In the era of Amazon, TJX Companies has shunned the internet almost entirely and instead, has remained steadfast in its approach to retail by way of brick-and-mortar networks to much success. On the heels of reporting full year earnings for 2017 that significantly topped those of Gucci and Balenciaga’s parent company Kering, TJX reported second quarter results that once again beat analysts’ estimates and that topped those of at least one of fashion’s biggest conglomerates.
According to Tuesday’s report, net sales for TJX, which owns T.J. Maxx and HomeGoods, among other off-price retailers, amounted to $9.3 billion for the three months ending on August 4, 2018. That is an increase of 12 percent from the same 3-month period last year. On average, analysts were expecting net sales of $9 billion from the Framingham, MA-based giant. Its net income for the second quarter was $740 million; this is “no small feat,” per Bloomberg, “as other apparel sellers have been tripped up in recent years by everything from ill-fitting garments to unseasonable weather to a stalled-out fashion cycle.”
As a whole, net sales for the first 6 months of the year for TJX amounted to $18 billion, a 12 percent increase over the first half of last year. For a point of comparison, Kering – the Paris-based conglomerate that owns Gucci, Saint Laurent, Balenciaga and Bottega Veneta, among other luxury brands – announced last month that it reported revenues of $6.4 billion for the first half of 2018, up almost 35 percent, a whopping $11.6 billion less than TJX’s.
Unsurprisingly, both are outdone by LVMH Moët Hennessy Louis Vuitton, which recorded revenue of $25.5 billion in the first half of 2018, an increase of 10 percent compared to the same period in 2017.
According to a statement from Ernie Herrman, Chief Executive Officer and President of The TJX Companies, Inc., “Customer traffic was once again the primary driver of our sales increases at all of our divisions as we continue to reach a very wide customer demographic.” The latest report further marks the 16th straight quarter of customer traffic increases for TJX, with the giant “attracting new customers to all our divisions, a significant share of whom are younger customers.”
In particular, Herrman noted that TJX is “especially pleased with the robust performance of our apparel business,” which is no stranger to high fashion, with off-price garments from Givenchy, Missoni, Alexander Wang, and Elizabeth & James – just to name a few – regularly lining the racks at T.J. Maxx, alongside an array of in-season Gucci, Fendi, Yves Saint Laurent, Balenciaga, and Céline bags for several hundred dollars less than other retailers.
Also helping the off-price retailer to boost sales? Millennials, who, according to Simeon Siegel, an analyst at Prosek Partners, says, “are showing the company’s successful evolution from a utility purchase to a sought-after retail experience.”
It is hardly a secret that T.J. Maxx and co. thrive not only on the low prices they offer but maybe even more significantly, the thrill of the hunt, something that T.J. Maxx does better than most brands on the market, off-price or otherwise. The retailer enables – or better yet, forces – consumers “to go on a treasure hunt through its aisles to find ever-changing deals on a wide array of products,” a tactic that not only keeps existing consumers coming back but routinely draws in new shoppers in search of a shopping experience and of course, deals on both its in-house brands, as well as big-name brands.
Yes, aside from a promising apparel business and spend-happy millennials, Bloomberg’s Sarah Halzack says TJX has itself to thank: “TJX’s strength in part reflects just how intoxicating shoppers find its oft-discussed treasure-hunt store format. But it is also a testament to the merchant firepower at TJX; its buyers clearly know how to identify and secure the right goods.”
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