“We never like to name the other retailers where it's happening, but we do strongly believe that creates market share opportunities and market grab for us,” TJX CEO Ernie Herman said on the company’s earnings call when asked about Bed Bath & Beyond.
HomeGoods, the second largest division of TJX, saw sales decline 7% in the first quarter as the segment continues to battle tough comparisons from what management has described as “outsized sales” during the pandemic.
For the quarter HomeGoods produced $1.97 billion in net sales, accounting for roughly 16% of TJX’s overall net sales. With Bed Bath and Beyond winding down its 360 stores over the next few months, TJX, and HomeGoods specifically, will benefit, according to Bernstein retail analyst Aneesha Sherman.
In an April note titled, “Why TJX and TGT (TGT) stand to gain most from BBBY’s demise,” Sherman wrote that more than 80% of Bed Bath and Beyond locations have a HomeGoods or TJ Maxx within five miles.
On Wednesday, TJX management revealed those locations are a key part of the company’s strategy to gain market share with Bed Bath and Beyond out of the picture. For stores near where a Bed Bath & Beyond once stood, HomeGoods can “re-rank” inventory to match products that might’ve been popular at the local Bed Bath & Beyond store.
“We don't just go in and say, ‘Oh, we should do more of this category of business because that's what Bed Bath & Beyond did,’” Herman said. "We do it by location and by the category of businesses as we think they stood for. And we say, yeah, there's more market share opportunity for us in those categories.”
In the near-term, Bed Bath & Beyond's winddown will likely be a headwind, Sherman said, as the company heavily discounts its remaining inventory. But when those sales end sometime this year, TJX will stand to benefit in the second half of the year.
"People who would have shopped at BBBY over holidays will now have to shop somewhere else, and given the overlap and similarity in store base, customer base, locations and assortment, HG should be a big winner," Sherman told Yahoo Finance via email on Wednesday.
Josh is a reporter for Yahoo Finance.