Specialty Retail and Department Stores: You asked: are higher in-store inventories a risk to off-price?

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Specialty Retail and Department Stores: You asked: are higher in-store inventories a risk to off-price?

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Specialty Retail and Department Stores

You asked: are higher in-store inventories

a risk to off-price?

Industry Overview

Inventory up but well-balanced 23 June 2026

We are hearing increasing concerns around the risk of higher off-price inventory levels. Equity

TJX, ROST and BURL posted strong comps and captured market share in 1Q, partly United States

driven by strategic inventory planning. Our view is that the teams are striking the right Retailing

balance between offensive and defensive initiatives, and we see limited risk to the Lorraine Hutchinson, CFA

recent build of in-store inventory positioning. We reiterate our Buy ratings on BURL, Research Analyst

ROST, and TJX as we think the strong value proposition continues to attract core and BofAS+1 646 855 0951

trade-down consumers. lorraine.hutchinson@bofa.com

Mary Sport

Playing offense with the assortment to drive share gains ResearchBofAS Analyst

We estimate inventory per square foot ended 4Q +11%. And it worked to help fuel +1 646 743 0227

mary.sport@bofa.com

sales…off-price comps rose 10% in 1Q. Having more product in stores allowed off-

pricers to capitalize on outsized customer demand for value. For ROST and BURL, better

inventory positioning led to improved seasonal transitions during early Spring. 1Q ending

in-store inventories rose 15%, which is causing investor concern again. We see little risk

to the higher inventory levels given the strong comp momentum.

ROST: optimizing inventory levels to meet demand

Having more product in stores is paying off, allowing ROST to capture pent-up demand,

which is resulting in outsized sales growth. In-store inventory growth of 10% at the end