TJX plots new home decor chain concept, HomeGoods expansion

Dive Brief:

Pointing to the strength of its HomeGoods stores unit, TJX Cos. CEO Ernie L. Herrman said Wednesday the company is poised to launch a second home decor concept, according to a transcript of his conference call with analysts from Seeking Alpha.
Herrman declined to name the concept or divulge many concrete details, but said TJX “will [strive] to differentiate these two U.S. home concepts to encourage customers to shop both stores” by offering merchandise not found at HomeGoods stores.
Herrman added that TJX will open four of the new U.S. home stores this year, as well as 81 new HomeGoods stores nationwide.

Dive Insight:

The off-price stores run by TJX Cos. have stayed above the retail fray, with its T.J. Maxx and Marshalls giving department stores a run for their money by offering apparel shoppers a treasure hunt-like atmosphere. TJX said on Wednesday that Q4 net sales rose 6% to $9.5 billion, while fiscal year consolidated same-store sales increased 5% — its 21st consecutive year of positive same-store sales.

Now TJX is boosting its offerings in another category that department stores have long depended on: home goods. TJX is boosting its number of HomeGoods stores, which sell a variety of products like bedding and bathroom supplies, frames and candles, and some furniture. Though Herrman didn’t elaborate on what the new concept would be, he said it would be different enough from HomeGoods to avoid cannibalization of the existing chain, first launched by TJX in 1992 and now encompassing 568 stores in 45 states.

“While we are proud to have grown HomeGoods' customer base for many years, we believe we remain significantly underpenetrated in the total U.S. home market and enormous opportunity remains for us to gain share in this space,” Herrman said Wednesday. “Our customers are passionate about HomeGoods, and we are confident they will love our new home concept too.” TJX added that HomeGoods could eventually span 1,000 stores nationwide, not including the new U.S. home concept.

Like home improvement sales, home goods sales are benefiting from the strong housing market. HomeGoods in particular has gained traction among U.S. consumers: Though there are far fewer HomeGoods stores than J.C. Penney, Macy’s or Sears stores, female primary household consumers were more likely to shop for housewares there, according to a recent study by Kantar Retail cited by CNBC Wednesday. The move to expand in this area bodes well for TJX, according to analysts at Jane Hali and Associates.

“The home goods sector has been strong across the market and many retailers have opened up floor space to this category,” according to a Hali note emailed to Retail Dive. “The TJX group has seen positive results in this market across their stores for a few seasons now. Consumers have been spending their dollars in this market (both the millennial and baby boomer consumer groups) and we believe their new concept will bring more positives to their business."