Why TJX Companies Is Standing Out Among Retail Stocks During Market Slowdown

When the economy tightens, most retailers suffer. But not all of them.

While the broader S&P 500 has climbed 14.5% so far this year through late October, the retail sector has lagged significantly with just a 3.3% gain. Consumer spending concerns and persistent inflation have pressured traditional retailers, yet one standout from the list of retail stocks keeps defying expectations: TJX Companies (NYSE: TJX).

Why TJX Thrives When Others Stumble

The company operates a chain of discount retailers under beloved banners like TJ Maxx, Marshalls, HomeGoods, and Homesense. The appeal is straightforward: customers hunt for quality merchandise—apparel, footwear, home furnishings, and more—at significant discounts.

Here’s where TJX’s business model becomes particularly powerful during tough times. When budgets tighten and consumers grow price-conscious, TJX’s stores become destinations. Simultaneously, suppliers facing their own challenges often redirect excess inventory to off-price retailers like TJX at favorable terms. This dynamic creates a win-win: the company accesses more merchandise while price-sensitive shoppers flock through the doors.

The Numbers Prove the Thesis

The most recent quarterly results validate this story. Despite a challenging economic environment, TJX’s fiscal second-quarter performance showed gate-store sales increased across all divisions, ranging from 3% to 9%, with companywide growth hitting 4%.

Even more impressive—the company isn’t just moving volume through aggressive discounting. Gross margins expanded 30 basis points year-over-year to 30.7%, a remarkable achievement given the higher costs from tariffs that have plagued the sector. Diluted earnings per share grew 15% to $1.10, demonstrating strong bottom-line expansion alongside top-line growth.

The stock itself has captured 19.1% gains this year through October, outpacing the S&P 500’s 14.5% return.

Valuation Trade-Offs

There’s a catch: TJX’s valuation has climbed. The trailing price-to-earnings ratio has expanded from 28 to 33 during this run, reflecting investor confidence. Some may view this as expensive for a retailer.

However, consider the alternative. TJX’s ability to generate consistent sales and profitability gains—even as the broader retail sector struggles—suggests the premium valuation reflects real competitive advantages. A company that prospers when economic headwinds blow strongest offers a form of insurance for uncertain times.

For investors seeking exposure to the retail sector, TJX Companies represents perhaps the most compelling opportunity among available options right now.