TJX Companies expands assortment as it buys up extra inventory

The reign of off-price conglomerate TJX Companies continued in Q3 with a 7% YoY bump in net sales and a strong start to the holiday season.

For the past several quarters, the parent company of TJ Maxx and Marshalls has benefited from consumers’ preference for off-price goods, but the environment has only gotten more advantageous for the retailer, as plentiful merchandise opportunities have helped it expand and diversify its assortment for a wider range of customers.

“Availability of quality branded merchandise has been exceptional, and we are in an excellent position to flow a fresh assortment of goods to our stores and online,” CEO Ernie Herrman told shareholders, touting TJX as a destination for gift buying.

The emphasis on assortment reflects what one fellow off-price CEO sees as the company’s greatest strength. “Over the last few years, we’ve seen an expansion in the brands they carry and the quality of brands they carry,” Shraysi Tandon, CEO of Kidsy, an off-price retailer of baby goods, told Retail Brew.

A decade ago, TJ Maxx was carrying more lower and mid-tier brands, she said. Now, it’s carrying a greater proportion of luxury goods, in part because higher-end brands increasingly need off-price partners to survive in a challenging market.

“It’s almost as if now they don’t have a choice but to play in the game, given the speed at which this market is increasing,” Tandon said.

As Herrman explained in the earnings call, “we have so much availability across brands” and “more availability in some of the categories that we hadn’t seen in a while.”

Indeed, Herrman stressed that fighting the urge to buy too much is one of the company’s biggest challenges, as it strives to take advantage of the extra supply while also remaining in a position where buyers can be flexible and opportunistic.

• Total inventories in Q3 were up $1 billion dollars from the year before, bringing the total to $9.4 billion.

The wider assortment and customer base doesn’t mean TJX is shifting its focus from value, however. While Herrman acknowledged reports that luxury is driving sales, CFO John Klinger stressed that it was still a “lower-income demographic that was driving the comp in the majority of our geographies.”