Carol Meyrowitz - President and CEO Sherry Lang - IR Jeff Naylor - Senior Executive Vice President, Chief Financial and Administrative Officer Ernie Herrman - Senior Executive Vice President, Group President

Jeffrey Black - Barclays Capital Adrianne Shapira - Goldman Sachs Kimberly Greenberger - Citigroup Jeffery Stein- Soleil Securities Paul Lejuez - Credit Suisse Laura Champine- Cowen and Company Richard Jaffe - Stifel Nicolaus Daniel Hofkin - William Blair & Co Stacy Pak - SP Research David Glick - Buckingham Research Group Dana Telsey - Telsey Advisory Group Marni Shapiro - Retail Tracker Howard Tubin - RBC Capital Markets Susan Sansbury - Miller Tabak

Ladies and gentlemen, welcome to The TJX Companies' third quarter fiscal 2010 financial results conference call. (Operator Instructions). As a reminder, this conference call is being recorded Tuesday, November 17, 2009. I'd like to turn the conference call over to Ms. Carol Meyrowitz, President and CEO of The TJX Companies, Incorporated.

Good morning, everyone. Before I begin, Sherry has few comments today.

Good morning. The forward-looking statements we make today about the company's results and plans are subject to risks and uncertainties that could cause the actual results and the implementation of the company's plans to vary materially. These risks are discussed in the company's SEC filings, including without limitation, the Form 10-K filed March 31, 2009. Further these comments and the Q&A that follows are copyrighted today by The TJX Companies. Any recording, retransmission, reproduction or other use of the same for profit or otherwise without prior consent of TJX is prohibited and a violation of United States copyright and other laws. Additionally, while we have approved the publishing of a transcript of this call by a third party, we take no responsibility for inaccuracies that may appear in that transcript. Please note that the financial results and the expectations we discuss today are on a continuing operations basis. Also we have detailed the impact of foreign exchange on our consolidated results and our international divisions in today's press release and the Investor Information section of our website www.tjx.com. As a reminder, the comparable store sales numbers that we talk about today are on a constant currency basis. With respect to the non-GAAP measures we discuss today, reconciliations to GAAP measures are included in today's press release and posted on our website, www.tjx.com, in the Investor Information section. Thank you, and now I'll turn it over to Carol.

Thanks, Sherry. Joining me on the call today with Sherry are Jeff Naylor and Ernie Herrman. So let me start by saying it is great to see our significant momentum continue. Again in the third quarter, we delivered record results with earnings per share increasing by 40% on a reported basis. We continue to see comp sales and customer transactions not only increase, but accelerate. Although, we have also fared well during recessions, this is the first time we are seeing acceleration during a recession. This presents a huge opportunity for us to capture a significant increased consumer spending when the economy improves. With our extreme value proposition and a demographic reach that we believe is wider than just about any other apparel or home retailer out there; we believe we are in excellent position to retain the new customers we are attracting today. For us, value has always been and continues to be the place to be. We believe our values and merchandising mix are only getting better. This unusual environment is presenting major opportunities for our company and with our flexible business model and substantial financial resources, we are seizing the day. Across the board, all of our businesses including our growth vehicles are performing well, which bodes extremely well for our future. The important message I want to share with you on this call is our confidence in our ability to sustain our strong, consistent profitable growth. We focused on the reasons for our confidence at our investor event on October 20th, and I want to reiterate those key things with you today. Our goal is to be one of the best retailers in the world. I'll outline for you what gives us confidence in our ability to grow TJX to be $30 billion and a $40 billion retailer long-term. Before I continue, I'll turn the call over to Jeff to recap our third quarter and year-to-date financial results. Then I'll review the highlights of our third quarter, cover the key points and then discuss our financial strength. We'll also speak to our outlook for the fourth quarter and full year, and for now I'll turn it over to Jeff.

Thanks, Carol. Good morning, everyone. Let me recap third quarter results. Net sales were $5.2 billion; that's up 10% over last year. Our consolidated comps were up 7%, and that was significantly above our original plan. The diluted earnings per share was $0.81. As Carol mentioned, that's up 40% over the $0.58 we reported last year. Now I should point out that last year benefited by a penny from a non-operating item and by $0.05 from foreign currency, while this year benefited by $0.02 from foreign currency. So if you look at the underlying adjusted growth rate, it was much stronger than we reported given the currency headwinds that we faced in the third quarter. These items are all detailed in today's press release. Our consolidated pre-tax profit margin was 10.8%; that's up 200 basis points over last year on a reported basis. Now comparisons to prior year were adversely impacted by two items. First, last year benefited 10 basis points from a non-operating item that we detailed in today's press release. Second, the third quarter of both years, were impacted by foreign currency exchange rates, last year much more positively than this year. That reduced the year-over-year improvement in pre-tax margin by 40 basis points. So the underlying pre-tax margin growth on an adjusted basis is actually 50 basis points more than we are reporting when you adjust for currency and you adjust for the non-operating item. The gross profit margin was up 180 basis points and well above our plan, primarily due to strong merchandise margins, partially offset by the 40 basis point impact from foreign currency that I just discussed. SG&A expense improved by 50 basis points as a percent of sales, despite a 40 basis point increase in expenses related to performance-based compensation. As a reminder, as we discussed on our last conference call, we have a broad based incentive program that goes very deep into the organization and includes thousands of associates, including our store managers. In terms of other items impacting the P&L, a lower tax rate versus last year added about a penny to EPS, while higher net interest expense reduced EPS by about a penny. As to inventories, at the end of the third quarter consolidated inventories on a per-store basis, including the warehouses, were down 5%. If you exclude the impact of foreign currency, we were actually down 7% on a per-store basis. At Marmaxx, our total inventory commitment, including the warehouses, stores, and merchandise on order, was down versus last year on a per-store basis. We ended the third quarter with very clean inventories and are very, very comfortable with our inventory liquidity as we begin the fourth quarter. Let me briefly discuss our results for the first nine months now. EPS for the first nine months was $1.91; that's up 27% over last year's $1.50 that we reported. Last year's EPS benefited by $0.03 per share from non-operating items that are detailed in today's press release. If you exclude these items, EPS was up 30% over the adjusted $1.47 per share. Also as outlined in today's press release, foreign currency adversely impacted EPS for the first nine months of this year by $0.04, whereas last year it actually had a $0.04 positive impact in the first nine months. So the EPS increase year-to-date would have been significantly higher if it weren't for these impacts. Our comp sales increased by a strong 5% in the first nine months. Now I'll turn the call back to Carol and I will recap our guidance for the fourth quarter and full year at the end of the call.

Thanks, Jeff. The major things I want to highlight on this call are as follows: First, as I said, we are taking full advantage of the opportunities the current environment is presenting us. Second, we have an extremely flexible model that delivers consistent results in both strong and weak environments. Third, we are confident that our top-line and bottom-line growth is sustainable going forward. Lastly, our strategies for managing the business and our growth vehicles are clearly working. First, I'll share with you some Q3 highlights, which are pretty interesting. Beginning in the US, Marmaxx segment profit was up 52% over last year and has achieved a segment profit of 12.5%, the highest segment profit margin in its history. As you know, given Marmaxx's consistently strong out-performance ahead of our investor event, we raised our long-term outlook for Marmaxx's segment profit margin above its prior target. We now estimate that Marmaxx's segment profit margin will fall in the 10.5% to 11.5% range for the next three years. HomeGoods continues a remarkable year, with customer traffic up well into the double digits and record segment profits that more than doubled from last year. We are also expecting record-breaking increases for the full year. This organization is executing great fashion and brands at exceptional value. Our values are truly outstanding compared to other retailers and our customers are getting it. A.J. Wright delivered another profitable quarter and a 110 basis points improvement in its bottom-line profit margin. Store contribution is at the level we required to support a high-return business model, and we are now very comfortable continuing to roll out this chain. The new market of Atlanta is performing well above expectation and our new stores are beating our plan, which bodes well for opening stores in new markets for the future. Now to our international businesses, beginning with TJX Canada, with our Winners and HomeSense businesses; despite the adverse impact of foreign currency, which we have discussed all year, TJX Canada had an increase in reported segment profit in the third quarter. Further, excluding foreign currency, segment profit was up 16%. As Sherry mentioned upfront, this is all laid out in the tables on our website. The bottom line is that TJX Canada continues to execute very well, buying better and controlling expenses and mitigating the impact of currency on its results. At TJX Europe, we continue to be very pleased with our business. Like Canada, TJX Europe was also adversely impacted by foreign currency. Excluding that impact, segment profit was up 32% and segment profit margin improved a 120 basis points. Again, this is laid out on our website. As we leverage costs across a broad European base, we now expect T.K. Maxx in the U.K. to exceed the 8% profit margin we had previously modeled as its potential. Our German operation should be profitable in Q4 and next year; not bad for a business that is just two years old. We entered Poland, the ninth largest country in the EU, with our first four stores in the third quarter. We love the cost structure in Poland and believe this will be another substantial growth vehicle in Europe. Now let's review what makes us so convinced that TJX is not only positioned for today, but extremely well positioned for its future growth. First, we believe many of the opportunities this environment is presenting us are not only helping us today, but will continue to help us in the future. We are growing our customer and vendor basis and taking advantage of the real estate landscape as well as supply chain and cost reduction opportunities. With customer traffic counts reaching extraordinary highs, even a slight uptick in our average ticket will be very meaningful for our business. We are very focused on keeping our new customers, and we will be substantially investing in a variety of ways to not only keep them but to gain even more customers. One of our key strategies for retaining the new customers we are attracting today is our aggressive reinvestment in stores to create a better shopping experience. How many retailers today are in the position of being able to truly invest back into their business? We also love our new marketing campaign and more importantly, our customers love them. We are reaching more customers than ever before and educating consumers about our off-price concept. Our vendor base is not only growing by huge numbers, but we are becoming even more meaningful to the vendor community. I think it's important for anyone following the TJX story to understand that any one vendor represents only a small percentage of our merchandise mix, and as we add vendors, it becomes even less important. In the global real estate landscape, we are taking full advantage of opportunities and signing deals that we would have never imagined. Lastly on this thing, we are capitalizing on opportunities in the supply chain to make us even better and faster, and we believe our cost reduction opportunities continue to be very real. The second key thing is that we have a business model that was built to have tremendous flexibility and grow with the times, no matter what the environment. Our history has shown us that in good and bad economic times, TJX has always thrived. In our 33-year history as a company, we have only had one year with a negative comp. Our comps are remarkably consistent and much less volatile than those of traditional retailers. It's also important to note that our model was built to never be dependent on any one or even any few vendors. If one vendor doesn't have product for us at a particular time, many more do, and we have the flexibility to make adjustments. We are certainly not waiting around for things to happen in the marketplace. Managing the vendor universe and handling changes in the marketplace is what we know and is what we do every single day. We work with a universe of over 10,000 vendors and are constantly opening new stores. In this year alone, we have added over 2,000 vendors. We have over 500 buyers covering the marketplace all the time and building mutually beneficial vendor relationships. We operate many buying offices around the world and stores in 60 countries. In our stores, we have extreme flexibility and no walls. We can easily expand and contract departments depending on opportunities and evolve with customer tastes. Third, we have great confidence in our ability to sustain our strong top and bottom-line growth. This was a major theme of our Investor Day and I'd like to reiterate some of the key points here also. On the top line, we have enormous growth opportunities with our value proposition, demographic reach, and the growth potential we have in our existing concept as well as our new seed for the future. We believe that even when the recession ends, the importance of value to consumer will remain, which plays to our strengths. Our history through three prior recessions, show us that we tend to keep new customers [we gave] in the recession when the economy improves. We believe we will see this again when we emerge from this recession, perhaps even to a greater extent than in the past, given the importance of value to the consumer. The TJX Companies is truly about exceptional value, exceptional fashion and exceptional brands catering to all income levels and all demographics. Our brands give us the ability and flexibility to shift and to maximize a wide range of customer income level and demographic groups. We are global and diverse, which gives us enormous opportunities for the future. We continue to have significant store growth potential within our current portfolio. We believe we can add approximately 1,500 stores to our existing concept alone. This is before expanding into new countries where there's enormous, potential, before rolling out any standalone shoe concept, and before expanding any of our new [seeds]. Beyond our existing concept, of course, we are always developing new [seeds] for the future, which is just part of our DNA. We continue to develop our current [seeds] like the Shoe Megashop by Marshalls, STYLESENSE in Canada, and HomeSense in the U.K. We are excited about Poland, a new country. While still very early, we are hoping to grow 100 stores in that country. We know that a big question out there is whether we can sustain our strong pre-tax margins and profit margin. I want to reiterate that we are very confident that we can. We believe that factors driving profitability will continue. We continue to have opportunities to run the business with even leaner inventory. This has worked well for us this year, as it puts our buyers in chase mode and drive faster inventory turns and higher merchandise margin. In each of the 10 years, Marmaxx's merchandise margins have been flat or up every year; and we are not done. We remain focused on cost reduction. We have seen the benefit over the past several years and believe significant opportunities remain. Our younger businesses both in Europe as well as HomeGoods and A.J. Wright in the U.S. are growing their store bases, which will drive the overall segment profit as these businesses expand their store bases and further leverage their cost structure. Further, as Marmaxx and TJX Canada continue to add stores to their fleet, we also gain more leverage on costs and drive profitability. Fourth, our strategies for running the business and our growth vehicles are certainly working. The conservative strategies that we laid out at the beginning of the year for managing the business are clearly delivering strong results. Planning conservatively and setting our inventory and expense plans around conservative comps is serving us well this year. We'll continue to follow this approach, because it's working and as always we will strive to beat those conservative plans. In the last several years, we have developed our growth vehicles and planted many seeds for growth and nearly all of them are performing well. Take A.J. Wright; this division has made significant progress, and its store contributions are now at the level that gives us confidence in growing the chain. We believe that A.J. Wright can ultimately grow to 500 plus stores. Internationally, over 20% of our sales and profits today are outside the U.S. and growing. Our TJX Europe infrastructure is providing great leverage. In Germany, we now operate 23 stores. The German retail market presents great opportunities for us. Without middle-tier or off-price retailers, with Germany's population of 83 million, we believe that we can grow to 300 stores in that country. I am confident that these growth vehicles and our many seeds will lead to tremendous growth in the future. Lastly, it is our goal to be one of the best retailers globally. Today, we think and act as a global company, giving great value to all our customers every day. We have strengthened our management team and are hiring talent globally. We are communicating better than ever before, leveraging and collaborating on all fronts with no walls. The seeds are planted for growth, both top and bottom line. Big picture, we have great confidence in our ability to ultimately grow this company to twice its size. Now let's spend a moment on our financial strength. Our strong operations generate substantial amounts of cash. This allows us to reinvest in our businesses and be conservative with CapEx to preserve our flexibility in this economy, while returning value to shareholders through share repurchase and dividends. In terms of share repurchases, we bought back approximately $304 million of TJX stock during the third quarter. We retired 8.2 million shares. It continues to be our plan to buy back a total of approximately $625 million of TJX stock in 2009. This consists of the $250 million we originally planned and the additional approximately $375 million to buy back shares that converted in the first quarter. However, we may adjust this up and down depending on the economic conditions and other factors. So in closing, I hope that what I have outlined for you today makes you as convinced as we are in the future growth and success of TJX. We're taking full advantage of the opportunities in today's environment and believe that we'll emerge from this recession in an even stronger position. We believe that value wins in this and any environment that we are positioned. We are positioned as the premier off-price value retailer. Value is deeply rooted in our TJX culture and it is an internationally understood concept. We have one of the most flexible business models in the world, which enables us to drive consistent results and grow in both strong and weak environments. In the near future, we feel good about our momentum and opportunities for the fourth quarter. With plentiful buying opportunities in the marketplace, we will continuously flow exciting assortments to meet the gift-giving needs of our customers. Since the question of availability continues to persist, let me be clear on this point. Availability is never an issue. Whether the marketplace is running with leaner inventories or excess inventories, it's good for TJX. When department stores are running with leaner inventories, the environment is less promotional, which raises our pricing umbrella and widens the value gap between us and traditional retailers. Excess inventories in the marketplace means a lower cost of goods. Either way, we win. We certainly have plenty of open to buy going into the fourth quarter. There are strong reasons for our confidence in our ability to sustain our top and bottom-line growth, many of which I shared with you. We have shown you that our strategies for managing the business and growth vehicles are working; and we continue with our proven approach of our intelligent risk-taking. With our strong momentum exiting October, our very strong start to November, and confidence going into the fourth quarter, we are raising our guidance for both the fourth quarter and full year. I'm excited about the future and look forward to updating you on our results at the end of the year, as well as our plans for 2010. Now I'll turn the call back to Jeff to go through guidance, and then we'll open it up for questions.

Before I get into the guidance I wanted to reiterate one point on third quarter performance. As Carol mentioned, it's very important to note that the results for both TJX Canada and TJX Europe were significantly impacted by currency during the quarter. Excluding the impact of foreign currency, the profit performance of these businesses was significantly stronger than on the reported basis. So, on our website, we have laid out reconciliation between reported results and results excluding currency translation and mark-to-market impacts at those foreign businesses. I would really encourage investors to refer to this information so you get a good picture of the underlying growth in both Canada and Europe. Now to details on our guidance for the fourth quarter. As Carol mentioned, with the strong momentum we're seeing in our business we are raising our outlook for the full year and for the fourth quarter. We are now planning EPS for the full fiscal 2010 year to be in the range of $2.55 to $2.61 compared with $2.08 per share last year on a reported basis. This range is based on expected comp store sales of approximately 5% for the full year. As a reminder, last year's results included a $0.09 per share benefit from the 53rd week as well as certain other items that impact comparability, which we've detailed in a table in today's press release. If you exclude these items, our full year EPS outlook represents a 33% to 36% increase over last year's adjusted $1.92. I should also point out that this guidance includes an estimated $0.02 per share negative impact from foreign currency for the current fiscal year, compared with a 1 penny benefit in the prior year. So the underlying growth rate if you were to exclude foreign exchange is actually a little stronger than the numbers would suggest. Turning to the fourth quarter, our outlook assumes fourth quarter EPS of $0.65 to $0.71 compared with $0.58 last year. There are several items impacting comparability. Again, last year's results were positively impacted by a $0.09 per share benefit from the extra week in our fiscal calendar as well as a $0.03 per share adjustment to our computer intrusion reserve. Adjusting for these factors, our fourth quarter guidance represents a 41% to 64% increase over prior year's adjusted $0.46 per share of EPS. With that said, currency has a significant impact on year-over-year EPS growth. Our estimated range for this year's fourth quarter reflects an expected benefit from foreign currency of $0.02 per share. This compares to a negative impact of $0.04 per share last year. So with currency now turning to a tailwind, the underlying growth is actually a little less strong than the numbers would suggest since we now are benefiting from currency. One last factor impacting fourth quarter EPS growth was the incentive comp expense. This year with our very broad-based programs and above-plan performance, this expense is up significantly. This is exacerbated by last year, where we had very low incentive comp expense as business softened in the fourth quarter. This incremental expense adversely impacts fourth quarter EPS growth by about 11 percentage points, which was twice the impact it had on our third quarter EPS growth. Let me now get into some of the details around the guidance. We are assuming a fourth quarter top line of $5.6 billion to $5.8 billion with comp sales planned up 5% to 7% on a consolidated basis and up 5% to 7% at the Marmaxx Group. As to monthly comps on both the consolidated basis and at the Marmaxx Group, we expect comp sales increases in the ranges of 7% to 9% in November. So, November is off, as Carol mentioned, to a strong start; 3% to 5% in December; and 3% to 5% in January. It is very important to remember that, unlike most other retailers, TJX did not have a comp store sales decline in December last year when comps were essentially flat despite the very difficult environment. In terms of pre-tax profit margins we've planned those in the 7.9% to 8.5% range. That's up 50 to 110 basis points over the 7.4% we reported last year. Now, the pre-tax margin last year benefited 60 basis points from the 53rd week and it benefited 40 basis points from an adjustment to the intrusion reserve, but was negatively impacted by 40 basis points by foreign currency. So combined, these items are expected to negatively impact growth in the fourth quarter pre-tax margin by 60 basis points in aggregate. So if we exclude these non-recurring items, the underlying pre-tax profit margin is up 110 to 170 basis points over last year on a comparable basis. We are anticipating fourth quarter gross profit margin to be 24% to 24.3% compared with 22.7% last year. Last year's gross profit margin was positively impacted by 60 basis points by the 53rd week and negatively impacted by 40 basis points due to foreign currency. So combined, these items positively impacted last year's gross profit by 20 basis points, which adversely impacts the comparisons to prior year. So despite this adverse impact, we still anticipate our fourth quarter gross profit margins to be up significantly over last year. We expect SG&A as a percentage of sales to be about 15.7% to 15.8% compared to 15.6% last year. This year's SG&A rate is adversely impacted by higher performance-related incentive compensation expense, as I mentioned earlier, which is estimated to have a 60 basis point impact on the year-over-year comparisons. So, excluding this item, we continue to see a significant amount of expense leverage. Finally, for modeling purposes we are anticipating a tax rate of 38.3% in the fourth quarter, which is higher than last year, and net interest expense in the $10 million to $11 million range. Combined, these two items reduced EPS growth by two pennies. Finally, we anticipated a weighted average share count of approximately $425 million. So with that, we are going to open it for questions. We ask that you please limit your questions to one per person. To keep the call on schedule, we are going to continue to enforce a one question limit, and we appreciate your cooperation with that. Thanks, and I'll now turn it back to Candy and open it up for questions.

(Operator Instructions) Thank you. One moment for you first question. Jeffery Black of Barclays Capital, your line is open. Jeffrey Black - Barclays Capital: Carol, I guess you mentioned in your meeting that the opportunity to take inventory leaner. Can you guys share with us where the low-hanging fruit is on that, is it outside Marmaxx? How do we think about inventory per square foot, if that's the way you want us think about it, and/or inventory turn next year? In other words, how far can we improve turn and profit?

Well again, we don't share that number, but you can see that this year we were down in total 5% on a store-by-store basis against a year ago down 6%, Jeff. I think we see this year another opportunity to hopefully be in that range, and it's definitely across the board. So we are buying much closer to need. We have invested a great deal in our supply chain, and we intend next year to make us even speedier. So I don't know where the end number is, but our goal is to every year try to chop it and to turn faster.

Next question, Adrianne Shapira of Goldman Sachs, your line is open. Adrianne Shapira - Goldman Sachs: All year, we've been seeing, obviously, we've grown accustomed to your under-promise, over-deliver. I'm just wondering, Jeff, if you kind of look at the components of the guidance, where will you see perhaps the source of upside going further? Whether it's sales, margins, you talked about obviously that incentive compensation on expenses, but where would you see the levers continuing to be perhaps better?

Well, s you know, we are planning the margins slightly lower than Q3, but closer to the total year. Again, we had a flat December, so we kind of hope there is opportunity there, but I think we always plan conservatively. Again, we're happy with what we are seeing at the beginning of November, and we like to plan our sales conservatively and hopefully beat them and keep our inventories nice and lean. So, I think we are in a pretty good place in terms of planning. Adrianne, as always, we hope very much to beat those numbers. Adrianne Shapira - Goldman Sachs: Carol, if I could just follow-up the point about the margin planning lower. Any read across in terms of how aggressive the competitive landscape is heading into the holiday season or again just conservatism?

Not at all. I mean it was so promotional last year. We are not expecting it to be quite as promotional, but either way, it doesn't affect us, because we are tremendously open-to-buy going into Q4.

Next, Kimberly Greenberger of Citigroup, your line is open. Kimberly Greenberger - Citigroup: Carol, I am wondering if you could help us understand the relative impact of increased customer traffic and increased transactions in terms of comp contribution. Are you still seeing ticket down? Then I just had one clarification for Jeff. I'm not sure I caught what you said about the 11 percentage point increase in incentive comp, could you just clarify that?

Well, I'll start with the clarification. What we were saying is that, we have a higher bonus expense this year in the fourth quarter, because last year, if you think about it, it was a tough fourth quarter for us like it was for everybody, so there was very little bonus expense that we accrued in the fourth quarter, whereas this year, we're significantly outperforming. So that higher level of bonus expense this year is costing us about 11 points of EPS growth. So in other words, if the bonus expense were the same this year as it were last year, we would be looking at 11% more EPS growth, if you will, Kimberley. So it's just the impact that it's having on the EPS growth rate.

Kimberly, our customer traffic every quarter is increasing tremendously. We have certainly not seen numbers like this in the past. Our average ticket is slightly down; it's low single-digits down, pretty much consistent quarter-over-quarter. We are increasing our advertising spend versus plan for Q4 because we think we have an opportunity again to keep driving new customers into our stores, and as I have said in the past, one of our goals is to certainly put some capital back into our stores to keep the customers for the future. So our goal is to keep our customer, and our ticket may get back to flat next year. We'll see, but our goal is to just give great, great value. So we're just pretty excited about the constant increase quarter-over-quarter.

One other thing I'd add to that, Kimberly, is obviously, with a lower ticket you have to ship more units to do similar levels of business. So we are shipping more units., but we've actually been offsetting that cost with some of the productivity that we've been seeing both in our DCs and our stores. So you haven't heard us talk about that as a de-levering factor to either buying and occupancy or SG&A expense, because we largely offset it with productivity year-to-date. Kimberly Greenberger - Citigroup: Carol, the improvement has gone from a plus-two comp in Q1 to a plus-four in Q2 to a plus-seven here in Q3, which is very impressive acceleration. Is it primarily your traffic that's getting better and better or are you also seeing a little less pressure on your ticket as we've gone through the year?

No, it's pure traffic. It's pure increase in customer traffic.

Next question Jeffery Stein of Soleil Securities, your line is open. Jeffery Stein- Soleil Securities: Jeff, I am wondering if you could talk about merchandise margin versus B&O leverage that you saw during the third quarter. Then, Carol, I am wondering if you might talk a little bit about or amplify a little bit on your strategy for holding on to the customer. You referred to improving customer experience, and I'm kind of wondering exactly what that means.

The merchandise margin, as we mentioned, in the third quarter was up 180 basis points. We had a 40 basis hit from mark-to-market, Jeff; so it was actually up 220 basis points if you look at the underlying trends. Most of that was merchandise margin. Buying and occupancy, we got a little bit of leverage from, but we don't really talk about this , we have some incentive comp expense flows through buying and occupancy. The other thing that happens with our accounting is that, in our inventories we capitalize some buying and occupancy costs into inventory, so that when we are bringing our inventory down you actually end up with some expense that you have to flush through your P&L. So if you adjust for the bonus impact that's flowing through, as well as these capitalized costs that come down as you reduce your inventory, but we actually had a significant amount of B&O leverage in the quarter.

In terms of the in-store, we've done a lot of customer research and a lot of customer surveys on what is it that they want to see in our stores. I'm not going to tell you too much of the specifics, but we have reacted to that, and believe it or not, every store is almost treated differently. We will have a store where we will get some feedback and we will work on a specific project, and in other stores we will do something that maybe a little bit different. This all comes from really listening to our customer and reacting to that. So we're pretty excited. Some of it is just in store labor, some of it's recovery, some of it's physical work, but I think we're seeing very good results from this. We will continue to do it and probably be fairly aggressive next year, as we will end the year with quite a bit of cash.

Paul Lejuez of Credit Suisse, your line is open. Paul Lejuez - Credit Suisse: Carol, can you talk about for which of your concepts you feel you have the greatest visibility going into 4Q from a traffic, ticket, and just overall product availability perspective, maybe in which do you have the least visibility? Then I'm wondering how that answer might change if I asked you the same question about next year?. Then Jeff, just a point of clarification, the $0.02 help from FX in 4Q, is that strictly translation or does that include the FX hedging?

Why don't I take that question first just as a clarification. It is all from translation, Paul. So that $0.02 is all translation benefit this year as we have higher FX rates in both Canada and the UK than we did last year at this time. So there is no mark-to-market in there; it is all translation. Paul Lejuez - Credit Suisse: You don't expect anything on the gross margin line from mark-to-market?

We never really expect it. It all depends upon what the currency rates are on the very last day of the quarter, because that's when we look at marking those hedges to market. So if there is significant volatility between the time we hedge our inventory positions and wherever the rates are on the last day of the quarter, there could be, but candidly, it's not something you can really plan, because it solely depends on what the rates are on the last day.

Paul, in terms of visibility, we really have the same visibility across the board in all of our chains. You know, we leverage our communications throughout. So if there is an initiative that is going on in one division, it will be going on in another division if it's appropriate. They also leverage each other. So if there is a European vendor, let's say there is a high-end vendor, then that is shared with the corporation and we go in as a team to leverage that also. So I can't quite answer you, because there really is no difference in the visibility. We know all the initiatives. We know what we're going after. The open-to-buy is the open-to-buy by division; and it's pretty much consistent across the board. Everybody is pretty lean.

Next Laura Champine of Cowen and Company, your line is open. Laura Champine- Cowen and Company: Carol, just as we continue to address some concerns on product availability, can you talk about, coming out of past recessions, do you lose vendors that you signed on? We know you had 100s of new ones this year. How good is your track record of keeping those vendors moving into a recovery?

Honestly, Ernie can help you too, but I don't remember ever losing a vendor. I mean having ran Marmaxx for five years, I can't remember ever losing a vendor.

Laura, I'll jump in here. I would echo what Carol just said. The dynamics going on here, I think, is we've opened dramatically more new vendors of recent. So I think, again, you can never predict exactly where the markets are going to flood or lean up a little, but overall, the availability across all the departments should just continue to be there. Laura Champine - Cowen and Company: So just as a follow-up, when demand recovers does that mean that as suppliers invest in more capacity your availability actually improves?

We had to shut the guys down last year. We had to shut the guys down this year. We did it last week. It is just always available goods and there is always available quality goods. One thing I have to make clear in this environment is that, if people do business with TJX, where we pay on time, where we're very, very solid company, I think there is a change in the mentality. I think vendors will want to do more business with us in the future versus keeping anything consistent. I think there is more of an opportunity for them to do more business with us.

Laura, I'll jump in, back, prior to this whole change in the economy a little over a year ago, we have always had to manage the buyers and not buy too much. So the availability, again, just echoing what Carol said, just seems to be there regardless of the economic environment.

Our brilliance is in managing these 500 maniacs that are out there.

Next question Todd Slater of Lazard Capital Markets, your line is open.

It's actually [Jennifer] for Todd. Let me add my congratulations. Going back to guidance, your comp guidance assumes about a 5% deceleration on a two-year basis between the third quarter and the second quarter. Are you seeing that much of a deceleration or should we attribute that to your conservatism?

Jeff will speak to this, but right now I think we are planning conservatively and that is what we're comfortable with.

Yes, November is off to a strong start. Carol clearly said that on her prepared remarks. I think if you look on a three-year basis, you will see a little less deceleration than you do on a two. So we look at it both ways, but I think November is off to a strong start. We are up against a flat comp in December. There is always uncertainty around the December numbers, so we are being a little cautious, but we think it's prudent to be cautious. We set our cost structures and our inventories around these comps, so I think it just makes sense given there is a lot of business in front of us to be prudent at this point in time.

One quick clarification. Where do you think Marmaxx margins will end up this year, around the high end? Your long-term range is now 10.5% to 11.5%.

The guidance implies 11.1% to 11.2%. Jennifer Cook - Lazard Capital Markets: So in second quarter and third quarter you had record EBIT margins, but you would expect that fourth quarter you might see a little bit of a deceleration?

In Marmaxx in the fourth quarter we're planning the bottom line segment margin up 150 to 180 basis points on a 52-week basis. You have to, when looking at last year, adjust 60 basis points out of it, Jennifer, because we had the benefit of the 53rd week. So if you adjust for that, we've got them up 150 to 180 on a five to seven comp, and in the third quarter they were up 340 basis points on a nine comp. So there may be a little bit of opportunity there I think again, as Carol mentioned, when you look at the guidance, you look at the total fourth quarter for the company against third quarter and you look at the trend, we're clearly calling bottom line profit growth below the trend, and most of that is in merchandise margins. Again, we've got the whole fourth quarter to go here.

A tremendous amount of open-to-buy, so we'll think.

Next question Richard Jaffe of Stifel Nicolaus, your line is open. Richard Jaffe - Stifel Nicolaus: Thanks very much, guys, and my congratulations as well. Just a follow-on question regarding marketing, both in terms of dollars and in terms of initiatives, the way you'll be spending the money, TV, print, social networking, outgoing e-mails, that sort of thing?

TV is going to be pretty heavy, Richard. Heavier than a year ago, and we are going to be hitting a lot more markets than a year ago. Then social networking is a big chunk of it also. We have not decreased our direct mail, but I think we're more pointed with it. So we're feeling very good about our TV. We are very excited about our (inaudible); you are going to see something what I think is even more clever than our intervention. So we're pretty excited about it. Richard Jaffe - Stifel Nicolaus: The dollars year-over-year?

Dollars are slightly up over plan and slightly down versus a year ago. A year ago we were quite a bit up from the prior year. Again, we are leveraging that a lot more. You're going to see us on top-rated shows that we were not on a year ago. Richard Jaffe - Stifel Nicolaus: You're achieving that with less money?

Yes.

Next question Daniel Hofkin of William Blair & Co, your line is open. Daniel Hofkin - William Blair & Co: On the merchandise margin, could you provide a little more color? Anything you can add on initial markup or trends within product categories as opposed to a mix effect, anything on markdowns there? Then, just coming back once again to the outlook, particularly for December, my records show you've got a couple years, actually, in December of basically flat comps at least in the Marmaxx division. I am just wondering if that month in particular could have some upside relative to the guidance that you've laid out?

Daniel, we really don't talk about margins by product category, so I'm really not comfortable going there. As we said, we are comfortable with our plans in terms of our comps, and we are believing that we're somewhat conservative. We understand that. We'll see what happens. I think Ernie is feeling pretty good in terms of Marmaxx and going into the fourth quarter. So I think we're doing what we do.

The one thing we can say about merchandise margins increase is, it's pretty balanced between mark-on and mark-down. We're obviously buying closer to need, and take advantage of great deals and that helps in the mark-on, and then lower inventory levels, that helps you control your mark-down. So we are seeing pretty balanced between the two as we look at the year-over-year increase year-to-date and in the third quarter.

Next Stacy Pak of SP Research, your line is open. Stacy Pak - SP Research: Congratulations and a very good quarter, guys. A question for you, though, Carol you talked a lot about keeping this customer that you gained in the recession. I've heard everything you said about how you're going to keep the customer, but is there something you are seeing now that's telling you the customer will stay going forward beyond what you said? I'm wondering, Jeff, if you sort of quantified, I mean, there was so much going for you guys in '09 in terms of Mervyn's and Linens and bankruptcies and this incredible drop that we all saw last year, leading to incredible excess inventory in the market. Is the 12.5% operating margin that Marmaxx posted this year, the difference between that and the 10.5% to 11.5% that you're talking about as the longer-term target, is that kind of the impact that you think all those things like Mervyn's had on the business, more the one-time things?

No, Stacy, it's more of a third quarter there. The third quarter typically is our strongest quarter... Stacy Pak - SP Research: You had a 100 to 200 basis point impact from those other things or how do you sort of quantify that? Then I have a follow-up on A.J.

Yes, I think the quantification there is, most of those happen in the first half of the year, so if they had a short-term benefit you would have expected a pop and then a deceleration. We're actually seeing an acceleration in our comp, whether you look at it on a one-year or on a stacked basis. We are also seeing an acceleration in transactions, so we appear to be continuing to pick up business even after the initial impact of those businesses going away. So I guess that's the way I'd respond to that question. I don't know if Carol could add to that.

There are just a couple of things. First of all, Linens 'n Things is not affecting HomeGoods at all, so where there is a Linens 'n Things, our stores that are not near Linens 'n Things are doing just as well, in some cases better. That's pretty much the case with Marmaxx too. You are asking about the customer increasing, it's increasing every single quarter. So that means that we're maintaining the new customer and we're still adding new customers. So it's a continuous acceleration, which tells you that it's likely going to continue and you're going to certainly keep that customer. So we feel pretty confident about that. The other thing in terms of Marmaxx last year is, third quarter we did take some markdowns. We got hit pretty quickly like everybody else did in November. So we where loaded a year ago. We moved very quickly to get out of it, and then we ended up in January with much leaner inventory. So part of that number from a year ago was certainly a weaker quarter in terms of margins. So that will also show the acceleration on the Q3 versus Q3 a year ago. Stacy Pak - SP Research: So on an annualized basis then you don't really think the recession and the bankruptcies and the excess inventories we saw really had any meaningful, positive impact on your business in '09?

No, I really don't. Stacy Pak - SP Research: Then the follow-up, Jeff, I just don't totally understand A.J, because if I'm looking at this correctly, their operating expense was up about 110 basis points on a plus-11 comp; whereas they Q3 it was up about 120 basis points on a plus-five comp. I thought you were looking for about that kind of increase on a much lower comp, like a four. So I'm just wondering if you could address that?

No, we had some one-time issues and a couple of things that hit us in A.J.

Yes, I think the flow through was less than you would expect. So you correctly identified, Stacy, the segment profit margin was up 110 basis points. That was less than we would have expected, candidly. We had higher incentive comp. We also remodeled nine stores, and so we had some write-offs associated with those remodels. Then we also had merchandise margins up at A.J; they were not as up as much as other divisions due to some markdowns we took transitioning from summer to fall that we talked about on one of the sales calls. So those were the main factors. I'd say, look, year-to-date, we've got $7 million of profit against a $2 million loss last year; we've got almost 200 basis points of bottom line profit improvement. Our store contribution margin is right where we need it to roll new stores. We are seeing terrific performance out of the new stores we've opened this year. So we're seeing feeling very confident about the business and I think you are just looking at a little bit of a hiccup on the flow through in Q3.

Next David Glick of Buckingham Research Group, your line is open. David Glick - Buckingham Research Group: Congratulations on the quarter. Two quick questions for Jeff, just what is the count for the store openings in Q4? Then, any color on the rollout over 2010? Obviously, in your investor day you updated us on the new square footage growth outlook, but if you can give us a sense for the pace of new stores?. Carol, you've talked about the flexibility of the model and the ability to go after new categories. I'm wondering if you can give us some examples of some new categories that are working, in what areas, whether it's apparel, accessories, or home you are having the most success, and how meaningful these new categories are to your overall business?

Well, I'll answer that one with a non-answer. For competitive reasons; I don't want to go there, but I will tell you, it's both apparel and non-apparel where our initiatives are. So there are some interesting things. Again, I suggest hopping into our stores over the holiday season, and I think you'll see some newness and pretty exciting things. David Glick - Buckingham Research Group: Then, Jeff, on the new stores?

In terms of the new stores, most of the stores we're opening this year are open. We've got a handful that are opening in the fourth quarter, but of the 93 net new stores, net, net of closings, that we anticipate this year. Just backing up, we anticipate opening 105 stores this year; closing 12; so we've got 93 net. The lion's share, I think all but a handful, are in the third quarter. We generally, David, try to do our openings, get it done before the end of the third quarter and given the fourth quarter it is just tougher to open stores in that time frame. David Glick - Buckingham Research Group: Then the pace for next year?

We are not public on that yet. I think we said we would anticipate increasing the square footage growth from 3% to 4% historically to 4% to 5%. So we're clearly going to ramp it up, but in terms of the actual numbers and by which divisions, we will give you all that in February.

Next Dana Telsey of Telsey Advisory Group, your line is open. Dana Telsey - Telsey Advisory Group: As you look at the business with some of the smaller divisions, whether it's HomeGoods, A.J, or now even Europe, with their profitability levels improving, do you see the opportunity for HomeGoods. Could it reach the double-digit operating margin of Marmaxx or could Europe get even halfway towards where Canada is, does it become a 12% or 13% operating margin business? Do you have economies of scale that allow you to get there?

Dana, I will answer, then, and then Jeff can. My answer would be I hope so and we're going to work our way towards it.

Yes, I think I'll give you two answers, one for HomeGoods and one for Europe. HomeGoods is having just a phenomenal year. So we looked at it, prior to this year the pretax margin for that business was 5.1%. With a weak comp last year, particularly in the back half, it went down to 2.7%. This year the guidance implies 6.5% to 6.8%. So they have had just a phenomenal year in terms of recovering their profitability. Their returns on invested capital are now approaching mid-teens, so we are very, very happy with that business. I don't know yet whether it can be go beyond 8%. I think we're increasingly confident that it can get to 8%, because we are getting close. The question is can we get beyond? They are driving improvements in merchandise margins with lower levels of inventory this year and getting more cost leverage, frankly, than we thought that they were going to be able to achieve. They plugged a lot of cost leverage into the model and are beating it. So maybe, I guess; that's a good solid maybe there. On Europe, we used to think T.K-UK was an 8% business. Our current guidance calls for 8.4% to 8.6%, so we're clearly approaching higher levels of profitability there. As we expand across Europe, we should get leverage. A, we can take those UK fixed costs and spread them across the broader store base. Secondly, as we open in Europe we are seeing in those markets that rents are lower than the UK and there is less CapEx that we are putting into stores that are all at least as productive as the UK. So all those signs tell us that there is a pretty high-margin, high-ROIC opportunity in Europe, but again, that remains to be seen. We have got to prove it. Initial signs are all very encouraging.

The other thing, Dana, about Europe is, we have an opportunity to take the backend of the business. UK is probably the most expensive country to operate in. As we learn more about this, we may have some more opportunities for cost reduction, much greater than we maybe think today. Dana Telsey - Telsey Advisory Group: When do you announce the new concept, Carol?

Not for a little bit.

Next Marni Shapiro of Retail Tracker, your line is open. Marni Shapiro - Retail Tracker: Congratulations and good luck with the fourth quarter, in case I forget. I might add my suggestion to maybe change your holiday TV ads and put the maniacs in them, since you seem so in love with them.

Actually one of our buyers did do one of the commercials recently, and she was really terrific. One of our real buyers. Marni Shapiro - Retail Tracker: Jeff, I just had one quick housekeeping, because you were talking faster than me, actually. The revenue line for fourth quarter, could you just restate what that was? Then just another quick small question was on advertising, did you say when you are rolling it out and how long it was going to run and were you doing print as well?

Yes, our advertising, well, it's starting now. The big TV starts the end of this month and we'll be hitting pretty hard. Marni Shapiro - Retail Tracker: Will it run through December?

Yes.

On the revenue, Marni, $5.6 billion to $5.8 billion was the revenue guidance for the fourth quarter.

Next we have Howard Tubin of RBC Capital Markets, your line is open. Howard Tubin - RBC Capital Markets: Carol, can you comment a little bit on the home business, home fashions and home goods, and what you think is fueling the strength there this year?

To tell you the truth, the home business is pretty strong across the board. I talk a lot about leveraging, and we have worldwide home meetings. Actually there is one going on right now across the room, but I think we're just very, very much on target as to the value and what customer wants. So I think the home sector is going to be pretty strong for us going forward, but it truly is across the board. HomeSense, HomeSense in the UK, the home businesses in all divisions, and HomeGoods is very, very strong, as well as HomeGoods in the home area in Marmaxx.

Our last question comes from Susan Sansbury of Miller Tabak. Susan Sansbury - Miller Tabak: One number in the quarter jumped out at me, which is 38% increase in corporate expense. Could you break the major buckets down? I missed a comment that you made about compensation burden in the third quarter, if you could just clarify that for me, please?

Sure, the corporate expense increase was really a function of two things. One was we made a contribution. We have a charitable foundation called the TJX Foundation, and we made a contribution of $8 million during the quarter; against last year when we didn't make any contribution. So that's one of the pieces. The balance is bonus related. A portion of the compensation expense gets booked to the corporate group. So what you're seeing is, you are seeing some impact from the bonus flowing through that line as well as through each of our divisions. In terms of the third quarter, what we have said is that, underlying SG&A is up 50 basis points. Within that there is a 40 basis point hit from higher incentive compensation expense. Again, we have incentive comp programs that go very deep and broad in our company. So that the underlying SG&A leverage then would be 90 basis points if you excluded the underlying bonus expense.

I want to thank everyone, and we look very much forward to reporting on the holiday season. Have a great holiday. Thank you.

Ladies and gentlemen, that concludes your conference call for today. You may disconnect. Thank you for participating.