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The Boston Globe Online

APPAREL RETAILING
770 Cochituate Road
Framingham, MA 02172
(508)390-1000
Chief Executive: Bernard Cammarata/Chair. & CEO
Stock symbol/Exchange: TJX/NYS Worldwide Employees: 54,000
#1. TJX Cos.
COMPANY OF THE YEAR

By Chris Reidy, Globe Staff

In 1976, T.J. Maxx was a one-man show. It had no stores, only an office in Framingham, where a guy from Brooklyn named Ben Cammarata sat by himself, trying to figure out how to launch an off-price retail chain.

Buying clothing was nothing new for Cammarata, who had paid his dues in New York's garment district. About the time his friends were finishing college, the young father with two kids and a high school degree was hanging suits, schmoozing with vendors, and learning about fabrics and fashions, bargains and bottom lines. The job paid $70 a week.

``It was a bottom-up education, better than anything you could receive at business school,'' said Cammarata, who is now 57.

In 1997, the man who started at the bottom is on top. As chief executive of the TJX Cos., Cammarata presides over a $6.7 billion empire of nearly 1,100 off-price apparel stores. Today, that empire is honored as the Globe 100's Company of the Year.

In its ninth year, the award salutes the top publicly traded company in Massachusetts, based on four yardsticks: total sales, sales growth, return on equity, and increase in profits as a percentage of sales.

Over 20 years, Cammarata has built the Framingham-based company into the envy of the industry. The company's success has come through unflinching devotion to one idea: selling brand-name clothing at bargain prices. In Cammarata, TJX has a merchant with an eye for spotting fashion trends and a chief executive with a talent for making bargains - and major acquisitions.

In late 1995, TJX, which already operated the biggest off-price chain, T.J. Maxx, bought its biggest off-price rival, Andover-based Marshalls. That deal added about $3 billion to annual sales.

``Ben bought Marshalls the same way he buys dresses - at a bargain-basement price,'' said Barry Bryant, a retail analyst at Rodman & Renshaw/ABACO.

Marshalls is a big part of the TJX story. In the mid 1970s, Zayre Corp. tried unsuccessfully to buy Marshalls. Instead, Zayre hired Marshalls' top merchant - Cammarata - and told him to create a Marshalls clone in T.J. Maxx.

Soon the clone eclipsed the original. And in 1989 Zayre spun off its divisions into two companies: Waban Inc. and TJX.

``TJX and Cammarata are one and the same,'' said analyst Skip Wells of Adams, Harkness & Hill. ``TJX is one of the outstanding leaders in the retail field.''

Cammarata ``ought to be CEO of the year,'' said analyst Richard Jaffe of Schroder Wertheim & Co.

Even as a young man in the garment district, Cammarata instinctively understood what clothing would sell and what wouldn't. As a teenager trying to help out his working-class family, he found work at Macy's. His first job was a stock boy.

Almost right away, he knew that retail was the career for him.

Later, in another of his early jobs, he made a big bet on a style of women's mix-and-match coordinates. He still remembers the look of concern on his boss's face as scads of green-and-white ensembles arrived at the store.

``I lost a couple of nights sleep,'' he said.

But as with many of the purchases that Cammarata has made over the last 30 years, the merchandise sold briskly. Picking out the right clothes is an innate talent, he said, like ``the ability to draw or hit a baseball.''

In acquiring his garment district MBA, Cammarata majored in off-price retailing. First practiced by pushcart vendors and later refined by Filene's Basement, off-price retailing is based on a simple premise: Buy brand-name merchandise meant for department stores, then sell it to customers at prices 20 to 60 percent below what department stores regularly charge.

It sounds simple, but it's hard to execute. One key is buying the right merchandise at the right time at the right price. Another is keeping overhead low.

At TJX, the goal is to pile up brand-name clothes and home furnishings in big low-rent stores. Let the department stores spend on frills, big ad campaigns, and wide assortments. TJX focuses on two things: brand names and low prices.

Others have pursued the off-price strategy, but none with the single-mindedness of Cammarata.

Filene's Basement got into trouble a few years ago when it signed expensive real estate leases as it tried to expand. Marshalls, meanwhile, tried to be more like a department store, offering wider varieties, loading up on private-label clothing, and stressing ``buy one, get one free'' sales.

Marshalls wobbled in 1994 and 1995 when department stores started aggressively slashing prices. A general price war broke out, and one result was that shoppers were as likely to find bargains at department stores as they were at off-price retailers. ``Marshalls would have lost money in 1995,'' Cammarata said.

Instead, TJX scooped up Marshalls for $550 million. The marriage of Marshalls and T.J. Maxx has enabled TJX to cut expenses and enjoy greater buying power with vendors.

Meanwhile, department stores stopped cutting prices in the hopes of increasing profits. With the price gap once again wide between off-pricers and department stores, TJX profits in 1996 soared from $26.3 million to $363.1 million.

Some of that big jump can be explained by 1995 charges associated with the sale of its Hit or Miss chain and with the closing of some stores following the Marshalls acquisition. And 1996 results were helped by one-time gains from selling its Chadwick's catalog operation. Still, income from continuing operations in 1996 surged 195 percent to $214 million.

When the Marshalls acquisition was completed 18 months ago, TJX stock was trading at about 16. With shares hovering in the mid to high 40s, a 2-for-1 stock split has been proposed.

Now bigger and more focused than ever, TJX looks to expand abroad. Like Ike before D-Day, Cammarata contemplates an invasion of Europe.

``Over 20 years, no other retailer has put up the numbers that Ben has,'' said Bryant, the analyst at Rodman & Renshaw/ABACO.

This story ran in the Boston Globe on 05/20/97.
© Copyright 1997 Globe Newspaper Company.

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