Ladies and gentlemen, thank you for standing by. Welcome to the TJX Companies’ Third Quarter Fiscal 2016 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session [Operator Instructions] As a reminder, this conference call is being recorded on Tuesday, November 17, 2015. I would like to turn the conference call over to Ms. Carol Meyrowitz, Chairman and Chief Executive Officer of the TJX Companies, Inc. Please go ahead, ma’am.

Thanks, Melissa. And good morning everyone and before we get started, Deb has a few 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 31, 2015. 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 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, tjx.com. Reconciliations of the non-GAAP measures we discuss today to GAAP measures are included in today’s press release or otherwise posted on our website tjx.com, in the Investor Information section. Thank you. And now I'll turn it back over to Carol.

Thanks, Deb. And joining me and Deb on the call are Ernie Herrman and Scott Goldenberg. Before I review the quarter, I want to take a moment to say how excited we are about our recent news that Ernie will become the next CEO of TJX. As you the know, the Board plans to elect Ernie as CEO at the beginning of our next fiscal year. The board and I could not be more convinced that Ernie is the right person to lead TJX into the future is proven successful track record, leadership abilities, strategic vision, discipline and focus are all characteristics that we believe make an absolutely the right choice. Succession planning has always been a priority of TJX and we are confident that our long thoughtful and deliberate process will results in a seamless transition. I will remain active with the company in the role of Executive Chairman and very much look forward to continuing to work with Ernie and the team. Moving to the third quarter, I’m extremely pleased with our continued strong momentum, we are thrilled with our customer traffic gains as we continue to strive to takes a bigger piece of the pie. We believe on many initiatives to attract new shoppers are working and that we are growing our customer base. It was great to see strong performance across our apparel, accessory and home categories demonstrating that our amazing values and merchandise mix are resonating with our consumers across all of our geographies. Earnings per share was $0.86 significantly above our plan, our 5% consolidated comp store sales growth over 2% increase last year continued our strong trend from the first two quarters of the year and was also well above our expectations. The comp was entirely driven by customer traffic. This marks the…

Thanks Carol and good morning everyone. As Carol mentioned, our third quarter consolidated comparable store sales increased 5% continuing our strong trend this year and exceeding our plan. This quarter marks our 27th consecutive quarter of consolidated comp store sales growth. As a reminder, our comp sales exclude e-commerce. We were very pleased that customer traffic was the primary driver of our comp increases at every division. It was also great to see a strong increase in our unit sold again this quarter. As we anticipated, average ticket decreased which was essentially in line where we had planned it. Diluted earnings per share were $0.86 versus last year’s $0.85 and also well above our plan. It’s important to note that our third quarter EPS growth was negatively impacted by 7% due to foreign currency and transactional foreign exchange and about 4% primarily due to our wage initiatives and incremental investments. Consolidated pre-tax profit margin was 12.1% down 90 basis points versus the record margin in the prior year and significantly better than we planned. Gross profit margin was 29.0, down 40 basis points versus last year. Buying and occupancy leverage on the five comp was more than offset by transactional foreign exchange at our international divisions, increased cost associated with moving more units through our supply chain and e-commerce. We are delighted that merchandise margins remain strong in the third quarter, despite these headwinds. While overall merchandise margins were down slightly, we were very pleased to see an increase in our brick-and-mortar merchandise margins. SG&A expense as a percentage of sales was 16.7%, up 50 basis points versus last year’s ratio. This increase was primarily due to our wage initiative and increased supply chain costs as we had anticipated. At the end of the third quarter, consolidated inventories on a per store basis, including inventories held in warehouses, but excluding in-transit and e-commerce inventories were up 6% on a constant currency basis. We are very comfortable with our inventory position, which we strategically increased ahead of the fourth quarter to provide more flexibility to flow fresh merchandise goods to our stores with greater precession throughout the holiday season. We are in excellent position to take advantage of our flush marketplace for the quality branded merchandize and we will be buying right after the holidays. In terms of share repurchases during the third quarter, we bought back 459 million of TJX stock retiring 6.4 million shares. Year-to-date we have retired 19.1 million shares buying back 1.3 billion of stock. We continue to anticipate buying back 1.8 billion to 1.9 billion of TJX stock this year. Now, let me turn the call back to Carol and I'll recap our fourth quarter and full year fiscal 2016 guidance at the end of the call.

Thanks, Scott. Now I'll share some color on the third quarter by division. So, in the U.S., Marmaxx comp increased 3% and again this quarter was fantastic to see the comp was entirely driven by customer traffic, while segment profit margin was down 70 basis point, we had anticipated a negative impact to margins from our wage initiative and higher supply chain cost. Importantly, for the fourth consecutive quarter we saw an increase in merchandize margin. We continued our strategy of adjusting our pricing and merchandize mix to offer shoppers amazing assortments and value. As we expected this resulted in a lower average ticket, our gains in traffic, units sold and merchandize margins tell us our strategies are clearly working and underscore the flexibility of our business model. We believe our ability to adjust our values and mix to suite customers needs and preferences, differentiates us from many other major retailers. We expect our average ticket to be lower again in the fourth quarter, which is reflected in our guidance that Scott will review in a moment. We are convinced that our strategies will attract more shoppers during the holiday season, set us up well for the first quarter and benefit our business in the medium and long-term by driving traffic and market share gain. Wrapping up on Marmaxx, our apparel business performed well in the third quarter and home and accessories continue their excellent performance. Also, we opened our result in 1000 Marshalls store in October, a proud milestone for our business. HomeGoods delivered another excellent quarter, comps were up 6% over strong 7% increase last year. Segment profit margin increased 10 basis points and as we expected was impacted by our wage initiative. We are delighted with HomeGoods continued sharp execution and strong merchandise margin improvement. We believe…

Thanks Carol. Now to fiscal guidance beginning with the fourth quarter. We expect earnings per share to be in the range of $0.91 to $0.93 versus last year’s $0.93 per share. This guidance assumes an expected negative impact to EPS growth of about 5% due to foreign currency and transactional foreign exchange. Our plans also reflect a 4% negative impact to EPS due to a combination of our wage initiative, incremental investments to grow our market share and pension costs. I wanted to note that our plans also reflect a five-penny negative impact to EPS from a combination of factors that were not contemplated in our previous guidance. These costs include costs associated with Trade Secret as we start to integrate it into TJX, a lower average ticket at Marmaxx as Carol mentioned as well as the timing of some expenses. We are modeling fourth quarter consolidated sales in the $8.6 billion to $8.7 billion range. This guidance assumes a 2% negative impact to reported revenue due to translational FX. We are assuming comp sales growth of 2% to 3% on both a consolidated basis and at Marmaxx. Fourth quarter pretax profit margin is planned in the 11.3% to 11.5% range versus 12.4% last year. We are anticipating fourth quarter gross profit margin to be in the range of 27.7% to 27.8% versus 28.2% last year. This assumes foreign currency pressure and additional supply chain costs. Despite these headwinds, we expect underlying merchandise margins to remain strong. We are expecting SG&A as a percent of sales to be approximately 16.2% versus 15.7% last year primarily due to our wage initiative, costs associated with integrating Trade Secret into our business and increased supply chain costs. For modeling purposes, we are anticipating a tax rate of 37.4% and net interest expense of…

Thank you [Operator Instructions] And our first question comes from Omar Saad [Evercore ISI]. Your line is open.

Well thanks. Good morning, great job. Congratulations guys and Carol and Ernie also congratulations on everything going on.

Thanks Omar.

Thank you.

Clear changes. Actually I wanted to ask about weather. A year ago, you didn’t mentioned weather at all the day, a lot of retailers this earning season have been talking about weather. A year-ago you guys had talked a little bit about on seasonal weather in the third quarter and unseasonably cold in the first quarter last year. What has change that you have been able to - if anything you have been able to maybe adapt and avoid some of the weather put falls that hit you last year and that are hitting some of the other retailer this year? Thanks.

So Omar that’s all about execution and delivering the right products to right stores at the right time and every year we learn and we get better weatherproofing our business. And it just comes back to the model, we learn and we keep ourselves very flexible. So it’s just really guys executed extremely well, they did the right categories, the right timing, they did a fabulous job. So I would say rather I you know I would rather not talk about weather, but I hope every single quarter, we get better at figuring out how to transition, so just great execution.

That’s helpful. Thank you.

Thank you. The next question comes from Ike Boruchow [Wells Fargo Securities]. Your line is open.

Hi. Good morning everyone, let me add my congrats. I appreciate the color next year on the wages and how to think about that. Just to follow that up, the increase in supply chain costs due to the sustain so many units you’ve been running through the supply chain this year and also FX pressures, transaction impact into next year. Is there anything else you could help us when we think about any potential headwind that you might have on margins for next year in terms of those two other buckets?

Yes, I mean our average ticket - as we have said we have that build into our fourth quarter, a little bit into first quarter and then that should start to mitigate at that point. Foreign exchange, I hope it’s an opportunity next year and you never know.

Great. Thank you.

Thank you. The next question comes from Matthew Boss [JPMorgan]. Your line is open.

Hey, good morning. Congrats on a nice quarter.

Thank you.

So we know apparel promotional and there is inventory in the channel. I guess my question is any changes that you see necessary to your price algorithm versus how you initially laid it out. And then as we think about brick-and-mortar traffic that you generating versus peers. I mean what do you think is the secret sauce that’s driving the continued market share. And then as we think about the open to buying and pack way. I think more so the question is where you stand today versus historically and if you looked back how do you compare availability in the channel today versus the past?

I’m going to throw it over to Ernie for availability, because we are kind of looking at each other and going Oh My God, but any way. First of all, we really aren’t going to talk about our secret sauce, we have built a machine, we have buyers around the world, we think we have the most eclectic exciting mix and that’s what drives our business. Last year, we felt we wanted to improve our apparel mix, I think the guys did a fabulous job of the right brands in the right fashion and Ernie talked inventory, it's just really exciting.

Yes, I think Matthew first of all in terms of I think your first question was about pricing. We kind of work with the - the buyers are well aware where retails are across the industry and so from there, we are pretty closed in, we decided where the value should be, obviously we need to be the best value and so that's kind of how we do the pricing. We stay consistent for that model, having said that and Carol just started to allude to it. The market as you can imagine right now have availability which we've talked about before, I would say now availability beyond the normal amount of availability, I don't want to give you any specifics, but its across numerous brands and numerous categories throughout the store. And so that certainly helps us with the competitive pricing as you can imagine down the road. And as Carol said by the way on the secret sauce we can't give you specifics, but what I think the color I just gave you that that's a bit of how we operate. And as you guys know we have around a 1000 buyers worldwide that are able to take advantage of all the opportunities that are out there and we're into tremendous liquidity position. Right now coming out of this quarter allowing us to take advantage of any of the opportunities with the obvious availability that's out there. As well as our inventories, really in a position to take advantage of some low hanging fruit which we felt we missed some opportunities last fourth quarter on. So, hopefully that answer your questions.

Yes, we're in a fabulous open to buy position.

Great. Best of luck.

Thank you.

Thank you. The next question comes from Mike Baker [Deutsche Bank]. Your line is open.

Hi thanks. So a couple of questions, maybe if this is a serious stuff tell me, but so it sounds like you're giving customers a little bit more value to win some share, which seems to be working out. Is that sort of the same type of merchandize, but at better price or you sort of moving the mix down to product that might be a little bit more moderate?

Yes, Mike, some of it is mix, but a lot of it is looking at what we did last year and looking across the country at what is really the right, again the right product in the right parts of the country at the right time. So it's a combination of everything. It's just we get better at it. Every year we look and we say, what did we do wrong and what could we do better? We never look at it as let’s just repeat exactly what we did. We always try and improve and that's the part of innovation, it's part of learning, it's part of our secret sauce, it's part of our sourcing, so we strive to be better every year. That's what keeps our comps going.

Okay that makes sense. If, I could ask just two more quick sort of follow-up questions?

Maybe.

Okay, you said that merchandize margins were up in Marmaxx but…

On the brick-and-mortar, yes.

Oh, up in Marmaxx brick-and-mortar, okay, that's a clarification. So, why we would e-commerce drag it down? Is that mix, I assume that shipping is not in the merchandize margin, is that right?

Well, e-commerce doesn't produce the kind of operating income that Marmaxx does it, you are look at 14% almost operating income, so what it does do is build traffic, it is bringing in new customers and it's doing exactly what we wanted to do and it's giving the convenience of shopping, which is why we are differentiating it. Number one, it's not the same as that product in the store, because it's enticing for people to continue shopping 24/7. And we believe that as that grows in the future, it brings customers into the store which we are seeing. So the combination of bringing in new customers and seeing a lifetime value of a customer that shops online and in brick-and-mortar, is really what is driving for. So we carefully invest and that's why we're not going dung-ho and investing a billion dollars online that really wouldn't be smart. So when we say we're investing carefully and methodically that's what we mean.

Okay that makes sense. One more, quick one, [indiscernible] me and everyone else how you guys characterize your pack away, I think you said in the past not more than 10% of cost of goods sold, is that still a right way to think about it?

Absolutely, well, yes, we haven't really increased the percentage or - as Ernie just said, the market is so loaded with curing good and that's what you really want. Yes, at the end of the season are they going to be a ton of coats in cold weather available, probably and we'll take full advantage of that but we really want to be the best brands and most of current and the right fashion.

Great, I appreciate it. Thank you.

The next question is from Kimberly Greenberger [Morgan Stanley]. Your line is open.

Hi everyone this is Greg Baglione for Kimberly. Just first off really a nice quarter, just going back on the merchandize margin question and obviously really strong results year-to-date, aside from the attractive buying environment, could you just talk on a few things that sustain that momentum as you move into 2016. And then just a quick follow-up on Canada, obviously really impressive double-digit comps year-to-date, just any update or thoughts on what's going on in that environment and how you are seeing that longer term? Thanks

Well I'll answer, in terms of Canada I just think the group has been, we’ve built a foundation there Ernie put a team together and I think it’s now they are many years into it and I just their mix is absolutely terrific and they are executing extremely well. I have to go back to your first question, I am not really - didn’t quite understand, you said 2016 merchandise margins. Can you clarify?

Just on the strong improvement year-to-date what kind of keeps the momentum going as against next year, I understand the buying environment is very attractive right now, but just any other leverage that really keep that moving forward?

I think our liquidity position will really help us going forward. We are in a great position in terms of open to buy across the entire company and that really when you have a flush market like we said early on the script, I think really plays to us taking advantages of those opportunities and the margin to your question.

I think the other piece is just our supply chain that we move quicker and we invest in that so that we can deliver more often to a store and closer. So the guys will be in the market, probably the week of the holiday or the week right before and that’s what exciting about it. We can buy very close to need. Thank you. We have another question?

Thank you. Yes, the next question is from Stephen Grambling [Goldman Sachs]. Your line is open.

Yes, good morning. Thanks for taking the questions. Just a follow-up on the EBIT margin comment. Should we be rebasing Marmaxx's margin expectations lower longer term due to the supply chain costs from a lower ticket or e-commerce or can you recoup some of these pressures?

Well as I said the average ticket will start to mitigate probably a little less in the first quarter and then will start to really flatten out. On the wage, Scott do you want to reiterate that?

Yes, again we talked about the 4% impact to EPS. We really not at this time we are going to go into it by division, clearly, it effects the domestic divisions but there is going to be some pressure on the European divisions. In Europe, in the UK there is also some legislation passed in terms of higher minimum wage that’s reflected in that 4% number we get, but again a 4% EPS impact next year will effect Marmaxx and the HomeGoods divisions a bit more than they have this year.

I guess I was trying to ask another way, just I think historically you were guided to around call it low double-digit or 9% to 13% EPS growth incorporated some EBIT margin expansion and I am wondering has anything changed in that potential for EBIT margin expansion?

We will be going through - at the end of the year we will be talking going forward, but the wage impact will hit us next year. However, there is positive to that and we think that we keep people longer and we build our talent and we think that’s all positive to the in-store experience. So long-term I think that’s going to be positive for us.

Great. And I'll seek one other one if I can which is just as you end the year it looks like you are going to be around adjusted an adjusted or adjusted debt-to-EBITDA ratio around 1.7 times maybe a little above, where as you used to operate in the mid two for a about a decade. Can you just talk to how you evaluate the right leverage ratio for the business?

Sure. Some of the decrease is obviously by the strong operating performance, some of that is also on how the Moody’s and Standard & Poor’s have changed some of the valuation of the leases, so we’ve had a bit of a benefit from that going from the low two range to the 1.7 that you’ve talked about. But annually we go over the shareholder distribution policies with our Board in terms of what is the right mix of dividends and buyback and certainly we have kept our powder dry on the balance sheet. But at this point we have been trying to grow the dividend ahead of our earnings per growth and share growth and we have been consistently growing in around 20%. But really not going to go through what next year’s plans are at this point other than we have been very consistent in that distribution of all of our excess cash through dividends and buyback and certainly we see no change to that policy.

Great. Thanks. Best of luck for the holiday.

Thank you.

Thank you. The next question is from Roxanne Meyer [MKM Partners]. Your line is open.

Great. Thanks. Let me add my congratulations on a really solid quarter. Two questions for you. One, I was wondering if you could elaborate on a strength that you are seeing in Canada and Europe now for a couple of quarters and really what is behind that and driving that in each market? And then second, how should we think about the accretion of Trade Secret overtime, obviously it’s small, but curious to know if you can share your expectations for the impact? Thanks.

Okay, well Roxanne really the strength in Europe and Canada, I'm kind of repeating myself is really about execution. We really act as one and a global organization so we are able to advantage of the trends around the world and I just think that our team is getting stronger and stronger. So it just comes down to share execution. In terms of Trade Secret. Well we’re hoping a little bit smaller, but we’re hoping it’s a mini Canada, so we’re pretty excited about it. We’ll invest in it appropriately, but we think it’s a tremendous opportunity, there is really no great value retailers there, it’s a very strong demographic average income, it’s actually a little bit higher than Canada. So we’re feeling great about it.

Great. Thanks and best of luck for holiday.

Thank you.

Thank you. The next question comes from Paul Lejuez [Citi]. Your line is open.

Hey thanks guys. Just going back to Omar’s question. Can you actually share with us the comp by region. Just kind of curious about the delta between some of your stronger regions and which ones those were as well as your weaker regions. And then just second tjmaxx.com or tkmaxx.com are either of those large enough and growing fast enough to move the comp isle if they were to be included in your overall comp? Thanks.

So Paul, we were across the board strong, I’m not going to divided up by region, but we just had strong comp across the board. And as far as T.J. Maxx, Scott you do want to comment on that, I mean it’s small today, it’s a good growth but…

Yes, I would just say it’s too small enough at this point, it will just be a rounding if you happen to be close enough to make it round up or down, so I would say it’s just too small.

Even combined.

Yes, because as we’ve said before the total sales of the e-commerce businesses in an around the 1% range.

Got you. And then just one follow-up. Can you talk inventory by division where you might be a little bit heavier or lighter going to 4Q?

No, the real answer we’re in great shape across the Board.

Yes, I mean, we don’t go by prior division, I think as Ernie said, we feel real comfortable as we try to point out, it’s a timing of the inventory. So our inventories at the store level are exactly where we would want them to be and at the end of the third quarter.

Well on the DCs some of that’s or flow for opportunities like in Marmaxx. Basically in ratio to the sales I would tell you that each division is right where we want them to be. So we do look at it that way Paul, we look at the similar trend with the open to buy, with the inventory level not just one aspect. And at the same time by the way globally there is so much availability across every market that applies to Canada, Europe, U.S. and other markets that we didn’t even name. Again, we’re feeling very good about the inventory level relative to the sales trend in each division.

And just to reiterate on the inventory. I mean although we are up 6% on a per store basis. As we’ve said we would expect the end of the year inventory to be slightly up on a per store basis, again with stores where we were and obviously that means the DC inventory would be coming down accordingly. So we feel real good about that and again we have total sales plans with the comp and total close to 7% built in here.

Great. Thank you guys, good luck.

Thank you.

The next question we have comes from Bob Drbul [Nomura]. Your line is open.

Hi. Just a couple of quick questions. On the wage investments are you seeing a tighter labor market or are you having any challenge with the growth getting to right people into the stores?

Not at all. If anything, we think we’re attracting really traffic people. It’s so important to understand our culture too and that’s what really keeps our turnover pretty low and keeps people here year-after-year. We’re actually going to be soon hitting a 40-year anniversary of our first off prior store.

Great. And then just couple of questions on the e-commerce side. In terms of the expansion of brands with be offering there. Are you having luck taking your current brands or in the stores and expanding them online, are you getting that opportunity. Can you just talk about like success that you’re having with categories or success that you expect to have as you add new categories online?

So Bob we can talk about, yes we’ve been opening up more and more of current brick-and-mortar vendors onto the website. We don’t want to give specific names there, but that’s kind of an open book, you can shop the website and you’ll see them. Additionally, I would tell you without giving information specifically on how our category is doing. And I think we’ve talked about it before we’ve added new categories throughout the last six to nine months on the website and we are pleased with the way the new categories are performing. So that’s something you will see us continuing to do, but nothing jumps up by the way, it’s all kind of in proportion to the business, if you look at each category that’s on there they are all performing relatively similar in terms of the total, but we do look to continuing to offer more brands there.

Great. And just like it sounds like the inventory buying environment is pretty good for you guys I don’t know if you could just maybe give us the last time you saw environment like this in terms of your availability and the deals that you’re able to buy and seeing?

Yes. I’m going to tell first of all, there isn’t a year that Ernie is not like making the guide stay home. So it’s very plentiful now but every single year, we never have a shortage of finding merchandise that we love. So it just a matter of the magnitude of it, its plentiful today. But again it’s not - we’ve always had to manage our open to buy globally, it’s an ongoing process.

Okay. Thank you very much. Carol congratulations and Ernie best of luck, congratulations to you.

Thank you.

Thank you. The next question we have comes from Brian Tunick [RBC Capital]. Your line is open.

Thanks I'll add my congrats as well. I guess we’ve talked about that secular shift away from the department stores, I guess now it’s resulting in I guess new off-price competition for you. How, I guess do you guys or your buyers maybe think about the new off-price entrance and have the vendors are going to deal with that? And then secondly what are you seeing on the real estate availability side or on the rent side as you look to sign these leases for 2016? Thanks very much.

Okay. First of all, there is always competition in the world. We were just talking the other day and Ernie said, you remember [Low Men's] (Ph) and how many off-price stores there were out there. Our job is to be innovative, to be ahead of it. We've built a machine with the number of stores we have I mean 3,600 stores the vendor relationships, the cloud, the global leveraging, is all what makes TJX what it is, we’ve been doing this for almost 40-years. So there is always competition and our job is to be outrageous value every day and have a very unique eclectic mix and that’s what we strive for. We don’t harp on we move forward, we don’t harp on the competition, we like competition, we like when we are next two, I won’t name certain stores, but we’re fine with it, it brings traffic and our job is to do a better job. In terms of real estate, we’re excited, because we’ve opened more countries and Ernie is always balancing how much to do in Europe, how much to do in the United States, but we’ll update you on a store count next year, but today its business as usual.

Next question, ma’am?

Yes. Do we have another question?

Yes. So next question is from Lorraine Hutchinson [Bank of America Merrill Lynch]. Your line is open.

Thank you, good morning. I wanted to follow-up on the questions around Europe. How is the home penetration in Europe and how is that business done? And I guess following on that are there any updated thoughts on potentially open in a new concept in there to focus on that?

You mean expand our concept?

Right. Sorry expand your existing…

Yes [indiscernible] Ernie.

Yes. So Lorraine the home business has been very strong there and what Carol is just joking about is you know we have HomeSense there, which has been expanding sporadically I would say or cautiously we’ve been expanding. But now we’re going on really a pretty long stretch here, strong home business and I would tell you it has grown in percent for the total there. We can’t give you that number, but we can tell you it has grown and we are looking to continue to expand that business and that banner and its healthy in TK as well. So our home business is very healthy in Europe and we look at that further as an opportunity.

And sorry I was referring to new market specifically, are there plans to open the HomeSense into some of the new countries that you’ve entered?

We will eventually, yes. Lorraine I think the thing - what Ernie is doing right now is building the buying group and the team to get a strong foundation, but certainly that’s not in our store count, but we certainly see it is.

We see that as an opportunity for sure.

Yes.

Thank you.

Your next question comes from Michael Binetti [UBS]. Your line is open.

Hey guys good morning and congrats on a nice quarter. I know we asked this, there is a few questions on AUR and strategy here and you’ve mentioned that it starts to flatten as we get into it the early in the year. But given that its sluggish industry backdrop and sales loaded inventory levels we’re seeing across the space. Would you guys thinking other strategic decision to lower AURs again in 2016 to maintain that relative price gap as the soft line competitors. Do you say more promotional or is your view late in the year that it flattens out, is that an expression of your opinion that this is temporary for area like the department stores and that they will be back to normally AURs and will be relative value next year?

I think it’s a combination of mix and also the level of brands. I mean we are getting outrageous deals from a lot of better brands. So we’re pretty comfortable with going into the second quarter. We will always keep the right distance between us and everyone it may be, yes we will be at the right value, but I think we're pretty clear in what we see going forward.

Yes, and because of the open to buy position we're in, whatever happens around us and I think Carol is saying the same things as we can adapt, our buyers will really decide closer in, because we have so much open to buy that we buy so close to me, which is part of our model on flexibility we've talked about that we'll be able to adapt to whatever is going on retail around us. There is a little bit of a lag, but for the most part we will adjust based on that.

And then your traffic trends in this backdrop suggests that you're gaining share and accelerating pace, and you pointed to some solid trends with new customer acquisition. Could you talk a little bit about what difference you're seeing in the mix of demographics and new customers, compared to the newly recruited customers a few years ago. A few years ago there was a lot of commentary on being more relevant with budget strap millennials coming out of recession, I'm curious what kind of customers are entering the franchise today.

Yes, we're getting the younger customers. We absolutely are, even in our HomeGoods is even getting younger customer, and they're targeting it, we want to get them young and we want to keep them, but we're keeping our -- again we've such a wide demographic of all the customers and younger, but our newer customers are tending to be younger.

Thanks a lot.

Thank you. And our final question comes from Marni Shapiro [The Retail Tracker]. Your line is open.

Hey guys congratulations and congratulations Ernie and Carol, so, when you retire [indiscernible] I think you would much better than that currently we have out there?

I don't want to be President but [indiscernible].

On wages, I just wanted to follow-up on the wages, along with raising the wages, first of all are you doing this globally, are you doing this also at the manager, assistant manager and regional manager level. And at the same time are you shifting to more full-time employment versus part-time employment, if you could just give a little more insight there?

I mean basically we're raising the average pay, we look at it across the board, everything that Scott gave you in terms of the number is inclusive and it's inclusive of what we've done globally. So, A, we've buy the by the laws, but B, we felt it was the right thing to do and our goal is to retain people and to build to our culture. We look at everything in the long-term and we want people to come into work here and be happy everyday and work harder at TJX. So, I think we're building the right environment and I think we're doing all the right things for the future.

Are you shifting to have more full-time people - employers or that's not part of the strategy?

Well, pretty much the way we're today, we haven't really changed this.

In the last couple of years, it's been pretty steady.

Right.

That’s fantastic. Great guys, best of luck for the holidays.

Thank you.

Thank you.

Well I want to thank everyone and have a great holiday and we look forward to reporting our fourth quarter and have a great one and thank you Melissa.