TJX Companies as a corporation is very much like the T.J. Maxx, Marshalls, and HomeGoods store chains it operates: no frills and no artifice. Just a strict focus on basics, which has led to untold treasures for customers and shareholders.
The off-price retailer on Wednesday reported yet another quarter of stellar growth to cap off a fiscal year that brought TJX’s revenue to slightly more than $56 billion. During the fourth quarter, comparable sales, a metric that strips out stores opened or closed during the year, was up 5% despite a tough retail environment. And to Wall Street’s delight, TJX expects sales to grow again this year.
The company’s latest successful quarter follows years of corporate strategizing that emphasized restraint over flashiness. Under Ernie Herrman, CEO since early 2016, TJX revenue has nearly doubled. When he took the reins, the company had just eclipsed Macy’s in revenue; today, it is more than twice as large as the department store company. On the market cap front, the difference is far more dramatic: At $133 billion, TJX’s stock market value is about 35 times that of Macy’s.
An off-price retailer is one that sells items typically found at other stores, very often department stores, at lower prices because they are out of season or went unsold. During the 2008–09 recession, off-price companies like TJX and Ross Stores boomed as consumers sought deals and tired of the declining service standards at many other retailers.
Over time, TJX also became much less reliant on overstock items from department stores, and is peerless at offering the fun of shopping that has kept flocks of fashionistas coming in. “The thrill of the treasure hunt and the comprehensiveness of deals and bargains across the store are important differentiators that are still helping TJX move the dial,” Neil Saunders, managing director at GlobalData, wrote in a research note.
What makes TJX’s success even more astonishing is how it thrives with almost no e-commerce to speak of. Under Herrman, TJX outmaneuvered rivals like Ross Stores as well as the discount chains operated by the likes of Macy’s and Nordstrom.
A history of good governance
When Herrman took the corner office, plenty wondered whether he’d be able to continue TJX’s incredible growth story under his predecessor, Carol Meyrowitz. In her nine years as CEO, TJX sales soared 67% to $29.1 billion in 2015 while profit tripled to $2.2 billion, and she turned the company, based in Framingham, Mass., into a recession-resistant powerhouse. As Stifel analyst Richard Jaffe put it at the time: “She’s a tough act to follow.” Under her watch, TJX also focused squarely on the business, doing no press events or speaking at conferences, something Herrman has continued.
If Herrman has clearly built on her legacy, investors can thank TJX’s exemplary succession planning. Herrman had been president of TJX for five years, working as Meyrowitz’s top lieutenant as she prepared him for the top job. After he took the helm, she stayed on as executive chair to provide continuity and guidance, something that continues to this day.
In an unusual arrangement, Meyrowitz has remained executive chair for nine years. A 2023 study of more than 200 U.S. public companies by Spencer Stuart found that executive chairs had been in their roles for a little less than two years on average. An executive chair is much more hands-on than a chairman and has, as the title suggests, executive functions, without being as involved in day-to-day matters as the CEO. The majority of executive chairs in the Spencer Stuart study, some 57%, had been CEO prior to becoming executive chair.
Having an executive chair is typically a move that lasts a year or two and is designed to support a CEO transition. But clearly the company and its shareholders think the arrangement is working: Earlier this month, TJX extended both Herrman’s and Meyrowitz’s contract for another three years.
