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TJX Companies' (TJX) Sales Driving Efforts to Boost Traffic

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With more shoppers flocking to off-price retailers, TJX Companies, Inc.’s (TJX - Free Report) business has been receiving quite a boost. The company’s robust off-price business model combined with initiatives to drive sales has been enhancing store and online traffic, which has been favoring top-line growth for a while.

Increasing Store Traffic & Raising Store Count

Backed by the company’s impressive merchandise mix along with sales-driving efforts, consumer footfall at TJX Companies’ stores has been steadily rising. The impacts of such trends were clearly visible on the company’s third-quarter fiscal 2018 results, wherein sales grew 6% year over year.

Moreover, in order to sustain the momentum in store traffic and reap benefits from consumer’s increasing preference for discounted products, the company has been resorting to store expansions. Notably, TJX Companies plans to take the store count to 5,600 in the long term, including plans to open approximately 260 stores in fiscal 2018.

In North America, the company plans to add more than 1,400 stores in the long term, along with strategies to double Marmaxx’s U.S. store count. The company also intends to expand HomeGoods chain to at least 1,000 stores. Like TJX Companies, Burlington Stores (BURL - Free Report) , a major discount-retailer, has also been undertaking store expansion initiatives to boost sales.

Effective Inventory Management & Marketing Strategies

TJX Companies’ inventory management efforts are quite noteworthy. In fact, the company’s off-price business model derives much retail strength from disciplined inventory management. In fact, other off-price retailers such as Ross Stores (ROST - Free Report) and Big Lots (BIG - Free Report) have also been deriving much strength from efficient merchandising policies.  

Driven by such efforts, consolidated inventories per store for TJX Companies were down 4% on a currency-neutral basis, at the end of the third quarter. Further, management stated that it began the fourth quarter on a strong note with solid inventory position.

Along with effective merchandising strategies, TJX Companies’ aggressive marketing and advertising campaigns have also been boosting store traffic. Also, the company’s gift-giving initiatives, unique among off-price retailers, and loyalty card program improve customer engagement. Further, in order to encourage more frequent visits and cross-shopping of brands, the company is expanding loyalty programs in the United States and Canada. Additionally, the company has been undertaking product innovations to drive sales.

Adapting With Consumer Trends

With consumers’ changing shopping patterns, many retailers have resorted to e-commerce as an additional channel to drive sales. TJX Companies has also undertaken several initiatives to boost online sales by recruiting an experienced internet management team. In this regard, the company’s e-commerce business, Sierra Trading Post, is working toward growing its business. Moreover, TJX Companies’ official website — tjmaxx.com — is accessible from tablets and smartphones. The website appeals to the young generation — the company’s main target consumers. Further, the company plans to add more categories to the online shopping site and invest categorically to differentiate it from brick-and-mortar stores.

 



Bottom Line

We expect this Zacks Rank #2 (Buy) company’s efficient inventory management and marketing plans to continue aiding store traffic growth and overall business expansion. Such initiatives are also expected to deliver substantial strength to the company to tide over wage-costs related concerns. Notably, TJX Companies’ shares gained 8.2% in the past three months while the industry rallied 20.2%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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