TJX Sees Future in Cheapskates
By Tom Ryan
Not seeing the bargain hunters leaving anytime
soon, TJX Cos. believes it can nearly double its size primarily by expanding
its core T.J. Maxx and Marshalls concepts. The prediction came last week
after the off-pricer reported fourth-quarter earnings jumped 57.6 percent
to $395 million. Revenues increased 10 percent to $5.9 billion with comparable
stores up 12 percent.
On a conference call, president and CEO Carol
Meyrowitz said gains were driven by new customers across income levels
flocking to its stores amid the downturn. She expects many of them to keep
shopping after the economy perks up.
“We believe that there has been a paradigm
shift among customers to value,” said Ms. Meyrowitz. “Regardless of whether
the economy is weak or strong, value isn’t going out of style. Also, if
some of our newly acquired customers go back to shopping at their favorite
high-end department store more often than in the past, it does not mean
they’ll stop shopping us. Our value proposition meets the needs of the
consumer in an unconventional way.”
She also said the chain’s “no walls” business
model enables it to shift rapidly to meet consumer needs.
“We can entirely eliminate one category and
open a new category within weeks or months,” said Ms. Meyrowitz. She also
credited her merchandising team with taking on over 2,000 new vendors
in 2009, bringing its supplier base up over 12,000.
are actually more of a sourcing machine than practically any other retailer,
and I am not sure that this is understood as well as it should be,” said Ms.
Meyrowitz. “I believe the
quality of our merchandize mix is more exciting than ever and getting even
better. My expectations for 2010 is to wow our customers even more.”
Also supporting the company’s sales growth
is an extensive store remodel
program launched in 2009 at its T.J. Maxx and Marshalls chains and bigger
investments in marketing to get its value message out. Company research
shows that that 75 percent of U.S. shoppers have not shopped its stores
in the past year.
“That means there are tens of millions of
untapped shoppers in just the U.S. alone we can attract to our stores with
great value,” said Ms. Meyrowitz.
TJX plans to expand its square footage by
five percent in 2010 and by another six percent in 2011, up from three
percent in 2009.
According to The Wall Street Journal,
one doubt came from the investment firm Jefferies, which believes the trend
of a “trade-down consumer” throughout the recession appears to be reversing
and the pendulum shifting away from TJX as the quantity of excess supply
Do you see value-oriented consumption persisting after the economic
recovery, supporting TJX’s expansion? What area (i.e., merchandising,
marketing, in-store experience) does TJX most need to work on to retain
the new customers it found during the downturn?
- The TJX Companies,
Inc. Q4 2009 Earnings Call Transcript – Seeking Alpha
- TJX’s Profit Rises
58% – The Wall Street Journal
- TJX 4Q profit rises
as shoppers seek discounts – The Associated Press/The Miami