2 Off-Price Retail Titans: Which Stock Has More Upside in 2025?

Core Insights - The off-price retail shopping trend gained significant traction in 2024, with consumers increasingly favoring retailers like TJX Companies and Ross Stores for discounted brand-name apparel, impacting larger retailers negatively [1] TJX Companies Overview - TJX operates under various brands including TJ Maxx, Marshalls, HomeGoods, Sierra, and HomeSense, offering premium designer brands at discounts of up to 60% [2] - The company reported Q3 2024 EPS of $1.14, exceeding consensus estimates by$0.05, with revenues increasing by 6% year-over-year to $15.06 billion, surpassing expectations of$13.95 billion [3] - Consolidated comparable store sales rose by 3% year-over-year, driven entirely by customer transactions, with HomeGoods showing strong performance [5] - The pretax profit margin increased by 30 basis points to 12.3%, above company forecasts, and TJX plans to expand into Spain in early 2026 [6] Q4 Guidance and Stock Buybacks - Despite a solid Q3, TJX issued conservative Q4 guidance with EPS expected between $1.12 and$1.14, below the consensus estimate of $1.18, and comp sales projected to rise by 2$2.25 billion to $2.50 billion of stock during the fiscal year ending February 1, 2025, which helped the stock reach a 52-week high of$128.00 [8] Ross Stores Overview - Ross Stores operates under the Ross Dress for Less and dd's DISCOUNTS brands, being the largest off-price retailer in the U.S. with 1,800 stores [11] - The company reported Q3 EPS of $1.48, beating estimates by$0.08, but revenues rose only 3.6% year-over-year to $5.1 billion, falling short of the$5.15 billion consensus [13] - Same-store comps increased by 1% year-over-year, and the company issued Q4 guidance of EPS between $1.57 and$1.64, below the consensus estimate of $1.67 [15] Expansion and Market Position - Ross is aggressively expanding, having opened 89 new stores in 2024, including 43 Ross and four dd's DISCOUNTS stores [12] - The company aims to cater to affluent off-price shoppers by enhancing its premium luxury brand offerings with discounts ranging from 20% to 70% [11] - Ross Stores stock has increased by 11.9% year-to-date as of December 2, 2024 [16]