TIME

You’ll Never Guess Which Store Is the Most Powerful in the U.S.

T.J. Maxx Retail
A customer shops at the opening of TJ Maxx's 1000th store on April 25, 2012 in Washington, DC. Paul Morigi—Getty Images

The off-price chain has built a fantastically loyal following. How?

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This post is in partnership with Fortune, which offers the latest business and finance news. Read the article below originally published at Fortune.com.

Consider Company X. Its annual sales—now $27.4 billion, or more than those of Estée Lauder, Hilton Worldwide, and Hershey combined—have risen 50% over the past six years. Its profits have almost tripled, to $2.1 billion. Its shareholders have been the beneficiaries of 18 consecutive years of earnings-per-share growth. In its nearly-four-decade history, it has had only one year of negative same-store sales. And it does all this by selling blouses…pots and pans…and bedding, sunglasses, sriracha seasoning, yoga mats, and the occasional $1,250 Stella McCartney dress.

Company X—make that TJX—may well be the biggest enigma in an industry so fragile and capricious that Starbucks CEO Howard Schultz once likened it to the “human condition.” The business of retail is hard stuff. Chains soar when they manage to sell into the zeitgeist (“Tar-zhay,” anyone?) and collapse when the stars of public taste realign (Abercrombie). In the off-price realm that the TJX TJX Companies dominates, it is, if anything, harder. The past six years have seen the demise of Filene’s Basement, Daffy’s, and Loehmann’s, which has reemerged as an online-only store. The number of customer purchases at TJX, by contrast, has risen in each of the last six years; over that time, TJX shares have climbed over 200%.

“It’s the most consistent, most powerful apparel retailer in the United States,” says Howard Davidowitz, who has run his own retail consulting and investment banking firm for 33 years. “It’s a bold statement, but it’s true.” Ron Hess, a professor of marketing at William & Mary’s Mason School of Business, puts it this way: “They are stunningly good.”

But there is one other salient fact about the Framingham, Mass., retailer that adds to the enigma: It will do almost anything to prevent anybody else from knowing how it has managed all of the above. TJX is Company X: a black box—arguably one of the most secretive retailers around.

For the rest of the story, go to Fortune.com.

TIME

Here’s Why the Mac Is Beating the PC Right Now

Mac vs. PC
A MacBook computer and instruction manual. JiaJia Liu—flickr Editorial/Getty Images

Mac sales are up, PC sales are down. And in that shrinking market, Apple takes the lion’s share of the profits

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This post is in partnership with Fortune, which offers the latest business and finance news. Read the article below originally published at Fortune.com.

Tim Cook reported Tuesday that Mac sales grew almost 18% year over year in the June quarter while the rest of the PC market shrank by nearly 2%.

And the Mac is the most profitable PC on the market. By far.

“Indeed,” writes Asymco‘s Horace Dediu, “it’s more profitable than all the other vendors put together.”

For the rest of the story, go to Fortune.com.

TIME

Starbucks Is Totally Killing It Right Now

Starbucks Center, headquarters for the i
Starbucks Center, headquarters for the international coffee and coffeehouse chain, is seen on March 22, 2011 in Seattle, Washington. Mark Ralston—AFP/Getty Images

Starbucks posted a solid quarter after announcing price hikes in July

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The numbers: Starbucks met analyst estimates on Thursday by posting third quarter profits of 67 cents per share on $4.15 billion in sales. Analysts had expected the Seattle-based coffee company to deliver earnings of 67 cents on $4.15 billion in revenue. Starbucks also said sales growth accelerated to 11% for the quarter from 9% in the previous quarter. Other especially significant numbers from the earnings report: Comparable store sales 6% during a quarter in which the average price of customer orders increased 4%. Starbucks announced plans to raise costs for drinks and packaged items in the U.S. earlier this month, the first price hikes in almost four years. Starbucks also opened 344 new stores around the world, for a total of nearly 21,000 in 64 countries.

The takeaway: With the price of drinks rising, Starbucks isn’t likely to alienate its customers. The company is one of the most admired in the world (in fact, fifth on Fortune’s most admired list). Plus, the company is expanding its brand by getting into the tea business through its partnership with Teavanna, whose products are now available in-store. Overseas sales, too, are strong, highlighted by the company’s 18th consecutive quarter where global comparable growth has been 5% or more.

What’s interesting: Starbucks unveiled a number of new initiatives this quarter to keep its customers (and employees) happy and coming back for more. For instance, Starbucks introduced its Fizzio handcrafted sodas and Teavanna iced teas to bolster its refreshment offerings. Starbucks has also partnered with Duracell to offer Powermat wireless charging in certain stores, with a planned expansion to more stores in 2015. Also big news for the quarter: The coffee company launched the Starbucks College Achievement Plan for employees to earn a bachelor’s degree with Starbucks helping to foot the bill.

TIME Companies

This Might Be Apple’s New Biggest Problem

Apple Profit Margins
The exterior of the downtown Apple Store in Central Hong Kong in May 2014. George Rose—Getty Images

Analysts’ average estimate for the gross profit margin is 38.1%

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In a note to clients Monday, UBS’s Steven Milunovich raised his Apple price target to $115 from $100 on signs that the company’s gross margins — long the envy of its competitors — are once again on the upswing.

Gross margin, or GM, may be the number Apple analysts watch most closely — even more than iPhone unit sales, although the two are closely linked (the more iPhones Apple sells, the better its gross margins).

GM is a ratio calculated by the formula GM=(Rev-Cost)/Rev, and it measures how efficiently a company turns sales into profits — something Apple does better than most because it doesn’t have to cut prices to stay competitive.

Instead, Apple’s gross margins tend follow their own internal rhythms, falling when the company is tooling up to build new products and rising as efficiencies increase and component prices fall.

Gross margins peaked in Q2 2012 at an extraordinary 47.4% on the strength of sales of the iPhone 4S and dropped to 36.9% in Q3 2013 as Apple was gearing up to launch, in the same quarter, two new iPhones and pair of iPads.

For the rest of the story, go to Fortune.com.

TIME Companies

This Is the Scandal McDonald’s Is Dealing With Now

Firms cut ties to Shanghai-based supplier after allegations revive memories of 2012 scandal

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McDonald’s Corp and Yum Brands Inc are embroiled in a new scandal over food safety in China after one of its suppliers came under investigation for allegedly selling expired beef and chicken.

The episode threatens to throw a wrench in the pair’s efforts to get over a similar scandal in 2012, when they were accused of selling chicken products with excessive amounts of antibiotics.

Yum is the parent of KFC, Pizza Hut and Taco Bell and is the biggest operator of fast-food restaurants in China, having first opened KFC there in 1987, while McDonald’s has recently been lost second place, in terms of stores, to Taiwan-based Dicos.

Yum had said only last week that like-for-like sales in China had risen 15% in the second quarter, and that KFC sales had risen 21%, a badly-needed boost in view of falling sales in the U.S. at KFC and Pizza Hut.

For the rest of the story, go to Fortune.com.

TIME

That Time Steve Jobs Called Apple’s New BFF a Very Bad Name

Steve Jobs IBM Orifice
Steve Jobs, former chief executive officer of Apple Inc., unveils the iCloud storage system at the Apple Worldwide Developers Conference 2011. Bloomberg via Getty Images

Tim Cook wasn’t kidding when he said that selling into the enterprise wasn’t in Apple’s DNA

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This post is in partnership with Fortune, which offers the latest business and finance news. Read the article below originally published at Fortune.com.

Pat Gelsinger, then a senior vice president at Intel, now CEO of VMWare, tells the story:

“I went with (former Intel CEO Paul) Otellini to meet with [Steve] Jobs and his lieutenants. We go into this meeting and say Steve, let’s work together to make your Macs better for enterprise customers. Jobs looks at us and says ‘why would I do anything for that orifice called the CIO?’” said Gelsinger. “At Intel we’re aghast; two-thirds of our business is that orifice called the CIO.”

The anecdote, relayed by Jeff Jedras in Computer Dealer News, says a lot about why Apple needs IBM to crack the so-called “enterprise market” — those corporate and government IT departments rich and powerful enough to require a chief information officer.

Under Jobs, Apple stayed focused on the far larger consumer market. Unlike the enterprise, where CIOs decide what equipment to buy, purchase decisions in the consumer market are made by the people who actually use the devices — a dynamic that plays into Apple’s strengths in design and ease of use.

In Gelsinger’s anecdote, Jobs goes on to say: “I’m going to build devices that are irresistible for consumers, and CIOs will just have to deal with it.”

For the rest of the story, go to Fortune.com.

TIME technology

Here’s the Biggest Problem With IBM’s Supergenius Watson

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This post is in partnership with Fortune, which offers the latest business and finance news. Read the article below originally published at Fortune.com.

Watson has plenty of smarts, but not enough emotional intelligence, says IBM SVP Bridget van Kralingen. The head of the company’s consulting and services business (and former psychologist) spoke at Fortune Brainstorm Tech in Aspen today.

Since Watson made its debut on Jeopardy in 2011, the so-called cognitive system has learned slang and transformed into a fledgling analytics tool for doctors, insurance companies and retailers. Recently, the company has also made efforts to open up the super-smart computer and turn it into a platform for third-party developers, paving the way for what IBM IBM -0.72% hopes will be thousands of applications for all sorts of industries. That includes providing some developer tools and giving partners access to “subject matter experts” within IBM. The company also recently announced it would invest more than $1 billion into a newly-formed Watson Group, and launch a $100 million fund for investing in the Watson “ecosystem.”

“The thought is that we could have a whole cognitive network of capabilities in the world around us,” Kralinger said.

For the rest of the story, please visit Fortune.com.

TIME Brainstorm Tech

Watch Fortune Brainstorm Tech 2014 Livestream

Watch some of the biggest names in tech and business speak at Fortune's annual conference

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Fortune’s annual technology conference kicked off July 14 in Aspen, Colo.

Monday’s highlights included interviews with Ericsson CEO Hans Vestberg, Intel President Renée James, and a discussion on Big Data between Walter Isaacson and Microsoft CEO Satya Nadella.

Stay tuned to this livestream for more interviews and talks through Wednesday, July 16 with some of the biggest names in tech and business.

See Fortune.com for a full list of speakers and times.

TIME Companies

This Is How Much All That Muscle Milk Is Worth

Hormel Acquires Muscle Milk
A carton of Diet Muscle Milk at the Diet Muscle Milk Fuels NY Fashion Week at Lincoln Center on September 12, 2010 in New York City. Brian Ach—Getty Images

$450 million deal for CytoSport meant to broaden the company’s reach to younger consumers

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Hormel Foods has agreed to pay about $450 million to acquire sports-nutrition maker CytoSport, a deal meant to broaden the company’s reach to younger consumers.

The deal to acquire CytoSport, which makes Muscle Milk products, is expected to close within 30 days. CytoSport’s 2014 annual sales are expected to total about $370 million. Hormel HRL 0.61% expects the deal will add about five cents a share to earnings in fiscal 2015, with a neutral impact on fiscal 2014 results.

CytoSport first formed in 1998 by Greg and Michael Pickett, a father and son team that aimed to compete in the sports nutrition category. The company’s first protein products hit the market in 1999, though the Muscle Milk powder — which is the company’s most popular product — was released in 2000. CytoSport has also expanded abroad in recent years, in Canada and the United Kingdom.

For the rest of the story, go to Fortune.com.

TIME

This Is How Much James Bond Is Really Worth

The World Is Not Enough
Irish actor Pierce Brosnan as 007 in the James Bond film 'The World Is Not Enough', 1999. Keith Hamshere—Getty Images

90-year-old Metro-Goldwyn-Mayer film studio said it raised $100 million more than it originally sought.

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Metro-Goldwyn-Mayer (MGM) said Thursday it has raised $300 million in fixed-rate loans arranged by JP Morgan Chase and Goldman Sachs.

The 90-year-old film studio, which for years made classic films and is now home to the James Bond franchise, said it raised $100 million more than it originally sought. The loan spans six years and comes at a fixed rate of 5.125%, and it will be used for “general corporate purposes.”

For the rest of the story, go to Fortune.com.

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