WHY BRICKS & MORTAR WINNERS IS NO LOSER IN THE AGE OF AMAZON
No web presence? No problem.
TORONTO•TJXC os. Inc ., owner of Winners and HomeSense, is one retailer that continues to defy the Amazon odds — it doesn’t sell its goods online or reveal its current lineup of goods on a website, but its performance is consistently strong.
The off- price retailer’s shares leapt seven per cent Wednesday after it posted another strong year of sales growth in Canada, up five per cent in the period ended Feb. 3.
That followed a robust 2016 where sales climbed eight per cent, and prompted the retailer to boost its long- term store growth estimates in the country to 600 from a previous target of 500. TJX has 454 stores across Canada.
“We are confident that our excellent merchandise and values will continue to resonate with Canadian shoppers,” chief executive Ernie Herrman told investors on an earnings call. He said customer traffic was up in all of the company’s divisions and was the primary driver behind same- store sales increases.
The news comes amid a general queasiness about the performance of mall- based retailers and in particular big- box stores, whose deep selection of goods has been mimicked by the “endless aisle” of the internet.
The off- price niche in which Framingham, Mass.based TJX dominates with more than $ 35 billion in annual sales has been regarded as largely immune to weakening apparel and decor trends at bricks and mortar stores. That hasn’t helped rival Hudson’s Bay
Co., however, whose offprice business in the year ending Jan. 2017 declined 7.4 per cent. Its financial results for the full year ended in January 2018 have not yet been released, but in the first three quarters of 2017, samestore sales in the off- price division fell 6.8 per cent, 2.3 per cent, and 7.6 per cent, respectively.
“TJX has cultivated a particularly loyal and specific shopper over the years,” says Jennifer Marley, a partner at Toronto- based retail advisory firm Sklar Wilton & Associates.
“The Winners shopper loves a treasure hunt and they have come to expect that — they have come to expect quality for less. It’s not unlike what consumers love about Costco.”
About a quarter of consumers enjoy the treasure hunt experience, she said, but the Winners and Marshalls customer might not overlap with patrons of Saks Off Fifth, the off- price chain owned by HBC.
“Saks Off Fifth suggests rarefied goods at an offprice,” compared with a more mid-market and aspir- ational brand profile at Winners, she said, while general awareness is likely still low for Gilt, an off- price online retailer purchased by HBC in 2016. In a bid to boost its flagging off- price division, HBC began selling inventory from Saks Off Fifth in the third quarter on Gilt. com, with the rationale that both off- price divisions would benefit from a shared pool of common inventory.
TJX’s same- store sales rose four per cent overall in the fourth quarter at the company’s portfolio of stores i n North America and Europe. It marked the company’s 22nd- consecutive quarter of same- store sales increases and almost doubled analysts’ estimates for 2.1- per- cent same- store sales growth in the period.
Neil Saunders at research firm GlobalData Retail said the results prove “the offprice market has not yet run out of steam,” adding that consumer tracking indicates heightened interest in the off- price segment and that the pool of consumers shopping at off- price stores is growing.
“However, our questions over the long-term health of off- price remain,” Saunders said in a research note. “We do not necessarily see the sector grinding to a halt, but we do see it becoming steadily more crowded and competitive. Ultimately this means growth could be spread more thinly among the various players. Theoretically, TJX has the most to lose as it has the highest market share. However, we remain confident that the company’s unique model and superior buying operation will allow it to outperform.”
THE WINNERS SHOPPER LOVES A TREASURE HUNT.