Earnings Season Reveals Winners and Stragglers Across Retail’s Off-Price Arena

For years, off-price retailers such as TJX (parent of T.J. Maxx, Marshalls and HomeGoods), Ross Stores, Burlington, Dollar General and even Target have built their pitch on a simple thesis: economic downturns make bargain hunting not just appealing but essential.

The sector’s core customer base of households that live paycheck to paycheck, or hover at the edge of middle-class stability, become more price-sensitive when inflation bites, tariffs disrupt or wages stagnate.

And with the news that consumer sentiment fell 5% in August, the first such dip in four months, that thesis is now being tested by the latest earnings season.

Topping the list is TJX Cos., which enters the back-to-school rush fresh off an 8% jump in fiscal second-quarter sales to $14.6 billion and a 23% surge in net income to $1.24 billion. Management credited a “robust and broad-based increase in customer traffic” during the company’s most recent quarterly earnings, the clearest sign yet that shoppers who need to stretch each paycheck are steering toward treasure-hunt displays rather than orderly racks.

Those numbers were strong enough for TJX Chief Executive Ernie Herrman to lift full-year earnings guidance for the second straight quarter, suggesting momentum heading into the all-important holiday stretch.

Burlington Stores already flashed its credentials in May: first quarter 2026 revenue rose 6% to $2.5 billion and earnings per share vaulted 26% to $1.60 as tightly managed inventories prevented the markdown spiral that has plagued many full-price chains. Chief Executive Michael O’Sullivan told investors the company is “buying very lean,” freeing merchants to pounce on cancelled orders and fashion miscalculations at rivals.

Burlington will report its second quarter earnings on Aug. 28.

The numbers look different at Target. Once the paradigm of “cheap chic,” the Minneapolis-based giant on Wednesday (Aug. 20) saw second-quarter net sales slip 0.9% to $25.2 billion while comparable sales fell 1.9%. Executives emphasized improving digital growth and healthier margins, but the retailer’s core middle-income customer remains under pressure, spending more on groceries and less on discretionary aisles that command fatter profits.

Target is also swapping out its CEO as it looks to regain momentum, tapping Michael Fiddelke, its current chief operating officer, as its next chief executive.

“We’re encouraged by our progress in Q2, but we won’t be satisfied until Target returns to growth,” the company said.

At the same time, Dollar General and Dollar Tree, once considered more in the consumables space, are increasingly competing for the same paycheck-to-paycheck customer. Dollar Tree’s first-quarter net sales rose 11.3% to $4.6 billion. Dollar General, reporting Aug. 28, is expected to echo that trend, benefiting from rural shoppers who face little competition for consumables within a 30-minute drive.

Those dynamics are shaping strategy as much as sales tallies. TJX and Ross together plan roughly 180 net new stores this fiscal year, banking on cheap strip-center vacancies to extend their reach into smaller markets. Burlington, whose smaller prototype averages 25,000 square feet, sees room for at least 500 additional locations over time. Target, by contrast, is slowing large-format openings while pouring capital into same-day fulfillment service

The PYMNTS Intelligence July 2025 Paycheck-to-Paycheck research shows that three-quarters of lower- to middle-income households, which we define as those earning between roughly $50,000 and $100,000 a year, say they are living paycheck to paycheck.

That’s a 10% increase since May and the highest level seen since we began tracking more than 185,000 consumers living paycheck to paycheck starting in 2020. But it isn’t just the purchasing power of consumers that is reshaping retail behavior, but the back  aend of procurement and supply chains, too, in light of ongoing trade wars and tariffs.

“Tariffs are no longer an abstract policy lever,” PYMNTS wrote earlier this month. “They are a daily pain point at the checkout aisle. Retailers must brace for a consumer who is both price-sensitive and chronically unsure whether the product will even be on the shelf.”

Research by PYMNTS Intelligence has tracked the impact of the tariffs on consumers throughout the spring and summer. For example, June’s “Stock Out” survey showed 47% of American shoppers said they could not find or afford everyday items because tariffs led to supply chain disruptions or higher price tags.

Earlier this year, PYMNTS Intelligence detailed that in-store shopping was far from dead. But when it comes to buying online, we found that consumers spent more when getting items through digital channels, and key areas of discretionary spending were gravitating to online merchants.

Separate findings from the July PYMNTS Intelligence report “Speed Versus Spend: Who Shopped Amazon and Walmart’s Deal Days and Why” revealed a price-versus-brand tradeoff among shoppers, and also highlighted the fact that affluent consumers can increasingly be found shopping at Walmart.

The post Earnings Season Reveals Winners and Stragglers Across Retail’s Off-Price Arena appeared first on PYMNTS.com.