T.J. Maxx and HomeGoods are reaping huge benefits from store closures and shopping slowdowns that are crushing other retailers

• T.J. Maxx and HomeGoods are benefiting from the struggles other retailers are facing, parent company TJX says.
• Store closures and slowdowns mean there's more, better inventory for TJX brands to choose from.

As the retail world deals with slowing online sales and a wave of store closures, one company is reaping the benefits: TJX, the parent company of discount chains like T.J. Maxx and HomeGoods.

Not only are more shoppers turning to these lower-price stores, but the retailers are getting an influx of valuable inventory from their less-fortunate competitors.

TJX reported $14.5 billion in sales during the fourth quarter, a 5% increase compared to 2022. CEO Ernie Herrman attributed that growth to shoppers, their budgets stretched by inflation, flocking to the company's off-price chains. But he also highlighted how the challenges faced by the rest of the industry have become an unexpected boon for TJX's business.

"A lot of store closures as well as the slowdown in the e-com business across the board, is obviously creating an influx of inventory and better brands than we've seen, even versus our last call," Herrman said.

He described current availability of inventory as "phenomenal," particularly when it comes to higher-end brands, and attributed it to "spill off availability" from other brands who can't purchase as many goods as they once could.

"Some of the vertical e-com players, as you can imagine, tough to forecast that their sales were gonna be hit that hard, that they were going to yield this much goods, which is why we are very, very bullish on the branded content of our mix," he said.

Though Herrman didn't mention other companies by name, several retailers have had a challenging start to the year: Bed Bath & Beyond has announced over 400 store closures since September and has struggled to keep its shelves stocked, while housewares company Tuesday Morning is closing more than half its stores as part of its bankruptcy process. Both companies compete with TJX's HomeGoods chain.

In apparel, Macy's is shuttering locations nationwide, while TJX's off-price competitors have seen slowing sales. Nordstrom's off-price Rack division has been struggling for months, and UBS analysts warned in late 2022 that the coming year could be a challenging one for department stores, particularly those in the mid-tier range.

Those struggles have led customers to flock to TJX chains, Herrman said.

"We're attracting new customers, we're opening new stores, and we're likely to benefit from other home store closures," Herrman said. "Even if you factor in that half of those stores, only half of the categories marry up and create a visit to us, that's still a big number when you count the hundreds that are now slowing down or closing hundreds of stores."