The parent of off-price retailers including T.J. Maxx and HomeGoods is accelerating global expansion plans, raising its long-term target by 500 stores to operating 7,500 locations.
Framingham, Massachusetts-based TJX Cos. offered the update Wednesday when it reported its fiscal second-quarter earnings. President and CEO Ernie Herrman said the company sees “a long runway for growth ahead” for many years to come. That can be accomplished, in part, by opening more stores in rural areas and putting small-format locations in urban neighborhoods, according to company officials.
TJX has roughly 5,200 stores in 10 countries under banners including T.J. Maxx, Marshalls, HomeGoods, Homesense and Sierra. He announced plans to accelerate store openings even though the company’s Marmaxx division — T.J. Maxx, Marshalls and Sierra — didn’t perform as well as usual because of problems with their merchandise mixes.
“We are planning to accelerate our store openings to 4% starting next year to take advantage of the growth opportunities we see out there.”
Even as TJX has been steadily increasing its brick-and-mortar presence, it’s not at the very top of the list when it comes to U.S. store openings. This year Dollar General and German discount grocer Aldi appear likely to hold that distinction. But the expansion of those two retailers, as well as off-price TJX, is indicative of the success of chains that are offering bargains to price-conscious American shoppers.
In off-price retail, a store sells brand-name, designer or high-quality goods at major discounts, usually 20% to 60% lower than traditional department-store prices. Herrman said TJX’s expansion plans are supported by continued strength in the off-price sector, as well as the retailer’s store formats, supply chain network and vendor relationships.
“Today, we are increasing our long-term store growth potential by 500 stores to a total of 7,500 stores, or over 2,200 more stores with just our existing retail banners within our current 10 countries,” Herrman said on the earnings call.
That reflects the long-term potential for the T.J. Maxx and Marshalls chains to add 300 stores to reach a combined total of 3,300 stores and for the HomeGoods division to expand by 200 stores to reach 2,000 locations, according to Herrman.
“Further, we are planning to accelerate our store openings to 4% [up from 3%] starting next year to take advantage of the growth opportunities we see out there,” he told Wall Street analysts.
Marmaxx has various ways to open additional stores, according to company officials.
“We’re seeing opportunities in rural markets where we see department stores are closing,” Chief Financial Officer John Klinger said. “We’ve experienced strong comp growth for so many quarters that we’re seeing the ability to put stores closer together than we thought before. The small-format store allows us to expand in a lot of densely populated urban areas, as well.”
TJX is also looking at new countries as places to expand into, according to Herrman.
TJX’s stores in Canada have performed particularly well, he said.
“While sales at Marmaxx were below our expectations, HomeGoods, TJX Canada and TJX International all delivered terrific comp sales increases of 6% to 7%, which underscores the strength of our global diversified business,” Herrman said.