Q&A with TJX's Bernard Cammarata
''It certainly is exciting to see the consumer reacting so well''

Perhaps no retailer better understands the lure of a bargain better than Bernard Cammarata, the man who founded TJX from scratch in 1976 and built it into what is now the world's largest retailer of off-price apparel. Unlike retailers who focus on price or selection, TJX offers its customers the thrill of taking part in what amounts to a treasure hunt, in which the lucky winners snap up brand-name apparel at a huge discount. That formula helped make Cammarata's first offering -- T.J. Maxx -- the U.S. leader in off-price apparel. Then in late 1995, he snapped up Marshalls, his top rival, and sent TJX growth into the stratosphere. But now, with the big benefits of that merger behind him, Cammarata faces the challenge of finding fresh avenues for growth. He recently spoke with Business Week Boston Bureau Manager William Symonds about the state of TJX. Here are excerpts from their conversation:

Q: 1998 was the second year in a row in which you managed to grow your earnings better than 40%. How did you manage this?
The acquisition of Marshalls in 1995, along with a change [in the behavior] of department stores led to this.

Q: What changed at the department stores?
The department stores had been extremely promotional. They were out of control with their promotions. But then they finally realized they are in business to make a profit. Since then, they have changed their position greatly. For us, that has meant we didn't have to fend off their [the department stores'] ridiculously low prices. Now we are able to achieve a gross margin that is realistic.

Q: Can you keep growing at this pace?
No, that would be unrealistic. But we feel we can keep growing at a 15% to 20% pace over the long term.

Q: How do plan to achieve that 15% to 20% growth?
We plan to continue to expand by opening over 350 new stores over the next three years, in the U.S. and abroad. We are looking for comparable-store sales growth of [at least] 3% a year. [We see strong growth from our smaller divisions] including Europe, Canada, our HomeGoods unit [home furnishings]. and our new A.J. Wright division.

Q: Why are you buying back so much of your stock?
We feel the stock is a terrific buy. We've bought back about $600 million [worth of TJX stock] in the last two years, and the board has authorized an additional buyback of $750 million. Of this, we've bought back $100 million. So I'd venture that over the next year, we'll buyback about $300 million.

Q: Have you ever seen a retailing environment this good?
I don't remember it, and I've been around for over 30 years. It certainly is exciting to see the consumer reacting so well.

Q: Are you worried about a downturn?
We don't anticipate a major change. But we are very fortunate. If there is a downturn, we will still fare well. Customers are looking for value in a downturn, so if we execute our businesses [which stress value], we will continue to do well.

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