Ross Stores Just Flipped the Off-Price Retail Story After TJX's Marmaxx Miss

Key Points

• Ross Stores entered earnings under pressure after TJX Companies reported softer comparable sales at its largest division.
• A weak July retail sales report added another layer of concern around consumer spending and the outlook for off-price retailers.
• Ross Stores' latest quarter gives investors a fresh comparison point for judging whether value-focused shoppers are still spending.

Ross Stores NASDAQ: ROST stock fell over 2% before it reported its Q2 2026 earnings. That's when the story changed. ROST jumped roughly 8% in extended trading after the company delivered results that analysts deemed better-than-expected.

The report came the day after TJX Companies NYSE: TJX delivered its earnings report. The headline numbers were fine, but the company reported some softness in its Marmaxx business (the combination of TJMaxx, Marshalls, and Sierra stores, as well as their e-commerce sales), which only delivered a 1% increase in comparable store sales.

With TJX falling, it was logical that ROST was down ahead of its own report. If one off-price retailer reported softness, it's not a stretch to believe it would carry across the category.

Why Weak Retail Sales Raised Concerns for Ross Stores

The market's reflex to punish TJX before it even looked past the headline didn't come out of nowhere. It was a reaction to the retail sales report that dropped on Aug. 14.

The Commerce Department reported that retail and food services sales fell 0.6% in July from the prior month, pulling back after a modest gain in June. That was the steepest monthly drop since May 2025, and it landed well below the roughly flat reading Wall Street had penciled in.

In dollar terms, the numbers weren't any better. Total seasonally adjusted sales came in at $763.6 billion, down from a revised $768.1 billion in June. Stripping out the volatile categories doesn't improve the picture much. Excluding gas stations and auto dealers, sales still fell 0.3%, indicating the weakness persisted even after those swings.

The category breakdown showed consumers pulling back across the board.

• Motor vehicle and parts dealers posted the sharpest monthly decline among major categories, falling 1.8%

• Non-store retailers, including online shopping, fell 2.2%

• Gasoline stations fell 0.9%

However, a handful of categories bucked the trend. One of those was clothing and accessories, which rose 1.9%. That's why the reaction to the TJX report was swift.

It's a classic gap between perception and fundamentals. The fundamentals said TJX beat estimates and raised full-year guidance. The perception said, "discount retailer, slowdown, here we go again." Perception won the first trading session. It took Ross Stores a day later to force a rethink.

Ross Stores Turns the Tables on TJX

Ross Stores and the TJX Companies compete for the same value-driven, trade-down shopper. In the past, that meant the results from TJX and subsequent price action tended to be a preview for ROST.

That appeared to be the case again. TJX reported earnings on Aug. 19 and beat analysts' estimates on the top and bottom lines. The stock fell anyway, closing down nearly 3% after tumbling as much as 6% in early trading.

Guidance did most of the damage. TJX's third-quarter earnings per share (EPS) outlook of $1.30 to $1.32 missed the $1.35 analysts wanted. CEO Ernie Herrman didn't help matters, calling a slowdown at TJ Maxx and Marshalls "self-inflicted." Comparable sales at Marmaxx, the company's largest division, grew just 1%, down sharply from 6% growth the prior quarter. The market skipped the nuance. It just heard "slowdown."

Ross Stores Delivers a Strong Q2 2026 Earnings Beat

So what was it that got analysts bidding ROST higher? Total sales for the quarter increased 13% versus last year, with comparable store sales up a very strong 10%, primarily driven by customer traffic.

Earnings told a similar story, though with an asterisk worth flagging. Earnings per share came in at $2.66, including an approximate 60-cent-per-share benefit from IEEPA tariff refunds, well above guidance of $1.85 to $1.93. However, even with that one-time refund stripped out, the beat still holds. Excluding the tariff benefit, operating margin increased 205 basis points, well above the company's plan for an increase of 130 to 150 basis points.

CEO Jim Conroy framed the quarter as broad-based rather than concentrated in one category or region: "We achieved stellar sales and earnings growth in the second quarter... comparable store sales growth once again primarily driven by customer traffic," he said, adding that the gains came from both new customers and higher engagement among existing ones.

Ross Stores Boosts Guidance and Plans More Store Openings

Ross backed the quarter with expansion plans and a raised outlook. The company opened 47 new stores during the quarter and used the report to increase its 2026 new store opening plan to 115 locations. Full-year EPS guidance moved up to $8.61 to $8.77, and third-quarter comparable sales are now expected to run 6% to 7%.

The stronger outlook reinforces the idea that Ross expects its recent sales momentum to carry into the second half of the year. Combined with the accelerated store-opening plan, management is signaling confidence that demand from value-focused shoppers remains healthy.

Can Ross Stores Stock Rally Back to Record Highs?

That's where Ross Stores flipped the script. Beating on the top and bottom lines and raising its guidance was what analysts needed to hear.

TJX also edged higher in extended trading following Ross Stores' report. It wasn't much of a gain. But it appears analysts have become more focused on the broader story that the value-focused shopper hasn't gone away.

The post-earnings surge also pushed ROST beyond where many analysts had valued the stock heading into the report. Several analysts had issued new price targets well above the consensus in the month leading up to the earnings report. If more analysts follow suit in the coming days, ROST could be on its way back to new all-time highs.

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