The TJX Companies, Inc.

770 Cochituate Road
Framingham, Massachusetts 01701
U.S.A.
(508) 390-1000
Fax: (508) 390-3635

Public Company
Incorporated: 1962 as Zayre Corp.
Employees: 56,000
Sales: $7 billion (1996)
Stock Exchanges: New York
SICs: 5651 Family Clothing Stores; 5661 Women’s Shoes; 5944 Jewelry, Precious Stones, and Precious Metals; 5261 Ready-to-Wear Apparel; 5632 Apparel, Accessories; 5961 Women’s Apparel, Mail Order

The TJX Companies, Inc. is the largest off-price apparel retailer in North America. Each of its operating divisions approaches off-price apparel retailing from a different perspective. T.J. Maxx, the largest retailer of its kind in the United States with 578 stores nationwide, offers brand-name family apparel, fine jewelry, house and gift wares, as well as women’s shoes and accessories at prices 20 to 60 percent below department store regular prices. Marshall’s is the nation’s second largest off-price apparel retailer. Acquired by TJX in 1995, Marshall’s operates over 450 stores nationwide, offering brand-name family apparel, giftware, domestics, and accessories, as well as shoes for the entire family and a broad assortment of menswear. Winners Apparel Ltd. and T.K. Maxx, each modeled after the T.J. Maxx concept, are leading off-price family apparel chains in Canada and the United Kingdom, respectively. Home-Goods, a chain of off-price home fashion stores, operated 21 stores at the end of 1996, offering giftware, bed and bath accessories, rugs, lamps, and seasonal merchandise.

Company Origins

The TJX Companies, Inc. traces its history to Zayre Corp., parent of the Zayre Store chain of discount department stores incorporated in 1962. The first Zayre—Yiddish for “very good”—store opened in Hyannis, Massachusetts, in 1956. Its founders were two cousins, Stanley and Sumner Feldberg. With sales doubling every second or third year, the Feldbergs were quick to establish new Zayre stores, which numbered more than 200 by the early 1970s. By then, the company had diversified into specialty retailing.

Among Zayre’s early acquisitions was the Hit or Miss chain, which opened its first store in Natick, Massachusetts, in 1965. The store flourished and grew into a chain so quickly that within four years it had attracted the attention of a giant by comparison, Zayre. In 1969 Zayre bought the Hit or Miss chain and began its exploration of the upscale off-priced fashion market. Zayre’s timing could not have been better. During the recession of the 1970s, Hit or Miss’s results climbed so rapidly that Zayre began to think of expanding its off-priced upscale apparel merchandising.

The T.J. Maxx concept was also inspired in part by this recession. Bernard Cammarata, once a buyer himself and the future president and CEO of TJX, was hired by Zayre Corp. to capitalize on the potential for a chain offering off-priced upscale apparel for the whole family. In Auburn, Massachusetts, in March 1977, he opened the first T.J. Maxx.

Within six years of the opening of the first T.J. Maxx store, Zayre had found yet another avenue to the off-priced fashion market. In 1983 Chadwick’s of Boston began to sell selected Hit or Miss items through mail-order catalogs. Hit or Miss and Chadwick’s crossover operations allowed customers to handle products before ordering, and brought the frequent buyer the convenience of home shopping.

By the mid-1980s off-priced specialty retailing was becoming more important to Zayre. Hit or Miss and T.J. Maxx had brought in just 14 percent of the company’s operating income in 1980; by the first half of 1983 these operations were producing nearly 45 percent of income. At the same time, however, Zayre was renovating its discount department stores and expanding its product mix. In 1984 Zayre entered the membership warehouse-club market, launching B.J.’s Wholesale Club, and also acquired Home Club, Inc., a chain of home improvement stores, the following year. While neither of these ventures was immediately profitable, Hit or Miss and T.J. Maxx continued to thrive.

By 1986 the number of Hit or Miss stores in the United States had reached 420, and sales had climbed to $300 million. Some 70 percent of its inventory was made up of nationally known brands. The remaining 30 percent consisted of standard apparel, such as turtlenecks and corduroy pants, which were produced by Hit or Miss under its own private label. With such a merchandise mix, Hit or Miss was able to sell current fashion at 20 to 50 percent less than most specialty stores.

In 1986 profits of the Zayre chain, targeting low- to middle-income customers, dropped, although T.J. Maxx, Hit or Miss, and Chadwick’s of Boston, targeting mid- to higher-income customers, continued to grow. That year alone, Zayre Corp. opened 35 more T.J. Maxx stores and 31 new Hit or Miss stores. In fact, Zayre Corp.’s off-priced retailing chains were so successful that by 1987 Zayre thought it prudent to organize them under one name and grant them autonomy from the decreasingly prosperous parent company.

TJX Companies is Established and Zayre is Sold

In June 1987 just ten years after its flagship chain, T.J. Maxx, opened its first store, The TJX Companies, Inc. was established as a subsidiary of Zayre. It sold 9.35 million shares of common stock in its initial public offering; Zayre owned 83 percent of the subsidiary.

During this time, Zayre was facing several challenges. In the first half of 1988, Zayre had operating losses of $69 million on sales of $1.4 billion. Observers blamed technological inferiority, poor maintenance, inappropriate pricing, and inventory pileups, and speculated Zayre was ripe for takeover. Throughout all this, subsidiary The TJX Companies continued to yield a profit.

In October 1988 the company decided to focus on TJX. It sold the entire chain of over 400 Zayre Stores to Ames Department Stores, Inc. In exchange, the company received $431.4 million in cash, a receivable note, and what was then valued at $140 million of Ames cumulative senior convertible preferred stock.

The company continued to hone in on its profitable new core business, selling unrelated operations. In June 1989 it spun off its warehouse club division, Waban, Inc., which owned B.J.’s and Home Club. Zayre gave shareholders one share of Waban for each two shares of Zayre they owned, as well as a $3.50 per share cash payment. The same month, the company acquired an outstanding minority interest in TJX. On the day it acquired the minority interest, the company merged with TJX. Later that month, the company changed its name from Zayre Corp. to The TJX Companies, Inc. The newly named company began trading on the New York Stock Exchange.

The company’s transition into an off-priced fashion business was relatively smooth, but the Ames preferred stock it received in the Zayre transaction had been a problem. This preferred stock was not registered and had no active market. While the stock was entitled to six percent annual dividends, Ames had the option of paying the first four semi-annual dividends with more Ames preferred stock rather than cash, an option that Ames exercised for each of the payments it had met. However, the value of Ames preferred stock was dubious, as Ames had been closing stores and experiencing losses.

In April 1990, TJX established a $185 million reserve against its Ames preferred stock and contingent lease liabilities on former Zayre stores as a result of Ames’s announcement of continued poor performance. That same month, Ames filed for protection from creditors under Chapter 11 of the U.S. Bankruptcy Code.

The 1990s: Winners and Losers

On a bright note, TJX’s operations remained solid. In 1991 T.J. Maxx, by far the company’s largest division, posted record results for the 15th consecutive year since it opened. At the end of 1991 T.J. Maxx had 437 stores in 46 states. It planned to open many more stores, focusing primarily on the only scantily penetrated southwestern United States, as well as expanding several existing stores. T.J. Maxx also planned to follow up its success in jewelry and shoes by opening up these respective departments at locations that did not carry these items. It also planned to expand high-performance nonapparel categories, such as giftware and domestic items. T.J. Maxx also embarked on an effort to enlarge a number of stores to a larger format ranging from 30,000 to 40,000 square feet. This change facilitated expansion of all departments, especially giftware and housewares, as well as other nonapparel categories. T.J. Maxx opened 21 stores during 1996 and closed 30. The store recorded excellent sales in 1996, which increased five percent over the previous year.

The purchase of Marshalls from the Melville Corp. brought TJX a prize to complement T.J. Maxx. The immediate plan called for closing certain underperforming T.J. Maxx and Marshalls stores. Marshalls opened 11 stores in 1996 and closed 53. Sales at Marshalls rose ten percent in 1996. Fifteen openings and 50 closings were planned for 1997; more were not expected, since many of the existing stores had performed so well. TJX credited this success with its back-to-basics approach. The prior Marshall ownership had strayed from off-price strategies, so TJX refocused the business. It emphasized nonpromotional marketing, quality brand names at low prices, and timely markdowns—to draw customers back and strongly.

Company Perspectives:

“TJX’s staunch commitment to the communities in which we have a corporate and retail presence continues to be a cornerstone of our Company. Through The TJX Foundation and other corporate contributions, our philanthropic efforts center on those organizations that help needy families and children.”

Success at T.J Maxx and Marshalls hinged on execution of the off-price concept, which demanded rapid inventory turnover at the store level. “Opportunistic buying” was done “in season,” that is, close to customer need. Merchandise moved into warehouses and out to stores through state-of-the-art distribution centers and sophisticated inventory tracking systems. In effect, each of the 1,000-plus stores received two shipments of merchandise with a total of 10,000 items. Markdowns also played a major role, adding value for customers and clearing shelves. Despite the similarities in operations, TJX was determined that T.J. Maxx and Marshalls retain distinct identities.

TJX ventured into Canada in 1990 to acquire the five-store Winners Apparel Ltd. chain. Building on the off-price concept, similar to that of T.J. Maxx, Winners opened 13 stores in 1996, bringing its total to 65. Moreover, Winners planned on opening about 13 more stores in 1997. TJX viewed Winners as a meaningful way to expand over the next several years—about 12 new stores per year for the next several years. In fact, store sales posted an increase of 13 percent in 1996, plus an increase in operating income of 114 percent.

T.K. Maxx, also inspired by the T.J. Maxx concept, caught on in the United Kingdom in 1996. Comparable store sales increased by 30 percent, outperforming any predicted sales figures. This move abroad proved that further expansion was key to TJX’s growth strategy.

Not all the news among TJX holdings was good. Despite concerted efforts to bolster merchandise assortment and value, sales at TJX’s HomeGoods stores flagged. Moreover, Hit or Miss had a difficult time in the early 1990s, transitioning its business in a recessionary economy. After closing many nonperforming stores and renovating others, TJX sold this women’s specialty division in 1995.

In late 1996 the company also sold its Chadwick’s of Boston catalog division to Brylane L.P., owner of the Lane Bryant women’s fashion chain. Proceeds from the sale totaled about $300 million, plus cash, a note, and certain receivables. The after-tax gain enabled TJX to repay about $500 million of debt, including the debt incurred in relation to the 1995 acquisition of Marshalls. The transaction left TJX with a stronger cash position and in a position of greater flexibility.

Overall, 1996 was a banner year for The TJX Companies. Sales from continuing operations hit $7 billion, up from $4 billion in 1995, fueled largely by the Marshalls acquisition and the economies of scale it allowed TJX to achieve. Focusing on containing expenses in order to pass greater values on to the customer and thereby increase sales volume, TJX expected to see continued earnings growth as the 20th century drew to a close. At the same time, the T.K. Maxx chain in England, planning on expansion onto the European Continent, represented another encouraging prospect for growth.

Principal Divisions

T.J. Maxx; HomeGoods; Marshalls; T.K. Maxx (United Kingdom); Winners Apparel Ltd. (Canada).

Further Reading

Mammarella, James, “TJX Diversifies, Adapts and Survives” Discount Store News, February 20, 1995, pp. 19–20.

Smith, Geoffrey, “Can TJX Turn Off-Price On?” Business Week, October 30, 1995, p. 44.

“T.J. Maxx/Marshalls Upsets Marketplace,” Discount Store News, January 1, 1996, p. 3.

“TJX Adjusting Well to its Megachain Size,” Discount Store News, June 17, 1996, p. 1

—Maya Sahafi

—updated by Catherine Hamrick

The TJX Companies, Inc.

770 Cochituate Road
Framingham, Massachusetts 01701-4672
U.S.A.
Telephone: (508) 390-1000
Fax: (508) 390-2828
Web site: http://www.tjx.com

Public Company
Incorporated: 1962 as Zayre Corp.
Employees: 94,000
Sales: $11.98 billion (2002)
Stock Exchanges: New York
Ticker Symbol: TJX
NAIC: 448140 Family Clothing Stores; 442299 All Other Home Furnishings Stores; 454111 Electronic Shopping; 551112 Offices of Other Holding Companies

The TJX Companies, Inc. is the largest off-price apparel and home fashions retailer in both the United States and the world, with nearly 1,850 stores worldwide by the end of fiscal 2002. Six of the firm’s seven divisions target middle to upper-middle income shoppers who are fashion and value conscious; the A.J. Wright chain is designed to serve more moderate-income consumers. All of the seven concepts aim to offer quality brand-name merchandise at prices 20 to 60 percent below department store and specialty store regular prices. T.J. Maxx, the largest retailer of its kind in the United States with 713 stores in 47 states, offers brand-name family apparel, accessories, fine jewelry, home fashions, women’s shoes, and lingerie. Marshall’s is the nation’s second largest off-price apparel retailer. Acquired by TJX in 1995, Marshall’s operates 629 stores in 42 states and Puerto Rico, offering a product line similar to that of T.J. Maxx but with a full line of family footwear and a wider assortment of menswear. Winners (146 units) and T.K. Maxx (123 units), each modeled after the T.J. Maxx concept, are the leading off-price family apparel chains in Canada and the United Kingdom, respectively. HomeGoods, a chain of off-price home fashion stores, operates some 140 stores offering giftware, accent furnishings, rugs, lamps, and seasonal merchandise. A.J. Wright, a 75-unit chain launched in 1998, offers family apparel and footwear, lingerie, accessories, home fashions, and costume jewelry. Debuting in 2001 and expanded to 15 stores by the end of the following year, HomeSense is a Canadian version of the HomeGoods chain.

Company Origins

The TJX Companies, Inc. traces its history to Zayre Corp., parent of the Zayre Store chain of discount department stores incorporated in 1962. The first Zayre—Yiddish for “very good”—store opened in Hyannis, Massachusetts, in 1956. Its founders were two cousins, Stanley and Sumner Feldberg. With sales doubling every second or third year, the Feldbergs were quick to establish new Zayre stores, which numbered more than 200 by the early 1970s. By then, the company had diversified into specialty retailing.

Among Zayre’s early acquisitions was the Hit or Miss chain, an off-price chain specializing in upscale women’s clothing. The first store, which opened in Natick, Massachusetts, in 1965, flourished and grew into a chain so quickly that within four years it had attracted the attention of a giant by comparison, Zayre. In 1969 Zayre bought the Hit or Miss chain and began its exploration of the upscale off-price fashion market. Zayre’s timing could not have been better. During the recession of the 1970s, Hit or Miss’s results climbed so rapidly that Zayre began to think of expanding its off-price upscale apparel merchandising.

Zayre first attempted to buy the Marshalls chain, which had already established itself as a retailer of off-price apparel for the whole family. When that effort failed, the company hired Bernard Cammarata, who had been Marshalls’ top buyer, to essentially create a Marshalls clone. In Auburn, Massachusetts, in March 1977, he opened the first T.J. Maxx.

Within six years of that opening, Zayre had found yet another avenue to the off-price fashion market. In 1983 Chadwick’s of Boston began to sell selected Hit or Miss items through mail-order catalogs. Hit or Miss and Chadwick’s crossover operations allowed customers to handle products before ordering, and brought the frequent buyer the convenience of home shopping.

By the mid-1980s off-price specialty retailing was becoming more important to Zayre. Hit or Miss and T.J. Maxx had brought in just 14 percent of the company’s operating income in 1980; by the first half of 1983 these operations were producing nearly 45 percent of income. At the same time, however, Zayre was renovating its discount department stores and expanding its product mix. In 1984 Zayre entered the membership warehouse-club market, launching B.J.’s Wholesale Club, and also acquired Home Club, Inc., a chain of home improvement stores, the following year. While neither of these ventures was immediately profitable, Hit or Miss and T.J. Maxx continued to thrive.

By 1986 the number of Hit or Miss stores in the United States had reached 420, and sales had climbed to $300 million. Some 70 percent of its inventory was made up of nationally known brands. The remaining 30 percent consisted of standard apparel, such as turtlenecks and corduroy pants, which were produced by Hit or Miss under its own private label. With such a merchandise mix, Hit or Miss was able to sell current fashion at 20 to 50 percent less than most specialty stores.

In 1986 profits of the Zayre chain, targeting low- to middle-income customers, dropped, although T.J. Maxx, Hit or Miss, and Chadwick’s of Boston, targeting mid- to higher-income customers, continued to grow. That year alone, Zayre Corp. opened 35 more T.J. Maxx stores and 31 new Hit or Miss stores. In fact, Zayre Corp.’s off-price retailing chains were so successful that by 1987 Zayre thought it prudent to organize them under one name and grant them autonomy from the decreasingly prosperous parent company.

Establishment of TJX Companies and Divestment of Zayre

In June 1987 just ten years after its flagship chain, T.J. Maxx, opened its first store, The TJX Companies, Inc. was established as a subsidiary of Zayre, with Cammarata serving as president and CEO. It sold 9.35 million shares of common stock in its initial public offering; Zayre owned 83 percent of the subsidiary.

During this time, Zayre was facing several challenges. In the first half of 1988, Zayre had operating losses of $69 million on sales of $1.4 billion. Observers blamed technological inferiority, poor maintenance, inappropriate pricing, and inventory pileups, and speculated Zayre was ripe for takeover. Throughout all this, subsidiary TJX Companies continued to yield a profit.

In October 1988 the company decided to focus on TJX. It sold the entire chain of over 400 Zayre Stores to Ames Department Stores, Inc. In exchange, the company received $431.4 million in cash, a receivable note, and what was then valued at $140 million of Ames cumulative senior convertible preferred stock.

The company continued to hone in on its profitable new core business, selling unrelated operations. In June 1989 it spun off its warehouse club division, Waban, Inc., which owned B.J.’s and Home Club. Zayre gave shareholders one share of Waban for each two shares of Zayre they owned, as well as a $3.50 per share cash payment. The same month, the company acquired an outstanding minority interest in TJX. On the day it acquired the minority interest, the company merged with TJX. Later that month, the company changed its name from Zayre Corp. to The TJX Companies, Inc. The newly named company, headed by Cammarata, began trading on the New York Stock Exchange.

The company’s transition into an off-price fashion business was relatively smooth, but the Ames preferred stock it received in the Zayre transaction had been a problem. This preferred stock was not registered and had no active market. While the stock was entitled to 6 percent annual dividends, Ames had the option of paying the first four semiannual dividends with more Ames preferred stock rather than cash, an option that Ames exercised for each of the payments it had met. The value of Ames preferred stock was dubious, however, as Ames had been closing stores and experiencing losses.

In April 1990, TJX established a $185 million reserve against its Ames preferred stock and contingent lease liabilities on former Zayre stores as a result of Ames’s announcement of continued poor performance. That same month, Ames filed for protection from creditors under Chapter 11 of the U.S. Bankruptcy Code.

Early to Mid-1990s: Winners and Losers, Hits and Misses

On a bright note, TJX’s operations remained solid. In 1991 J. Maxx, by far the company’s largest division, posted record results for the 15th consecutive year since it opened. At the end of 1991 J. Maxx had 437 stores in 46 states. It planned to open many more stores, focusing primarily on the only sparsely penetrated southwestern United States, as well as expanding several existing stores. T.J. Maxx also planned to follow its success in jewelry and shoes by opening these respective departments at locations that did not carry these items. It also planned to expand high-performance nonapparel categories, such as giftware and domestic items. In addition, T.J. Maxx embarked on an effort to enlarge a number of stores to a larger format ranging from 30,000 to 40,000 square feet. This change facilitated expansion of all departments, especially giftware and housewares, as well as other nonapparel categories. T.J. Maxx opened 21 stores during 1996 and closed 30. The chain recorded excellent sales in 1996, which increased 5 percent over the previous year.

Company Perspectives

Our mission is to deliver an exciting, fresh and rapidly changing assortment of brand-name merchandise at excellent values to our customers. We define value as the combination of quality, fashion and price. With approximately 300 buyers worldwide and about 9,000 vendors, we believe we are well positioned to continue accomplishing this goal. Our key strengths include: expertise in off-price buying; substantial buying power; solid relationships with many manufacturers and other merchandise suppliers; deep organization with decades of experience in off-price retailing, and off-price inventory management systems and distribution networks.

The November 1995 purchase of Marshalls from the Melville Corporation for $606 million in cash and preferred stock brought TJX a prize to complement J. Maxx. The immediate plan called for closing certain underperforming J. Maxx and Marshalls stores. Marshalls opened 11 stores in 1996 and closed 53. Sales at Marshalls rose 10 percent in 1996. Fifteen openings and 50 closings were planned for 1997; more were not expected, because many of the existing stores had performed so well. TJX credited this success with its back-to-basics approach. The prior Marshall ownership had strayed from off-price strategies, so TJX refocused the business. It emphasized nonpromotional marketing, quality brand names at low prices, and timely markdowns—to draw customers back and strongly.

Success at J. Maxx and Marshalls hinged on execution of the off-price concept, which demanded rapid inventory turnover at the store level. “Opportunistic buying” was done “in season,” that is, close to customer need. Merchandise moved into warehouses and out to stores through state-of-the-art distribution centers and sophisticated inventory tracking systems. In effect, each of the 1,000-plus stores received two shipments of merchandise with a total of 10,000 items. Markdowns also played a major role, adding value for customers and clearing shelves. Despite the similarities in operations, TJX was determined that J. Maxx and Marshalls retain distinct identities.

TJX ventured into Canada in 1990 to acquire the five-store Winners Apparel Ltd. chain. Building on the off-price concept, similar to that of J. Maxx, Winners opened 13 stores in 1996, bringing its total to 65. Moreover, Winners planned on opening about 13 more stores in 1997. TJX viewed Winners as a meaningful way to expand over the next several years—about 12 new stores per year. In fact, store sales posted an increase of 13 percent in 1996, plus an increase in operating income of 114 percent.

T.K. Maxx, launched in 1994 and also inspired by the J. Maxx concept, caught on in the United Kingdom in 1996. Comparable store sales increased by 30 percent, outperforming any predicted sales figures. This move abroad proved that further expansion was key to TJX’s growth strategy.

Not all the news among TJX holdings was good. Despite concerted efforts to bolster merchandise assortment and value, sales flagged at TJX’s HomeGoods chain, which had launched as an off-price home fashions retailer. Moreover, Hit or Miss had a difficult time in the early 1990s, transitioning its business in a recessionary economy. After closing many nonperforming stores and renovating others, TJX sold this women’s specialty division in September 1995 to the division’s management and outside investors.

In late 1996 the company also sold its Chadwick’s of Boston catalog division to Brylane L.P., owner of the Lane Bryant women’s fashion chain. Proceeds from the sale totaled about $300 million in cash, a note, and certain receivables. The aftertax gain enabled TJX to repay about $500 million of debt, including the debt incurred in relation to the 1995 acquisition of Marshalls. The transaction left TJX with a stronger cash position and in a position of greater flexibility. Overall, 1996 was a banner year for The TJX Companies. Sales from continuing operations hit $6.69 billion, up from $3.98 billion in 1995, fueled largely by the Marshalls acquisition and the economies of scale it allowed TJX to achieve.

Key Dates

1956:

Two cousins, Stanley and Sumner Feldberg, open their first Zayre discount department store in Hyannis, Massachusetts.

1962:

The company is incorporated as Zayre Corp.

1969:

Zayre purchases the women’s clothing chain Hit or Miss, beginning its involvement in the upscale off-price fashion market.

1977:

The first T.J. Maxx opens in Auburn, Massachusetts, offering off-price upscale apparel for the whole family.

1983:

Company launches Chadwick’s of Boston, which sells selected Hit or Miss items via mail order.

1984:

Zayre enters the membership warehouse-club market, launching BJ.’s Wholesale Club.

1985:

Home Club, Inc., a home improvement chain, is acquired.

1987:

Zayre’s off-price chains are organized as The TJX Companies, Inc., which operates as a subsidiary of Zayre; TJX is taken public through an IPO, with Zayre retaining an 83 percent stake.

1988:

The Zayre discount chain is sold to Ames Department Stores, Inc.

1989:

Company spins off its warehouse club division, including BJ.’s and Home Club; it acquires the minority shareholding in TJX Companies that had been publicly traded, merges with TJX, and then adopts the name of its former subsidiary.

1990:

TJX acquires Winners Apparel Ltd., a Canadian chain similar to T.J. Maxx.

1992:

The HomeGoods home fashions chain is launched.

1994:

Company ventures into the United Kingdom to launch T.K. Maxx, modeled after T.J. Maxx.

1995:

The Hit or Miss chain is divested; Marshalls is acquired from Melville Corporation for $606 million.

1996:

Chadwick’s of Boston is sold to Brylane L.P.

1998:

A.J. Wright, targeting moderate income customers, makes its debut.

2001:

HomeSense, a Canadian version of HomeGoods, begins operations.

A Growing Off-Price Empire into the New Century

The late 1990s saw TJX leveraging the strong performance of its main chains into the launching of experimental new hybrid formats as well as brand-new chains. Having improved the performance of HomeGoods, in part by tweaking the merchandise mix—eliminating appliances and emphasizing home decorating items—the company began testing superstore concepts that combined HomeGoods with the J. Maxx and Marshalls formats. By the end of 1998 there were 14 of these larger, 50,000-square-foot superstores, known as J. Maxx ’ More and Marshalls Mega-Stores, respectively, and these units were performing well. That year, TJX opened two T.K. Maxx stores in The Netherlands as a first tentative step onto continental Europe. These stores got off to a slower than anticipated start. The company also launched A.J. Wright in 1998, opening six stores in New England. This marked the firm’s first attempt to create an off-price family clothing store for the moderate income consumer.

As T.J. Maxx, Marshalls, and Winners continued their consistently profitable performance in the late 1990s, the Home-Goods and T.K. Maxx operations finally turned the corner into profitability in 1999. Nine more A.J. Wright outlets opened their doors in 1999, although that division remained in the red and the company still had much to learn about this new segment of the market. Overall, net sales reached $8.8 billion, with more than 88 percent attributable to T.J. Maxx and Marshalls. Cammarata took on the additional post of chairman that year, while Ted English was named president and COO. The following year, English was promoted to president and CEO, with Cammarata remaining chairman. English had joined TJX in 1983 as a buyer to T.J. Maxx, having previously worked for several years at Filene’s Basement, the Boston-based off-price pioneer.

TJX maintained its growth path into the new century. During 2000 alone, the T.J. Maxx store count increased by 29, both Marshalls and HomeGoods by 30, A.J. Wright by 10, Winners by 17, and T.K. Maxx by 20. Another 172 stores were added to the overall store count during 2001, although TJX did take one step backward that year, closing its three T.K. Maxx stores in The Netherlands because of their disappointing results. That year TJX rolled out its latest new concept: a new Canadian chain called HomeSense, which was modeled after Home-Goods. Seven HomeSense stores began operating in 2001, all located in Ontario, and company officials were very pleased with their initial performance. Even in the poor economic environment of 2001 and with the post-9/11 effects on consumer spending, TJX still managed to increase revenues 12 percent, to $10.71 billion, surpassing the $10 billion mark for the first time. Net income did fall slightly, however, dropping to $500.4 million from $538.1 million. The TJX Companies were also more personally affected by the events of September 11, 2001. Seven company employees, traveling on business, died when their jetliner crashed into the World Trade Center.

During another year of economic uncertainty and worldwide geopolitical disturbance, TJX once again managed to achieve a 12 percent jump in revenues during 2002. All seven of the company’s formats were expanded; overall, the firm added 178 stores, bringing the total count to 1,843. The only unprofitable operation was A.J. Wright, but the company expressed high hopes for the young chain, which was already 75 units strong. The TJX Companies had plenty of additional growth potential. The company projected that by the early 2010s, it could be operating in excess of 4,300 stores: 1,800 T.J. Maxx and Marshalls stores, 650 HomeGoods, more than 1,000 A.J. Wrights, 200 Winners, 80 HomeSense units, and 300 to 600 T.K. Maxx outlets. This was just with the current portfolio of stores. TJX was sitting on a pile of cash and had long been expected to pursue additional acquisitions. Targets were expected to include both large chains that retained some growth potential and smaller ones needing capital to fund expansion.

Principal Divisions

T.J. Maxx; HomeGoods; Marshalls; A.J. Wright; HomeSense (Canada); Winners (Canada); T.K. Maxx (U.K.).

Principal Competitors

Federated Department Stores, Inc.; The May Department Stores Company; Target Corporation; J.C. Penney Corporation, Inc.; Sears, Roebuck and Co.; The Gap, Inc.; Kohl’s Corporation; Wal-Mart Stores, Inc.; Kmart Corporation; Limited Brands, Inc.; Ross Stores, Inc.; Value City Department Stores, Inc.

Further Reading

Brady, Jennifer, “Melville to Sell Marshalls to TJX for $550 Million,” Daily News Record, October 17, 1995, p. 3.

Chanko, Kenneth M., “Zayre Corp. Spin-off, Merger Lays Groundwork for Future Growth,” Discount Store News, December 19, 1988, pp. 5 +.

Duff, Mike, “Resilient Record Bodes Well for Off-Price Leader,” DSN Retailing Today, December 10, 2001, pp. 31, 32.

_____, “TJX to Try New Formats, Expand Home Business,” Discount Store News, June 22, 1998, pp. 3, 4.

_____, “TJX Ups Expansion to Increase Earnings,” DSN Retailing Today, June 18, 2001, pp. 2, 44.

_____, “TJX Won’t Rest on Laurels,” Discount Store News, June 21, 1999, pp. 3, 54.

Lillo, Andrea, “TJX Maps Out Expansion Plans,” Home Textiles Today, June 10, 2002, pp. 1, 27.

Mammarella, James, “T.J. Maxx/Marshalls Upsets Marketplace,” Discount Store News, January 1, 1996, pp. 3, 54.

_____, “TJX Diversifies, Adapts, and Survives,” Discount Store News, February 20, 1995, pp. 19–20.

Pereira, Joseph, “TJX Tailor-Makes a Marshalls Plan to Revitalize Retailer,” Wall Street Journal, October 8, 1996, p. B4.

Reidy, Chris, “TJX Named Company of the Year: Here, Only Profits Have Big Markups,” Boston Globe, May 20, 1997, p. CI.

Rudnitsky, Howard, “The King of Off-Price,” Forbes, January 31, 1994, pp. 54 +.

Smith, Geoffrey, “Can TJX Turn Off-Price On” Business Week, October 30, 1995, p. 44.

“TJX Adjusting Well to Its Megachain Size,” Discount Store News, June 17, 1996, p. 1.

“TJX Cos. Steamrolls to Front of Off-Price Pack,” Discount Store News, July 4, 1988, p. 151.

“TJX Needs to Be Better Than Better,” Discount Store News, March 3, 1997, pp. 6, 28.

—Maya Sahafi

—updates: Catherine Hamrick, David E. Salamie

The TJX Companies, Inc.

770 Cochituate Road
Framingham, Massachusetts 01701
U.S.A.
(508) 390-1000
Fax: (508) 390-2091

Public Company
Incorporated: 1962 as Zayre Corp.
Employees: 28,000
Sales: $2.46 billion
Stock Exchange: New York

Composed of T.J. Maxx, Hit or Miss, Chadwick ’s of Boston, and Winners Apparel Ltd., The TJX Companies, Inc. is the largest off-price apparel retailer in North America. Each of its operating divisions approaches off-price apparel retailing from a different perspective. T.J. Maxx offers discounts on a continually changing inventory of brand-name family apparel, in addition to off-priced jewelry, giftware, shoes, and household goods. Hit or Miss, a chain of women’s apparel specialty stores, carries both private label and brand name career and casual fashions at substantial savings. Chadwick ’s of Boston sells off-price women’s apparel through mail-order catalogs. Winners Apparel Ltd. is a small but growing off-price family apparel chain in Canada, acquired in 1990.

The TJX Companies, Inc. was not organized as a separate subsidiary from Zayre until 1987 and did not assume its present form until 1989. Its member companies were part of Zayre Corp., parent of the Zayre Store chain of discount department stores incorporated in 1962. T.J. Maxx, Hit or Miss, and Chadwick’s of Boston each got their start several years later.

The first Zayre—Yiddish for “very good”—store had opened in Hyannis, Massachusetts, in 1956. Its founders were two cousins, Stanley and Sumner Feldberg. With sales doubling every second or third year, the Feldbergs were quick to add stores, which numbered more than 200 by the early 1970s. By then, the company had diversified into specialty retailing.

Hit or Miss opened its first store in Natick, Massachusetts, in 1965. The store flourished and grew into a chain so quickly that within four years it attracted the attention of a giant by comparison, Zayre. In 1969 Zayre bought the Hit or Miss chain, and began its exploration of the upscale off-priced fashion market. Zayre’s timing could not have been better. During the recession of the 1970s, Hit or Miss’s results climbed so rapidly that Zayre began to think of expanding its off-priced upscale apparel merchandising.

T.J. Maxx was definitely a product of this recession. Bernard Cammarata, once a buyer himself, was hired by Zayre Corp. to capitalize on the potential for a chain offering off-priced upscale apparel for the whole family. In Auburn, Massachusetts, in March 1977, he opened the first T.J. Maxx.

Within six years of the opening of the first T.J. Maxx store, Zayre had found yet another avenue of approach to the off-priced fashion market. In 1983 Chadwick’s of Boston began to sell selected Hit or Miss items through mail order catalogs. Hit or Miss and Chadwick’s crossover operations allowed customers to handle products before ordering, and brought the frequent buyer the convenience of home shopping.

By the mid-1980s, off-priced specialty retailing was becoming more important to Zayre. Hit or Miss and T.J. Maxx had brought in just 14% of the company’s operating income in 1980; by the first half of 1983, they were producing nearly 45%. At the same time, however, Zayre was renovating its discount department stores and expanding its product mix. In 1984 Zayre entered the membership warehouse-club market, launching B.J.’s Wholesale Club. It bought Home Club Inc., a chain of home improvement stores, the following year. Neither of those ventures were immediately profitable, but Hit or Miss and T.J. Maxx continued to surge.

By 1986 Hit or Miss’s number of stores reached 420 and sales climbed to $300 million. Some 70% of its inventory was made up of nationally known brands. The remaining 30% consisted of standard products such as turtlenecks and corduroy pants, and were produced by Hit or Miss under its own private label. With such a merchandise mix, Hit or Miss was able to sell current fashion at 20% to 50% less than most specialty stores.

In 1986 profits of the Zayre chain, targeting low-to-middle income customers, dropped, although T.J. Maxx, Hit or Miss, and Chadwick’s of Boston, targeting mid- to higher-income customers, continued to grow. That year alone, Zayre Corp. opened 35 more T.J. Maxx stores and 31 new Hit or Miss stores. In fact, Zayre Corp.’s off-priced retailing chains were so successful, that by 1987 Zayre thought it prudent to organize them under one name and grant them autonomy from the decreasingly prosperous parent company.

In June 1987, just ten years after its flagship chain, T.J. Maxx, opened its first store, The TJX Companies, Inc. was established as a subsidiary of Zayre, selling 9.35 million shares of common stock in its initial public offering. Zayre owned 83 % of the subsidiary.

Zayre was experiencing problems. In the first half of 1988, Zayre had operating losses of $69 million on sales of $1.4 billion. Observers blamed technological inferiority, poor maintenance, inappropriate pricing, and inventory pileups, and speculated Zayre was ripe for takeover. Throughout all this, The TJX Companies continued to yield a profit.

In October 1988, the company decided to concentrate on TJX. It sold the entire chain of over 400 Zayre Stores to Ames Department Stores, Inc. In exchange, the company received $431.4 million in cash, a receivable note, and what was then valued at $140 million of Ames cumulative senior convertible preferred stock.

The company continued to hone in on its profitable new core business, selling unrelated operations. In June 1989 it spun off its warehouse club division, Waban Inc., which owned B.J.’s and Home Club. Zayre gave shareholders one share of Waban for each two shares of Zayre they owned as well as a $3.50 per share cash payment. The same month, the company acquired an outstanding minority interest in TJX. On the day it acquired the minority interest, the company merged with TJX. Later that month, the company changed its name from Zayre Corp. to The TJX Companies, Inc. The newly named company began trading on the New York Stock Exchange.

The company’s transition into an off-priced fashion business was relatively smooth, but the Ames preferred stock it received in the Zayre transaction had been a problem. This preferred stock was not registered and had no active market. While the stock is entitled to 6% annual dividends, Ames had the option of paying the first four semi-annual dividends with more Ames preferred stock rather than cash, an option that Ames exercised for each of the payments it had met. However, the value of Ames preferred stock had been in question because Ames had been closing stores and experiencing losses.

In April 1990 TJX established a $185 million reserve against its Ames preferred stock and contingent lease liabilities on former Zayre stores as a result of Ames’s announcement of continued poor performance. That same month, Ames filed for protection from creditors under Chapter 11 of the U.S. Bankruptcy Code. Late in 1990, Ames began to show a modest profit, but it was uncertain as to when Ames would emerge from Chapter 11.

TJX’s operations remained solid. In 1991 T.J. Maxx, by far the company’s largest division, posted record results for the 15th consecutive year since it opened. Hit or Miss had a difficult year, transitioning its business in a recessionary economy. Chadwick ’s of Boston finished strong in both sales and profitability and Winners Apparel exceeded sales expectations. These results came despite heavy markdown activity among competitors and a weak economy.

At the end of 1991, T.J. Maxx had 437 stores in 46 states. It planned to open many more stores, focusing primarily on the only scantily penetrated southwestern United States, as well as expanding several existing stores. T.J. Maxx also planned to follow up on its success in jewelry and shoes by opening up these respective departments at locations that do not carry these items. It also planned to expand high-performance nonapparel categories such as giftware and domestic items.

Hit or Miss planned to hone in on areas that needed improvement and to close approximately 75 nonperforming stores. After renovating 175 stores in 1991, it planned to upgrade systems for administration and merchandise planning.

Chadwick’s of Boston planned to expand its business through aggressive and carefully planned growth. Winners Apparel Ltd. planned to continue to build the off-price concept in Canada.

Principal Subsidiaries

Hit or Miss, Inc.; NBC First Realty Corp.; NBC Second Realty Corp.; Newton Buying Corp.; Chadwicks of Boston, Ltd.; Commonwealth Direct Marketing, Inc.; West Bridgewater Realty, Inc.; Avon Trading Corp.; Winners Apparel Ltd.

—Maya Sahafi