TJX Finds ‘Tremendous Advantage’ in Off-Price Offerings

Apparel retailer TJX reported an increase in sales Wednesday (Nov. 16), a development the company’s CEO attributed to consumers “treasure hunting” for the chain’s off-price offerings.

“Looking forward, while not immune to macro factors, we are convinced that our flexible business model and value proposition will continue to be tremendous advantages, as they have been for more than four decades and through many kinds of retail and economic environments,” CEO Ernie Hermann said in a news release.

“We are excited about the abundance of deals we see in the marketplace for quality, branded product.”

Headquartered in Massachusetts, TJX’s brands include the clothing retailer TJ Maxx and Marshalls and the home products stores HomeGoods and HomeSense. The company’s quarterly earnings report showed sales at the TJX clothing stores were up 3%, while sales at the home goods stores fell 16%.

These earnings follow a second quarter that saw TJX surprised by a 5% drop in same-store sales, with the demand for home-related items weaker than expected. But that decline was again largely driven by HomeGoods and HomeSense, where sales were down 13% versus the 2% for the clothing brands.

The numbers come as consumers seek bargains (like the kind they’d get when purchasing off-price clothing) and cut back on nonessentials (for example, the type of decorative items they’d find at HomeGoods).

Recent research by PYMNTS shows that 87% of consumers say their incomes are not keeping up with inflation. These consumers are more likely to scale back their nonessential spending, look for cheaper merchants, and purchase lower-quality products to adjust to what’s been called the “universal pay cut.”

A large margin of consumers who saw their incomes decrease, remain the same, or rise less than inflation were among those who cut down on nonessential expenses. Of those who saw incomes decrease, a majority — at 53% — switched to lower-quality products.

The quarter also saw TJX increase its store count by 57 locations, with TJ Maxx, Homegoods, and Sierra also seeing double-digit growth, bringing the total store count to 4,793. That’s up slightly from the 21 stores the retailer added last quarter and half the amount of the 117-store expansion it reported in February.