TJXTJX Companies, Inc. (The)

TJX sells branded clothing at a discount by buying other people's excess — and does best precisely when others are struggling.

The model is the inverse of ordinary retail. The company does not order a collection in advance; it buys what did not sell at brands and other chains — opportunistically, in lots, cheaply. Its assortment is therefore unpredictable, and the shopper comes for a find rather than a specific item.

Two properties follow. First, industry overproduction is raw material for TJX, and in years that are hard for brands it buys better. Second, e-commerce hurts it less than ordinary retail, because the value lies in searching a changing assortment rather than in delivering a known product.

The constraint is its buyers' ability to source: growth is limited by supply of excess rather than by demand. Labour and rent are the main cost lines. TJX pays a dividend and buys back stock consistently.