TJ Maxx is one of the most difficult shops to socialize

TJ Maxx is one of the most difficult shops to socialize

It may not be such a difficult task.

There are already early signs that many shoppers are eager to return to the reopened TJ Maxx stores, despite persistent fears of the coronavirus. In the 1,100 stores that have been open for at least a week in states that have been reopened worldwide, sales have risen above last year’s levels, the company noted.

Indeed, TJ Maxx stopped reopening the shops to return to customers for the first time on Saturday because too many customers showed up and it was difficult to practice social distancing.

“We decided not to open on Saturday because we are getting so many customers and it was difficult for our employees to manage,” said Ernie Herrman, managing director of parent TJ Maxx TJX last week. He noted that there is a “pent up demand” from buyers.

Now, the shops are reopening on Monday.

The chain has not been immune to turbulence in the retail sector in the past few weeks. Last week, TJX (TJX), which also owns the Marshalls chain, said it lost nearly $ 900 million in the last quarter. In the United States, sales of TJMaxx and Marshalls plunged 53% during the quarter.

But analysts predict that TJ Maxx will emerge a winner from the crisis, thanks to the consumer’s appetite for discounts that are likely to accelerate only when people become more cost-conscious.

Buy cheap clothes

Before the coronavirus epidemic, TJX was in tears.

It also expanded its physical footprint when customers made online purchases and closed rivals or went bankrupt. The company has added more than 300 TJ Maxx and Marshalls stores to the United States since 2015. Today it has over 2,400 U.S. outposts.

TJX (TJX) established resistant against competition from Amazon (AMZN) and big chains of boxes like Target (TGT) is Walmart (WMT). The company increased sales by attracting shoppers among income groups looking for bargains and found a niche among millennials, retail analysts said. TJ Maxx has sold clothing and home decorations 20% to 60% cheaper than full-price retailers.

The chain used a flexible business model to attract buyers. When brands produced too many clothing items or department stores canceled orders, TJX stepped in to purchase the extra inventory and sell it at low cost. This approach allowed him to constantly rotate in a new range of brands and styles on the shelves to attract shoppers to his no-frills stores.

Sales of TJ Maxx plummeted in the last quarter during the shutdown. But it is already showing signs of a return.
But the coronavirus pandemic has bruised the US retail sector, stifling demand and forcing the temporary closure of hundreds of thousands of stores. Clothing chains were among the hardest hit companies during the pandemic. Sales in clothing and accessories stores fell 78% in April, according to the Census Bureau.
Macy (M) sales in stores that have been open for at least a year have plummeted 45% in the last quarter. Sales at Kohl (KSS) dropped 43%. Already exhausting clothing chains and department stores like JCPenney (JCP), Neiman Marcus, J. Crew, Stage Stores and others have filed for bankruptcy protection.

TJX closed stores in March and closed an already limited online operation.

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“This rapid change in our business underscores the challenges that very healthy companies with solid foundations like ours have faced in the past two months,” Herrman told analysts in a earnings call last week.

“Request repressed”

But TJ Maxx is ready to benefit from various economic forces.

First, with over 30 million jobless Americans, buyers will be looking for low prices.

“As many consumers emerge from this crisis, their willingness to pay the full price for clothing will be reduced,” said Neil Saunders, CEO of GlobalData Retail. “This plays right in the hands” of TJ Maxx.

Shopping malls and retail stores are reopening. But buyers may not return
Second, some competitors permanently close stores. Victoria’s Secret will close 250 locations. JCPennny will close nearly 200. UBS expects 100,000 retail stores to close by 2025. This will push more buyers to TJMaxx and help the company gain market share, analysts say.

“TJX will continue to benefit from the industry disruption,” said Jamie Merriman, an analyst at Bernstein.

The vast majority of TJ Maxx stores are also independent areas located in shopping malls, an advantage over indoor shopping malls during a pandemic. Many stores are located next to supermarkets, offering convenience to shoppers as they venture out less frequently.

“With its off-mall real estate exposure, this is a key advantage as customers feel more secure [versus] shopping malls closed, “said Kate Fitzsimons, an analyst at RBC Capital Markets.

TJX can also be well positioned to pick up the excess clothing that has been sitting on retailers’ shelves and in warehouses as the economy was closing. As companies attempt to free up their excess inventory, they will download some merchandise to TJ Maxx and other discount chains.

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“The market is full of inventory and I am convinced that we will have access to many high-quality branded products to offer consumers,” CEO Herrman told analysts.


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