Carol Meyrowitz - Chief Executive Officer and Director Sherry Lang - Senior Vice President of Global Communications Ernie Herrman - President Jeffrey Naylor - Chief Administrative Officer, Chief Financial Officer, Chief Accounting Officer and Senior Executive Vice President

Daniel Hofkin - William Blair & Company L.L.C. Richard Jaffe - Stifel, Nicolaus & Co., Inc. Stacy Pak - Prudential Paul Lejuez - Credit Suisse Mark Montagna - Avondale Partners, LLC Adrianne Shapira - Goldman Sachs Group Inc. Howard Tubin - RBC Capital Markets, LLC Marni Shapiro - The Retail Tracker Jeffery Stein - Soleil Securities Group, Inc. David Weiner - Deutsche Bank AG Todd Slater - Lazard Capital Markets LLC Evren Kopelman - Wells Fargo Securities, LLC Kimberly Greenberger - Morgan Stanley Laura Champine - Cowen and Company, LLC

Ladies and gentlemen, thank you for standing by. Welcome to the TJX Companies Fourth Quarter and Full Fiscal 2011 Financial Results Conference Call. [Operator Instructions] I would like to turn the conference call over to Ms. Carol Meyrowitz, Chief Executive Officer for the TJX Companies, Inc. Please go ahead, ma'am.

Thanks, Holly. Good morning, everyone. Before we begin, Sherry has some comments.

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 30, 2010. 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 the 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 the financial results and 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 in 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. In addition, we have posted in that section reconciliations of guidance with respect to non-GAAP measures to guidance on a GAAP basis. Thank you and I'll turn it back to Carol.

Thanks, Sherry. Joining me on the call is Ernie Herrman, whom as you know was promoted as President of TJX last month. It's terrific to have Ernie take on a bigger role with the company. I couldn't be more pleased with this new management structure, which further strengthens our leadership team to continue to grow TJX successfully. Also joining me with Ernie and Sherry is Jeff Naylor. I'm proud to report that we delivered a 23% increase in adjusted EPS in 2010, particularly because it was on top of an adjusted 48% increase in the previous year. This marks the 15th consecutive year of EPS increases. We drove this profit growth on a 4% annual comp increase over a very strong 6% increase last year. What continues to give this company the ability to post these increases year after year in good, bad and in-between times and even over very tough comparisons is the extraordinarily flexibility of our business model. One of the most impactful ways we used our flexibility in 2010 was to run with leaner inventories than we ever have in the past. This gave us fast returns and growth in merchandise margins over large increases the year before. We believe that there is still room for further improvement in running with even leaner inventory, as well as fine-tuning our shipping of the right goods to the right stores at the right time. We will continue to invest significantly in our infrastructure for both the short and the long term. In addition, our customer traffic was up mid-single digits over huge increases last year, as our great brands and values continue to attract new and existing customers. This tells us that whether we are in recessionary times or recovery, value remains a constant top-of-mind priority with consumers. I will keep my comments brief today. I'll focus on the sustainability of our strong top and bottom line growth, as well as our long-term vision to grow as a global off-price retailer. Before I continue, let me turn the call over to Jeff to recap our full year and fourth quarter results.

Thanks, Carol. Good morning, everyone. Again, I want to emphasize that we will be referring to adjusted results throughout today's presentation. Reconciliations between GAAP reported and adjusted results are provided in today's release, and are also on our website. So now to recap full year fiscal 2011 results. Net sales reached $21.9 billion, which is an 8% increase over last year. Consolidated comp store sales were up 4% on top of last year's very strong 6% increase. The growth, as Carol mentioned, was driven entirely by continued growth in transactions with the average ticket down slightly for the year. Adjusted earnings per share were $3.49, which is a 23% increase over last year's adjusted 48% increase and this underscores the sustainability of our profit growth even over challenging comparisons. Foreign currency rates positively impacted full year EPS by $0.02 this past year, compared with a neutral impact the year before that. Consolidated pretax profit margin on an adjusted basis was a 10.6%, and that represents a 100 basis point increase over the prior year. This increase is primarily due to significant improvement in gross profit margins, which were up 90 basis points on an adjusted basis due to strong merchandise margin growth as well as buying and occupancy costs leverage. Pretax profit margins also benefited from SG&A expense leverage, which improved 10 basis points on an adjusted basis. As the inventories at the end of the fourth quarter, consolidated inventories on a per store basis including the warehouses were up a 4% versus a 10% decrease last year. As we have discussed in our recent monthly sales calls, per store inventory levels are impacted by higher levels of pack-away this year compared to last, which reflect some great opportunities for branded goods at the end of this year. It's important to note that pack-away still represents a relatively small portion of our overall inventory, less than 10%, and that we planned our per store inventory levels to be down again us of the end of this coming year. And we're also, obviously, very comfortable with our open to buy position, which continues to be in great shape as we enter the spring season. In terms of share repurchases for the year, we bought back $1.2 billion of TJX stock, retiring 27.6 million shares. During the fourth quarter, we bought back $355 billion of TJX stock, retiring 7.9 million shares. Now I'll recap the fourth quarter results. Net sales were $6.3 billion, that's a 7% increase over last year, and our consolidated comps were up 2% over last year's very strong 12% increase. Adjusted EPS for the fourth quarter was $1.5, which is a 12% increase on top of last year's 104% adjusted increase. The impact of foreign currency exchange rates on year-over-year comparisons were neutral in the fourth quarter. And then finally, our consolidated pretax profit margin on an adjusted basis was 11.2%, which represents a 50 basis point increase over last year, and on top of last year's 440 basis point adjusted increase. This increase was due -- the 50 basis points this year was due to continued improvement in gross profit margins, which were up 30 basis points on an adjusted basis, with the balance of the improvement coming from SG&A expense leverage. So that's it for the wrap up on the numbers this year. Let me turn the call back to Carol and I'll come back at the end of the call to recap first quarter and full year fiscal '12 guidance.

Thanks, Jeff. The major themes I would like to highlight today are the sustainability of our strong top and bottom line growth and how we are in an even stronger position today to achieve our long-term plans for global growth. Beginning with sustainability. Clearly, as I've mentioned, our strong fourth quarter and full year 2010 performance demonstrates the power of our off-price model to deliver year-over-year growth on top of challenging comparisons. I'd like to highlight some of the elements that led to our success in 2010 that we believe will continue to benefit us. Let me begin with why I believe TJX will continue to be a retailer of choice for consumers. First, throughout 2010 and as we enter 2011, customer traffic continued to be up, significant increases over the prior year, which we believe indicates that value continues to be uppermost in the consumer's mind. Second, our more powerful marketing is working and driving customer traffic to our stores. Our U.S. network TV push was very successful in the fourth quarter. In 2011, our ads will continue to reach out even more aggressively to consumers who have not yet shopped our stores, there's plenty of them, and emphasizing the great fashion and value that we have to offer. Third, we saw sales lift in our 700 neatly modeled Marmaxx stores in 2010 and we'll continue our aggressive store upgrade program across the company to enhance customer shopping experience and drive sales. In 2011, we expect to do about 350 across all our banners, which is about what we did last year. Fourth, we continue to open vendor doors in 2010 and now source from a universe of over 14,000 vendors. Our vast vendor universe allows us to offer customers better brands, more excitement and continuous freshness. There's a plentiful marketplace out there, and we see many exciting opportunities for 2011. In the same way we are a retailer of choice for consumers as we expand our global sourcing, grow our store base and build mutually beneficial relationships, we're also a retailer of choice for vendors. As long as we continue to offer the combination of great brands, fashion, quality and values that we do and continue to execute, we believe consumers will not only continue to choose our stores, but new customers will turn to shopping the TJX brand. In fact, that's what our customer research is telling us. Now let's move to running with even leaner inventories and our further opportunity to improve our supply chain, a major factor in our confidence in sustaining our top and bottom line strength. In the last two years, we have made significant improvements in our supply chain, which has enabled us to reduce inventory, which we've operated the business to historically low levels. As we run even leaner, we are turning inventories faster, buying closer to need and driving even more excitement to our stores. This has reduced markdowns, leading to sequential improvement in merchandise margin. I believe that we can continue to reduce our inventory levels, and we are investing in our supply chain to run even faster and even better. Over the next few years, we have meaningful opportunities to become more precise in getting the right goods to the right stores at the right time. In addition, we will continue our cost-cutting initiative. In 2010, we exceeded our plan to reduce costs. And in 2011, we are again planning cost reductions in the $50 million to $75 million range, which will help protect our profit margin and offset other cost increases. The second major theme that I want to highlight is our outlook for successful long-term global growth. I believe that our actions in 2010 position us even more strongly to prioritize our most profitable businesses, all of which have major store growth potential. I am certain that our decision to consolidate A.J. Wright, while a very difficult run because it affected so many people, was the right action for TJX as a whole. This move significantly improves our economic prospects in the near and long-term and enables us to focus our managerial and financial resources on fewer, larger businesses with higher returns. To recap the key points, as we convert A.J. Wright stores and lever the efficiencies of our more profitable banners, we expect the benefit to earnings to grow. We expect the move will negatively impact EPS in the first quarter with an increasing benefit over the last three quarters of 2011, and that we will see the full benefit to annual earnings in 2012. In subsequent years, we expect the annual beneficial benefit will be even greater as sales in our converted stores grow. Now, I'll review how we're prioritizing growth. In 2011, our plans call for growing square footage by 4% or netting 115 stores, excluding the A.J. Wright closing. This is slightly less than our original plan for 2011, reflecting our slowing the pace of growth in Europe a bit, which I'll discuss in a moment. At the same time, we are investing in Marmaxx, HomeGoods and TJX Canada, which are all achieving consistently strong performance. Let's talk about Marmaxx, which delivered another outstanding year in 2010. Comps increased 4% over last year's exceptionally strong 7% increase and segment profit was up 18% over record results last year. With Marmaxx outperforming our expectations once again, we will maintain the higher level of new store openings that we established in 2010. Long term, we believe Marmaxx has the potential to grow to 2,300 to 2,400 stores, which is 300 to 400 more stores than we originally envisioned. Over the past two years, we have widened our customer demographic reach significantly and T.J. Maxx and Marshalls have been very successful in markets with similar demographics to A.J. Wright. This gives us confidence in our increased expectation for Marmaxx's long-term store growth prospects. I should note that we have excellent visibility into the level of cannibalization from new Marmaxx stores and are achieving solid ROIs after reflecting that effect. HomeGoods also had a terrific year in 2010, achieving strong sales and profit increases over record results in the prior year. With HomeGoods' consistent performance, we also see opportunities to expand this store chain beyond our previous thinking. We will pick up the pace of growth in 2011 and over time believe that we can nearly double the number of HomeGoods stores to at least 600. It's worth noting that many home businesses with higher average tickets in HomeGoods are close to or over 1,000 stores. TJX Canada had an excellent year in 2010 as well. We are very excited about bringing Marshalls to Canada this spring. We achieved our highest returns in Canada, so we are thrilled to launch another vehicle for growth in that country. We are opening our first stores in the Toronto area in March and long-term, see the potential for Marshalls to be 90 to 100 store chain in Canada. And overall, we expect TJX Canada's long-term store growth potential to be around 425. Now to TJX Europe. We were disappointed with the TJX Europe's results in 2010. But I can assure you that in the short term, we are very focused on getting this position back on track. With 54 store openings in Europe and the complexities of adding a new country in 2010, we lost our focus on execution. When this happens, inevitably, we give up some of our value proposition and our customers see it. This is exactly what happened at TJX Europe. So in 2011, we are slowing the pace of growth in Europe to give our team time to refocus on the basics of our off-price model: Great brands, great fashion, great quality and great value. We are also strengthening our European organization with some TJX veterans. Further, through our TJX University, we are leveraging the knowledge of seasoned TJXers across the company to teach the new talent in our buying right. Our expectation is that we will begin to see progress in this business towards the end of the first half, with greater improvement in the second half when TJX Europe typically earns the vast majority of its profit. There is no doubt in my mind that we will get this business back on track this year. When we have stumbled at other businesses in the past, we have fixed them and I am confident that we will fix this one too. It's worth noting that TJX Europe has been on a successful 15-year trajectory through the first quarter of last year. I would like to make it perfectly clear that we are as confident in our long-term growth opportunities in Europe as we ever were. Further, I believe we were right to have taken advantage of the European real estate opportunities that we had in 2010. I am convinced that the stores we opened in Europe last year will benefit our company in the long term. The competitive landscape in Europe is fertile ground for us, and we continue to believe it holds enormous growth potential for TJX. Long term, we see the potential for TJX Europe to grow to 750 to 875 stores in just our current European markets and many more beyond. Wrapping up our long-term growth, we see TJX growing from 2,700 stores today to over 4,300 stores long term. We are also investing in our infrastructure for both the short and the long term, and believe we have enormous future growth in front of us. In terms of our financial plans for 2010, we'll continue to plan conservatively as we did in 2010. At the same time, I can assure you that this management team is motivated to surpass those goals as we have done successfully many times. Jeff will provide details on our guidance in a moment. Before I sum up, I want to briefly mention how we see the current retail environment playing into our strengths. We all know that there's a lot of confusion out there about forcing and pricing. Historically, disruptions in the marketplace have benefited our business by creating great off-priced opportunities. We entered the first quarter with very liquid inventories, which affords us the flexibility to respond quickly to market trends. If the retail-pricing umbrella rises, we have an opportunity to raise our average ticket while maintaining our value gap and drive merchandise margin. If other retailers do not pass costs on to consumers, we've proven our ability to buy right, remain under the pricing umbrella and sustain merchandise margin. Either way, we will watch the market around us and adjust and believe that for us, the net result of the product pricing issues will be positive for us. Summing up, our strong top and bottom line performance in 2010 demonstrates, once again, the power and flexibility of our off-price model to deliver consistent growth in both weak and strong environments. As we begin a new year, we have great opportunities and I am convinced that our strong sales trends and profits are sustainable. I believe that value is more important than ever in the consumer's mind. We see ourselves as a sourcing machine with a vast vendor universe. This affords us enormous flexibility to capitalize on disruptions in the marketplace and shift categories swiftly as consumers' tastes change. Our marketing is driving new customers to our stores and our upgraded shopping experience keeping them coming back. We are running our stores with even leaner inventors and turning them even faster, which leads to exciting selections and higher merchandise margin. We are offering consumers great brands, fashion, quality and value. It is this combination of elements that I believe position us to continue to be a retailer of choice. As we work to achieve our goals, I'm very pleased with our exceptionally strong management team. In addition to Ernie taking on a larger role, Michael MacMillan and Nan Stutz have also been promoted and are now Group President. They join Jeff, Jerry Rossi and Paul Sweetenham as Senior Executive Vice President. With a management team with many decades of combined retail experience and years of working well together, I'm confident that TJX will grow to be a $30 billion and then a $40 billion company. Now, I'll turn the call back to Jeff to go over guidance and then we'll take questions.

Thanks, Carol. Before I get into the guidance for fiscal 2012, let me iterate our continued confidence in our three-year growth outlook, which calls for compound EPS growth of 10% to 13%. This remains unchanged from our prior outlook. As you can see from today's release, we provided fiscal 2012 guidance on both a GAAP basis and an adjusted basis, and the adjusted basis excludes the impact of the A.J. Wright closing, the costs we're going to incur to convert and rebrand open 90 A.J. Wright stores to other banners and the impact of a nonoperating item in fiscal 2011 [ph]. So all the details of this adjusted guidance, along with the related reconciliations to GAAP financial information, can be found in the table in the Investors section of our website, www.tjx.com. That's up there right now, and I encourage you to, sometime today, as you march through the guidance to look at these. And I'm going to speak to the adjusted numbers in my remarks today, because we think those best represent the underlying trends in our business. So let me turn to fiscal 2012 full year guidance. For fiscal 2012, we expect adjusted diluted earnings per share in the range of $3.78 to $3.93, and this represents an 8% to 13% increase over the adjusted $3.49 in EPS in fiscal 2011. Our EPS guidance assumes consolidated top line sales of about $22.6 billion to $22.8 billion and a consolidated comp store sales increase in the 1% to 2% range on both a consolidated basis and at the Marmaxx Group. For the year, we expect adjusted pretax profit margins to be 10.4% to 10.7%. This represents a 20 basis point decrease to a 10 basis point increase over the adjusted fiscal 2011 pretax profit margin of 10.6%, and it's a little better than we'd expect, given the 1% to 2% comp increase. We are planning adjusted gross profit margins to be 27.1% to 27.3%, which is flat to up 20 basis points over the adjusted 27.1% in fiscal 2011. This improvement is primarily due to merchandise margins, which we are planning slightly up as we continue to reduce inventories and drive faster turns. We expect adjusted SG&A to be 16.4% to 16.5% as a percent of sales versus the adjusted 16.3% in fiscal 2011. This represents 10 to 20 basis points of deleverage and that's about what we would expect on a 1% or 2% comp. Foreign exchange rates, assuming current levels, are expected to add approximately $0.02 to full year EPS growth. For modeling purposes, we're planning net interest expense in the $40 million to $42 million, a tax rate of 38.1%, which is consistent with fiscal 2011, and a weighted average share count of 386 million shares. Capital is planned in the $800 million to $825 million range and we are planning to buyback at approximately $1.2 billion. The increase in capital spending is driven primarily by a greater number of remodels, which includes investments to convert former A.J. Wright stores to their new banners. It also includes replacement of the company's existing data center, as well as additional distribution capacity. We anticipate our cash balance at the end of 2012 after this increased capital spending and increased shareholder distributions to be approximately $1.5 billion, which provides significant financial flexibility. Now let me turn to Q1 guidance. We expect adjusted earnings per share to be in the range of $0.75 to $0.82, a 6% decrease to a 3% increase over last year's very strong $0.80 per share, which in turn represented a 63% increase over the prior year. In addition to challenging year-over-year comparisons, there are several other factors that impact the first quarter. First, we are planning further deleverage from our European business, as Q1 was the strongest quarter for Europe last year. Second, for the majority of the first quarter, we will not have the benefit of sales from the A.J. Wright conversion stores, and this impacts expense ratios and our bottom line in the first quarter. Finally, we will run with heavier headcount earlier in the year as we absorb talent from A.J. Wright into our businesses. So combined, these factors represent about 50 to 60 basis points of deleverage in the first quarter, but will moderate as the year progresses. In contrast, today's guidance implies adjusted EPS growth for the second through the fourth quarters, so for the balance of the year, up 12% to 15%. And it also implies adjusted pretax margin improvement for the balance of the year of 10 to 30 basis points on a 2% to 3% comp for that period. So we view the Q1 guidance as being heavily impacted by the timing issues that I discussed. Now with some details in Q1 guidance. We're assuming a first quarter top line in the $5.0 billion to $5.1 billion range. This is based on comp sales in the range of down one to up two on both the consolidated basis and at the Marmaxx Group on top of last year's very strong 9% and 10% increases, respectively. As the monthly comps for February, we are planning comp sales increases of 2% to 3% on a consolidated basis and 3% at the Marmaxx Group on top of last year's increases of 10% and 11%, respectively. So the year is off to a strong start. For the combined March-April period, we are planning on comps in the range of down one to up one on both a consolidated basis and at Marmaxx over last year's very strong 9% increases at both. This year, the March-April period is impacted by the Easter shift, with this holiday falling in April this year, compared with the March selling period of last year. Consequently in March, we're planning comps to decrease 2% to 4% on both a consolidated basis and at Marmaxx. In April, we are planning on comp increases of 2% to 4% on both a consolidated basis and at Marmaxx. For the first quarter, adjusted pretax profit margins are planned in the 9.5% to 10.1% range, and that's down 60 to 120 basis points over the prior year. At the high-end of the range, the decline in adjusted pretax profit margin of 60 basis points is adversely impacted 50 to 60 basis points by the factors I mentioned earlier. So those factors really explain the decline in the pretax profit margin at the high-end of the range. At the low-end of the range, the decline is driven by these factors as well as deleverage from the 1% comp decrease. We're anticipating first quarter adjusted gross margin in the range of 26.8% to 27.2%, down 10 to 15 basis points versus prior year, primarily due to buying and occupancy deleverage, which is about what you'd expect on the up two to down 1% comp sales guidance. We're expecting adjusted SG&A as a percentage of sales to be in the 16.9% to 17.1% range, up 50 to 70 basis points versus prior year. Again, this is due entirely to the factors mentioned earlier. Although at the low end, there are obviously some deleverage on the negative 1% comp. As a reminder, full year SG&A rates are expected to deleverage only slightly on a one to two comps. So again, this is principally a timing matter. For modeling purposes in the first quarter, we're anticipating a tax rate of 38.1% and net interest expense to be in the $10 million to $11 million range. We anticipate a weighted average share count of approximately $393 million. So I'll wrap up with our store growth plans for fiscal 2012. There's a lot going on here, so let me break down the components. We entered fiscal 2012 with 2,859 stores. We have since closed the remaining 142 A.J. Wright stores and we'll reopen and 90 of these as Marmaxx and HomeGoods stores. 81 of these 90 conversions will be incremental to the store count, with nine of these representing relocations of existing Marmaxx stores. We will also add 115 net new stores during the year. So between conversion stores and new stores, we will add 196 stores on a consolidated basis, ending the year with an estimated at 2,913 stores. This represents 2% square footage growth on a reported basis, but 4% if we adjust for the A.J. Wright closed stores. One final comment. In the past, we provided and discussed the detailed divisional breakdown of our guidance for the current quarter, but have not provided it for the full year. Going forward, we intend to discuss the detailed divisional model for the full year with investors in the street, as we think this provides useful insights into the growth and economics of our individual businesses. That said, we will no longer provide this divisional detail for the current quarter, as we already provide guidance for all the P&L elements and we'd like to keep our conversations more strategic. We will now open it up to questions and ask that you please limit your questions to one per person. To keep the call on schedule, we're going to continue to enforce our one question limit and we appreciate your cooperation. Thanks, and we'll open it up for questions now.

[Operator Instructions] Kimberly Greenberger [Morgan Stanley]. Kimberly Greenberger - Morgan Stanley: Carol, I'm wondering if you can take a look at Europe. I know that you're taking a pause in the growth rate there this year. But how do you envision the path back to the appropriate operating margin structure throughout the year this year? And how would you think about reaccelerating the growth? What would you like to see out of the business before you tried to do that?

So Kimberly, we obviously stubbed our toes and I can reiterate it in terms of we grew too fast and complexities. We had 57 stores and opening new countries and a fairly new talent -- a team that needed a lot of learnings in terms of time in their jobs. So I feel at this point, we've slowed the growth. I think we are building our foundation and making it much stronger. We're much more country focused in terms of getting the right fashion to the right country. We've injected strong veterans of high levels and given people smaller jobs so that they can have time in jobs. We're really levering the corporation. So I see this year as I think we're going to -- towards the back half and towards the end of the first half, I think we're going to see some terrific progress. And I think that we're doing the right thing by slowing the store count down. And my gut is, by the end of next year, we're going start to feel pretty good and look at next year to start accelerating it.

Kimberly, just to expand on that a little bit. We think we planned Europe relatively conservatively this year. We're planning a two to three comp for the full year on top of a minus 3% last year. And we think if we achieve that, we'll have a profit margin back up to the 4.5% to 5% range versus 3% last year, but also versus a peak of over 7%, which by the way at that time the U.K. was almost 9%, so we're starting to make some progress. We're planning some progress candidly, not as much as we hoped to achieve this year into the numbers. The store count for this year for Europe is up 27 stores, significantly below where we've run the last couple. And I think to Carol's point, I think we need to see a little bit more before we make a decision on the reacceleration.

The real key is the team is getting a lot more solid and we have three very high level executives that are now in the business that weren't there a year ago, which is, I think, going to make a very big difference. So again, we don't have to push these buttons too hard. We got time. We'll fix it. And we didn't have too dissimilar an issue with HomeGoods years ago. So I believe we will come back roaring, and we're going to take this year carefully.

Our next question comes from Stacy Pak. Stacy Pak - Prudential: Question for you, I guess, on the whole marketing side of things, Carol. I was hoping that you could expand on what you're seeing in your customer research findings, particularly with regard to attracting new customers. And if you want to share at all, kind of what you are seeing in existing customers. And also within that, can you comment, Jeff, on the advertising dollars or percent plans in '11? And if there's any big changes by quarter and maybe weave in TV.

So, Stacy, our dollars are not way up, but our impressions are. And we're fairly aggressive in the first quarter in that we will be on Network TV that we weren't on a year ago. And we have a fairly aggressive plan in terms of things that we learned last fourth quarter for our December Gift-Giving business, which will get us a lot more pointed. And I think we have a terrific program again for the back half. So our customer research is very clearly telling us that our customers -- our new customers like shopping us. New customers are planning on coming back. We keep increasing the percent of new customers and reaching out into the universe. It's just that we still have an enormous, enormous percentage out there that we haven't tapped yet. But our messages are getting out there very loud and clear and our educational message is getting out there. So the positive news is when they get into the stores, they want to come back and that's very clear. So I think we have a lot of growth rate in the future. So we're pretty excited about it.

Paul Lejuez. Paul Lejuez - Credit Suisse: Carol, this is the first time in a long time that we're living through an inflationary environment from a cost perspective. What do you think needs to change about how you run your business, if anything? And then maybe just, specifically, does your mix in upfront versus in-season buys need to change in this new environment?

So I'll start with absolutely not. Our business model does not have to change. We are in a fabulous, liquid position. And as I said, it's usually the gap between us and everyone else. Ernie, you have some insight to this also as we're all dealing with these increases in prices?

Well, I would say, and I think Carol alluded to it further in the script, the model of our business has generally worked for us in the past. Any time there is like unknown or confusion in the market, that usually works to our advantage. So our goal is really simply to show relative value, better value relative to the competition. If during that, by the way, the average ticket goes up, well as long as we're still offering better relative value, I think that's only good for us as well. But again, because of our opportunistic business model, I don't think we need to change anything. And I think when the environment changes like that, it usually bodes well for us. Paul Lejuez - Credit Suisse: Moving to a lot of retailers managing inventory units down, does it need to change when you order goods in terms of upfront versus in-season? Waiting for in-season?

Well, you know, first half all, and this usually comes out in a different question. Availability is not an issue. If anything, we're having to hold the merchants back from buying too much too soon. I don't see that pattern changing amidst this whole pricing discussion that's going to be in the marketplace. So I would say we'll just stay the course and maintain the relative value. I don't see our upfront, closeout percentages or any of that happening to be toyed with to any significant degree.

Yes, Paul. The increase in our inventories today is really strictly some pack-away deals, which were just great brands. Last year, we were lean on pack-aways. But we're still in the same percentage. So that's really the only difference in the inventory. We're just as open to buy as we were a year ago. We're actually a little bit even more open. So we're in a great position.

Evren Kopelman [Wells Fargo Securities]. Evren Kopelman - Wells Fargo Securities, LLC: Can you talk about the 115 net new store additions? Which divisions will they be in? How many Marmaxx in there? Also along -- within that of the ones you are converting from A.J. Wright, do you plan to merchandise them differently from a core Marmaxx, maybe more comparable to the urban brands that A.J. Wright was carrying, or are they going to look more comparable to your average Marmaxx?

Okay. Well, first of all, I'll have Jeff run through the numbers. But in terms of the conversion, we have an overlay of many stores that live in that demographic. We know -- we're very clear on how to merchandise those stores, so we're pretty comfortable. Our mix will say similar. We do not have the same mix in every store in Marmaxx. And this is all part of what we strive in terms of getting the right goods to the right store at the right time, and focusing on enhancing our supply chain. That all comes around that messaging and the dollars that we're putting into systems is all about improving that. So we have many stores, again, that overlap, so we're pretty clear on what that needs to be. And Jeff, you want to break down the stores?

Yes, so we have a 115 new stores, that's 1-1-5. In terms of the store openings, we have 51 planned for Marmaxx, and that compares to 50 last year. So we're maintaining a very similar place at Marmaxx as we've been on. HomeGoods, we have 22 stores. And last year, we opened 13 net. So we're accelerating the pace at HomeGoods. We think that's appropriate given the terrific performance out of that division, strong comps, strong profit and just really phenomenal performance. In Canada, we have 15 stores. Last year, we had seven. The primary driver there, obviously, is opening Marshalls -- with Marshalls opening this year that's driving a little higher store count in Canada. Very happy about that, since Canada is our highest return business. So happy to be investing in that country. And then in Europe, we have 27 new stores versus 54 last year. Breaking that down for you, 10 are in the U.K., 10 are in Poland and seven are in Germany. So that's the break down on the new store count. And obviously, we retain flexibility to do more if we choose to do so, and a lot of that Canada, just depends upon real estate opportunities in North America.

Adrianne Shapira [Goldman Sachs Group]. Adrianne Shapira - Goldman Sachs Group Inc.: My question is how you mentioned the first being really discussed the sustainability of your results. And it seems as if you're confident of that ongoing merchandise margin expansion with inventory turn continuing to improve. So it seems as if, looking at the average turn, doesn't really tell the whole story on the opportunity. Jeff, perhaps you could share with us differences across the divisions to give us the confidence that there's more room to improve and where we can learn from those divisions that are turning faster and what some of those lessons are.

Adrianne, I'm going to turn over to Jeff in a minute. But part of it comes again back to shipping the right goods to the right store at the right time and your freshness percentages. There is a lot of detail in this. And that helps lean up the inventory and drive sales harder. So Jeff will go through by division, but as we get better and better at that, we don't know how low we can go or how quickly as we increase this supply chain to get the stores faster in number of deliveries. So it's going to change over time, and we're going to keep learning more. Jeff?

I think overall for TJX, our store turns have improved significantly over the last two years. And I think, when you peel it back, Adrianne, what you see is that we've taken the inventories down more aggressively at our smaller divisions because, obviously, in the larger division you want to be very careful. And so, I think if you looked at it, you'll still see fairly meaningful variances between our smaller divisions and our largest division, Marmaxx. So I think when you look at that, that suggests that there's still opportunity. We're going to continue to, obviously, be very, very careful on it because we don't want to sacrifice sales and profit for turn, but we do believe that there's opportunity in them. The other thing that I should point is that none of this is plugged into the model. So if you look at our three-year model, we talked about hitting 10% to 13% growth. We are plugging merchandise margin improvement into that. So that would be upside to the model were we able to achieve that. Adrianne Shapira - Goldman Sachs Group Inc.: Could you talk about what some of those meaningful variances are? Give us a ballpark in terms of what the differences are?

No, we'd rather not be public on that.

Adrianne, I just wanted to jump in for a second and say that I think in Canada, which again, I've become pretty familiar with over the last couple of years, I think there's still opportunity out there. As Jeff alluded to, a couple of the business is Marmaxx in Canada. I think we have opportunity to lean up a little further over the next couple of years and make improvements on the markets -- merchandise margins.

Brian Tunick [JP Morgan Chase].

It's actually Ike calling in for Brian. I wanted to ask a question on the A.J. Wright convergence to Marmaxx. When we think about those stores that are converting to the Marmaxx format, how should we think about the profitability of those locations? I guess, meaning, could they earn similar Marmaxx four-wall profitability despite their real estate?

Absolutely. They should and they will. We put in the right cannibalization factors. We're probably going to start out being conservative. But we have no doubt that they should, because we already have stores in the those demographics that clearly have very strong operating income.

And when you look at the four-wall contribution of Marmaxx stores that are already in those demographics, it's very similar to the Marmaxx, overall four-wall contributions. So I think for the individual stores, we're looking for similar profit dynamics as we would in base Marmaxx stores.

Todd Slater [Lazard Capital Markets]. Todd Slater - Lazard Capital Markets LLC: I guess my question, Carol, is as you move to more pack-aways, if you could give us sort of an order of magnitude. It sounds like maybe you can go from single digits now more to your low double digits or something. And if so, what are the implications on inventory currency and relevancy on markdowns? Because in the past, your decreased impact rates has self improved, but the turnover as well as the product currency and lower markdowns and therefore margins. So as this increases, sort of, how do you see that affecting margins or risk margins going forward?

Todd, the pack-away, honestly, the number is so irrelevant, it's not funny. I mean it's well within our normal. We're not even near double-digits nor will we be. Last year we were just a little bit lean. We're probably somewhere in the middle of where we have been in the past. We're going to be current. We're going to be great value. We're going to be the most current in fashion and brands and that is our business and we will continue to run it that way.

Todd, if I could also jump in. At this point in time with the inventories which again holds some of the incremental pack-aways, which is not really in the scheme of things a significant number, we are pleased with our inventory position going to the year though. We have more accounts payable leverage than last year and our EPS as a percentage of inventories are up, which is telling us that our inventories are even fresher than last year to what Carol just said. So that validates that. And also, our absolute inventory turns increased during the fourth quarter. So again, we're still turning very, very fast and we're very lean and flexible.

The next question comes from Daniel Hofkin [William Blair & Company]. Daniel Hofkin - William Blair & Company L.L.C.: Just, I guess a question regarding inflation and listening to your comments about cost versus the retail-pricing umbrella. Can you discuss just kind of what you're seeing right now in terms of the competitive pricing environment and also kind of the what rate or roughly rate of cost inflation you're seeing out there currently? And are you seeing retailers thus far passing it along or choosing to absorb a little bit in maybe in their margins?

Right now, the retailers are not really passing a significant amount. And I think that's going to start to happen probably towards the end of the back half, middle to end of back half and possibly into the following year. So we'll see. Again, I'm thrilled if our average ticket goes up. It's fantastic for us, but I can guarantee, we'll keep the distance of great value. And that's what we're focused on.

Richard Jaffe [Stifel, Nicolaus & Co.]. Richard Jaffe - Stifel, Nicolaus & Co., Inc.: Can you go through the individual divisions in fiscal 2012, how you see them contributing both in terms of sales and operating margins?

Total model?

Yes, we're happy. So overall in the comp, we're planning one to two. Right now, we'd be looking at a one to two for Marmaxx, one to two for Canada, one to two for HomeGoods and, as I mentioned earlier, two to three for TJX Europe. So pretty consistent planning other than a little bit heavier comps for TJX Europe for the full year. As we look at it by business, we would see Marmaxx at 12.9% to 13.1%, that's down 40 basis points at the low end and down 20 basis points at the high end. So we have it planned down 20 basis point at the high end on a two comp. That's going to be reflective of cannibalization from those -- we've got 74 of those 90 stores are opening as Marmaxx's. The cannibalization impact that has a bit of diluted impact on Marmaxx for the year. That said, overall, the exited A.J. Wright business is worth 30 basis points to the consolidated company. So the economics here all work very well. In the case of Canada, last year was 14%, we're planning it 14% to 14.2%. In the case of HomeGoods, last year was 9.5%, we're planning it 9.1% to 9.4%, again at the high-end we've got a two comp. So it's a little bit of deleverage on a two comp, 10 basis points. Again, nothing unusual. In Europe, we had a 3% margin last year, we are going from 4.6% to 5.0% for the current year and then those are really the major items. I commented on tax rate interest. They are elements that are really in our asset. So I just have to be [indiscernible] the detail that you need. And we're happy, obviously, to follow-up and talk further about it in the follow-up calls.

Next question comes from Dave Weiner [Deutsche Bank]. David Weiner - Deutsche Bank AG: Just another follow-up question on Europe, if I could. Carol, I think you talked about potentially seeing progress by the end of the first half of the year. I guess, could you give some specifics on what that's based? Is it largely on just easier compares and so that makes running the business easier? Or are there other kind of specific catalysts that you plan to come into action at that time? And then also Jeff, I think you had talked about 17 new stores in between Poland and Germany for the new year. I think that's the number 10 and seven. Didn't hear anything on productivity of those countries. Could you give a little color on how those stores are doing versus the U.K. stores?

Yes, it's completely based on what I'm seeing in terms of the mix and the leveraging the corporation and better focus. So, I think we're starting to see where we'll turn the corner. There are specific categories that are trending in a positive direction and there are specific categories that we're very, very focused on to do a better job in the value and the mix. So it really all comes back to based on execution and that's where I'm sort of laying out the time frame. David Weiner - Deutsche Bank AG: Is that a result more from maybe the training of some of the buyers gotten or...

It's training, it's the brand focus and it's the fashion focus. And there are things that work in the U.K. that don't necessarily work in the Germany that we have learned that we're much more focused on, where to ship, again coming back to the right goods to the right store. So there is a lot of we've learned from this past year. And understanding the pure value equation. In the long-term, I hate to say it, when you skip a beat like this, you usually get a lot stronger.

As you look at the pacing too, we've, the first quarter, we would rough against the one comp. If you look at the remaining three quarters, we're up against a down four. So clearly, the comparisons do get easier. So if you look at Europe, we planned it up three and up four -- up three to four against the down four. So again, we think that's the realistic plan and, as Carol mentioned, lots of plans and actions in place to achieve that. In terms of Germany and Poland, 17 stores. Poland last year, the performance was in line with our plan in terms of the bottom line. Generally, we're seeing stores that are performing above where we thought they would be. We had some phenomenal openings, particularly in Warsaw, really just some terrific openings. So we remain very, very confident in terms of continuing that plan in Poland and the performance of the underlying store base in line with what our expectations were. Germany, in the back half of the year, the stores fell off their trends, just as they did across all of our European business. So we ended up with a sales miss at Germany and some compression in the margin rate. That said, I would tell you when we look across the portfolio of stores that we have and the relative productivity and relative four-wall contributions versus the U.K., they're just a little bit below the U.K. Likely, were trending earlier. So we remain very, very confident that as we improve the mix and take some of the merchandising actions that Carol talked about, that we'll see strong improvement there, which gives us the confidence to go ahead and continue to invest. Now, obviously, it's seven stores in Germany versus 24, 25 last year. So we're slowing it down there considerably and we think that'll help benefit that business.

The other factor in Germany is we got hit very hard in the fourth quarter and we did, I'm saying that it's truly -- we own it in execution. But Germany really did get hit by an enormous unusual weather pattern of snow. And we did see some day-to-day tremendous hits by that. So that was a little bit unusual. So I think there is just some base opportunity there also.

Howard Tubin [RBC Capital Markets]. Howard Tubin - RBC Capital Markets, LLC: Maybe just a quick question on the remodeling program. Can you give us any color on the lift you see close to remodel, maybe relative to a store that hasn't been remodeled?

We really don't talk to that, Howard. Not a number we give out. Nice try though.

Laura Champine [Cowen and Company]. Laura Champine - Cowen and Company, LLC: The pack-away inventory is usually not enough to move the needle at all, and we're seeing it throughout the closeout industry. What's driving that increase? It's not as if full-price retailers are missing. Why is there suddenly such a great availability of branded product?

First of all, you've got to understand it's versus last year, we were down 10% last year. And we were chasing a little bit. But we had very little pack-away last year. This year, there just happened to be a bunch of brands that we liked very much and we went after it. And that's really the whole story there. There's no big change here.

And part of it is the wholesale market. Some of those vendors were a little more aggressive, maybe based on what was going on out there. So that combination yields more goods.

Jeff Stein [Soleil Securities]. Jeffery Stein - Soleil Securities Group, Inc.: Carol, you mentioned at the beginning of the call that you're now dealing with 14,000 or so vendors and that's a fairly large jump if I'm recalling the prior year's number which I...

I think we were being a little conservative in the past, Jeff. I don't even want to tell you what we think the real number is. Jeffery Stein - Soleil Securities Group, Inc.: Obviously, there's been a big jump. And I'm wondering, is most of the increase, one, coming from Europe? And two, if you can just kind of segment it between higher-end vendors and just kind run-of-the-mill kind of moderate vendors.

Yes. Well, first of all, it's both. And we are -- again, when I talk about the different stores and the different demographics, we've pushed the high-end and we'll continue to do that. Part of that is some interesting new countries. There's a lot going on in HomeGoods. There's some changes in apparel. There's a lot of new contemporary guys out there. So we're seeing a vast increase in many, many new areas. Poland, Germany, and we have offices now. When we talk about Germany and we talk about Italy and even in China, we have many, many people on the ground. We just opened another new country in terms of having a buying office -- so it's a combination of upgrading countries and then having more feet on the ground also in terms of moderate vendors. So it's really across the board. And you want it across the board so that you have that tremendous reach. So that if we're converting an A.J. Wright store, you have a fantastic mix appropriate to that type of environment and then when you're opening in the middle of New York City or downtown Boston, again, you want a mix that's different. So it's really across the board.

And our next question comes from Mark Montagna [Avondale Partners]. Mark Montagna - Avondale Partners, LLC: The store openings for next year. If you're reducing the amount of inventory in the stores, turning the inventory faster, are you able to open smaller square footage stores?

I mean, we have. We still have our Mega Shoe stores. But it's a advantage to us. Again, it has to do with the real estate and the shape of the real estate, the size of the real estate. So we always look to -- we can do a $7 million to $20 million store, if that's what we would rather do.

One of the beauties of our business model is we don't have a defined footprint. So what we can do is we can open -- we can start a 20,000 square foot store, we can start a 40,000 square foot store. So really we are opportunistic in many ways and take what the market will give us. Marni Shapiro - The Retail Tracker: So you don't see the average store size decreasing by the different...

No. As a matter of fact when we can put a HomeGoods with a Maxx or HomeGoods with a Marshalls, it's terrific for us. So, again, we go with the deal, the right deal. I want to thank everyone. Thank you, Holly. And we look forward to giving you the results of our first quarter. Thanks.

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