FRAMINGHAM, Mass. — The TJX Cos. Inc. told shareholders at the company’s annual meeting Tuesday that it plans to expand its reach and keep a lid on expenses.
The nation’s largest off-price retailer is coming off a first quarter of record profits, with its stock up more than 40 percent this year and customer traffic gains across all divisions.
“For me, it’s still about one thing: execution,” said Carol Meyrowitz, president and chief executive officer, at company headquarters here. “I use that word all the time.”
In the short term, the $19 billion company will continue to pare expenses, shaving about $150 million in operating costs, running with lean inventories and reducing capital expenditures by 23 percent, to $450 million. But it will use its healthy balance sheet, which includes $1 billion of cash on hand, to grow its footprint, opening 15 to 20 more stores than initially projected, for a total of 75 to 85 new doors this year. It will also launch its first national network-television ad campaign, dual-branded for both components of its Marmaxx unit, TJ Maxx and Marshalls.
In the long term, Meyrowitz envisions taking the off-price model global. She’s buoyed by the retailer’s success in Germany, a highly regulated and tough retail market from which Wal-Mart Stores Inc. pulled out after years of losses. The European opportunity for the retailer is “vast,” she said.
In her letter to shareholders, Meyrowitz predicted the German market alone could support 300 stores.
The company’s more moderate off-price concept, A.J. Wright, is another bright spot. The family apparel concept, led by former Wal-Mart Stores Inc. executive Celia Clancy, turned in its first profitable year since 2003, posting a $2.9 million operating profit. Comparable-store sales for the division rose 12 percent in the first quarter, as A.J. Wright reversed a $885,000 year-ago loss to post $4.4 million in operating income.
At its 1,680-store Marmaxx division, TJX continues to roll out shop-in-shop boutiques featuring a changing mix of high-profile brands. The Cube, a 1,000-square-foot junior concept in Marshalls, launched in 280 stores last year after successful tests. TJ Maxx operates The Runway, featuring contemporary and designer goods in a smaller number of stores. The company also has been able to widen its vendor base — an upside, presumably, of being cash-rich in a down economy. Without naming names, Meyrowitz said the company inked deals with “hundreds” of new vendors in the first quarter alone.
The only mention of the company’s 2006 data breach, in which thousands of customer names and credit card numbers were stolen by hackers, came in an annual report note listing $171 million in costs associated with the scam. However, it was evident Tuesday that TJX has ratcheted up all aspects of security, photographing visitors upon arrival and having security guards confiscate briefcases and laptops before entry to the shareholders’ meeting.
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