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

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.

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 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...