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Financial Instruments

9 Months Ended

Oct. 28, 2023

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) income 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 fuel 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 2023, TJX entered into agreements to hedge a portion of its estimated notional diesel fuel requirements for fiscal 2024, and during the first nine months of fiscal 2024, TJX entered into agreements to hedge a portion of its estimated notional diesel fuel requirements for the first nine months of fiscal 2025. The hedge agreements outstanding at October 28, 2023 relate to approximately 50% of TJX’s estimated notional diesel fuel requirements for the remainder of fiscal 2024 and the first nine months of fiscal 2025. These diesel fuel hedge agreements will settle throughout fiscal 2024 and throughout the first ten months of fiscal 2025. 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 October 28, 2023 cover merchandise purchases the Company is committed to over the next several months in fiscal 2024. 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. 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 Euro denominated merchandise purchases from third-party vendors. TJX calculates any excess Euro exposure each month and enters into forward contracts of approximately 30 days' duration to mitigate this excess 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 October 28, 2023:

In millions						Pay			Receive						Blended Contract Rate			Balance Sheet Location			Current Asset U.S.$			Current (Liability) U.S.$			Net Fair Value in U.S.$ at October 28, 2023
Fair value hedges:
Intercompany balances, primarily debt:
			€			60			£			52			0.8738			(Accrued Exp)			$	—		$	(0.1)		$	(0.1)
			A$			150			U.S.$			104			0.6937			Prepaid Exp			8.4			—			8.4
			U.S.$			69			£			55			0.8010			(Accrued Exp)			—			(2.0)			(2.0)
			£			150			U.S.$			186			1.2396			Prepaid Exp			3.9			—			3.9
			€			200			U.S.$			220			1.1008			Prepaid Exp			7.8			—			7.8
Economic hedges for which hedge accounting was not elected:
			Diesel fuel contracts			Fixed on 3.0M – 3.8M gal per month			Float on 3.0M – 3.8M gal per month						N/A			Prepaid Exp			2.7			—			2.7
Intercompany billings in TJX International, primarily merchandise:
			€			118			£			102			0.8646			(Accrued Exp)			—			(1.1)			(1.1)
Merchandise purchase commitments:
			C$			773			U.S.$			575			0.7440			Prepaid Exp			16.8			—			16.8
			C$			35			€			24			0.6826			Prepaid Exp / (Accrued Exp)			0.2			(0.1)			0.1
			£			365			U.S.$			458			1.2537			Prepaid Exp / (Accrued Exp)			14.7			(0.1)			14.6
			A$			58			U.S.$			39			0.6677			Prepaid Exp			1.9			—			1.9
			zł			581			£			110			0.1900			(Accrued Exp)			—			(3.6)			(3.6)
			U.S.$			120			€			110			0.9190			(Accrued Exp)			—			(3.2)			(3.2)
Total fair value of derivative financial instruments																					$	56.4		$	(10.2)		$	46.2

The following is a summary of TJX’s derivative financial instruments, related fair value and balance sheet classification at January 28, 2023:

In millions						Pay			Receive						Blended Contract Rate			Balance Sheet Location			Current Asset U.S.$			Current (Liability) U.S.$			Net Fair Value in U.S.$ at January 28, 2023
Fair value hedges:
Intercompany balances, primarily debt:
			€			60			£			53			0.8807			(Accrued Exp)			$	—		$	(0.3)		$	(0.3)
			A$			150			U.S.$			105			0.7003			(Accrued Exp)			—			(2.6)			(2.6)
			U.S.$			69			£			55			0.8010			(Accrued Exp)			—			(0.3)			(0.3)
			£			200			U.S.$			244			1.2191			(Accrued Exp)			—			(5.5)			(5.5)
			€			200			U.S.$			213			1.0652			Prepaid Exp / (Accrued Exp)			0.8			(7.0)			(6.2)
Economic hedges for which hedge accounting was not elected:
			Diesel fuel contracts			Fixed on 3.2M – 3.6M gal per month			Float on 3.2M– 3.6M gal per month						N/A			Prepaid Exp			3.9			—			3.9
Intercompany billings in TJX International, primarily merchandise:
			€			146			£			129			0.8834			Prepaid Exp			0.8			—			0.8
Merchandise purchase commitments:
			C$			705			U.S.$			525			0.7449			Prepaid Exp / (Accrued Exp)			2.2			(7.1)			(4.9)
			C$			23			€			16			0.7064			Prepaid Exp / (Accrued Exp)			0.4			(0.0)			0.4
			£			299			U.S.$			356			1.1916			Prepaid Exp / (Accrued Exp)			0.1			(15.4)			(15.3)
			zł			507			£			91			0.1788			(Accrued Exp)			—			(3.6)			(3.6)
			A$			104			U.S.$			71			0.6819			(Accrued Exp)			—			(3.3)			(3.3)
			U.S.$			85			€			82			0.9634			Prepaid Exp			4.3			—			4.3
Total fair value of derivative financial instruments																					$	12.5		$	(45.1)		$	(32.6)

The following is a summary of TJX’s derivative financial instruments, related fair value and balance sheet classification at October 29, 2022:

In millions						Pay			Receive						Blended Contract Rate			Balance Sheet Location			Current Asset U.S.$			Current (Liability) U.S.$			Net Fair  Value in  U.S.$ at  October 29, 2022
Fair value hedges:
Intercompany balances, primarily debt:
			€			60			£			51			0.8526			(Accrued Exp)			$	—		$	(0.8)		$	(0.8)
			A$			170			U.S.$			120			0.7034			Prepaid Exp			10.6			—			10.6
			U.S.$			75			£			55			0.7368			(Accrued Exp)			—			(11.2)			(11.2)
			£			200			U.S.$			247			1.2341			Prepaid Exp / (Accrued Exp)			20.8			(4.1)			16.7
			€			200			U.S.$			217			1.0862			Prepaid Exp / (Accrued Exp)			17.7			(0.5)			17.2
Economic hedges for which hedge accounting was not elected:
			Diesel fuel contracts			Fixed on 3.1M – 3.9M gal per month			Float on 3.1M – 3.9M gal per month						N/A			Prepaid Exp			18.4			—			18.4
Intercompany billings in TJX International, primarily merchandise:
			€			222			£			195			0.8769			Prepaid Exp			4.2			—			4.2
Merchandise purchase commitments:
			C$			710			U.S.$			542			0.7633			Prepaid Exp / (Accrued Exp)			22.2			(0.5)			21.7
			C$			16			€			12			0.7453			Prepaid Exp / (Accrued Exp)			0.2			(0.0)			0.2
			£			389			U.S.$			475			1.2201			Prepaid Exp / (Accrued Exp)			29.6			(3.0)			26.6
			A$			79			U.S.$			54			0.6843			Prepaid Exp			3.6			—			3.6
			zł			614			£			108			0.1760			(Accrued Exp)			—			(2.8)			(2.8)
			U.S.$			88			€			85			0.9635			Prepaid Exp / (Accrued Exp)			0.3			(4.0)			(3.7)
Total fair value of derivative financial instruments																					$	127.6		$	(26.9)		$	100.7

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						Thirty-Nine Weeks Ended
In millions						October 28, 2023			October 29, 2022			October 28, 2023			October 29, 2022
Fair value hedges:
Intercompany balances, primarily debt			Selling, general and administrative expenses			$	26		$	24		$	29		$	57
Economic hedges for which hedge accounting was not elected:
Diesel fuel contracts			Cost of sales, including buying and occupancy costs			2			(1)			(6)			53
Intercompany billings in TJX International, primarily merchandise			Cost of sales, including buying and occupancy costs			(2)			(6)			2			(6)
Merchandise purchase commitments			Cost of sales, including buying and occupancy costs			49			65			27			113
Gain recognized in income						$	75		$	82		$	52		$	217

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- References

No definition available.

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X

- 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://www.xbrl.org/2003/role/disclosureRef
-Topic 815
-SubTopic 40
-Name Accounting Standards Codification
-Section 50
-Paragraph 5
-Subparagraph (f)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480237/815-40-50-5

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 815
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 5C
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480434/815-10-50-5C

Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef
-Topic 815
-Name Accounting Standards Codification
-Publisher FASB
-URI https://asc.fasb.org//815/tableOfContent

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