Ross Stores Grew Comparable Sales 10%. TJX Grew 4%. Only One Stock Went Up.
Ross Stores Grew Comparable Sales 10%. TJX Grew 4%. Only One Stock Went Up.
Daniel Sparks, The Motley FoolSat, August 22, 2026 at 8:43 PM UTC
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Key Points -
Ross Stores earned $2.66 per share in its fiscal second quarter, beating its own guidance even after backing out $0.60 of tariff refunds.
TJX beat its plan on sales, margin, and earnings, raised its full-year outlook, and the stock still fell after its report.
Ross guided for 6% to 7% comparable sales growth in the third quarter, while TJX is planning for 2% to 3%.
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The two biggest off-price retailers just reported the same 13 weeks of business, one day apart. The market treated them like different industries.
TJX(NYSE:TJX), the company behind TJ Maxx, Marshalls, and HomeGoods, reported Wednesday morning that its comparable sales -- sales at stores open long enough to compare with a year earlier -- grew 4% in its fiscal second quarter of 2027 (the period ended Aug. 1, 2026), above its own plan. The stock fell 4% that day and kept falling Thursday, leaving it within about 5% of its 52-week low.
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Ross Stores(NASDAQ:ROST) reported its own quarter, covering the very same weeks, after Thursday's close. Comparable sales grew 10%. The stock jumped on Friday, closing up more than 4%.
What did the market see that the headline numbers miss? The answer sits in the two companies' second-half plans.
Image source: The Motley Fool.
Ross: the growth is broadening
Ross delivered the kind of quarter off-price investors have been waiting for. Total sales rose 13% year over year to $6.3 billion, and the 10% comparable sales gain was driven primarily by customer traffic (more people in stores, not just bigger baskets).
Even more encouraging, management said the growth drew on both new customers and higher engagement from existing ones. And the 10% gain came on top of just a 2% rise in the same quarter last year.
Additionally, net income climbed to $851 million from $508 million a year earlier, and earnings per share of $2.66 landed far above the company's own $1.85-to-$1.93 guidance. About $0.60 of that came from tariff refunds under the International Emergency Economic Powers Act (IEEPA), so the clean beat was smaller than it looks -- but it was still a beat, and the company raised its outlook on top of it.
That outlook is the part the market paid for. Ross now expects comparable sales to grow 6% to 7% in the third quarter and 4% to 5% in the fourth -- raised numbers, against tougher year-over-year comparisons. And the third-quarter range matches the comparable sales guidance Ross gave for the quarter it just beat by three points.
TJX: bigger, steadier, slowing
TJX's quarter was good by nearly every measure it guides on. Revenue rose 5% year over year to $15.2 billion, and earnings per share of $1.36, up 24%, came in well above plan.
Excluding a $0.14 net tariff-refund benefit, adjusted earnings per share still grew 11%.
Topping it all off, the company raised its full-year margin and earnings outlook, lifted its long-term store target to 7,500 locations, and returned $1.3 billion to shareholders in the quarter. And the stock fell anyway.
The problem was the composition.
Marmaxx, the U.S. division that includes TJ Maxx and Marshalls and generates most of TJX's sales, grew comparable sales just 1%, down from 3% a year ago. The strength came from everywhere else.
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"While sales at Marmaxx were below our expectations, HomeGoods, TJX Canada, and TJX International all delivered terrific comp sales increases of 6% to 7%, which underscores the strength of our global diversified business," said CEO Ernie Herrman in the earnings release.
The second-half plan, I think, extends the slowdown. TJX expects third-quarter comparable sales growth of just 2% to 3% and full-year growth of 3% to 4%. That sales outlook was not raised. The earnings raise came from margin, and part of it from tariff refunds.
The second half decided it
Put the two plans side by side and the reactions stop looking strange. Ross just posted 10% comparable sales growth and told investors to expect 6% to 7% next quarter. TJX posted 4% and told investors to expect 2% to 3%, with its flagship division near flat.
The valuations sharpen the contrast.
TJX's market value sits near $155 billion, about twice Ross' $78 billion, and the stocks trade at similar valuations: TJX at about 26 times earnings, Ross at about 29 times earnings.
So investors are paying nearly the same price per dollar of profit for a company growing comparable sales at less than half the rate.
And forward price-to-earnings ratios, measured against each company's own raised full-year guidance, land in the same neighborhood.
Sure, TJX runs the bigger, more diversified business, and a turn at Marmaxx could change this comparison quickly. Herrman said the third quarter is off to a strong start overall, with improvement at Marmaxx, and he may prove the plan conservative. But off-price is a traffic business. Ross is still pulling more customers through its doors quarter after quarter, while growth at TJX's biggest U.S. banners has nearly stalled.
I think the market read the two reports correctly. The quarter was fine at both companies. The second half, by each management team's own numbers, belongs to Ross.
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Daniel Sparks and his clients do not have positions in any of the stocks mentioned. The Motley Fool has positions in and recommends TJX Companies. The Motley Fool has a disclosure policy.
Source: “AOL Money”
