The buzz factor: 5 reasons TJX Cos. sees “massive opportunity” ahead in home

Framingham, Mass. – Consolidated home sales at TJX Cos. are expected to grow to 1/3rd of total sales this year, or north of $18 billion.

And in subsequent years, the multi-nameplate off-price company expects that home will continue to expand as a percentage of sales.

“We feel just a massive opportunity in market share because our home business, we do it so differently than really anybody else,” CEO and president Ernie Herrman told investors after TJX announced its financial results yesterday.

The Buzz

HomeGoods has caught fire on social and unpaid media. From viral Tik Toks to third-party endorsements and mentions on talk shows, the excitement around the retail brand is galvanizing store visits.

“It’s become a bit of a cult because people know that you can’t go in there and spend less than a couple of hundred dollars, even though you’re planning on doing it just for a bed pillow,” said John Klinger, TJX’s EVP and CFO, according to Seeking Alpha’s transcript of the TJX Cos. Q4 call.

The Momentum

After a wobbly start to 2023, when TJX execs were still trying to figure out the trend in home, sales began to pick up. By the time the company closed the books on 2023, that question seemed to have been answered.

Home at Marmaxx U.S. generated a mid-single-digit comp for the fiscal year ended Feb. 3.

HomeGoods returned to a positive comp last year, with the trend accelerating in the 2nd half. Annual sales grew to nearly $9 billion, and comps grew 3%, with 2nd half comps increasing high single digits.

TJX Canada’s family of stores (Marshalls, HomeSense and Winners) have been running a strong home business, said Herrman, “and it’s also continuing that way as we enter spring.”

Across the company’s nameplates, annual comp gains were driven by increased customer transactions.

The Demographics

Younger consumers continue to make up a more significant share of the company’s shoppers. In fact, TJX is now over-indexed in the 18- to 34-year-old age group – slightly above the population average.

The company’s customer mix is balanced between 3 key household income groups: under $50K, $50K-$99K and over $100K. But it skews a bit more toward $50K and above households.

The Vendor Access

Brick & mortar store closures keep driving more vendors toward TJX’s off-price banners. That, in turn, is giving the company access to better brands and quality merchandise.

“And that is one of the things that probably will continue to allow us to buy a little bit better on an ongoing basis,” said Herrman. “At the end of the day, there’s more goods out there than we can handle, and we’re still holding our merchants back.”

The Growing Footprint

In the U.S., TJX plans to add about 45 net new stores in Marmaxx and 23 HomeGoods stores and 17 Home Sense stores.

Company ended the most recent fiscal year with 2,516 Marmaxx stores in the U.S., 919 HomeGoods units and 55 Home Sense stores.

“We don’t have competition in the same way – whether it’s all the fashion aspects of what we do in home, some of the categories that are more replenishment,” Herrman told investors. “I’m not talking just about HomeGoods. I’m talking about the home area in Marmaxx has been really strong, the home area over in T.J. Maxx and in Winners [and] Marshalls in Canada.”

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