According to recent analysis, discount clothing stores in the United States may be bouncing back faster from COVID-19 than higher-priced apparel retailers. Some of the companies enjoying a rapid return to viable levels of foot traffic include Burlington Stores (BURL 1.58%), Ross Stores (ROST 0.09%), and TJX (TJX -0.06%), parent company of Marshalls, TJ Maxx, and other brands.
At least some of the retailers saw year over year sales gains in January and February, before the arrival of COVID-19 on America's shores. According to TJX's fiscal Q1 2021 earnings results, posted on May 21, comparable store sales, or comps, rose more than 5% year over year in February 2020. At that time, with TJX's stores having been reopened for only 19 days before the report, CEO Ernie Herrman stated, "Although it's still early and the retail environment remains uncertain, we have been encouraged with the very strong sales we have seen with our initial reopenings."
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Herrman's positive news seems borne out by events since, according to analysis from Jefferies. Weekly sales and traffic figures seem to indicate that the major discount apparel retailers are returning to their pre-coronovirus condition more rapidly than full-price retailers such as J.C. Penney, which was forced into bankruptcy after a long struggle with various business problems.
In a Jefferies research note, analyst Janine Stichter wrote, "The rebound at TJX has meaningfully outpaced department stores, which we see as a long-term secular share donor to [off-price], a phenomenon we expect to continue at an accelerated pace." She noted that TJX, Ross, and Burlington were all close to normality at the start of June, while crediting economic uncertainty as a factor contributing to the off-price retailers' success.
