The off-price channel continues to outperform the entire retail business in 2026; that’s pretty much become the new normal. But recent financial results from the biggest players in the business show exactly how much market share they are gaining and why that’s changing the retail marketplace. Over the most recent quarter, which represents the first one of their fiscal years, financial results from the Big Three of off-price, the TJX brands, Ross, and Burlington, show they have increased their topline revenues by just over $2.5 billion, representing double-digit gains for the latter two. And all this is coming in a basically flat period for overall retail sales for most companies.
As shoppers are increasingly pressed by inflation, unaffordable gas prices, and are generally spooked by the instability in most things out there, they continue to spend. But it’s where they are doing it that’s the big news. Yes, competing retailers like Walmart, Amazon, and the dollar stores are also doing well and delivering impressive numbers, but none of them are doing it at quite the velocity as the off-pricers. And the Big Three are joined by an increasing number of nameplates like Five Below that are benefiting from a practical consumer that wants a deal, real or perceived.
What retail sector is outperforming the others? And the answer is: Off-price is crushing retail as pragmatic shoppers manage inflation, tariffs and market uncertainties.
TJX Still Number One
As the largest player in the off-price space, with brands that include TJMaxx, Marshalls, and HomeGoods, TJ dominates any conversation about gaining market share in the retail universe. And even if it didn’t have the largest percentage gain based on its scale, the company did OK for itself this past quarter; in fact, more than OK. For its first quarter, ending May 2, it had a 9.2 percent increase on its topline to $14.3 billion, up from $13.1 billion a year ago. HomeGoods was its biggest gainer, up 11 percent, and its stores in Canada and Europe did even better. Comp store sales were up 6 percent across all the TJX nameplates, with HomeGoods leading the way at 9 percent.
Ross, the Best of the Bunch
The perennial number two in the channel led the way this time when it came to growth, hitting a 21 percent gain in overall sales to $6 billion, from $5 billion a year ago. Comp store sales were almost as dynamic, growing 17 percent in what the company said was a “robust” performance. Like TJX overall, it showed strong results on its bottom line with a dramatic increase in its operating margins, outdistancing its own forecasts, up 13.4 percent.
Burlington in Third Place
As the smallest of the three chains, Burlington’s gains were not quite as impressive, but its sales increased 14 percent to $2.85 billion, while comparable store sales increased 6 percent, compared to the first quarter of fiscal 2025. It also did well on its bottom lines and operating margins.
But Wait, There’s More
With these kinds of increases, it can’t come as a surprise that all three of these off-pricers want more. And more means more stores. TJX says they plan on opening 146 new locations, spread across all of its brands. Previously, it had upped the ceiling for the HomeGoods banner, from 1500 stores to 1800 ultimately. Don’t be surprised if that number climbs again. Ross said it expects to open 110 new locations this year, mostly in its main brand with 85 Ross Dress for Less additions, but also 25 dd’s stores, building on that mostly under-the-radar brand. Burlington, coincidentally, also said it sees 110 new stores this year, including in a number of former Joann’s locations.
These are big numbers for three companies that collectively already have more than 8,700 stores (TJX, 5200; Ross, 2300; Burlington, 1220). Only the big dollar store chains open more stores on an annual basis, and let’s not forget that their store closing numbers equal more than half the number of openings. Nobody else is even close to these two channels. Probably not coincidentally, remember that neither the off-pricers nor the dollar stores have well-developed ecommerce businesses, so physical stores need to drive the bus when it comes to growing sales.
Where’s It Coming From?
In what seems to be a modest year so far for overall retail sales — up 3.9 percent according to census numbers — these huge off-price gains have to be coming from somewhere at someone else’s expense.
- Retailers like Kohl’s and JCPenney sit directly above off-price and continue to underperform the overall market. It’s pretty obvious that they are the biggest losers in share.
- Target is also giving up share, at least during this period. It has struggled with lackluster merchandising and operational issues, and we are only starting to see the results of a possible turnaround. In the meantime, the Target shopper may be making a right turn at the strip mall and heading to the off-pricer down the walkway.
- Is it possible that the end of the de minimis rules on direct shipments is also having an impact? Is that shopper, now facing big shipping and duty added-on charges, choosing to shop off-price instead? This is a tough one to figure out precisely, but there’s an argument to be made that this is coming into play.
- And what about department stores? They have historically been the biggest losers when it comes to competing against off-pricers. Well, this past quarter, both Macy’s and Dillard’s did OK, but not off-price/double-digit OK.
- And would it be too much of a stretch to say the off-price customer is also the Saks and Neiman customer? The pragmatic luxury shopper is not above trading down while Saks Global is struggling to get its act together.
X Factors
Let’s not forget that stuff out there just costs more than it used to; inflation, raw materials cost increase, and politics are all contributing to higher price tags. And since all retailers are subject to these factors, the off-pricers may be better at merchandising (read disguising some of those increases) than many of their competitors. And you can never underestimate the decades-long campaigns the big off-pricers have run to convince the consumer that she is getting a great price when she shops at their stores. Just as Walmart’s incessant “Low Prices. Always” messaging has creeped into shoppers’ psyches, so too have off-price claims that they have the best deals in town. Retailers like to use the word “value,” but let’s face it: The American consumer loves a deal. And she loves it more than ever these days.
