Off-Price Retailer Undaunted by Pandemic Plans Up to $1.9 Billion in Capital Spending
TJX Cos., the giant off-price retailer, plans to open about 170 new stores this year and add 1,600 overall in the long term, as the brick-and-mortar sector aimed at cost-conscious shoppers continues to thrive.
The Framingham, Massachusetts-based company — parent of chains such as T.J. Maxx, Marshalls and HomeGoods — on Wednesday said it plans for store growth of 3% this coming year, which would bring its fleet up to 4,850 locations by year-end. To facilitate that expansion, TJX will allocate $1.7 billion to $1.9 billion in capital expenditures for new stores as well as remodeling and relocating certain storefronts and investing in the company’s distribution network.
The planned openings mark an increase from those during the fiscal year ending Jan. 29, when there were 117 net new stores, bringing the total fleet to 4,689.
“We continue to feel great about our opportunity to grow our global store base,” Scott Goldenberg, TJX chief financial officer and senior executive vice president, told Wall Street analysts during a fourth-quarter earnings call. “Long term, we believe we can grow our store base to 6,275, which is nearly 1,600 more stores than today with our current retail banners in our current geographies.”
Off-price retailers TJX and Burlington Stores as well as discounters Big Lots and Dollar Tree have been in expansion mode as some chains suffered and even filed for Chapter 11 bankruptcy protection while e-commerce sales rose and the pandemic’s repercussions rippled through the industry. TJX has provided an alternative place to shop after many department stores and other retailers closed their doors. At the same time, off-price retail continues to be a go-to for consumers who have to be frugal and watch their spending.
Store closings have also provided TJX with a wealth of inventory for its brick-and-mortar chains, according to company officials.
In 2021, in addition to opening 117 new stores, TJX relocated an additional 50 and remodeled over 300, according to CEO Ernie Herrman.
Global Expansion
With its planned opening of roughly 170 new stores, TJX will have 4,850 brick-and-mortar locations at the end of the fiscal year. In the United States, it plans to open 55 T.J. Maxx and Marshalls stores and 60 stores of its HomeGoods chain, including 10 Homesense and 20 Sierra locations, Goldenberg said.
In Canada, TJX will add about 10 new stores, while its international unit plans to open about 15 new stores in Europe and about 10 in Australia, he said.
In the United States, there are 1,284 T.J. Maxx, 1,148 Marshalls, 850 HomeGoods, 59 Sierra and 39 Homesense stores. In Canada, TJX has 293 Winners, 147 HomeSense and 106 Marshalls stores. There are 618 T.K. Maxx and 77 Homesense stores in Europe 68 T.K. Maxx stores in Australia.
TJX’s operations last year were affected by government-mandated store closings, due to the coronavirus pandemic, in Canada and the United Kingdom, and the outbreak of the omicron variant in the fourth quarter in the United States, according to company officials. TJX was also hurt by rising freight costs and higher labor costs. Ultimately, the retailer fell short of Wall Street’s estimates for earnings and sales.
Net sales for the fourth quarter were $13.9 billion, an increase of 27% compared with the fourth quarter of fiscal 2021, when stores were closed for roughly 13% of that period. Net sales for the fourth quarter of fiscal 2022 increased 14% versus the fourth quarter of fiscal 2020. U.S. open-only comparable store sales increased 13% over a 6% increase in the fourth quarter of fiscal 2020.
“The positive news is that many of the dynamics that helped TJX to a good final quarter will continue into the new fiscal year,” Neil Saunders, managing director of GlobalData, said in a note. “Consumers are under budgetary pressure which is making them seek better value for money. The interest in home and apparel remains strong, although demand may drop back a bit as we move into the middle and end of the year. These tailwinds should help the company to a solid performance, although growth will inevitably slow as it bumps up against much tougher prior year comparatives.”
According to Saunders, “Looking ahead, TJX has all to play for. The benchmark for the upcoming fiscal year is much tougher, so gains will be shallower. However, off-price and TJX will remain winners and will continue to gain market share.”