TJX's Assortment of Cheap Branded Merchandise Should Drive Traffic to Its Stores

While already boasting a leading position in the domestic off-price retail industry via its T.J. Maxx and Marshalls banners, we believe TJX Companies is well positioned to continue leveraging its procurement scale and existing footprint to drive growth. The company’s go-to-market strategy is difficult to replicate, in our view, as its network of over 21,000 global vendors and decades of procurement expertise serve as barriers to entry. Unlike traditional retailers that obtain inventory via defined purchase orders and replenishment deals, TJX opportunistically procures excess inventory made available from manufacturing overruns and retail closeout sales at prices 20%-60% lower than conventional outlets. With an ever-changing assortment of brand-name merchandise and minimal depth per stock-keeping unit, the retailer’s stores embody a treasure-hunt shopping experience for consumers searching for bargains. As such, we view TJX’s brick-and-mortar model as well insulated from digital competition.