If you look at it from 30,000 feet above, it may not seem like the best time in the world for a retailer.
But take a closer look (maybe closest to your nearby outdoor plaza), and you may be surprised to find a silver lining or two.
Related: Former Walmart CEO sounds the alarm on a growing problem
The early 2020s have been marked by something of a great consolidation across most consumer retail brands.
With a few exceptions, most of the specialty interest stores we used to frequent for things like crafts, home decor, clothing, and household goods have closed some locations and struggled with inventory theft. Some have filed for bankruptcy.
And if those stores were operating out of an indoor shopping mall, things may be more dire.
Macy's announced earlier this spring that it plans to close over 100 stores across the United States. Express and Rue 21 – both clothing retailers once beloved by mall-going teens – have now both filed for bankruptcy.
Many malls have shuttered due to a decline in foot traffic, and though the common belief is that they're closing due to Covid or Amazon (AMZN) , the reality is that people just don't like congregating the way they used to.
Instead of gathering at the mall, many shoppers now prefer a cheaper shopping experience, which can often be found either online or off-mall retailers like TJX Companies' (TJX) TJ Maxx and Marshalls and outlet malls.
TJX Companies is uniquely positioned for success
If you are someone who still goes in person from time to time to shop around, chances are you've stopped at one of the stores owned by TJX.
The parent company, which operates Marshalls, TJ Maxx, HomeGoods, Home Sense, Sierra, and others, act like a brick and mortar retailer. But it functions largely as a middle man for popular labels and deal-hunters. TJX stocks excess inventory, spillover, and past seasons' labels, then marks them down significantly, so shoppers can still get some of their favorite brand names – like a polo shirt from Ralph Lauren, bedding from UGG, or shoes from Puma.
More Retail:
- Ulta CEO sounds the alarm on a growing problem
- Lululemon releases a first-of-its-kind product
- Target store introduces a new 'over 18' policy
- Amazon launches genius new subscription product
The company's success is perhaps a product of mall fatigue; as fewer people seek out shopping malls for good deals, furniture, and fashion, they instead turn to more accessible (and often closer) retailers who consistently offer some of the lowest prices. TJX, uniquely, also regularly turns over its store inventory, so it's rare that two stores carry the same items – or that one store will have the same inventory within a week.
TJX shares good news for deal-seekers
And the results are palpable.
TJX Companies reported bumper Q1 earnings on May 22, with a 6% increase in revenue year-over-year and an earnings-per-share beat of 6.34% at $0.93.
Marmaxx, which combines TJX's popular T.J. Maxx, Marshalls, and Sierra stores, were up 5% to $7.75 billion. HomeGoods sales rose 6% to $2.08 billion. Comparable store sales, which measures the performance of stores that have been in operation for over one year, were up 3%.
"We saw comparable sales growth at every division entirely driven by customer transactions, which underscores the strength of our value proposition," CEO Ernie Herrman said during the earnings call. "This also gives us confidence in our ability to gain market share across all of our geographies."
Currently, TJX Companies operates approximately 4,900 stores, but rapid growth in late 2023 and 2024 has been accelerating plans to expand. If it seems like every plaza near you with an empty storefront is now building a TJ Maxx or Marshalls, you may not be far off.
Management indicated optimism that it will accelerate growth to serve more communities and expand.
"The second quarter is off to a good start and we see numerous opportunities for our business for the balance of the year that we plan to pursue," Herrman said. "Longer term, we are excited about the potential we see to drive customer transactions and sales, capture additional market share, and increase the profitability of TJX."
Related: Veteran fund manager picks favorite stocks for 2024
