The TJX Companies, Inc.

770 Cochituate Road
Framingham, Massachusetts 01701
U.S.A.
(508) 390-1000
Fax: (508) 390-2091

Public Company
Incorporated: 1962 as Zayre Corp.
Employees: 28,000
Sales: $2.46 billion
Stock Exchange: New York

Composed of T.J. Maxx, Hit or Miss, Chadwick ’s of Boston, and Winners Apparel Ltd., The TJX Companies, Inc. is the largest off-price apparel retailer in North America. Each of its operating divisions approaches off-price apparel retailing from a different perspective. T.J. Maxx offers discounts on a continually changing inventory of brand-name family apparel, in addition to off-priced jewelry, giftware, shoes, and household goods. Hit or Miss, a chain of women’s apparel specialty stores, carries both private label and brand name career and casual fashions at substantial savings. Chadwick ’s of Boston sells off-price women’s apparel through mail-order catalogs. Winners Apparel Ltd. is a small but growing off-price family apparel chain in Canada, acquired in 1990.

The TJX Companies, Inc. was not organized as a separate subsidiary from Zayre until 1987 and did not assume its present form until 1989. Its member companies were part of Zayre Corp., parent of the Zayre Store chain of discount department stores incorporated in 1962. T.J. Maxx, Hit or Miss, and Chadwick’s of Boston each got their start several years later.

The first Zayre—Yiddish for “very good”—store had opened in Hyannis, Massachusetts, in 1956. Its founders were two cousins, Stanley and Sumner Feldberg. With sales doubling every second or third year, the Feldbergs were quick to add stores, which numbered more than 200 by the early 1970s. By then, the company had diversified into specialty retailing.

Hit or Miss opened its first store in Natick, Massachusetts, in 1965. The store flourished and grew into a chain so quickly that within four years it attracted the attention of a giant by comparison, Zayre. In 1969 Zayre bought the Hit or Miss chain, and began its exploration of the upscale off-priced fashion market. Zayre’s timing could not have been better. During the recession of the 1970s, Hit or Miss’s results climbed so rapidly that Zayre began to think of expanding its off-priced upscale apparel merchandising.

T.J. Maxx was definitely a product of this recession. Bernard Cammarata, once a buyer himself, was hired by Zayre Corp. to capitalize on the potential for a chain offering off-priced upscale apparel for the whole family. In Auburn, Massachusetts, in March 1977, he opened the first T.J. Maxx.

Within six years of the opening of the first T.J. Maxx store, Zayre had found yet another avenue of approach to the off-priced fashion market. In 1983 Chadwick’s of Boston began to sell selected Hit or Miss items through mail order catalogs. Hit or Miss and Chadwick’s crossover operations allowed customers to handle products before ordering, and brought the frequent buyer the convenience of home shopping.

By the mid-1980s, off-priced specialty retailing was becoming more important to Zayre. Hit or Miss and T.J. Maxx had brought in just 14% of the company’s operating income in 1980; by the first half of 1983, they were producing nearly 45%. At the same time, however, Zayre was renovating its discount department stores and expanding its product mix. In 1984 Zayre entered the membership warehouse-club market, launching B.J.’s Wholesale Club. It bought Home Club Inc., a chain of home improvement stores, the following year. Neither of those ventures were immediately profitable, but Hit or Miss and T.J. Maxx continued to surge.

By 1986 Hit or Miss’s number of stores reached 420 and sales climbed to $300 million. Some 70% of its inventory was made up of nationally known brands. The remaining 30% consisted of standard products such as turtlenecks and corduroy pants, and were produced by Hit or Miss under its own private label. With such a merchandise mix, Hit or Miss was able to sell current fashion at 20% to 50% less than most specialty stores.

In 1986 profits of the Zayre chain, targeting low-to-middle income customers, dropped, although T.J. Maxx, Hit or Miss, and Chadwick’s of Boston, targeting mid- to higher-income customers, continued to grow. That year alone, Zayre Corp. opened 35 more T.J. Maxx stores and 31 new Hit or Miss stores. In fact, Zayre Corp.’s off-priced retailing chains were so successful, that by 1987 Zayre thought it prudent to organize them under one name and grant them autonomy from the decreasingly prosperous parent company.

In June 1987, just ten years after its flagship chain, T.J. Maxx, opened its first store, The TJX Companies, Inc. was established as a subsidiary of Zayre, selling 9.35 million shares of common stock in its initial public offering. Zayre owned 83 % of the subsidiary.

Zayre was experiencing problems. In the first half of 1988, Zayre had operating losses of $69 million on sales of $1.4 billion. Observers blamed technological inferiority, poor maintenance, inappropriate pricing, and inventory pileups, and speculated Zayre was ripe for takeover. Throughout all this, The TJX Companies continued to yield a profit.

In October 1988, the company decided to concentrate on TJX. It sold the entire chain of over 400 Zayre Stores to Ames Department Stores, Inc. In exchange, the company received $431.4 million in cash, a receivable note, and what was then valued at $140 million of Ames cumulative senior convertible preferred stock.

The company continued to hone in on its profitable new core business, selling unrelated operations. In June 1989 it spun off its warehouse club division, Waban Inc., which owned B.J.’s and Home Club. Zayre gave shareholders one share of Waban for each two shares of Zayre they owned as well as a $3.50 per share cash payment. The same month, the company acquired an outstanding minority interest in TJX. On the day it acquired the minority interest, the company merged with TJX. Later that month, the company changed its name from Zayre Corp. to The TJX Companies, Inc. The newly named company began trading on the New York Stock Exchange.

The company’s transition into an off-priced fashion business was relatively smooth, but the Ames preferred stock it received in the Zayre transaction had been a problem. This preferred stock was not registered and had no active market. While the stock is entitled to 6% annual dividends, Ames had the option of paying the first four semi-annual dividends with more Ames preferred stock rather than cash, an option that Ames exercised for each of the payments it had met. However, the value of Ames preferred stock had been in question because Ames had been closing stores and experiencing losses.

In April 1990 TJX established a $185 million reserve against its Ames preferred stock and contingent lease liabilities on former Zayre stores as a result of Ames’s announcement of continued poor performance. That same month, Ames filed for protection from creditors under Chapter 11 of the U.S. Bankruptcy Code. Late in 1990, Ames began to show a modest profit, but it was uncertain as to when Ames would emerge from Chapter 11.

TJX’s operations remained solid. In 1991 T.J. Maxx, by far the company’s largest division, posted record results for the 15th consecutive year since it opened. Hit or Miss had a difficult year, transitioning its business in a recessionary economy. Chadwick ’s of Boston finished strong in both sales and profitability and Winners Apparel exceeded sales expectations. These results came despite heavy markdown activity among competitors and a weak economy.

At the end of 1991, T.J. Maxx had 437 stores in 46 states. It planned to open many more stores, focusing primarily on the only scantily penetrated southwestern United States, as well as expanding several existing stores. T.J. Maxx also planned to follow up on its success in jewelry and shoes by opening up these respective departments at locations that do not carry these items. It also planned to expand high-performance nonapparel categories such as giftware and domestic items.

Hit or Miss planned to hone in on areas that needed improvement and to close approximately 75 nonperforming stores. After renovating 175 stores in 1991, it planned to upgrade systems for administration and merchandise planning.

Chadwick’s of Boston planned to expand its business through aggressive and carefully planned growth. Winners Apparel Ltd. planned to continue to build the off-price concept in Canada.

Principal Subsidiaries

Hit or Miss, Inc.; NBC First Realty Corp.; NBC Second Realty Corp.; Newton Buying Corp.; Chadwicks of Boston, Ltd.; Commonwealth Direct Marketing, Inc.; West Bridgewater Realty, Inc.; Avon Trading Corp.; Winners Apparel Ltd.

—Maya Sahafi