• TJ Maxx parent company TJX operates on a different playbook from most retailers.
• In particular, the CEO says it wants to give shoppers a "wow" factor from finding incredible value.
• It's part of a larger strategy that could help the company do well — even in chaotic times.

It's an experience that almost anyone shopping at TJ Maxx, Marshalls, Sierra, or Home Goods eventually has: you're browsing items, see a price tag, and think, "that can't be right."

Before you know it, you're a full-blown Maxxinista.

As it happens, TJX CEO Ernie Herrman said the company wants you to feel a little suspicious when you encounter a sharp deal.

"We want a customer to actually say, 'That almost feels too cheap,'" he said in a quarterly earnings call Wednesday. "One out of every 10 hangers I want a customer saying, 'Boy, that that almost feels too inexpensive,' strangely enough."

The playbook has been working for the company, which reported strong sales and traffic gains at its family of brands despite a broader slowdown in apparel and housewares categories in recent years.

Apart from a bad-weather month in February, monthly visits to TJ Maxx and Marshalls were up roughly 6% to 8% in January, March, and April of this year versus last year, according to foot traffic data from Placer.ai. Visits to traditional apparel stores have been basically flat or down for the period.

Placer.ai also found that not only do shoppers visit more often, they spend more time in the stores as they hunt for those surprising deals.

"A significant part of this success may stem from the segment's inherent 'treasure-hunt' experience — off-price shopping cultivates a browsing mentality, encouraging visitors to linger and explore the constantly changing inventory," Placer.ai's Bracha Arnold wrote.

This year so far, Placer.ai found TJ Maxx shoppers spent an average of 40.3 minutes in the store, while shoppers at traditional apparel chains averaged 33.3 minutes — a difference of about 20% more time spent trying to find that suspiciously good deal.

Of course, there's a lot more to the equation than simply offering low prices.

"Value isn't just a function of competitive prices," Global Data retail analyst Neil Saunders said in a note. "It also comes from buying well and meeting customer needs. In our view, TJX merchants are excellent at doing at that and they are one of the key assets that will propel the company forward."

On the earnings call, Herrman said TJX has a team of over 1,300 buyers who have relationships with more than 21,000 vendors across more than 100 countries around the world.

And while the company is not immune from tariff impacts (Herrman said TJX directly imports about 10% of its goods), much of its sourcing is downstream from other brands and retailers that will likely bear a fair amount of the costs, rather than TJX itself.

Global trade chaos now represents a key opportunity for TJX to load up on interesting merchandise, since unexpected inventory surpluses are where off-price retail shines.

Jefferies retail analyst Corey Tarlowe found that retail inventories are on the rise for the first time in two years, reversing a trend of leaner, more disciplined inventory strategies in the post-COVID era.

"Given these trends, the availability for TJX should remain robust. TJX management noted inventory availability in the marketplace is better than usual," Tarlowe wrote.

On the earnings call, Herrman said his buyers aren't tasked with a complex set of price sheets or profit margin targets. Their primary task is finding exciting products they can offer at a compelling discount to the full-price store around the corner.

"Our only contract to the customer is that we will have great value on the goods that we put out there, and it'll be below the out-the-door price of traditional retailers," he said.

• TJX CEO Ernie Herrman says he's excited about the opportunity for businesses like his from tariffs.
• "We've been to the movie before," he said of rising costs. "It's a different headline."
• Herrman also pointed to several ways the off-price retailer is able to soften the impact of tariffs.

Tariffs are shaking up retail, but not all companies are looking at the changes in the same way.

For TJX, CEO Ernie Herrman says he's excited about the opportunity the new trade costs present for businesses like his.

"We've been to the movie before," he said of managing rising costs from inflation. "It's a different headline; it's just the same approach."

Speaking on a fourth-quarter earnings call Wednesday, Herrman said TJX — which owns brands like T.J. Maxx, Marshall's, Sierra, and Home Goods — directly imports only an extremely small percentage of its inventory from China.

As an off-price retailer, the company typically stocks up on merchandise that other retailers have already imported (and paid the relevant duties on) and could not sell themselves.

In other words, most new tariffs aren't coming directly from TJX's pockets. Meantime, higher prices could push US consumers to get even more cautions about paying full price for things — and as long as TJX can sell products for less than their traditional retail counterparts do, Hermann says the company will come out ahead.

"I'm excited about the sales and margin opportunity in this environment, because this is pretty much textbook situation coming up," he said.

In addition, Herrman noted that a large chunk of TJX's sales come from housewares and furnishings, which tend to be more exposed to Chinese tariffs.

To soften the impact of those — and to differentiate TJX's assortment from its competitors— Hermann said the company sources more of its home goods from Europe.

"It creates an umbrella of fashion and brand and quality that other home retailers don't do," he said. "Customers love that piece of our mix."