T.J.Maxx Weathers the Retail Storm
Customers are flocking back for its signature “treasure hunt”
After a strong 2019 and weeks of lockdowns causing stock-price turbulence, The TJX Companies (TJX) shares are back to near they were a year ago and shoppers are excited to find great deals on their favorite brands again.
The treasure hunt
In addition to its off-price offerings, one of the most attractive propositions for TJX’s customers is that they don’t know what they’ll find at any given time. One week, it’s a pair of Nikes for one third the price you’d find at Dick’s, the next, it’s a Ralph Lauren shirt that’s perfect for the office and cheaper than the department store.
But in potentially the greatest storm that brick-and-mortar retail has ever faced (excluding the rise of e-commerce), TJX—whose stores include T.J.Maxx, Marshalls, and HomeGoods—was a sitting duck.
Lockdown
TJX announced that it would close all of its stores globally on March 19, 2020 and its stock dropped 14.6 percent over the next week. While it does operate tjmaxx.com and the recently-launched marshalls.com, e-commerce only accounts for 2 percent of revenues, according to The Wall Street Journal.
Additionally, the websites stopped taking orders at one point during the lockdown and is only operating at partial capacity now. TJX announced first-quarter losses of almost $900 million compared with $700 million in profit for the same period last year. Many corporate employees, whose job is to stock the stores with the latest fashions, went back to their hometowns with a lack of work.
Rebound and benefitting from bankruptcy
Stores started opening back in early May and as of June 17, 85% of stores had reopened, as reported by The Wall Street Journal. CEO Ernie Herrman said that sales had exceeded the levels they were at a year ago.
Off-price retailers have the most to gain now; classic department stores who were struggling before COVID-19 are once again struggling as consumers’ are curbing spending and looking for value options.
If retailers like JCPenny, which filed for bankruptcy on May 15, continue on their path, this may open to the door for TJX to become the dominant fashion store—for both cost- and style-conscious customers.
