TJX UK ramps up expansion

Discount retailer TJX UK has reported sales of £1.9 billion for its 2015/16 financial year and has recorded its strongest growth since 2012/13.

While the retailer ramped up expansion, especially of its core fascia TK Maxx, it also achieved like-for-like growth of 4.6 per cent, up 0.6 percentage points on the year. The retailer’s strong branded discount offer continues to resonate well with shoppers looking to get a bargain, and with disposable incomes remaining restricted in 2016, TK Maxx looks set to continue this trend into 2016/17. Despite its keen focus on cost control, operating profit increased by just 0.7 per cent to £123 million.

TJX UK’s store expansion continued apace during the last year, with 25 new outlets compared to 20 last year, including 19 new TK Maxx stores and six new HomeSense stores, taking its UK total to 343 branches. The retailer is expecting to end the 2016/17 financial year with 24 new stores including branches in Swansea and Chichester – with the latter being the retailer’s 500th European store.

HomeSense now accounts for 6.9 per cent of revenue. Reducing its dependence on its core fascia is sensible; however given the low levels of housing transactions this year, but expect more muted demand for homewares and furniture in the short term which will negatively impact footfall to its home-only HomeSense stores.

The primary focus for TK Maxx has been clothing, with the retailer continuing to raise its fashion credentials, via television adverts and social media, striving to become top of mind amid rivals such as department stores continuing to discount on branded goods. Likewise, Amazon’s investment in its fashion proposition does pose a threat to TK Maxx, especially as its online offer remains uncompetitive with click & collect not yet available in all stores and shoppers unable to filter by brand – making it harder for online browsers to find what they are looking for, risking unfruitful visits and dissatisfied shoppers.

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