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The Changing Face of TJX

By Dave Marino-Nachison
October 23, 2003
Off-price retailer TJX (NYSE: TJX) last night announced plans to acquire Bob's Stores, a 36-store value-oriented apparel and footwear chain based in Connecticut that's currently in bankruptcy reorganization. Assuming bankruptcy court and regulatory approval, the deal will cost TJX roughly $100 million, minus certain adjustments -- TJX probably won't assume all of Bob's leases, or buy out its entire inventory.

The deal provides an opportunity to take a closer look at TJX's plans for growth. The company invests several hundred million dollars in new properties each year, so this deal shouldn't really surprise anyone -- though it may surprise folks only familiar with its flagship T.J. Maxx and Marshall's chains that Bob's will represent its eighth store line.

TJX also operates Canadian off-price retailer Winners, value-priced home fashions chains HomeSense (in Canada) and HomeGoods (in the U.S), European T.J. Maxx knockoff T.K. Maxx, and A.J. Wright -- similar to T.J. Maxx but targeting a lower economic demographic. (The company has also experimented, combining HomeGoods stores with both T.J. Maxx and Marshall's to create off-price "superstores".)

The reasons behind TJX's broad approach to expansion can be seen in the company's financial results for the fiscal second quarter (ended July 26). To summarize:

Segment Sales Same-Store Sales
Marmaxx(1) +4% +0%
Canada(2) +33% +16%
HomeGoods +23% +4%
T.K. Maxx +33% 14%(3)
A.J. Wright +61% 11%

Notes: 1) Combines T.J. Maxx and Marshall's. (2) Combines HomeSense and Winners. (3) Excludes currency effects, without which the gain was 4%.

Year over year, profits rose for every segment except Marmaxx (as it's called in the company's 10-K) -- the same as in Q1, with the exception of the Canadian businesses.

TJX's news release instructs investors to think of Bob's as a "start-up" and to trust management's experience developing retail concepts. Next to the size of Marmaxx, however, the company's remaining chains are small by comparison. Yesterday's news is a strong indication that they will be counted on not to remain so for long.

Dave Marino-Nachison can be reached at

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