TJX Cos., parent of TJMaxx, Marshall’s and HomeGoods, has found the silver lining in the cloud that hangs over much of retail’s soft goods sector.
“When we look at our value positioning in terms of how well we’re able to execute, we’re so well positioned in our ability to execute brand, fashion, quality and at the value pricing,” says Ernie Herrman, chief executive of TJX.
The company is adding market share as increased customer traffic drives sales, though earnings have been pressured by rising labor costs and freight charges. TJX expects comparable store sales will rise between 2 and 3 percent this year, which would be the 24th consecutive year of comp store increases. TJX added a total 160 U.S. stores last year and opened another 75 in the first three months of 2019.
Vendors are key to TJX’s operating strategy. With a network of 21,000 vendors in more than 100 countries, the company can acquire merchandise at bargain prices virtually anywhere in the world. The goods can then be retailed at 20 to 60 percent less than they would cost in department or large specialty stores.
TJX has downplayed the volatility in overseas sourcing precipitated by trade disputes and tariffs. Herrman says the situation has resulted in only “little snippets of disruption.” The strong dollar has also produced some negativity in currency exchanges from TJX’s Canadian and overseas businesses.
While not avoiding online sales entirely, TJX maintains a strong focus on its physical stores. “The thrill of the treasure hunt is TJX’s biggest competitive advantage. Rather than investing in expanding this experience online, they’ve continued to invest in improving that experience in stores by continuing to diversify its vendor relationships and ensuring that new and relevant product is tailored to the market and store level,” says Kantar’s Tiffany Hogan.