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05/24/2021

Discount Retailers Report Comeback in First Quarter Earnings

Discount retailers are poised for growth in a post-pandemic world, with shoppers on the hunt for a good deal, according to a report from CNBC revealing shoppers are flocking back to stores.
TJ Maxx

Discount retailers TJX Companies and Ross Stores recently reported their first quarter earnings and showed elevated sales that beat analysts’ expectations. TJX includes retailers TJMaxx, Marshalls, HomeGoods and more. Shoppers are returning to stores more eager than ever to buy, and some Americans have extra funds in their pockets from government stimulus. In fact, the pent-up demand for shopping may make the discount retail sector even more popular as consumers return to treasure hunting for deals.

Executive Summary

Discount retailers were some of the hardest hit in the sector due to their reliance on in-store shopping and limited online presence. In the aftermath of the pandemic, discount retailers are reaping in sales from pent-up demand and expected big sales growth.

 

“We believe the appeal of our entertaining, treasure-hunt shopping experience gives consumers a compelling reason to shop [with] us,” TJX CEO Ernie Herrman said in an earnings conference call. “In-store shopping is not going away.”

Exec summary

Last year, TJX saw its sales drop by half during the lockdown phase of the COVID-19 pandemic. The retailer temporarily closed 4,500 stores in the U.S. and abroad, and was particularly hit hard because it does not offer online shopping for all its retail brands. Another discount retailer, Burlington Stores, got rid of its online store altogether at the start of 2020. Ross also reported a net loss a year ago, CNBC reported.

However, both TJX and Ross saw a rebound at the beginning of 2021.TJX’s net sales for the first quarter rose nearly 130% to $10.09 billion, from $4.41 billion last year. Ross’s sales more than doubled in the first quarter to $4.52 billion, compared with $1.84 billion a year earlier.