Why TJX and Ross Are on Track for Continued Growth

Off-price retailers such as TJX Companies and Ross continue to see sales increase and are capturing market share from competitors. Their success is not solely due to consumers seeking value due to financial pressures.

With ongoing inflation and the costs of essentials such as food and gas creeping up, shoppers have moved over from department stores like Macy’s and Kohl’s to discount retailers such as T.J.Maxx and Ross. However, these discount stores have become trendier shopping spots, especially for younger consumers. Their product range has improved as more brands see them as a growing market opportunity to collaborate with. On the contrary, department stores have continued to contract and lose market share.

Jessica Ramirez, a senior research analyst with Jane Hali & Associates, said, “They have trusted brands at a cheaper price. They’re more on-trend, they’re designer-led, they lean into categories that the customer is much more interested in.” She added, “In terms of categories that maybe are not resonating as well, they pull back from them and they have that ability because of their … strategy. A department store doesn’t have that.”

Last week, TJX and Ross revealed their fiscal first-quarter earnings that exceeded Wall Street expectations, despite both companies going up against significant growth from the previous year. TJX’s sales increased by 6% to $12.48 billion, compared to LSEG’s estimates of $12.46 billion. This growth adds to the 3% spike in sales seen by the retailer in the same time period the previous year.

Ross, known for its retail chains Ross Dress for Less and dd’s Discounts, achieved an 8% rise in sales, hitting $4.86 billion in revenue, going beyond LSEG’s estimated figure of $4.83 billion. This growth builds upon the 3.7% gain reported in the year before during the same period.

Since 2019, both companies have experienced significant growth and shared outstanding outcomes consistently throughout 2023.

Brooke Roach, Goldman Sachs analyst, said, “We think that the off-price sector is still healthy and we think that results this quarter, both for [TJX] and Ross, are showing consistent traffic-driven comp increases, which indicate that the consumer is still looking for value and the consumer still finds off price’s business model of branded goods at value prices as an attractive buying opportunity.”

Roach anticipates further growth from both companies this year, further strengthening the sales boosts they experienced in the previous year.