TJX: HomeGoods can grow to $4.5 billion
Aggressive store openings strategy will drive growth
Home Textiles Today Staff -- Home Accents Today, 10/24/2013 10:59:04 AM
Home is targeted as "a substantial growth vehicle" in the United States and Canada with "tremendous opportunity" going forward for TJX Cos.
The multi-plate off-price retailer shared this and other insights during its investor event this week.
"At HomeGoods, we see the potential for the division to reach profit margins of 13%-plus as it continues to grow into its infrastructure," said Carol Meyrowitz, CEO and director. "So that's the margin potential by business."
Ernie Herman, president, added that HomeGoods has delivered a "truly spectacular performance for several years now. HomeGoods has been really hitting the cover off the ball. We believe HomeGoods has plenty of room to grow."
More specifically, TJX Cos. is planning for HomeGoods to reach 450 stores by the end of this year, and the company sees the potential to eventually grow this chain to 825 units.
That said, Herman continued, "From a sales perspective, our estimate for 825 stores long term could bring HomeGoods to $4.5 billion in sales. This would be from store growth alone, not including comp growth in our existing store base."
The company also plans to open a new HomeGoods distribution center next year t support ongoing growth.
In Canada, where TJX currently operates more than 300 stores, the company believes it can grow to 450 stores with its three chains: Winners, HomeSense and Marshalls.
"This is 20 more stores than our prior thinking due to the opportunity we see in more rural markets," Herman explained. "This represents 30% store growth on top of TJX Canada's current size."
These estimates include growing Marshalls to a 100-store chain in addition to our growth at Winners and HomeSense.
"From a sales perspective, this store growth could bring TJX Canada to $3.6 billion in sales," he said.
TJX Cos. said it now expects its Marmaxx business to surpass the 2,000 store mark in 2013.
"But as big as Marmaxx is, we believe it can be even bigger. So today, we are raising our long-term store growth estimates for Marmaxx to 3,000 stores from the prior high end of the guidance, which was 2,600 stores," Herman said. "So this is 400 more stores than that high end of guidance that you already heard from us."
That would mean more than $5 billion in incremental sales over its existing business today and would bring Marmaxx sales alone to $23 billion purely from incremental store growth, he noted.
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