As T.J. Maxx parent surpasses Macy’s, CEO Carol Meyrowitz steps down on a high note
After a wildly successful nine-year stint at the helm of TJX Cos (TJX) that saw the parent company of T.J. Maxx and Marshalls overtake Macy’s (M) in size, Carol Meyrowitz is stepping down as CEO.
Meyrowitz, 61, started at TJX in 1983 and will move into the role of executive chairman for at least three years on January 31, when she hands over the reins to Ernie Herrman, currently president of the company, TJX said on Wednesday. The handover is the culmination of a succession plan that was enacted in early 2011, when Herrman was named president, making him the leading candidate for the top job.
TJX has thrived in recent years by offering customers designer labels at deep discounts. For a long time, much of its merchandise was leftover products department stores couldn’t sell in previous seasons. But during the recession, vendors saw how effective TJX was at selling their products and a growing percentage of its assortment was made specifically for TJX.
Meyrowitz, who was recently ranked No. 11 on Fortune’s Most Powerful Women in business list, took the helm at TJX in January 2007. In the first eight years of her tenure, revenue rose from $18.34 billion in 2007 to $29.08 billion last year, big enough to surpass Macy’s. TJX’s revenues didn’t even fall during the 2008-09 recession, when department stores and other retailers were routinely seeing 10% drops in business. And in the first two quarters of the current year, TJX’s hot streak has continued.
Remarkably, TJX has managed to keep growing even as retailers from Nordstrom (JWN) to Saks Fifth Avenue (part of HBC) to Neiman Marcus are expanding their fleet of off-price stores to muscle in on the fastest growing area in retail. Macy’s just launched its own off-price chain of stores, Backstage, last month to get in on the action, and its sister chain Bloomingdale’s is expanding its outlet store chain.
For a while, the conventional wisdom held that TJX’s growth coming out of the recession would cool as customers grew less bargain-hungry. That never happened. Many underestimated TJX’s formidable business model, which Fortune detailed at length in a 2014 profile by Beth Kowitt.
One example: TJX turns over its inventory every 55 days, vs. 85 for its peer group, according to Morningstar. That keeps merchandise on the sales floor fresh. Also, TJX’s products move so fast that it is often sold before the company has paid its vendors for it, a boon for cash flow. Fortune’s 2014 feature on the company cited a surveyof 2,137 shoppers by investment bank Cowen & Co. that found that 28% of women who make over $100,000 a year shop at TJX stores, showing how much this way of shopping appeals to even the more affluent.
Herrman, 54, has worked at TJX since 1989 and has been Meyrowitz’s colleague for decades. Before being named president nearly five years ago, he was in charge of Marmaxx Group, the company’s largest division (the name is an amalgamation of Marshalls and Maxx), as well as HomeGoods and TJX Canada.
During Meyrowitz’s time as CEO, TJX has deepened its international presence, expanding its T.K. Maxx chain into Germany in 2007, and then Poland two years later, and launching Marshalls in Canada four years ago. Two years ago, TJX took a second stab at e-commerce, relaunching tjmaxx.com after aborting the effort a decade or so earlier.
Investors have been rewarded handsomely: shares have risen nearly five fold to $71.69 (factoring in stock splits) since Meyrowitz became CEO in early 2007.