• Consolidated same store sales decreased 1% for the third quarter and increased 2% for the nine-month period over last year's comparable periods. Foreign currency exchange rates negatively impacted same store sales for the third quarter of fiscal 2009 by two percentage points. Therefore, without this impact, consolidated same store sales increased by 1% for the quarter. For the first nine months, currency rates had no impact on same store sales. Additionally, during the third quarter and nine-months ended October 25, 2008, we experienced an increase in customer traffic across the majority of our businesses.

• Our third quarter pre-tax margin (the ratio of pre-tax income to net sales) was 8.8% compared to 8.7% for the same period last year. For the first nine months, our pre-tax margin was 7.7% compared to 5.9% for the same period last year. Comparisons of pre-tax margins for fiscal 2009 to fiscal 2008 were impacted by the mark-to-market adjustments on inventory-related hedges due to changes in foreign currency rates (discussed below) and the Provision for Computer Intrusion related costs. The following table summarizes the impact of these items on pre-tax margin for each period:

                                                             Percentage Point increase (decrease) in Pre-tax margin
                                                        Thirteen Weeks Ended                      Thirty-Nine Weeks Ended
                                                 October 25,           October 27,            October 25,           October 27,
                                                    2008                  2007                    2008                  2007
Foreign currency impact on the
mark-to-market adjustment of
inventory-related hedges                               0.8                   (0.2 )                   0.2                 (0.1 )

Provision (credit) for Computer Intrusion
related costs                                          0.1                   (0.0 )                   0.1                 (1.7 )

• Our cost of sales ratios improved in both the third quarter and nine-month periods, primarily due to the favorable impact of currency exchange rates on the valuation of our inventory-related hedges. Consolidated merchandise margins were essentially flat in the quarter and improved for the nine months despite the impact of higher fuel costs. The cost of sales ratio in both periods was negatively impacted by an increase in buying and occupancy costs as a percentage of net sales. Selling, general and administrative expense ratios increased by 0.6 percentage points for the third quarter of fiscal 2009 compared to the same period last year and increased 0.2 percentage points for the nine-month period. Both the quarter and year-to-date ratios were up due to deleverage on the low same store sales as well as certain favorable expense items last year which were not repeated this year.

• Income from continuing operations for the third quarter of fiscal 2009 was $254.1 million, or $0.58 per diluted share compared to $251.3 million, or $0.54 per diluted share, in last year's third quarter. Income from continuing operations for the nine months ended October 25, 2008 was $664.2 million, or $1.50 per diluted share compared to $478.6 million, or $1.02 per diluted share, for the same period last year. Diluted earnings per share from continuing operations has been increased (decreased) by the following items:

                                                     Thirteen Weeks Ended                  Thirty-Nine Weeks Ended
                                                October 25,        October 27,         October 25,         October 27,
                                                   2008                2007               2008                2007
Computer intrusion provision                         0.01                   -               0.01                (0.28 )
Tax-related adjustments                                 -                   -               0.02                    -
Foreign exchange:
Translation of foreign divisions to U.S.
dollars                                             (0.02 )                 -                  -                    -
Mark-to-market adjustment on inventory-
related hedges                                       0.05               (0.02 )             0.04                (0.02 )

• During the third quarter of fiscal 2009, we repurchased 7.2 million shares of our common stock at a cost of $226.0 million, and during the first nine months of fiscal 2009, we repurchased 21.2 million shares of our common stock at a cost of $676.1 million. Our diluted earnings per share reflect the benefit of our stock repurchase program.

• Consolidated average per store inventories, including inventory on hand at our distribution centers, as of October 25, 2008 were down 6% from the prior year, versus a decrease of 1% as of October 27, 2007 from the comparable prior year period. Excluding the impact of foreign currency exchange, average per store inventories, including inventory on hand at our distribution centers, as of October 25, 2008 were down 1% compared to the prior year.

The following is a discussion of our consolidated operating results, followed by a discussion of our segment operating results. All references to earnings per share are diluted earnings per share unless otherwise indicated.

Net sales: Consolidated net sales for the quarter ended October 25, 2008 were $4.8 billion, up 2% from $4.7 billion in last year's third quarter. The increase in net sales for this year's third quarter included 3% from new stores, offset by a 1% decrease in same store sales. Consolidated net sales for the nine months ended October 25, 2008 were $13.6 billion, up 5% from $12.9 billion in last year's comparable period. The increase in net sales for the nine months ended October 25, 2008 included 2% from same store sales and 3% from new stores. New stores are a major source of sales growth. Our consolidated store count as of October 25, 2008 increased by 5% from a year ago and selling square footage as of October 25, 2008 increased by 4%.
The same store sales decrease for this year's third quarter was negatively impacted by two percentage points from foreign currency exchange rates, compared to a positive impact of two percentage points in last year's third quarter. Excluding the impact of foreign currency exchange rates in both years, same store sales increased 1 percentage point for the third quarter of fiscal 2009 and fiscal 2008. The same store sales increase for the fiscal 2009 nine months was not impacted by foreign currency exchange rates and fiscal 2008 nine month period was favorably impacted by approximately one percentage point from foreign currency exchange rates.
Same store sales increases (excluding the impact of foreign currency exchange) for both the quarter and nine months ended October 25, 2008 were driven by strong performance at our international divisions and an increase in customer traffic volume at virtually all of our off-price businesses. Shoes, accessories and dresses performed well. Home fashions were adversely affected by the weak housing market in the U.S. Geographically, sales in Canada and the United Kingdom were above the consolidated average, while in the United States, sales in the West Coast and Florida trailed the consolidated average. We define same store sales to be sales of those stores that have been in operation for all or a portion of two consecutive fiscal years, or in other words, stores that are starting their third fiscal year of operation. We classify a store as a new store until it meets the same store criteria. We determine which stores are included in the same store sales calculation at the beginning of a fiscal year and the classification remains constant throughout that year, unless a store is closed. We calculate same store sales results by comparing the current and prior year weekly periods that are most closely aligned. Relocated stores and stores that are increased in size are generally classified in the same way as the original store, and we believe that the impact of these stores on the consolidated same store percentage is immaterial. Consolidated and divisional same store sales are calculated in U.S. dollars. We also show divisional same store sales in local currency for our foreign divisions because this removes the effect of changes in currency exchange rates, and we believe it is a more accurate measure of the divisional operating performance.
The following table sets forth our consolidated operating results expressed as a percentage of net sales:

                                                   Percentage of Net Sales                  Percentage of Net Sales
                                                    Thirteen Weeks Ended                    Thirty-Nine Weeks Ended
                                              October 25,          October 27,         October 25,          October 27,
                                                  2008                 2007                2008                 2007
Net sales                                            100.0 %              100.0 %             100.0 %              100.0 %

Cost of sales, including buying and
occupancy costs                                       74.1                 74.7                75.1                 75.5
Selling, general and administrative
expenses                                              17.2                 16.6                17.1                 16.9
Provision for Computer Intrusion related
costs                                                 (0.1 )                0.0                (0.1 )                1.7
Interest expense (income), net                         0.1                  0.1                 0.1                  0.0

Income from continuing operations before
provision for income taxes*                            8.8 %                8.7 %               7.7 %                5.9 %

* Due to rounding, the individual items may not foot to Income from continuing operations before provision for income taxes

Impact of Foreign Currency Exchange Rates: Our fiscal 2009 third quarter operating results were adversely affected by foreign currency exchange rates as a result of significant changes during the quarter in the value of the U.S. dollar in relation to other currencies as follows:

Translation of foreign operating results into U.S. dollars: In our financial statements, we translate the operations of our stores in Canada, the U.K., Ireland and Germany from local currencies into U.S. dollars using currency rates in effect at different points in time. Significant changes in foreign exchange rates from comparable prior periods result in meaningful variations in consolidated same store sales, income from continuing operations and earnings per share growth as well as comparable store sales and operating results of our foreign segments between periods as a result of currency translation. Currency translation does not affect our operating margins as sales and expenses of the foreign operations are translated at the same rates each period. Inventory hedges: Additionally, we routinely enter into inventory-related hedging instruments to mitigate the impact of foreign currency exchange rates on merchandise margins when our international divisions purchase goods that are not denominated in their local currency, primarily U.S. dollar purchases. As we have not elected "hedge accounting" as defined by SFAS No 133 ("Accounting for Derivative Instruments and Hedging Activities"), under generally accepted accounting principles, we are required to record a mark-to-market adjustment on the hedging instruments in our results of operations at the end of each quarter which is prior to the currency gain or loss being recorded on the item being hedged. Thus the income statement impact of the hedges is effectively offset the following quarter when the related inventory is sold. While this adjustment occurs every quarter, it is of much greater magnitude when there is significant volatility in currency exchange rates, as there was in the third quarter of fiscal 2009. The impact of the mark-to-market adjustments on these hedges affects both our operating margins and earnings growth.
Cost of sales, including buying and occupancy costs: Cost of sales, including buying and occupancy costs, as a percentage of net sales, decreased 0.6 percentage points for the quarter ended October 25, 2008 as compared to the same period last year. The favorable impact of the mark-to-market adjustments on inventory hedges this year compared to the unfavorable impact in last year's third quarter improved this expense ratio by 1.0 percentage point. This improvement was offset by the delevering of occupancy costs, which increased 0.5 percentage points as a percentage of sales. Consolidated merchandise margin was flat for the third quarter of this year compared to last year despite increases in fuel costs.
For the first nine months of fiscal 2009, cost of sales, including buying and occupancy costs, as a percentage of net sales, decreased by 0.4 percentage points, as compared to the same period last year. The favorable impact this year compared to the unfavorable impact in the prior year of the inventory-related hedges improved the year-to-date expense ratio by 0.3 percentage points. Consolidated merchandise margin on a year-to-date basis improved by 0.4 percentage points with improved mark-on and reduced markdowns more than offsetting higher fuel costs. These improvements in the cost of sales expense ratio were offset by an increase in buying and occupancy costs as a percentage of net sales of 0.4 percentage points.
Selling, general and administrative expenses: Selling, general and administrative expenses, as a percentage of net sales, increased 0.6 percentage points for the third quarter and increased 0.2 percentage points for the nine months ended October 25, 2008 as compared to the same periods last year. The increase in selling, general and administrative expenses, as a percent of net sales, was impacted by the deleveraging of low single digit same store sales as well as some expense benefits in last year's third quarter that did not recur in fiscal 2009, primarily a $10 million reduction for casualty insurance losses. Provision for Computer Intrusion related costs: Since the discovery of the Computer Intrusion through the end of the fiscal 2009 third quarter, we had cumulatively expensed $195 million with respect to the Computer Intrusion, including costs incurred prior to establishment of a $178.1 million pre-tax reserve in the fiscal 2008 second quarter. The reserve was subsequently reduced by $19 million in the fiscal 2008 fourth quarter and by $7 million in the current fiscal 2009 third quarter. The fiscal 2009 third quarter reduction in the reserve of $7 million increased net income by approximately $4 million, or $0.01 per share, for both the quarter and nine-months ended October 25, 2008. Costs relating to the Computer Intrusion incurred and paid after establishment of the reserve are charged against the reserve, which is included in accrued expenses and other liabilities on our balance sheet.
As of October 25, 2008, our reserve balance was $58 million, which reflects our current estimation of remaining probable losses (in accordance with generally accepted accounting principles) with respect to the Computer Intrusion. This balance also includes our current estimation of total potential cash liabilities from pending litigation, proceedings,

investigations and other claims, as well as legal, monitoring, reporting and other costs, arising from the Computer Intrusion. As an estimate, our reserve is subject to uncertainty, and our actual costs may vary from our current estimate and such variations may be material. We may decrease or increase the amount of our reserve to adjust for developments in the course and resolution of litigation, claims and investigations and related expenses and insurance and for other changes.
Interest expense (income), net: Interest expense (income), net amounted to expense of $5.4 million for the third quarter of fiscal 2009 compared to expense of $3.1 million for the same period last year. Interest expense (income), net, amounted to expense of $9.8 million for the nine months ended October 25, 2008 compared to income of $0.4 million for the same period last year. The increase in net interest expense is primarily due to a reduction in interest income which totaled $3.4 million in the third quarter this year versus $7.3 million for the same period last year and $17.6 million for the nine-month period this year versus $30.4 million for the same period last year. The additional interest income last year was due to higher cash balances available for investment as well as higher interest rates.
Income taxes: The effective income tax rate was 39.2% for the third quarter this year compared to 37.7% for last year's third quarter. This year's third quarter effective rate included the negative impact (0.5 percentage points) of foreign exchange losses on certain intercompany loans not deductible for tax purposes. In addition last year's effective rate included the benefit associated with a change in assertion regarding the undistributed earnings of its Puerto Rican subsidiary and the related recognition of accumulated foreign tax credits. This item reduced last year's effective rate by 1.3 percentage points. The effective income tax rate for the nine months ended October 25, 2008 was 36.9% as compared to 37.8% for last year's comparable period. In addition to the negative tax impact of foreign exchange losses on intercompany debt, the nine months ended October 25, 2008 included a $15 million reversal of some uncertain tax positions as a result of federal and state filings and a $4 million benefit due to revised guidance on the deductibility of performance-based pay for executive officers and tax benefits relating to TJX's Puerto Rican subsidiary. On a combined basis, the net effect of these items reduced the fiscal 2009 nine-month effective income tax rate by 1.8 percentage points. In addition, last year's year-to-date effective income tax rate was favorably impacted by 0.9 percentage points due to the third quarter treatment of its Puerto Rican subsidiary as described above.
Income from continuing operations Income from continuing operations for this year's third quarter was $254.1 million, or $0.58 per diluted share, versus $251.3 million, or $0.54 per diluted share, in last year's third quarter. Income from continuing operations for the nine months ended October 25, 2008 was $664.2 million, or $1.50 per diluted share, versus $478.6 million, or $1.02 per diluted share, in the same period last year. The $4.0 million, after-tax adjustment to the Computer Intrusion Provision benefited fiscal 2009 third quarter diluted earnings per share from continuing operations by $0.01. The $130.2 million after-tax charge relating to the Computer Intrusion adversely affected the fiscal 2008 nine-month diluted earnings per share from continuing operations by $0.28 per diluted share. In addition, the third quarter and nine-month periods of fiscal 2009 were both impacted by the foreign currency items discussed above.
Discontinued operations and net income: In August 2008, we sold Bob's Stores and recorded an after-tax loss from discontinued operations of approximately $18 million, or $0.04 per share in the fiscal 2009 third quarter. Accordingly, all historical financial statements have been adjusted to reflect Bob's Stores as a discontinued operation. Including the impact of discontinued operations, net income for the third quarter of fiscal 2009 was $235.8 million and diluted earnings per share were $0.54, which compares to net income of $249.5 million, or $0.54 per diluted share, for the same period last year. For the first nine months of fiscal 2009, including the impact of discontinued operations, net income was $629.9 million and diluted earnings per share were $1.42, which compares to net income of $470.6 million, or $1.00 per diluted share, for the same period last year.
Segment information: The following is a discussion of the operating results of our business segments. In the United States our T.J Maxx and Marshalls stores are aggregated as the Marmaxx segment, and HomeGoods and A.J. Wright each is reported as a separate segment. TJX's stores operated in Canada (Winners, HomeSense and StyleSense) are reported as the Winners segment and TJX's stores operated in Europe (T.K. Maxx and HomeSense) are reported in the T.K. Maxx segment. We evaluate the performance of our segments based on "segment profit or loss," which we define as pre-tax income before general corporate expense, Provision for Computer Intrusion related costs and interest. "Segment profit or loss" as we define the term may not be comparable to similarly titled measures used by other entities. In addition, this measure of performance should not be considered an alternative to

net income or cash flows from operating activities as an indicator of our performance or as a measure of liquidity. Presented below is selected financial information related to our business segments (U.S. dollars in millions):

Marmaxx

                                                      Thirteen Weeks Ended                   Thirty-Nine Weeks Ended
                                                 October 25,         October 27,         October 25,          October 27,
Dollars in millions                                 2008                2007                2008                 2007

Net sales                                       $   3,058.2          $ 3,008.8          $   8,817.7          $   8,554.0
Segment profit                                  $     278.7          $   309.4          $     855.2          $     834.0
Segment profit as a percentage of net
sales                                                   9.1 %             10.3 %                9.7 %                9.8 %
Percent increase (decrease) in same store
sales                                                     0 %               (1 )%                 1 %                  1 %
Stores in operation at end of period                                                          1,679                1,628
Selling square footage at end of period
(in thousands)                                                                               40,930               39,881

Net sales for Marmaxx increased 2% for the third quarter of fiscal 2009 as compared to the same period last year and increased 3% for the nine months ended October 25, 2008 as compared to the same period last year. Same store sales for Marmaxx were flat for the third quarter and increased 1% for the nine-month period. We executed our off-price fundamentals well during the third quarter by maintaining a very liquid inventory position and investing inventory dollars in fashion trends with high customer demand.
Sales at Marmaxx for both the third quarter and nine-month periods reflected increased customer traffic and same store sales increases in footwear and accessories, children's apparel and dresses that were above the chain average. During the nine months ended October 25, 2008, we added 217 expanded footwear departments to Marshalls stores, and intend to add expanded footwear departments to 3 more stores in fiscal 2009. Home categories at Marmaxx reported same store sales decreases in both the third quarter and the first nine months of fiscal 2009. Geographically, same store sales in the Northeast and Mid-Atlantic regions were above the chain average, while same store sales in the West Coast, Florida and the Southeast were below the chain average for both the third quarter and first nine months of fiscal 2009.
Segment profit for the third quarter ended October 25, 2008 was $278.7 million, a 10% decrease compared to last year's third quarter. Segment profit as a percentage of net sales ("segment profit margin" or "segment margin") for the third quarter of fiscal 2009 decreased to 9.1% from 10.3% for the same period last year, driven by deleverage on the flat same store sales, mainly increased occupancy costs as a percentage of net sales (0.7 percentage points) and store payroll as a percentage of net sales (0.3 percentage points). Merchandise margin for the fiscal 2009 third quarter held essentially flat with last year's strong margin despite the negative impact of higher fuel costs. The third quarter segment margin comparison was also negatively impacted by an expense benefit . . .