uploads///Consistent Performance

TJX Companies: A Growth Story Investors Should Know About

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Apr. 9 2015, Updated 1:39 p.m. ET

Overview

TJX Companies, Inc. (TJX) is a leading off-price retailer of apparel and home furnishings. The company has a strong presence, with more than 3,300 stores in the United States, Canada, and Europe.

Headquartered in Framingham, Massachusetts, TJX has emerged as a strong player in the retail industry, with $29.1 billion in revenues in fiscal 2015 ending January 31, 2015.

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Tracing the roots

The journey for TJX Companies started in 1919 with the New England Trading Company in Boston, Massachusetts, founded by brothers Max and Morris Feldberg. The brothers opened their first retail store in 1929, which expanded rapidly and evolved in the mid-1950s to the Zayre discount department store chain. In the mid-1970s, the company entered the off-price category through the T.J. Maxx stores and continued to expand to become one of the leading off-price retailers.

Off-price retailing

Off-price retailing involves selling merchandise at deep discounts compared to prices for comparable merchandise at department stores or other retailers. Generally, off-price retailers buy excess inventories or cancelled orders from designers at low prices and pass the savings on to customers. TJX Companies sells its fast-moving merchandise assortment at 20%–60% below the prices offered by department and specialty stores.

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Strong industry presence

With its off-price business model and operational efficiency, TJX Companies has consistently performed well, even in difficult economic conditions. The company’s net sales have grown at a compounded average growth rate (or CAGR) of 7.5% to $29.1 billion in the period from fiscal 2010 through fiscal 2015. In fiscal 2015, TJX Companies finally surpassed the revenues of Macy’s (M), the largest department store.

Ross Stores (ROST), a smaller rival in the off-price space, registered a five-year CAGR of 9.0%. Department stores such as Kohl’s Corporation (KSS), Macy’s (M), and Nordstrom (JWN) posted a CAGR of 2.1%, 3.7%, and 9.4%, respectively, over the same period. The Gap (GPS), a specialty apparel retailer, recorded a five-year CAGR of 3.0% in its net sales, reaching $16.4 billion.

TJX Companies makes up ~1.0% of the SPDR S&P Retail ETF (XRT).

Series overview

In this series, we’ll take a look at TJX Companies’ business structure, performance, strategies, valuation, and competitive position.

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