Off-Price Retail Giant TJX Cos. Plans To Debut 150 Stores This Year, With Long-Term Goal of 1,400 Ad
TJX Cos., the global off-price retailer, is looking to open about 150 stores this year and sees an overall target of 1,400 new brick-and-mortar sites as attainable with the support of cost-conscious shoppers and a boost from the travails of its competitors.
The Framingham, Massachusetts-based company — parent of chains such as T.J. Maxx, Marshalls and HomeGoods — provided the update on its store-fleet expansion during a fiscal fourth-quarter earnings call. The company reported a solid quarter, with total sales increasing 4.8% and U.S. comparable-store sales up 4%.
Retailers that cater to frugal shoppers looking to save money fared relatively well last year in an environment of record inflation, when some consumers were struggling to even buy essentials such as groceries and gas. Earlier this week, discounter Walmart, the largest U.S. retailer by revenue, said its U.S. comparable store sales rose 8.3% for the fourth quarter.
But it and The Home Depot offered tempered 2023 outlooks because of continuing economic headwinds. T.J. Maxx and Marshalls — and their rivals such as Burlington Stores and Ross Stores — attract shoppers by offering bargains on apparel and home goods as off-price retailers, or chains that sell branded or designer items to consumers at much lower prices than traditional stores.
TJX officials also said they have additional momentum going into this year because some of their competitors are suffering financial troubles. CEO Ernie Herrman didn't identify any of those retailers by name. But home-goods seller Bed Bath & Beyond barely avoided bankruptcy and was bailed out by a more-than-$1 billion stock offering, and is still closing hundreds of stores. And Party City, the largest party-goods retailer in North America, has filed for Chapter 11 protection and is shutting several dozen stores.
TJX expects both customers of such chains, and those retailers' vendors, to be coming to it instead, according to Herrman and TJX Chief Financial Officer John Klinger.
“We’re likely to benefit from other home-store closures, so we still feel very positive about the home goods business,” Klinger told Wall Street analysts.
TJX — which has stores in not only the United Sates, but Canada, Europe and Australia — will “come out a bigger player in a fashion-home business than anybody thought we would be,” Herrman said.
“Availability of quality branded merchandise is phenomenal," he said. "We are in a great position to take advantage of the opportunities we are seeing in the marketplace. Further, we are convinced that our commitment to value and our treasure-hunt shopping experience will continue to serve us well in this environment. Importantly, we continue to see many opportunities to capture market share and improve profitability over both the short and long term.”
During the fiscal year ending Jan. 28, TJX said it increased its total store count by 146 to a total of 4,835 stores — with 3,500 in the United States — and its total square footage rose 3% to 127.4 million over the prior year. TJX is seeking to add about 150 net new stores this year, which would bring the year-end total to nearly 5,000 stores, up 3%, according to Klinger.
“Long term, we see the potential to open more than 1,400 additional stores across our current geographies, which we believe will attract even more shoppers to our great assortments and values,” Herrman said, echoing remarks he made a year ago.
Last year domestically TJX debuted a combined 50 T.J. Maxx and Marshalls stores. TJX's Marmaxx unit includes those two chains and Sierra.
TJX's home furnishing division surpassed 900 stores, opening over 50 HomeGoods and Homesense stores last year, according to Herrman.
“Long term, we continue to see the potential for HomeGoods to open over 500 additional stores and for profitability to significantly improve,” he said.
In Canada, TJX operates over 550 stores “and is very well penetrated throughout the country,” according to Herrman.
This year domestically TJX plans to open 45 net new T.J. Maxx stores, Klinger said. There will also be 50 new U.S. HomeGoods stores, including 18 Homesense stores, as well as 18 new Sierra stores.
Canada will see 11 new TJX stores, while Europe will get 18 more and Australia six more, Klinger said.
Neil Saunders, managing director of GlobalData, issued a note for clients on TJX's results.
"After a couple of softer quarters, TJX has rounded off its fiscal year with a positive set of numbers that buck some of the gloom surrounding the retail sector," he said. "
But Saunders also expressed caution.
"Despite the success over the golden quarter, the outlook for the year ahead is more modest with comparable sales increases of around 2% to 3% penciled in," he said. "This reflects a view that discretionary spending will remain under pressure and that even off-price, with its value-for-money mantra, will not be able to buck that trend entirely. Even so, we think this would represent a reasonable performance for TJX and allow it to remain one of the winners in both the off-price and the overall retail markets."
Elgin Development Group
Linda Moss, CoStar
- February 23, 2023