When you walk into a T. J. Maxx, you never quite know what you're going to find.
It might be an espresso machine or a hydroflask, a Calvin Klein jacket, Samsonite luggage, or Nike socks. At least those are some of the things that I've seen firsthand shopping there. This Vineyard Vine shirt, these Ralph Lauren pants both came from a T.
J. Maxx right here in New York City at a steep discount to its retail price. I swear every time I go in there, like just restocked or something.
These are all Under Ar mour, by the way. 9. 99 TJX is one of the most disruptive forces in retail over the last decade.
Bargain hunting has been something that you had to do as opposed to something that perhaps you wanted to do. TJ convinced the world that it's a treasure hunt. You opted out of your department store and you go to T.
J. Maxx, and you never know what kind of gem you can find. And it kind of speaks to the whole move to second hand and vintage that you see a lot of younger consumers doing.
The company saw over $54 billion in net sales for its fiscal year 2024. About 80% of that came from its U. S.
stores. So how did T. J.
Maxx turn bargain hunting into one of the biggest success stories in American retail? TJX companies operates five brands in the U. S.
the majority of its business is HomeGoods, Marshalls and T. J. Maxx, which operates over 1300 locations across the country.
What's very interesting about TJX is that it serves a very wide demographic. Although it's offering bargains and deals, it's not just serving a low income consumer. There are a lot of middle class consumers, a lot of higher income consumers that shop at TJX.
Between 2014 and 2024, TJX nearly doubled its annual sales. I'll make her a Maxxinista. T.
J Max, let us make a Maxxinista out of you. Over the last decade or so, you have really seen a shift in the way that consumers view off price. You're not some sad discount shopper.
Chopper. You're a smart, savvy Maxxinista, and I think that's actually really resonated with consumers. One of the most impressive things that they have done is they have turned discount shopping from something of an embarrassment into a badge of honor.
The off price space as a whole is doing well right now, but TJX is a standout in several ways. In 2023, its annual sales were more than Burlington Stores and Ross stores combined. The company's share price has more than doubled over the past five years, outperforming that of competition and the S&P 500.
T. J. Maxx and Marshalls both have a wide selection of inventory that goes beyond clothing into the home decor space.
However, the TJX retailer that takes that to the next level is home goods. Recent growth has been a little bit slower for the retailer than its other two brands, but it still accounts for over 20% of sales in the U. S.
, with significantly less stores. In this current macroeconomic environment, the housing market has set a standstill. It's frozen.
So at a time when a lot of consumers are retreating from the home goods sector, and when those brands are seeing a lot of pressure on their business. Home goods is still managing to win because it's the same kind of treasure hunt experience. TJ does not architect for a price point.
They're very different than a discounter model. Their goal is not to be a certain price. Their goal is to be a certain value.
That sounds nuanced, but it matters. And that value is derived not just from the treasure hunt perception of the shopping experience, but also the inventory itself. Selling to off price retailers can be extremely profitable for brands.
The key is to strike a balance of getting product into those stores without cheapening their brand's image. The moment there is a perception that brands are offloading and dumping a ton of product at TJX, no one needs to shop full price. And that's when the brand loses its equity.
Some consumers think off price. Retailers like T. J.
Maxx are just stores full of excess inventory from big brands. While this is partly true, there are other ways that these stores get products, some secure contracts to buy product directly from the manufacturers. The off price retailers will also partner with manufacturers to create their own exclusive private label brands.
TJX buyers are really expert at getting their hands on that must have stock, so they really are one of the leaders in terms of putting together a very compelling and engaging assortment for the consumer. And I would say TJX has the edge on that over many of the other off price players. Last time she was in this T.
J. Maxx she saw a Jean Paul Gaultier. I came in.
For a return and I left with this. With our more than 1300 global buyers sourcing from a universe of more than 21,000 vendors and from over 100 countries, we are confident that there will be plenty of quality branded merchandise available to us to support our growth plans. Beyond its quarterly earnings calls, the inner workings of TJX are somewhat secretive.
The company declined CNBC's request for an interview and would not permit us to film inside any of its stores. The company shared the following statement, saying T. J.
Maxx offers a wide variety of vendors. Our rapidly changing assortments create that exciting treasure hunt shopping experience. They're never publicly talking about their business.
Part of that, I think, is because of the relationship with the brands. If you actually look on TJX's website, if you're trying to shop on T. J.
Maxx. Com, you can't filter by brand. And there's a reason for that, because the brands aren't going to want you to do that because you're going to be undercutting their main website.
The brands can give product to TJ invisibly. They can give them stuff that you and I will never see. And as soon as they drop these pallets and boxes of products in TJ, they're gone.
And so this inability to go and search them online means that they're actually less brand dilutive than if they were priced higher initially at a full price store that you and I can see online and get blasts for friends and family. Sales left and right. In 2024, TJX reported annual sales soaring past the $50 billion mark.
Size is generally the biggest question people ask when it comes to TJX have they simply gotten too good? Have they simply gotten too big? Is there a point where the ceiling where high is too high?
So far, as long as department stores have volume and revenues to donate, I think TJ has revenues to collect, but size and inventory availability is generally the greatest risk. And if it feels like T. J.
Maxx has had an especially good selection of inventory over the past few years, it's not just you coming out of the pandemic in 2021 and 2022, shipping times were up as supply chain challenges were felt across the retail space. To compensate, companies began overordering products to prevent future disruptions. But then what happened is they all ended up with a glut of inventory that they couldn't get rid of.
So part of why TJ Maxx benefited from that is because all of these retailers had so much excess inventory, and they really relied on the off price channel to be able to get rid of it. So their assortment was better than ever Over the last couple of years. Economic pressure on the U.
S consumer should be easing with the Fed's most recent announcement. But while inflation has gone down, prices haven't. And unlike full price retailers, off price stores typically benefit when the consumer is under pressure.
This has underscored recent growth. However, T. J.
Maxx also wins when economic conditions are good because its customer base is so diverse, it's less reliant on the lower income consumer than its peers in the off price space. The company reported a same store sales increase of 4% in its fiscal 2025 second quarter. It said that the increase was driven entirely by transaction growth, which means that more shoppers were buying things in its stores.
Now, you could trade down to value channels as well cheaper retailers. But the problem is they don't stock the brands people want, whereas off price does. So I think the current environment is almost like a recruiting sergeant for off price.
But as new customers are recruited and retail supply chains normalize, TJX will have to ensure that it can continue filling its stores with compelling inventory that keeps shoppers coming back. This is especially important as the company scales. Tjx believes it has the potential to open 1000 more stores.
It currently has about 45% more stores than a decade ago. It's been growing its international presence as well. Operating nearly 1400 locations in Canada, Europe and Australia.
This map shows its presence in the U. K. with T.
J. Maxx counterpart T. K.
Maxx. I think what's exciting about TJ's international business is that the U. S business is still growing.
Companies that grow international, concurrent with U. S growth, are dramatically more exciting than companies that are simply shifting because the U. S business is starting to shrink.
Each store grows inside, sees its revenues grow with existing customers and new customers, and they have an opportunity to keep growing new stores keep adding stores to their fleet. That's a powerful one two punch.
