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TJX Companies SWOT & PESTLE Analysis

ID : 52578253| Aug 2019| 15 pages

COMPANY PROFILE -TJX Companies

Business Sector :Retail

Operating Geography :USA, Canada, Europe, Australia

About TJX Companies :

TJX Companies Inc. is a top American off-price retailer having 4300 stores in 9 countries. The company operates in USA, Canada, UK, Ireland, Germany, Australia, Poland, Austria and The Netherlands. The company’s mission is to deliver great value to customers every day by offering frequently changing assortment of quality products 20-60% cheaper than the full price retailers. The company ranks at the 85th position among Fortune 500 companies. The company sources merchandise from 21000 vendors in more than 100 countries. TJX had approximately 270,000 employees on its rolls as of February 2019.
TJX Companies' mission is to deliver great value to its customers every day.

TJX Companies Revenue :


$38,973 million (FY ending 2nd February 2019) (8.7% YoY increase)
$35,865 million (FY ending February 2018)

Competitive Analysis of TJX Companies

SWOT
PESTLE
The SWOT analysis for TJX Companies is presented below:
Strengths
Weaknesses
1. Flexible business model capable of delivering value worldwide
2. High availability of quality products from across the world
3. Effectively leveraging its global presence
4. Maintaining low cost operations
5. Strong financial performance and shareholder distributions
1. Controversies and lawsuits hurting the brand image
Opportunities
Threats
1. Multichannel retail strategy being adopted by the industry
2. Rise of experiential retailing
3. Growing home furnishing market providing great investment opportunities
1. Competition to off-price stores from thrift stores
2. Workforce challenges like employee retention and labor costs
3. Quality and safety issues of merchandise sold in the stores
4. Risks related to merchandise sourcing from other countries
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Detailed SWOT Analysis of TJX Companies

 

Strength

1. Flexible business model capable of delivering value worldwide: The retail business model of TJX is very flexible, which makes the company the top off-price retailer in the world. This flexibility coupled with a wide demographic reach enabled the company to achieve profitable growth in different economic cycles including major recessions across geographies. TJX has been effective at offering a unique and differentiated customer experience that can't be replicated through e-commerce and this has been one of its major competitive advantages. TJX’s wide-ranging product assortment attracts a wide customer demographic and it has demonstrated the ability to respond to changing customer preferences and industry trends. Store sales have always been positive, with a decline in sales occurring only once in the company’s history. TJX is among the very few US apparel and home fashion retailers who have managed to achieve successful international expansion. The company has stores in 9 countries across 3 continents, and continues looking for growth opportunities in US and abroad. The large annual cash flows generated have helped in this expansion and growth, while generating shareholder value.

2. High availability of quality products from across the world: Ever since the company’s inception, there was never a problem of merchandise availability to support the company’s growth. The company has built a flexible, value-driven and global sourcing model with 1100 Associates in the buying organization, buying offices located in 12 countries, 21000 global vendors and product sourcing from 100 countries. The company is able to bring on board many vendors due to its vendor friendly, mutually beneficial policies that aim to strengthen existing vendor relationships and develop new ones. The company’s stores have no walls, which enables the quick transfer of merchandise to respond to market opportunities and changing customer preferences. The combination of vendor relationship building capability and quick merchandise transfer ensures customers never face product availability issues in TJX stores.

3. Effectively leveraging its global presence: TJX has succeeded in effectively leveraging its global presence. It is the only major international company in the world operating in the domain of off-price apparel and home fashion retail. All the major divisions of the company are at least 25 years old. Over the years, the company has developed a highly integrated system of global teams and international infrastructure. All the divisions of the company make use of talent, ideas, expertise and infrastructure. The company has succeeded in capitalizing on first mover advantage to stay ahead of the competition.

4. Maintaining low cost operations: Prices of products at TJX are lower than that of many traditional retailers. There is aggressive focus on expenses across all businesses of the company. The company’s advertising budget is lower than that of traditional retailers because of the company’s focus on promoting its retail banners rather than products. Though TJX designs the stores to provide a convenient and pleasant shopping experience for customers, it spends less on store fixtures than traditional retailers. The company also has a cost-effective distribution network.

5. Strong financial performance and shareholder distributions: The Company’s consistently strong financial returns and cash generation have enabled growth along with shareholder value generation. Disciplined capital allocation has seen the company achieve one of the highest returns on invested capital in the industry in 2018. The company has the highest S&P Global rating in the retail industry of A+, which attracts vendors and other business associates. In 2018, the company generated $4.1 billion in cash from operations along with an increase in shareholder distributions. The same year, the company spent $2.5 billion in stock repurchase and retired 51.8 million shares. The per share dividend increased by 25%, making 2018 the 22nd consecutive year of dividend increase. In April 2019, the company once again saw an increase in per share dividend, this time by 18%, making 2019 the 23rd consecutive year of dividend increase. During the whole 23-year period, the compound annual rate of dividend increase was 22%. The company expects to continue the share buyback program in 2019, with $1.75 to $2.25 billion of repurchases planned. The company also saw cash flow increase from $2 billion in FY18 to $3 billion in FY19.

Weakness

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Opportunity

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Threat

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Major Competitors :

  • Walmart
  • Target
  • Lululemon
  • Five Below
  • Ross

Major Brands :

  • Marmaxx
  • Homegoods
  • Sierra
  • Homesense
  • Winners
  • T K Maxx
  • tkmaxx.com
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TABLE OF CONTENTS
DELIVERY AND FORMAT
WHY CHOOSE US?
References used in TJX Companies Analysis Report

1. TJX Annual report 2018 - https://investor.tjx.com/static-files/7d4ff952-f5b8-42ba-b9fe-345449002f94

2. Global social media research summary 2019 - https://www.smartinsights.com/social-media-marketing/social-media-strategy/new-global-social-media-research/

3. Waste management - https://www.tjx.com/responsibility/environment/waste-management

4. Where TJX Companies Is Investing for Growth - https://www.fool.com/investing/2018/08/30/where-tjx-companies-is-investing-for-growth.aspx

5. Statement on Political Activity and Expenditures - https://www.tjx.com/docs/default-source/corporate-responsibility/Corporate_Governance_Statement_on_Political_Activity.pdf

The detailed complete set of references are available on request in the 'Complete report' on purchase.

Copyrights and Disclaimer

TJX Companies SWOT and PESTLE analysis has been conducted by Nipunn V and reviewed by senior analysts from Barakaat Consulting.

Copyright of TJX Companies SWOT and PESTLE Analysis is the property of Barakaat Consulting. Please refer to the Terms and Conditions and Disclaimer for usage guidelines.

TJX Companies SWOT & PESTLE Analysis
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