TJX will phase out its A.J. Wright chain

Jenn Abelson and Chris Reidy, Globe Staff

Framingham discounter TJX Cos. is shuttering its A.J. Wright chain after more than a decade, a move that is expected to result in 4,400 job losses nationwide, including about 1,375 positions in Massachusetts.

The discount merchant said today it plans to convert 91 A.J. Wright shops into T.J. Maxx, Marshalls, or Home Goods stores, and the company will close the remaining 71 shops, including 10 in Massachusetts, and eliminate two distribution centers. The 162-store A.J. Wright chain focuses on apparel and home fashions.

Among Massachusetts A.J. Wright stores set for closing are stores in Fitchburg, Malden, Medford, Methuen, New Bedford, Quincy, Somerville, Springfield, Waltham, and Worcester, TJX said.

Commenting on the job losses, TJX said the employees will be paid through the holidays and that it will try to help them find jobs at other nearby stores in TJX chains. TJX added that it will seek to provide employees losing their jobs with "enhanced severance and other assistance."

The news today has shocked Fall River, the site of a distribution center that employs 800 people who will all lose their jobs early next year. An ambulance took away one worker this morning who had apparently complained of chest pains after learning about the plans, according to Fall River Mayor William Flanagan.

"This is devastating news for the city of Fall River, which already has an unemployment rate of 13 percent or above," Flanagan said. "To make this announcement two weeks before Christmas is disturbing."

But investors and retail analysts were less surprised by TJX's plans to eliminate the struggling chain. A.J. Wright, founded in 1998, turned its first profit in 2008, and the performance has remained inconsistent, according to Daniel Hofkin, an analyst with William Blair & Company.

"This is the right decision for the company," Hofkin said. "A.J. Wright was not as clearly defined as a concept in terms of why it needed to stand on its own."

TJX chief executive Carol Meyrowitz, in a statement, said, "While I believe this move makes us a much stronger company and will benefit TJX in both the near-term and long-term, it was not an easy decision as many positions will be eliminated and it will be difficult for our affected associates. As a company, however, it will allow us to focus our financial and managerial resources on our highest return business, all of which have significant growth opportunities, as well as to significantly improve the economic prospects of our business."

"This action is expected to improve the overall profitability of the company and will allow TJX to focus its managerial and financial resources on its larger, more profitable businesses," TJX said in a press release.

TJX said in its release that it expects to incur estimated pre-tax costs related to closing the A.J. Wright business in the range of $250 million to $280 million, which would reduce net income by $150 to $170 million, or by $.38 to $.43 per share.

"A critical factor in this decision is that, over the past two years, we have learned how to serve the A.J. Wright customer with our T.J. Maxx and Marshalls banners and have seen very strong performance from these stores in demographic markets similar to those in which we have A.J. Wright stores," Meyrowitz said in her statement.

When TJX launched A.J. Wright, it saw urban blue-collar women as one potential target audience for the new chain. T.J. Maxx, in contrast, tended to court a more upscale customer.

One initial challenge for A.J. Wright was that many blue-collar urban women relied heavily on circulars, coupons, and one-day sales. With its every-day low prices, TJX and A.J. Wright eschewed that philosophy.

Early ads for A.J. Wright featured such statements as, "We'll hurl ourselves off a cliff before we have a one-day sale," and "No way in this lifetime will we have an anniversary sale."

When TJX reported earnings last month, it said that third-quarter sales at A.J. Wright stores open at least a year, or same-store sales, were down 2 percent. For the same period, same-store sales at T.J. Maxx and Marshalls rose 1 percent, and same-store sales at HomeGoods were up 3 percent, TJX said.

As of the beginning of December, TJX said it operated 924 T.J. Maxx stores, 832 Marshalls stores, 336 HomeGoods stores besides its 162 A.J. Wright stores in the United States. In Canada, the company operates 212 Winners, 82 HomeSense and 3 STYLESENSE stores, and in Europe, 307 T.K. Maxx and 24 HomeSense stores.

TJX said that it anticipates that all 162 A.J. Wright stores will close between late January and the middle of February; for the 91 stores that will be converting to other banners, the company estimates this conversion process will generally take about eight weeks, during which time the stores will remain closed.

(An A.J. Wright store in Somerville is shown above in a Globe file photo.)