Will a new TJX concept put more hurt on department stores?
The off-price chains that make up TJX Companies — Marshalls, T.J. Maxx and HomeGoods — are frequently brought up as a competitive factor to explain the struggles department stores have had in recent years. With yesterday’s news that the company is planning to launch a new off-price chain of home good stores, department stores may face worse struggles ahead.
While not revealing the name of the business, TJX CEO Ernie Herrman told analysts on yesterday’s earnings call that the new stores will not compete directly with HomeGoods.
“Our approach will be to differentiate these two U.S. home concepts to encourage customers to shop both stores, which has been key to our successful growth at T.J. Maxx and Marshalls in the U.S. and Winners and Marshalls in Canada,” he said (via Seeking Alpha).
“We plan to leverage our existing distribution centers, supply chain and buying organization, which is similar to what we did when we launched Marshalls in Canada,” said Mr. Herrman. “While we are proud to have grown HomeGoods’ customer base for many years, we believe we remain significantly underpenetrated in the total U.S. home market and enormous opportunity remains for us to gain share in this space.”
Mr. Herrman said the company plans to open four of the new concept stores this year. He told analysts that TJX has been testing many of the home categories that it plans to sell in the new stores for the last year-and-a-half. The company has “a high degree of confidence on what the store can do for business when it starts up later on this year,” he said.
Same-store sales at HomeGoods, which has more than 570 stores in the U.S., increased five percent in the fourth quarter on top of a seven percent increase posed in the same quarter a year earlier.
- The TJX Cos. (TJX) Q4 2017 Results (Earnings Call Transcript) – Seeking Alpha
- TJ Maxx Has Sent a Huge Warning to Any Company in America That Sells Home Furnishings – TheStreet
- TJX is planning a new chain that could deliver another blow to department stores – CNBC
- The TJX Companies, Inc. Reports Above-Plan Q4 and FY17 Comp Sales and EPS Results – TJX Companies, Inc.
- How much loyalty do off-pricers have? – RetailWire
DISCUSSION QUESTIONS: How do you explain the popularity of the various TJX chains? Do you think the company can successfully operate two different home goods chains in the U.S.?