The TJX Companies, Inc. History
Framingham, Massachusetts 01701-4672
Telephone: (508) 390-1000
Fax: (508) 390-2828
Incorporated: 1962 as Zayre Corp.
Sales: $11.98 billion (2002)
Stock Exchanges: New York
Ticker Symbol: TJX
NAIC: 448140 Family Clothing Stores; 442299 All Other Home Furnishings Stores; 454111 Electronic Shopping; 551112 Offices of Other Holding Companies
Our mission is to deliver an exciting, fresh and rapidly changing assortment of brand-name merchandise at excellent values to our customers. We define value as the combination of quality, fashion and price. With approximately 300 buyers worldwide and about 9,000 vendors, we believe we are well positioned to continue accomplishing this goal. Our key strengths include: expertise in off-price buying; substantial buying power; solid relationships with many manufacturers and other merchandise suppliers; deep organization with decades of experience in off-price retailing, and off-price inventory management systems and distribution networks.
- Two cousins, Stanley and Sumner Feldberg, open their first Zayre discount department store in Hyannis, Massachusetts.
- The company is incorporated as Zayre Corp.
- Zayre purchases the women's clothing chain Hit or Miss, beginning its involvement in the upscale off-price fashion market.
- The first T.J. Maxx opens in Auburn, Massachusetts, offering off-price upscale apparel for the whole family.
- Company launches Chadwick's of Boston, which sells selected Hit or Miss items via mail order.
- Zayre enters the membership warehouse-club market, launching B.J.'s Wholesale Club.
- Home Club, Inc., a home improvement chain, is acquired.
- Zayre's off-price chains are organized as The TJX Companies, Inc., which operates as a subsidiary of Zayre; TJX is taken public through an IPO, with Zayre retaining an 83 percent stake.
- The Zayre discount chain is sold to Ames Department Stores, Inc.
- Company spins off its warehouse club division, including B.J.'s and Home Club; it acquires the minority shareholding in TJX Companies that had been publicly traded, merges with TJX, and then adopts the name of its former subsidiary.
- TJX acquires Winners Apparel Ltd., a Canadian chain similar to T.J. Maxx.
- The HomeGoods home fashions chain is launched.
- Company ventures into the United Kingdom to launch T.K. Maxx, modeled after T.J. Maxx.
- The Hit or Miss chain is divested; Marshalls is acquired from Melville Corporation for $606 million.
- Chadwick's of Boston is sold to Brylane L.P.
- A.J. Wright, targeting moderate income customers, makes its debut.
- HomeSense, a Canadian version of HomeGoods, begins operations.
The TJX Companies, Inc. is the largest off-price apparel and home fashions retailer in both the United States and the world, with nearly 1,850 stores worldwide by the end of fiscal 2002. Six of the firm's seven divisions target middle to upper-middle income shoppers who are fashion and value conscious; the A.J. Wright chain is designed to serve more moderate-income consumers. All of the seven concepts aim to offer quality brand-name merchandise at prices 20 to 60 percent below department store and specialty store regular prices. T.J. Maxx, the largest retailer of its kind in the United States with 713 stores in 47 states, offers brand-name family apparel, accessories, fine jewelry, home fashions, women's shoes, and lingerie. Marshall's is the nation's second largest off-price apparel retailer. Acquired by TJX in 1995, Marshall's operates 629 stores in 42 states and Puerto Rico, offering a product line similar to that of T.J. Maxx but with a full line of family footwear and a wider assortment of menswear. Winners (146 units) and T.K. Maxx (123 units), each modeled after the T.J. Maxx concept, are the leading off-price family apparel chains in Canada and the United Kingdom, respectively. HomeGoods, a chain of off-price home fashion stores, operates some 140 stores offering giftware, accent furnishings, rugs, lamps, and seasonal merchandise. A.J. Wright, a 75-unit chain launched in 1998, offers family apparel and footwear, lingerie, accessories, home fashions, and costume jewelry. Debuting in 2001 and expanded to 15 stores by the end of the following year, HomeSense is a Canadian version of the HomeGoods chain.
The TJX Companies, Inc. traces its history to Zayre Corp., parent of the Zayre Store chain of discount department stores incorporated in 1962. The first Zayre--Yiddish for "very good"--store opened in Hyannis, Massachusetts, in 1956. Its founders were two cousins, Stanley and Sumner Feldberg. With sales doubling every second or third year, the Feldbergs were quick to establish new Zayre stores, which numbered more than 200 by the early 1970s. By then, the company had diversified into specialty retailing.
Among Zayre's early acquisitions was the Hit or Miss chain, an off-price chain specializing in upscale women's clothing. The first store, which opened in Natick, Massachusetts, in 1965, flourished and grew into a chain so quickly that within four years it had attracted the attention of a giant by comparison, Zayre. In 1969 Zayre bought the Hit or Miss chain and began its exploration of the upscale off-price fashion market. Zayre's timing could not have been better. During the recession of the 1970s, Hit or Miss's results climbed so rapidly that Zayre began to think of expanding its off-price upscale apparel merchandising.
Zayre first attempted to buy the Marshalls chain, which had already established itself as a retailer of off-price apparel for the whole family. When that effort failed, the company hired Bernard Cammarata, who had been Marshalls' top buyer, to essentially create a Marshalls clone. In Auburn, Massachusetts, in March 1977, he opened the first T.J. Maxx.
Within six years of that opening, Zayre had found yet another avenue to the off-price fashion market. In 1983 Chadwick's of Boston began to sell selected Hit or Miss items through mail-order catalogs. Hit or Miss and Chadwick's crossover operations allowed customers to handle products before ordering, and brought the frequent buyer the convenience of home shopping.
By the mid-1980s off-price specialty retailing was becoming more important to Zayre. Hit or Miss and T.J. Maxx had brought in just 14 percent of the company's operating income in 1980; by the first half of 1983 these operations were producing nearly 45 percent of income. At the same time, however, Zayre was renovating its discount department stores and expanding its product mix. In 1984 Zayre entered the membership warehouse-club market, launching B.J.'s Wholesale Club, and also acquired Home Club, Inc., a chain of home improvement stores, the following year. While neither of these ventures was immediately profitable, Hit or Miss and T.J. Maxx continued to thrive.
By 1986 the number of Hit or Miss stores in the United States had reached 420, and sales had climbed to $300 million. Some 70 percent of its inventory was made up of nationally known brands. The remaining 30 percent consisted of standard apparel, such as turtlenecks and corduroy pants, which were produced by Hit or Miss under its own private label. With such a merchandise mix, Hit or Miss was able to sell current fashion at 20 to 50 percent less than most specialty stores.
In 1986 profits of the Zayre chain, targeting low- to middle-income customers, dropped, although T.J. Maxx, Hit or Miss, and Chadwick's of Boston, targeting mid- to higher-income customers, continued to grow. That year alone, Zayre Corp. opened 35 more T.J. Maxx stores and 31 new Hit or Miss stores. In fact, Zayre Corp.'s off-price retailing chains were so successful that by 1987 Zayre thought it prudent to organize them under one name and grant them autonomy from the decreasingly prosperous parent company.
Establishment of TJX Companies and Divestment of Zayre
In June 1987 just ten years after its flagship chain, T.J. Maxx, opened its first store, The TJX Companies, Inc. was established as a subsidiary of Zayre, with Cammarata serving as president and CEO. It sold 9.35 million shares of common stock in its initial public offering; Zayre owned 83 percent of the subsidiary.
During this time, Zayre was facing several challenges. In the first half of 1988, Zayre had operating losses of $69 million on sales of $1.4 billion. Observers blamed technological inferiority, poor maintenance, inappropriate pricing, and inventory pileups, and speculated Zayre was ripe for takeover. Throughout all this, subsidiary TJX Companies continued to yield a profit.
In October 1988 the company decided to focus on TJX. It sold the entire chain of over 400 Zayre Stores to Ames Department Stores, Inc. In exchange, the company received $431.4 million in cash, a receivable note, and what was then valued at $140 million of Ames cumulative senior convertible preferred stock.
The company continued to hone in on its profitable new core business, selling unrelated operations. In June 1989 it spun off its warehouse club division, Waban, Inc., which owned B.J.'s and Home Club. Zayre gave shareholders one share of Waban for each two shares of Zayre they owned, as well as a $3.50 per share cash payment. The same month, the company acquired an outstanding minority interest in TJX. On the day it acquired the minority interest, the company merged with TJX. Later that month, the company changed its name from Zayre Corp. to The TJX Companies, Inc. The newly named company, headed by Cammarata, began trading on the New York Stock Exchange.
The company's transition into an off-price fashion business was relatively smooth, but the Ames preferred stock it received in the Zayre transaction had been a problem. This preferred stock was not registered and had no active market. While the stock was entitled to 6 percent annual dividends, Ames had the option of paying the first four semiannual dividends with more Ames preferred stock rather than cash, an option that Ames exercised for each of the payments it had met. The value of Ames preferred stock was dubious, however, as Ames had been closing stores and experiencing losses.
In April 1990, TJX established a $185 million reserve against its Ames preferred stock and contingent lease liabilities on former Zayre stores as a result of Ames's announcement of continued poor performance. That same month, Ames filed for protection from creditors under Chapter 11 of the U.S. Bankruptcy Code.
Early to Mid-1990s: Winners and Losers, Hits and Misses
On a bright note, TJX's operations remained solid. In 1991 T.J. Maxx, by far the company's largest division, posted record results for the 15th consecutive year since it opened. At the end of 1991 T.J. Maxx had 437 stores in 46 states. It planned to open many more stores, focusing primarily on the only sparsely penetrated southwestern United States, as well as expanding several existing stores. T.J. Maxx also planned to follow its success in jewelry and shoes by opening these respective departments at locations that did not carry these items. It also planned to expand high-performance nonapparel categories, such as giftware and domestic items. In addition, T.J. Maxx embarked on an effort to enlarge a number of stores to a larger format ranging from 30,000 to 40,000 square feet. This change facilitated expansion of all departments, especially giftware and housewares, as well as other nonapparel categories. T.J. Maxx opened 21 stores during 1996 and closed 30. The chain recorded excellent sales in 1996, which increased 5 percent over the previous year.
The November 1995 purchase of Marshalls from the Melville Corporation for $606 million in cash and preferred stock brought TJX a prize to complement T.J. Maxx. The immediate plan called for closing certain underperforming T.J. Maxx and Marshalls stores. Marshalls opened 11 stores in 1996 and closed 53. Sales at Marshalls rose 10 percent in 1996. Fifteen openings and 50 closings were planned for 1997; more were not expected, because many of the existing stores had performed so well. TJX credited this success with its back-to-basics approach. The prior Marshall ownership had strayed from off-price strategies, so TJX refocused the business. It emphasized nonpromotional marketing, quality brand names at low prices, and timely markdowns--to draw customers back and strongly.
Success at T.J. Maxx and Marshalls hinged on execution of the off-price concept, which demanded rapid inventory turnover at the store level. "Opportunistic buying" was done "in season," that is, close to customer need. Merchandise moved into warehouses and out to stores through state-of-the-art distribution centers and sophisticated inventory tracking systems. In effect, each of the 1,000-plus stores received two shipments of merchandise with a total of 10,000 items. Markdowns also played a major role, adding value for customers and clearing shelves. Despite the similarities in operations, TJX was determined that T.J. Maxx and Marshalls retain distinct identities.
TJX ventured into Canada in 1990 to acquire the five-store Winners Apparel Ltd. chain. Building on the off-price concept, similar to that of T.J. Maxx, Winners opened 13 stores in 1996, bringing its total to 65. Moreover, Winners planned on opening about 13 more stores in 1997. TJX viewed Winners as a meaningful way to expand over the next several years--about 12 new stores per year. In fact, store sales posted an increase of 13 percent in 1996, plus an increase in operating income of 114 percent.
T.K. Maxx, launched in 1994 and also inspired by the T.J. Maxx concept, caught on in the United Kingdom in 1996. Comparable store sales increased by 30 percent, outperforming any predicted sales figures. This move abroad proved that further expansion was key to TJX's growth strategy.
Not all the news among TJX holdings was good. Despite concerted efforts to bolster merchandise assortment and value, sales flagged at TJX's HomeGoods chain, which had launched as an off-price home fashions retailer. Moreover, Hit or Miss had a difficult time in the early 1990s, transitioning its business in a recessionary economy. After closing many nonperforming stores and renovating others, TJX sold this women's specialty division in September 1995 to the division's management and outside investors.
In late 1996 the company also sold its Chadwick's of Boston catalog division to Brylane L.P., owner of the Lane Bryant women's fashion chain. Proceeds from the sale totaled about $300 million in cash, a note, and certain receivables. The after-tax gain enabled TJX to repay about $500 million of debt, including the debt incurred in relation to the 1995 acquisition of Marshalls. The transaction left TJX with a stronger cash position and in a position of greater flexibility. Overall, 1996 was a banner year for The TJX Companies. Sales from continuing operations hit $6.69 billion, up from $3.98 billion in 1995, fueled largely by the Marshalls acquisition and the economies of scale it allowed TJX to achieve.
A Growing Off-Price Empire into the New Century
The late 1990s saw TJX leveraging the strong performance of its main chains into the launching of experimental new hybrid formats as well as brand-new chains. Having improved the performance of HomeGoods, in part by tweaking the merchandise mix--eliminating appliances and emphasizing home decorating items--the company began testing superstore concepts that combined HomeGoods with the T.J. Maxx and Marshalls formats. By the end of 1998 there were 14 of these larger, 50,000-square-foot superstores, known as T.J. Maxx 'N More and Marshalls Mega-Stores, respectively, and these units were performing well. That year, TJX opened two T.K. Maxx stores in The Netherlands as a first tentative step onto continental Europe. These stores got off to a slower than anticipated start. The company also launched A.J. Wright in 1998, opening six stores in New England. This marked the firm's first attempt to create an off-price family clothing store for the moderate income consumer.
As T.J. Maxx, Marshalls, and Winners continued their consistently profitable performance in the late 1990s, the HomeGoods and T.K. Maxx operations finally turned the corner into profitability in 1999. Nine more A.J. Wright outlets opened their doors in 1999, although that division remained in the red and the company still had much to learn about this new segment of the market. Overall, net sales reached $8.8 billion, with more than 88 percent attributable to T.J. Maxx and Marshalls. Cammarata took on the additional post of chairman that year, while Ted English was named president and COO. The following year, English was promoted to president and CEO, with Cammarata remaining chairman. English had joined TJX in 1983 as a buyer to T.J. Maxx, having previously worked for several years at Filene's Basement, the Boston-based off-price pioneer.
TJX maintained its growth path into the new century. During 2000 alone, the T.J. Maxx store count increased by 29, both Marshalls and HomeGoods by 30, A.J. Wright by 10, Winners by 17, and T.K. Maxx by 20. Another 172 stores were added to the overall store count during 2001, although TJX did take one step backward that year, closing its three T.K. Maxx stores in The Netherlands because of their disappointing results. That year TJX rolled out its latest new concept: a new Canadian chain called HomeSense, which was modeled after HomeGoods. Seven HomeSense stores began operating in 2001, all located in Ontario, and company officials were very pleased with their initial performance. Even in the poor economic environment of 2001 and with the post-9/11 effects on consumer spending, TJX still managed to increase revenues 12 percent, to $10.71 billion, surpassing the $10 billion mark for the first time. Net income did fall slightly, however, dropping to $500.4 million from $538.1 million. The TJX Companies were also more personally affected by the events of September 11, 2001. Seven company employees, traveling on business, died when their jetliner crashed into the World Trade Center.
During another year of economic uncertainty and worldwide geopolitical disturbance, TJX once again managed to achieve a 12 percent jump in revenues during 2002. All seven of the company's formats were expanded; overall, the firm added 178 stores, bringing the total count to 1,843. The only unprofitable operation was A.J. Wright, but the company expressed high hopes for the young chain, which was already 75 units strong. The TJX Companies had plenty of additional growth potential. The company projected that by the early 2010s, it could be operating in excess of 4,300 stores: 1,800 T.J. Maxx and Marshalls stores, 650 HomeGoods, more than 1,000 A.J. Wrights, 200 Winners, 80 HomeSense units, and 300 to 600 T.K. Maxx outlets. This was just with the current portfolio of stores. TJX was sitting on a pile of cash and had long been expected to pursue additional acquisitions. Targets were expected to include both large chains that retained some growth potential and smaller ones needing capital to fund expansion.
Principal Divisions: T.J. Maxx; HomeGoods; Marshalls; A.J. Wright; HomeSense (Canada); Winners (Canada); T.K. Maxx (U.K.).
Principal Competitors: Federated Department Stores, Inc.; The May Department Stores Company; Target Corporation; J.C. Penney Corporation, Inc.; Sears, Roebuck and Co.; The Gap, Inc.; Kohl's Corporation; Wal-Mart Stores, Inc.; Kmart Corporation; Limited Brands, Inc.; Ross Stores, Inc.; Value City Department Stores, Inc.
- Brady, Jennifer, "Melville to Sell Marshalls to TJX for $550 Million," Daily News Record, October 17, 1995, p. 3.
- Chanko, Kenneth M., "Zayre Corp. Spin-off, Merger Lays Groundwork for Future Growth," Discount Store News, December 19, 1988, pp. 5+.
- Duff, Mike, "Resilient Record Bodes Well for Off-Price Leader," DSN Retailing Today, December 10, 2001, pp. 31, 32.
- ------, "TJX to Try New Formats, Expand Home Business," Discount Store News, June 22, 1998, pp. 3, 4.
- ------, "TJX Ups Expansion to Increase Earnings," DSN Retailing Today, June 18, 2001, pp. 2, 44.
- ------, "TJX Won't Rest on Laurels," Discount Store News, June 21, 1999, pp. 3, 54.
- Lillo, Andrea, "TJX Maps Out Expansion Plans," Home Textiles Today, June 10, 2002, pp. 1, 27.
- Mammarella, James, "T.J. Maxx/Marshalls Upsets Marketplace," Discount Store News, January 1, 1996, pp. 3, 54.
- ------, "TJX Diversifies, Adapts, and Survives," Discount Store News, February 20, 1995, pp. 19-20.
- Pereira, Joseph, "TJX Tailor-Makes a Marshalls Plan to Revitalize Retailer," Wall Street Journal, October 8, 1996, p. B4.
- Reidy, Chris, "TJX Named Company of the Year: Here, Only Profits Have Big Markups," Boston Globe, May 20, 1997, p. C1.
- Rudnitsky, Howard, "The King of Off-Price," Forbes, January 31, 1994, pp. 54+.
- Smith, Geoffrey, "Can TJX Turn Off-Price On?" Business Week, October 30, 1995, p. 44.
- "TJX Adjusting Well to Its Megachain Size," Discount Store News, June 17, 1996, p. 1.
- "TJX Cos. Steamrolls to Front of Off-Price Pack," Discount Store News, July 4, 1988, p. 151.
- "TJX Needs to Be Better Than Better," Discount Store News, March 3, 1997, pp. 6, 28.
Source: International Directory of Company Histories, Vol. 57. St. James Press, 2004.