Executive Changes Don't Phase TJX

The executive suite at TJX has always been a tough room to play, but despite many senior management machinations, the company continues a remarkable record of success that shouldn’t be dampened by the recession.

In some ways, the recession is good for TJX. Its stores sell goods intended for sale at other retailers when they aren’t accepted or when those stores can’t sell them. It then sells the same apparel and home furnishings to its own shoppers at a discount through stores in North America and Europe operating under the names including T.J. Maxx, Marshalls, A.J. Wright, Winners, T.K, Maxx and HomeGoods. With retailers shedding inventory dramatically in recent months, TJX has had access to a lot of product at even lower prices than usual, as it has pointed out in its television advertising.

Purchasing isn’t its only advantage in a soft economy. Because TJX focuses on designer and other well-known labels, the company is in a position to capture sales from consumers who are cutting back on spending and, consequently, no longer look at the unadorned racks at T.J. Maxx or Marshalls as unattractive alternatives to department and fashion specialty stores.

Much of the company’s success has to do with a focus on lean operations, which can be attributed to Ben Cammarata, who founded the chain when he was hired by original owner Zayre to develop a value fashion division. Still chairman, Cammarata has not been an easy man to work for. Just this week, TJX announced that CFO Nirmal “Trip” Tripathy had resigned to, as the euphemism goes, “pursue other opportunities.” His replacement, Jeffrey Naylor resumed the CFO role he relinquished in 2007. He retains responsibility for new business development as the company’s chief administrative officer and senior executive vice president, roles he took on in 2007, in part to sell the company’s Bob’s Stores division.

The acquisition and souring of the Bob’s Stores business were critical to the departure of former CEO Ted English in 2005. Cammarata temporarily replaced English as CEO, eventually giving way to current chief executive Carol Meyrowitz. But she, too, had her ins and outs with the company. In 2004, TJX announced she would depart as president of The Marmaxx Group – the division that includes T.J. Maxx and Marshalls — and senior executive vice president of TJX, staying on in an advisory capacity only until September 2005. Obviously, tales of her departure were greatly exaggerated.

All that being said, Naylor is well regarded. Citigroup analyst Kimberly Greenberger, responding to Tripathy’s departure, rated Naylor among the most talented CFO’s in retail.

Changing personnel isn’t the only example of how TJX keeps the heat on executives. In March 2006, the company said it’s 12 most senior executives, including the chairman, would take 10% salary reductions in a cost cutting drive that eliminated 250 headquarters positions.

Cammarata, at the time, said the company’s low-cost structure had been the key to offering customers great values so that the “decision to eliminate positions, although very difficult to make, reflects one of many measures our company is taking to reduce costs and grow our business profitably.”