The TJX Companies, Inc. (TJX), Ross Stores, Inc. (ROST): Still Plenty of Growth Prospects With the Off-Price Retailers

However, the one area where Ross Stores, Inc. (NASDAQ:ROST) under-performed TJX was in its home-goods sales, which only rose inline with its total sales growth. Similar to its rival, Ross Stores continues to beat its own guidance.

source: company presentations

Where next?

Essentially, both companies are executing well in their core U.S. off-price clothing markets. While other retailers are suffering from the ongoing cautiousness of the consumer, the off-price concept seems tailor-made for consumers seeking opportunities to avoid paying full price.

In addition, running an off-price retailer requires a significant amount of experience in purchasing inventory and merchandising.  Arguably, this provides TJX and Ross Stores, Inc. (NASDAQ:ROST) with some significant barriers to entry that aren’t replicated across many other parts of retail.

It’s been a difficult year for the retail sector with consumers being challenged by payroll tax increases, sequestration fears, tax-refund delays and some unusual weather conditions. However, both companies have demonstrated that they can outperform in a difficult retail environment, and with the U.S. economy continuing to generate moderate GDP growth of 2% to 3%, the off-price retailers have longer to run.

The article Still Plenty of Growth Prospects With the Off-Price Retailers originally appeared on Fool.com and is written by Lee Samaha.

Lee Samaha has positions in TJX and Ross Stores. The Motley Fool has no position in any of the stocks mentioned.

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