Will Strong Customer Traffic Sustain TJX's Comp Sales Momentum?

The TJX Companies, Inc. TJX is seeing consistent momentum as customer traffic continues to drive comparable store sales growth. In the first quarter of fiscal 2026, TJX delivered a 3% increase in comparable sales, led by gains across all business segments, Marmaxx (U.S), HomeGoods (U.S.), TJX Canada and TJX International (Europe & Australia). This growth was fueled by a higher number of customer transactions, signaling the strength of the company’s value-focused model.

At the core of this success is TJX’s off-price approach, offering brand-name apparel and home goods at everyday low prices in a treasure-hunt shopping format. This model continues to appeal to a broad range of consumers, particularly as shoppers look for more value in an uncertain economy. Both apparel and home categories delivered comparable sales during the quarter.

The company’s inventory strategy is also playing a role in sustaining traffic. Inventory per store rose 7% year over year, helping to ensure a steady stream of fresh, in-demand merchandise.

Looking ahead, the company projects 2% to 3% comparable sales growth for both the second quarter and full fiscal year. This depends heavily on continued customer volume. If shopper traffic holds, The TJX Companies is well-positioned to meet its sales guidance and extend comparable sales momentum through 2025.

TJX’s Competition in the Retail Discount Store Sector

Costco Wholesale Corporation COST and Dollar General Corporation DG are two key competitors challenging TJX in the retail discount and off-price market.

Costco remains a dominant player in the warehouse retail space, leveraging its membership-based model and bulk sales strategy to attract price-conscious consumers. In the third quarter of fiscal 2025, Costco reported a 5.2% increase in global store traffic and a 5.7% rise in comparable sales, driven by an efficient inventory model and favorable product mix.

Dollar General’s strategic efforts to improve inventory availability, optimize distribution center operations and ensure more reliable deliveries are aimed at boosting productivity and sustaining traffic. In the first quarter of fiscal 2025, Dollar General reported a 2.4% rise in same-store sales, supported by a 2.7% increase in average transaction size. Although customer traffic declined slightly by 0.3%, strength across all major categories, including consumables, seasonal items, home products and apparel, helped offset the dip.

TJX’s Price Performance, Valuation and Estimates

Shares of The TJX Companies have risen 6.5% in the past three months compared with the industry’s growth of 4.4%.

From a valuation standpoint, TJX trades at a forward price-to-earnings ratio of 27.73X, below the industry’s average of 34.39X.

The Zacks Consensus Estimate for TJX’s fiscal 2026 and 2027 earnings implies year-over-year growth of 4.7% and 10.2%, respectively. The estimates for 2026 and 2027 have remained unchanged in the past seven days.

TJX stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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