The leading off-price retailer
TJX Companies Inc.
) announced the purchase of Cheyenne, Wyoming-based off-price
Internet retailer Sierra Trading Post. TJX expects the
acquisition to be slightly accretive to its earnings starting
fiscal 2014. It is a strategic acquisition by TJX to boost its
TJX bought Sierra Trading Post for $200.0 million in cash,
subject to post-closing adjustments. TJX also acquired Sierra's
office, warehouse and photography studios in Cheyenne, as well as
its customer call centers and four outlet stores in Idaho, Nevada
and Wyoming, as a part of the takeover.
Reportedly, Peter J. Solomon Company LLC and BofA Merrill
Lynch were the financial advisors. Ropes & Gray LLP acted as
the legal counselor.
Sierra Trading Post is a discount Internet retailer offering
outdoor recreation, adventure gear, as well as footwear, clothing
and home decor at 35% to 70% lower prices than those offered by
other retailers. The company sells seconds, overstocks and
Sierra Trading Post, which started its business with an office
space of 500 square feet in 1986, has grown to over 500,000
square feet today. The company sells almost 1,000 branded
The acquisition is beneficial to TJX, which is already geared
up to launch online brands for its HomeGoods and Marmaxx
divisions. More and more retailers are focusing on online
business, which expands their reach to a greater number of
customers at a time.
TJX, which competes against
), has been reporting an increase in comparable store sales for
the past several quarters, driven by higher demand and increased
We are encouraged by the company's flexible off-price business
model that allows it to act according to market trends. TJX has a
low-cost structure compared to many other traditional retailers.
It focuses aggressively on reducing expenses across its segments.
Currently, we have a Neutral recommendation on the stock. TJX
holds a Zacks #2 Rank (short term Buy rating).
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