TJX Cos. Inc. may have revealed a management shuffle on Wednesday, but Wall Street approved.
In the third change of management at a major retailer revealed on Wednesday, TJX named Ernie Herrman as its next chief executive officer, succeeding Carol Meyrowitz, who will remain executive chairman.
He begins his new role on Jan. 31. Herrman, 54, has been president of TJX Cos. since 2011. He also has also been elected to the board.
News of the shift in management at TJX came on the same day that Ann Inc. revealed that Gary Muto would take the reins as ceo, succeeding Kay Krill, and Tilly’s said Edmond Thomas would rejoin the company as president and ceo, replacing Daniel Griesemer.
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Shares of TJX on Wednesday rose 1.6 percent to close at $71.90 in Big Board trading.
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Meyrowitz, 61, said, “Ernie Herrman’s proven successful track record, leadership abilities, strategic vision, discipline and focus are all qualities that make him absolutely the right choice for ceo.” She noted Herrman’s decades of experience as an off-price merchant, including his contributions to the company’s international growth. Those contributions include expansion into continental Europe, bringing Marshalls to Canada and intent to acquire Trade Secret in Australia.
Meyrowitz has a new three-year agreement, which addresses her role as executive chairman. Under the terms of the agreement, she will remain an active executive and be an adviser to Herrman on the company’s long-term growth initiatives.
On a more personal note, Meyrowitz, who has been ceo for the past nine years, said, “I look forward to continuing to work with the TJX leadership team in the role of executive chairman as we keep growing TJX as a global, value retailer.” She noted that both she and Herrman have worked together at the company for 20-plus years, and that as a “$30 billion company, we are confident that this structure allows us to continue to support and maximize the growth potential of TJX.”
Herrman said, “I am convinced that we are in an excellent position to grow to be a $40 billion company and beyond.”
Herrman’s previous roles at TJX include senior executive vice president, group president, where he had responsibilities for The Marmaxx Group, HomeGoods and TJX Canada. Before that, he succeeded Meyrowitz as president of The Marmaxx Group.
Stifel analyst Richard E. Jaffe said he is reiterating his “Buy” rating on shares of the stock, with an $85 a share target price. “We remain favorable regarding TJX’s long-term outlook and ability to grow its business both domestically and internationally.” He said his conclusion is “based on the company’s talented management team and flexible business model.”
On the flexibility of the model, Jaffe said the company is able to flow the right merchandise in the right categories at the right time, which drives strong sales and merchandise margins. “We believe this highlights the ongoing resilience and competitive strength of the off-price business model and the strength of TJX as the largest and dominant player in the off-price market,” the analyst added.
Craig R. Johnson, president of consulting firm Customer Growth Partners, called the move “thoughtful succession planning,” noting that Meyrowitz has “groomed Ernie Herrman for the ceo post over the last several years.” Johnson added that while the appointment is not unexpected, it is a reflection of what good companies do, which is to “develop a pool of strong potential successors, and then to hand off the reins after a decade or so.”