	1,927	$	1,906	$	1,820
Variable and short term lease cost	Cost of sales, including buying and occupancy costs	1,359		1,386		1,163
Total lease cost		$	3,286	$	3,292	$	2,983

Supplemental cash flow information related to leases is as follows:


	Fiscal Year Ended
In millions	January 28, 2023		January 29, 2022		January 30, 2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows paid for operating leases	$	1,949	$	2,080	$	1,663
Lease liabilities arising from obtaining right of use assets	$	2,095	$	1,658	$	1,380

During fiscal 2022, the Company repaid the rent deferrals that had been negotiated due to the COVID-19 pandemic in fiscal 2021 for a significant number of its stores.

The following table as of January 28, 2023 summarizes the maturity of lease liabilities under operating leases:


In millions
Fiscal Year:
2024	$	1,977
2025	1,825
2026	1,628
2027	1,402
2028	1,111
Later years	2,323
Total lease payments(a)	10,266
Less: imputed interest(b)	881
Total lease liabilities(c)	$	9,385

(a)Operating lease payments exclude legally binding minimum lease payments for leases signed but not yet commenced and include options to extend lease terms that are now deemed reasonably certain of being exercised according to the Company’s Lease Accounting Policy.

(b)Calculated using the incremental borrowing rate for each lease.

(c)Total lease liabilities are broken out on the Consolidated Balance Sheets between Current portion of operating lease liabilities and Long-term operating lease liabilities.