TJ Maxx parent says dropping some product categories may be answer to tariffs

After a strong Q1 in which increasing customer transactions fueled sales, TJX Companies, owner of TJ Maxx, Marshalls, and HomeGoods, says it has a plan for dealing with tariff-related inventory issues: If a certain product category becomes less available, the company will just shift availability to a different product.

CEO Ernie Herrman put it this way: “The good thing with our flexibility is, we will just take advantage of an adjacent category. We’d have a little less inventory on that and we’ll go after the ones where we think there’s more exciting value to put out there.”

This flexibility stems in part from the simplicity of TJX’s value proposition, Herrman explained.

“I always emphasize this: Our only contract to the customer is that we will have great value on the goods that we put out there, and it will be below the out-the-door price of traditional retailers, specialty retailers, etc.,” he said.

In other words, it’s all relative: If tariffs push up costs overall, TJX just has to undercut the higher prices offered at traditional retailers to “preserve that gap,” Herrman said, even if some of its own products are experiencing cost pressure as well.

• CFO John Klinger put it succinctly when explaining why TJX was maintaining its full-year guidance: “We believe we can do this primarily through our buying process—our ability to adjust our ticket while maintaining our value gap and our ability to diversify our sourcing.”

Doing it their way: What’s so special about TJX’s buying process? The company has become more important to vendors, Herrman said, “because they see us as probably one of the more consistent retail outlets. Our buyers are very straightforward with them, and we’re very transparent with our vendors.”

Echoing comments made last quarter that the wider retail sector’s loss could be TJX’s gain, Herman said its advantage could increase “as other stores perhaps close.”

The executive also provided a window into the discount giant’s pricing practices. TJX buyers do not use a “markup wheel,” he said, meaning cost increases don’t translate directly into price increase but instead price each item to achieve the “right value.” Our buyers, he added, “don’t start with the cost and focus on the cost as much as the other merchants do at other retailers.”