A new forecast from Forrester Research credits greater online spending by Canadians, lower shipping costs and more selection for the spending increase.
After abandoning e-commerce, TJX says online retailing is key to future growth.
Several years after shutting its U.S. retail e-commerce business, TJX Cos. Inc., the operator of the off-price T.J. Maxx, Marshalls and HomeGoods retail chains, is planning to make a “substantial investment” in online retailing as a key part of its plan to surpass $40 billion in total annual sales, up from $23 billion today, says CEO Carol Meyrowitz. That would represent a revenue increase of 73.9%, though Meyrowitz did not provide a schedule for that goal.
“E-commerce is clearly in our future,” Meyrowitz said in a conference call yesterday with stock analysts for the company’s fourth quarter and fiscal year ended Jan. 28. “We continue to see e-commerce as a major opportunity for TJX.”
The company’s plan to move aggressively into online retailing comes nearly six years after it shut down its U.S. e-commerce business, which had buckled under $15 million in operating losses in the fall of 2005 after just more than a year of online sales, TJX said at the time. The company had operated the TJMaxxHomeGoods.com e-commerce site.
TJX isn’t saying when it will launch new e-commerce sites, but it has been building a team of e-commerce experts who will build on the company’s strength in the offline world of selling apparel and home furnishings brands at discount prices, Meyrowitz said. “We’ll take the time and do it right,” she said in the conference call. “We’re not ready to talk timing yet, and we will have more to say as we move through the year.”
Meyrowitz said the new e-commerce sites will both complement TJX’s growing store chains and leverage the strong traffic that still comes to the company’s branded non-transactional sites, including TJMaxx.com, MarshallsOnline.com and HomeGoods.com. Noting that the company’s web sites scored more than 1 billion impressions during the 2011 holiday season, she said the sites averaged “well over 4 million visits every month—and this is without selling merchandise online other than a small amount in the U.K.” (After abandoning e-commerce in the U.S., TJX continued to process online transactions through its U.K.-based TKMaxx.com, the e-commerce site for its T.K. Maxx chain.)
Although Meyrowitz declined to offer more specifics about the company’s plans for new e-commerce sites, she said TJX was well positioned financially to invest in e-commerce as well as to expand its store chains. TJX plans to increase capital spending this year to as much as $900 million, and it expects to end its current fiscal year next January with $1.3 billion to $1.4 billion in cash.
By next January, TJX expects to add a total of 160 new stores in the United States, Canada and Europe, while closing about 10, resulting in a total of about 3,055 stores, chief administrative officer Jeff Naylor said during the conference call. It also plans to build a major new distribution center in the United States and a new data center. In the United states, TJX operates store brands T.J. Maxx, Marshalls and HomeGoods; in Canada, it operates Winners, HomeSense and Marshalls; in Europe, T.K. Maxx and HomeSense.
The new e-commerce sites will complement the expanded store presence by enabling TJX to offer a wider range of products, Meyrowitz said. “We believe e-commerce will open a greater landscape for categories,” she said. “Just think about the potential for us to carry categories online that we wouldn’t carry in our stores.”
She declined to be more specific, but added: “The more we learn, the more convinced we are of the huge opportunity e-commerce can be for us.”