Even though high-end department stores are struggling, discounted retail is booming, showing that Americans are still spending, but more selectively.
TJX Companies — which owns TJ Maxx, Marshalls and HomeGoods — beat Wall Street expectations in its fourth-quarter earnings report Wednesday morning.
Sales jumped 9% year over year to $17.7 billion in the fourth quarter, with same-store sales increasing 5%. TJX also increased its quarterly dividend by 13%, to 48 cents per share, and generated net income of $1.8 billion this quarter.
Most notably, the report reveals that the retail company plans to repurchase between $2.5 billion and $2.75 billion in stock this fiscal year, as TJX noted “continued strong cash flow.” This is a major signal that management believes the downward trend is not temporary.
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“Through the collective efforts and disciplined execution of our teams, we delivered better-than-expected results on both the top and bottom line. Annual sales exceeded $60 billion, marking a significant milestone for our company,” said Ernie Herrman, President and CEO of TJX. said in a statement.
Customers shop at the TJ Maxx store at Prince George’s Shopping Center in Hyattsville, Maryland. (Getty Images)
“We had an excellent fourth quarter, with sales, profitability and earnings per share well above our forecasts,” he continued. “Throughout the year, we remained focused on our non-price fundamentals to provide our customers with exceptional values, brands and fashions, as well as an exciting shopping experience in search of treasures every day. »
The success of off-price stores comes around the same time that traditional department stores are struggling to increase sales. Not only the parent of Saks Fifth Avenue and Neiman Marcus file for bankruptcy in January, but Macy’s and Nordstrom both reported weak sales and pressure on discretionary spending as higher-income shoppers retreat and promotional activity ramps up.
A report published earlier this week by Coherent Market Insights found that the global discount retail market had an estimated value of $372.5 billion in 2025 and is expected to reach $668.3 billion by 2032. On average, discount stores offer brand-name items at prices 30 to 60 percent lower.
Shoppers may turn to discount stores, especially as inflation remains high. On Friday, the Commerce Department reported that the Personal Consumption Expenditure (PCE) Index rose 0.4% in December on a monthly basis and was up 2.9% from a year ago. These figures were both slightly higher than the estimates of LSEG economists, who predicted 0.3% and 2.8% respectively.
Federal Reserve policymakers are focused on the headline PCE figure as they try to bring inflation back to their long-term goal of 2%, although they view the core data as a better gauge of inflation.
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Looking ahead to fiscal 2027, TJX expects comparable sales to increase 2% to 3% and diluted earnings per share to be between $4.93 and $5.02.
“As we enter 2026, the first quarter is off to a strong start and the availability of quality merchandise continues to be exceptional,” Herrman said. “Long term, we are excited about the opportunities we see to continue to grow our business and capture additional market share around the world for many years to come.”
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