Off-price shopping is trending, and ETFs may be the greatest beneficiaries. The TJX Companies Inc. (NYSE:TJX), which owns T.J. Maxx, Marshalls, HomeGoods, Homesense, and Sierra, experienced a solid second quarter as consumers hunted for deals in a challenging spending environment.
Foot Traffic Data Follows The Trend
Placer.ai reports indicated a jump in visits to TJX stores during Q2 2025 versus last year:
HomeGoods: Total visits up 11.1%, same-store visits up 7.4%
Homesense: Total up 22.6%, same-store up 3.5%
Marshalls: Total up 6.9%, same-store up 5.2%
Sierra: Total up 25.1%, same-store up 4.1%
T.J. Maxx: Total up 6.6%, same-store up 5.9%
To put these numbers in perspective, off-price rival Ross Stores Inc. (NASDAQ:ROST) also registered impressive traffic gains: overall visits up 5.8% in Q2, with a substantial 7.1% increase in July alone.
Earnings Payoff For TJX
All that foot traffic meant results. TJX’s Q2 comparable sales grew 4%, and net sales increased 7%. The company lifted full-year guidance, a reminder that value-driven shopping is structural rather than a seasonal pop.
Value Vs. Discretionary: The Retail Divide
Placer.ai Head of Analytical Research R.J. Hottovy pointed out that the divide has starkly appeared:
Winners: Value-focused off-price chains, such as TJX, which benefit as consumers stretch their budgets.
Laggards: Target Corp (NYSE:TGT), which saw a decline in traffic due to weakness in non-essential categories. Home Depot Inc. (NYSE:HD) and Lowe’s Companies Inc. (NYSE:LOW) experienced only modest growth, driven by small, necessary projects rather than large-ticket renovations.
In other words, consumers are still spending, but they're trading down.
Ross Takes The Stage
Ross, which reports on Thursday, could reinforce that message. Placer.ai analysis showed Ross outpacing its peers (Burlington and Citi Trends) in customer loyalty, with close to 29% of shoppers visiting Ross stores two or more times per month during Q2. If earnings top estimates, it would validate the off-price momentum that TJX has already affirmed.
ETF Implications
This consumer divide has direct implications for ETF investors:
Off-price exposure ETFs might perform better. SPDR S&P Retail ETF (NYSE:XRT), VanEck Retail ETF (NASDAQ:RTH), and Direxion Daily Retail Bull 3X Shares (NYSE:RETL) all own TJX and Ross, so they have upside potential in case the off-price rally extends.
On the other hand, ETFs that are heavily invested in discretionary giants may lag. The Consumer Discretionary Select Sector SPDR Fund (NYSE:XLY) and Vanguard Consumer Discretionary Index ETF (NYSE:VCR) tilt heavily toward Amazon.com Inc (NASDAQ:AMZN), Target, Home Depot, and Lowe's. With discretionary weakness dragging those retailers, these ETFs could face headwinds even if parts of the retail sector are thriving.
The Bottom Line
Off-price retailing is demonstrating uncommon vitality when overall discretionary spending is moderating. For ETF investors, the choice is stark: choose funds with TJX and Ross exposure and you can potentially harvest the shift of consumers to value. Hold more general retail or consumer discretionary ETFs, and those store bargains won’t necessarily end up as bargains in your portfolio.
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