FRAMINGHAM, Mass. — After racking up the biggest year-over-year profit increase in the firm’s 33-year history, The TJX Cos. Inc. hopes to extend the winning streak with a new off-price retail concept set to debut in spring 2011.
This story first appeared in the June 3, 2010 issue of WWD. Subscribe Today.
At its annual meeting at its headquarters here Wednesday, TJX, the largest off-price retailer in the U.S. with $20.29 billion in 2009 sales, declined to divulge details about the project until the third quarter but indicated the new business will stay within its core categories — principally apparel, accessories and home merchandise — and has the potential for 100 stores.
Even with recent expansion, TJX has a number of voids in the merchandise matrix it could seek to fill. With TJ Maxx and Marshalls of Marmaxx falling at or below bridge-contemporary price points and AJ Wright focused on moderate, TJX could explore designer and better apparel or launch a stand-alone venture dedicated to a single category, as the firm did in 1992 with HomeGoods and more recently with Shoe Megashop by Marshalls. Jewelry and accessories, which account for 13 percent of sales, provide potential, as does children’s wear, which performed well in 2009. Apparel and footwear accounted for 61 percent of revenues last year.
Despite a stellar year, TJX’s ambitions are to push further, faster. The retailer sees itself as a global player with the potential to grow net sales to twice the current levels.
“I continue to believe TJX can be a $30 billion and then a $40 billion retailer,” said president and chief executive officer Carol Meyrowitz during the annual meeting.
She did not give a time frame, but said the company can grow from 2,743 to 4,200 doors over time without new brands or entering new countries. In her letter to shareholders, Meyrowitz wrote: “We have seen positive business trends accelerate during the recession, underscoring our belief that there has been a fundamental shift in the consumer psyche toward value.”
In the first quarter, profits rose 58.4 percent to $331.4 million while sales rose 15.2 percent to $5.02 billion and gained 9 percent on a comparable-store basis.
“We’re off to a fantastic start,” said Meyrowitz, noting customer traffic increased across all divisions.
Last year, TJX boosted its bottom line 37.8 percent, to $1.21 billion, as sales expanded 6.8 percent to $20.29 billion and, matching the performance of the nation’s second-largest off-pricer, Ross Stores Inc., comps advanced 6 percent.
This year, TJX will invest most of its $750 million capital budget in Marmaxx and TJX Europe. The $13.3 billion Marmaxx division, which encompasses 1,703 TJ Maxx and Marshalls stores, will net 53 additional stores. Last year, Marmaxx produced a $1.59 billion operating profit on a 7 percent sales hike. Marmaxx has expanded profits each of the last three years, thanks to tighter inventory control, fewer markdowns and more ample markups. Juniors, dresses, footwear and children’s apparel outperformed. The company expects to have 700 stores renovated in a new prototype by fall, but declined to specify design changes.
TJX will also push forward in Europe, opening 54 stores across the U.K. (where it is the seventh-largest fashion retailer), Germany and Poland, which it entered in 2009 with four stores. Though the German market is notoriously difficult — Wal-Mart Stores Inc. pulled out after nearly a decade of losses — TJX anticipates its three-year-old operation will be profitable this year and can grow to 250 to 300 stores.
Once a weak link, the moderate-priced AJ Wright division turned in its best year, expanding profits more than fourfold to $12.6 million. However, TJX will open only eight Wright stores this year, for a total of 158, as it focuses on larger, more profitable divisions.
“We will pick up the pace next year,” said Meyrowitz, reaffirming AJ Wright has the potential to be a 500-store nameplate.
In its history, TJX has reported a comp decline only once.
After dumping $150 million worth of selling and administrative costs in 2009, the company plans to skim off another $50 million to $75 million this year. It will also repurchase roughly $1 billion worth of shares and boost the dividend by 25 percent.
Now in her fourth year as the firm’s ceo, Meyrowitz appeared in no way averse to risk in her comments to shareholders.
“Testing new ideas is part of our DNA,” she said.