- T.J. Maxx is an off-price retailer that offers a treasure-hunt shopping experience.
- It's been known as the retailer that takes the inventory other stores couldn't sell.
T.J. Maxx is often considered the last-resort retailer, taking inventory other stores couldn't sell. But one retail analyst says its reputation is changing.
Off-price retailers such as T.J. Maxx and Marshalls, which are both owned by TJX Companies, buy excess apparel, accessories, and home goods from department stores and specialty retailers and sell them at discounted prices. Typically, brands send the merchandise to off-price retailers if they've purchased too much or when it's out of season. TJX generally marks down the items from 20% to 60% lower than the original retail price.
The price tags may seem like a good deal, but that doesn't mean everything in an off-price store is cheap.
"TJX does not sell cheap clothing; they sell expensive clothing cheap," Simeon Siegel, a retail analyst, told Yahoo Finance in a video interview. "So they are giving you a reason to be in their store; it's not simply to check the box on a need."
The company sources from about 21,000 global vendors, or brands that supply inventory, according to its latest earnings call.
Those vendors help TJX grab customer market share by providing lots of options for shoppers and giving shoppers that treasure-hunt experience. Siegel said TJX was now taking an important market share from the vendors.
"They're becoming a very important destination in the retail ecosystem," he told Yahoo Finance. "This is no longer just a compendium of other people's mistakes. This is a go-to place that, if you're a brand, you want to make sure you're selling into. That's going to continue to push up the valuation, and that's going to continue to push up the numbers."
In the company's third-quarter earnings, TJX reported stronger-than-expected sales and saw comparable store sales increase by 6%, which it attributed entirely to an increase in customer traffic.
"We believe many vendors want to work with TJX because we offer them a very attractive way to grow their business," TJX CEO Ernie Herrman said in Wednesday's earnings call. "All of this gives us great confidence that there will be plenty of quality branded merchandise available for us."