Off-pricer TJX Does What Macy’s Couldn’t and Grows
The TJX Cos. Inc. proved once again that it is a market share machine.
The off-price giant’s Marmaxx division — which includes TJ Maxx, Marshalls and Sierra — saw sales increase 12 percent to $10 billion in the fourth quarter ended Feb. 3.
Some of that growth came from an extra week compared with the fiscal quarter a year ago, but Marmaxx was also helped along by new stores, adding 51 doors and 1.1 million square feet of space over the past year. The existing base is also doing its part with comparable sales up 6 percent in the quarter.
In all, the quarter capped another year of growth for TJX, which drove its annual net income up 27.9 percent to $4.5 billion with a 8.6 percent gain in sales to $54.2 billion.
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TJX was traditionally more of a retail side show, making its money by scooping up inventory from full-price sellers like department stores and selling it at a discount.
But the off-pricers, led by TJX, are clearly a main attraction now, especially for consumers who are looking to stretch their dollars and enjoy a little bit of a treasure hunt with their retail.
It’s an ascent that has very much hit traditional retailers hard and the contrast between TJX and Macy’s Inc. could not be starker.
Macy’s said on Tuesday that its sales last year fell 6.2 percent to $23.9 billion — a level the department store last saw in 2005.
Over that same 19-year period, TJX added more than $40 billion in sales that were clearly there for the taking, even as Amazon took over online and Walmart continued to loom large in brick-and-mortar.
Macy’s has entered a “bold new chapter” and the newly appointed chief executive officer Tony Spring is planning a shrink-to-grow approach, with the department store aiming to close 150 of its namesake stores while its other nameplates are expanded.
That shrink-to-grow approach is widely seen as the right one for Macy’s, but it still plays into TJX’s hand.
Ernie Herrman, CEO and president of TJX, was asked about the “opportunity” posed by closing Macy’s stores on a conference call with analysts on Wednesday.
“Obviously with the Macy’s store closures, you do have a lot of overlap in categories that marry up to the businesses that we run,” Herrman said. “Not that we would get all of that [market share], but we would get some of it, is what we always figure.
“I like to give our planning and allocation organization a lot of credit because they look for trends and our system is sophisticated enough to look for the trends in nearby store closures and how they affect our stores, [like] HomeGoods or a Marmaxx store, and then we’re able to watch those trends and shift back and capitalize,” the CEO said, referring also to TJX’s home chain.
Anything that Macy’s gives up, TJX is clearly ready to grab.
