TJX Ramps Up Sierra Expansion

Published: February 29, 2024

The active and outdoor business Sierra is enjoying a trajectory much like its sister off-price brands in the TJX Companies Inc. portfolio.

The smaller sister business to chains such as TJ Maxx and Marshalls isn’t often addressed in detail during quarterly earnings calls, but it’s been steadily growing.

For the fiscal year ended Feb. 3, 17 Sierra doors were opened. Another 26 are slated to open in the current fiscal year, CFO John Klinger confirmed Wednesday.

The projection marks the largest annual jump in new Sierra stores under TJX ownership and in Sierra’s history.

“Sierra’s sales trend all last year was strong, and we’ve been thrilled with where we’re heading there,” TJX President and CEO Ernie Herrman told analysts during Wednesday’s earnings call.

Sierra, unlike TJ Maxx and Marshalls, has a very specific assortment focused on active and outdoor, including watersports. Its most recent assortment online included merchandise from The North Face, Eddie Bauer, Prana, Columbia Sportswear, SmartWool, Roark, Keen, CamelBak, and Spyder, among other industry brands.

Sierra, at 95 doors, is still small relative to TJ Maxx and Marshalls and is referred to as a “seed” business internally. TJX doesn’t break out the financial performance of its individual brands, so it’s unclear how much revenue Sierra generated in the most recent quarter.

TJX bought the business, previously called Sierra Trading Post, in 2012 for about $200 million. The company, which was generating in excess of $200 million in annual revenue at the time of acquisition, was predominantly e-commerce with four physical locations.

The Numbers

The Marmaxx division, which lumps sales of TJ Maxx, Marshalls, and Sierra together, generated sales for the quarter ended Feb. 3 of $10.04 billion, up 12% from the year-ago quarter.

Same-store sales for the division increased 5%.

Meanwhile, for the full year ended Feb. 3, Marmaxx sales increased 9% from the prior year to $33.41 billion. Comparable sales for the year were up 6% for Marmaxx.

In total, company-wide net sales, which would also include the home business owned by TJX, was up 9% to $54.22 billion for the year. That was generated across 4,954 physical stores and e-commerce businesses.

Company-wide net income for the year totaled $4.47 billion, compared to $3.5 billion in the prior year.

Opportunities Ahead

The potential for the TJX businesses in the current fiscal year continues, with market turmoil likely to offer opportunities for the off-price channel.

Most notably, Macy’s Inc. announced plans this week to close roughly 150 Macy’s stores over the next three years.

“Obviously, with the Macy’s store closures, you do have a lot of overlap in categories… which marry up to the businesses that we run,” Herrman said. “I’m guessing an additional market share opportunity depending on the categories and the locations they’re in. So, not that we would get all of that, but we would get some of it is what we always figure.”

Aside from real estate, the Macy’s news also holds implications for buying teams, Herrman pointed out. Market volatility has led many brands to seek out relationships with retailers in positions to buy and pay on time.

“One of the benefits as we look forward,” Herrman said, “is the importance that our buyers have to the vendor community and that is one of the things that probably will continue to allow us to buy a little bit better on an ongoing basis.”

Strategy & Planning Series
Strategy & Planning Series
Strategy & Planning Series
Strategy & Planning Series