As retailers grapple with the impact of consumers tightening their purse strings, TJX is striking a different chord, as shoppers seek value and the most enticing bargains.
“We believe we are strongly positioned to be a top destination for gifts this holiday season,” TJX CEO Ernie Herrman said during the company’s quarterly earnings call Wednesday (Nov. 15).
In fact, the array of premium, branded products offered by the company has proven highly appealing to shoppers. TJX has become a preferred choice for suppliers grappling with large inventories, turning to the company to help clear out their stock over the past year. The attraction of its budget-friendly selection is particularly strong for cost-conscious customers in search of deals. This has ultimately led them to opt for TJX over competitors such as Macy’s and Target, especially amid the challenges of persistent inflation.
Given the momentum generated by inflation and the current state of the consumer, along with the nature of its business, TJX has decided to fully dedicate itself and intensify its focus by closing down its HomeGoods eCommerce site.
“We’ve made the decision to focus our resources on our brick-and-mortar stores,” said the company in an email.
In the email, HomeGoods clarified that the decision to close its online store, introduced in September 2021, was motivated by a dedication to enhancing the in-store experience for its customers. The brand provides a selection of discounted products in its physical stores.
This choice was influenced by the realization that online shopping did not significantly contribute to the company’s growth.
“As to eCommerce, overall, it remains a very small percentage of our business,” TJX Chief Financial Officer John Joseph Klinger said in August.
Traditional physical retail offers an experiential voyage that online stores cannot duplicate. This is apparent with discounted products, where shoppers crave the tactile engagement with items, the capacity to evaluate their quality, and the thrill of uncovering hidden treasures.
In this context, HomeGoods, celebrated for its continuously changing inventory, is like a treasure hunt, encouraging customers to savor the hands-on exploration of items on the shelves. The experience of stumbling upon a distinctive piece at a reduced price is lacking in online shopping.
In-store shoppers have the opportunity to touch and feel fabrics, experience the scent of candles, see the colors of items. This is crucial for discounted goods, as the attraction of quality at an affordable price relies on physically examining the merchandise.
In Q3 FY24, TJX reported a 6% increase in overall comp store sales, driven by heightened customer traffic. Marmaxx and HomeGoods also saw respective comp store sales increases of 7% and 9%, solely attributed to increased customer traffic.
The company reported a pretax profit margin of 12%, up 0.8 percentage points from the previous year. Diluted earnings per share exceeded expectations at $1.03, reflecting a 13% increase from the previous year.
TJX returned $1 billion to shareholders through share repurchases and dividends. The company has a positive outlook for overall comp store sales and diluted earnings per share for the entire fiscal year 2024.