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Inside the Store Expansion Plans of Off-Price Retailers in 2016

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Store networks

TJX Companies (TJX) has a wider store network than Ross Stores (ROST) and Burlington Stores (BURL). By the end of fiscal 2015, TJX Companies was operating 2,697 stores in the US under the brand names T. J. Maxx, Marshalls, HomeGoods, and Sierra Trading Post. Ross Stores operated 1,274 Ross Dress for Less stores and 172 dd’s Discounts stores at the end of fiscal 2015. Burlington Stores operated 566 physical stores at the end of fiscal 2015.

Unlike these other two off-price retailers, TJX Companies also has a strong international presence, with 387 stores in Canada, 495 stores in Europe, and 35 stores in Australia.

Inside the Store Expansion Plans of Off-Price Retailers in 2016

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Aggressive store growth plans

TJX Companies, the largest off-price retailer in the US, plans to add ~195 new stores in the fiscal 2016, thus bringing the store count to 3,809 stores. The company added a net of 219 stores in the previous fiscal year, reaching a total of 3,614 stores. TJX Companies’ store opening plans for the current fiscal year include 60 additional stores at Marmaxx, 50 new stores at HomeGoods, and five additional Sierra Trading Post stores in the US. In Canada, the company plans to add ~30 new stores, including new Winners stores in rural markets and nationwide opportunities for Marshalls stores. In Europe, TJX Companies plans to open 50 stores this year. The iShares US Consumer Services ETF (IYC) has 1.8% exposure to TJX Companies.

In Canada, the company plans to add ~30 new stores, including new Winners stores in rural markets and nationwide opportunities for Marshalls stores. In Europe, TJX Companies plans to open 50 stores this year. Notably, the iShares US Consumer Services ETF (IYC) has 1.8% exposure to TJX Companies.

Meanwhile, Ross Stores plans to open about 70 Ross Dress for Less stores and 20 dd’s Discounts locations in fiscal 2016. These store opening estimates do not reflect planned store closures or relocations. On March 29, Ross Stores announced that it opened a total of 22 Ross Dress for Less stores and six dd’s Discounts stores across 15 different states in February and March. Burlington Stores plans to open 25 net new stores in fiscal 2016.

In the 4Q15 press release, Nordstrom (JWN) disclosed its plans to open 20 new off-price Nordstrom Rack stores in fiscal 2016 and relocate two existing ones. At the end of fiscal 2015, Nordstrom was operating 194 Nordstrom Rack off-price stores.

Gearing up for competition

More and more, players are expanding to the off-price space to attract consumers with bargain deals. Fiscal 2015 saw Macy’s (M) make its debut in off-price retailing through Macy’s Backstage stores. Kohl’s (KSS) marked its entry through its first Off-Aisle Store. And despite this rising competition, off-price retailers still foresee strong growth opportunities. In the long-term, TJX Companies expects to open 3,000 Marmaxx stores in the US, 1,000 HomeGoods stores in the US, 500 stores in Canada, and 1,100 stores in Europe and Australia. Ross Stores expects its store count to double its existing store count to 2,500 locations in the US over the long-term. Burlington Stores sees an opportunity to reach 1,000 stores in the long term.

In the next part, we’ll look at how these companies measure up in shareholder returns.

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